The government has hit back at criticism of its levelling up strategy by a select committee inquiry and says it “stands behind councils up and down the country”.
A response to the Levelling Up, Housing, and Communities Select Committee’s report on funding for levelling up has been published today (10 August).
The select committee highlighted concerns over competitive funding, but the government said its recently published funding simplification plan “set out the further steps we are taking to simplify the landscape”.
The government said it was already working with 10 pathfinder local authorities to test its new approach. “We will build on this plan by launching a funding simplification doctrine in 2024, which will require any department launching a local growth fund to assess what type of distribution methodology is most suitable for delivering its funding objectives,” the government stated in its response. “Competitive funds remain valuable but where a competition does take place, there will need to be a clear rationale for why it delivers value for money.”
In its report, the select committee also noted that local authorities’ revenue funding had reduced significantly since 2010. It said levelling up funds “generally do not replace grant funding because first they are capital not revenue and; second, because they cover specific projects rather than necessarily covering the priorities of the local authorities”.
In response, the government noted that the final Local Government Finance Settlement for 2023-24 makes available up to £59.7bn for local government in England, which it said was an increase in Core Spending Power of up to £5.1bn or 9.4% in cash terms on 2022-23. “This boost in funding demonstrates how government stands behind councils up and down the country,” it said.
The government response continued: “We recognise all councils are facing pressures, so we are introducing a one-off funding guarantee to ensure that every council sees at least a 3% increase in Core Spending Power next year before any local decisions on council tax rates. We are funding this by repurposing the Lower Tier Services Grant and a proportion of the New Homes Bonus underspend. Over the period of the last three spending reviews however (between 2019-20 and 2023-24), local government has seen a real terms increase in Core Spending Power.”
The government also noted that levelling up funds are “not intended to duplicate core local government funding; and not all are capital first”. The response added: “For example, the £2.6bn, UKSPF, is predominantly a revenue programme and has no requirement for local authorities to deliver specific projects. Local leaders are empowered to shape the design of funding, working in partnership with local stakeholders to select the most appropriate mix of interventions and tailor them to needs and opportunities. This can shift and change through the programme as local leaders see fit. The majority of places have chosen to use a significant proportion of their UKSPF allocations for revenue projects, meaning the programme includes more revenue overall.”
The select committee also said in its report that it had “yet to see any evidence of sustained joint working between departments, and the coordination of the various funding pots they control” and that levelling up “must involve greater coordination and oversight across government” to be successful.
But in its response, the government said that levelling up was a “system-wide” policy. “The mission to reduce spatial disparities goes much further than individual funds, important though they are,” the government said. “In different ways, spending on health, education, skills, transport, housing, R&D, inward investment, business investment, policing, local government and regeneration, to name but a few, all contribute to levelling up. As indeed does tax and customs policy, including in freeports and investment zones. As such it would be misleading to categorise particular elements of spending, or tax for that matter, as contributing to levelling up or not. Levelling up is a whole of government mission.”
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The government also defended itself against claims there was “no evidence of sustained joint working with departments”, noting that there were clearly defined systems and roles in place.
The Department for Levelling Up, Housing and Communities (DLUHC) said it was “working with local places and other government departments, meaning that co-ordination and oversight is carried out locally – which we believe is right”. The department cited the Trailblazer Devolution Deals signed by Greater Manchester and the West Midlands as an example. They have created “a single economic settlement for the first time and contain significant new powers across employment support, skills and transport. We are rolling out further devolution deals in the East Midlands, the North East, York and North Yorkshire, Suffolk and Norfolk. We are undertaking twenty placed based levelling up partnerships, rolling out 12 investment zones across the UK in partnership with government departments as well as delivering eight freeports. All these initiatives require detailed co-ordination and joint working across a multitude of government departments and crucially with local actors as well.”
The government also addressed concerns raised by the select committee over data and metrics, where the committee had said the “dearth of data” available from DLUHC was “an area of serious concern”.
“Whilst there is always more that could be done on data, and improvements are continuously sought, good progress has been made against measuring the metrics in the technical annex of the Levelling Up White Paper,” the government’s response stated.
“The vast majority of these metrics are now publicly available, including on the Subnational Indicators Explorer. And indeed, many of them are recent innovations that give interested parties a level of granular detail and specificity that we have never had before.”
The full government response to the Levelling Up, Housing, and Communities Select Committee’s report on funding for levelling up can be read here.
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