The government’s levelling up policy will fail without a long-term, substantive strategy and funding approach – which it currently lacks, according to a parliamentary committee.
The Levelling Up, Housing and Communities Committee, appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Levelling Up, Housing and Communities (DLUHC), has published the sixth report of its ‘Funding for Levelling Up’ inquiry.
In the report, the committee said the method of delivering funding, the allocation process, and the extent to which different funds have been compatible with the needs of communities in the short and long-term is “creating several obstacles for the policy’s success”.
The committee said the “dearth of data” available from DLUHC was “an area of serious concern”. The report stated: “DLUHC has conceded that it does not have ‘sufficient data’ in relation to Whitehall departmental expenditure on the full range of levelling up funds or on combined authority income or expenditure.
“We cannot understand how DLUHC can make significant policy decisions either in relation to priority areas, funding allocations, or the measurement of the success or failure of the levelling up policy in achieving its objectives if there is not adequate data to support these tasks.”
The committee said it had also seen “limited evidence” that DLUHC had made any progress on reducing the requirements to access competitive bidding and simplifying the funding landscape. Instead, it said evidence suggested the challenges in these areas were “far greater” than those outlined in the government’s Levelling Up White Paper of 2022, published by DLUHC.
“Local authorities’ revenue funding has reduced significantly since 2010,” the report stated. “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.
“The Levelling Up Fund has held some merit in the funding of one-off projects across the country. However, due to the questionable use of metrics in the first round and the additional metrics for success in the second, the management of this fund has ultimately contributed to diminished perceptions of trust and transparency. This mismanagement has left the government open to criticisms that it has not made funding decisions based on need or, indeed, merit.”
The select committee also observed a contradiction between DLUHC’s claim that it had consulted with the devolved governments on the creation, compatibility, and implementation of the levelling up funds, including the UK Shared Prosperity Fund, and the devolved governments themselves reporting a “stark lack of meaningful consultation and engagement”.
The report added: “This lack of consultation is arguably supported by the apparent lack of compatibility most of these funds have in Scotland, Wales and Northern Ireland. Moreover, the lack of consideration for the circumstances in which the executive and its officials in Northern Ireland operate is of even greater concern to us. There is an overwhelming sense that DLUHC is unwilling to collaborate and adhere to devolved agreements in which the governments of Northern Ireland, Scotland and Wales operate.”
The committee concluded that while levelling up was a laudable policy aim, it is “unlikely to be successful given the government’s current approach to funding”.
The report said: “DLUHC does not know which pots of money across government contribute towards levelling up, nor does DLUHC appear to have oversight of how these objectives can be delivered strategically through departmental co-ordination. As a result, the government’s current approach is characterised by one-off short-term initiatives, and this will be insufficient if the geographic, economic, social and health inequalities are to be reduced and ultimately, overcome.”
Without a long-term strategy and funding approach, “levelling up risks joining the short-term government growth initiatives which came before it”.
In offering recommendations, the report stated: “If levelling up is to remain the government’s flagship policy, as it has described it, its delivery must involve greater co-ordination and oversight across government where applicable. The government must get to grips with setting out which funding streams are materially contributing to the levelling up policy. All government departments must identify and assess those spending allocations which are being used to achieve the objectives set out in the Levelling Up White Paper.
“DLUHC, as the department primarily responsible for delivering levelling up, must make clear what funding is being provided to achieve which objectives and outcomes so that the progress of the policy can be clearly monitored, and delivery against ambitions accurately assessed.
“As a starting principle, local authorities who most require prioritising within the levelling up policy should be allocated money through revenue to achieve objectives that are in line with their local circumstances and need, with the appropriate monitoring and expenditure in place. Local authorities must be given the flexibility to use allocated funds in the most effective way they can.
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“Therefore, we recommend there is a change in approach across government when it comes to funding for levelling up. The department should move away from an overemphasis on bid and judgement[1]based funding pots which may impede effective local decision-making.”
The select committee also recommended that future governments “take a more sustained and long-term approach to levelling up matched by ongoing and secure funding”. This must avoid “unnecessary duplication” and not just lead to the creation of more local growth initiatives. “Only in this way can the policy begin to address the challenges outlined in the White Paper and ultimately find success in ‘levelling up’ the UK,” the report said.
The inquiry into funding for levelling up began on 20 October 2022, drawing upon a range of existing and ongoing research as background. More than 40 written submissions were received, while eight panels were questioned across five oral evidence sessions.
Power to the councils
Responding to the select committee report, Kevin Bentley, chairman of the Local Government Association’s People and Places Board, said: “Levelling up has the potential to transform people’s lives and livelihoods, with councils best placed to make this happen.
“This should be locally led by evidence of where crucial investment needs to go to, not based on costly competitive bids between areas, as this important report confirms.
“Awarding relatively small pots of cash is not a sustainable approach to economic development or public service delivery. It also falls short of the challenge set out by the Levelling Up White Paper and the ambitions of local leaders for their residents and places.
“The government can boost local sustainable productivity and save money, by building on the White Paper’s commitment to streamline the long list of individual local growth funds. It should also commit to providing better information about total public spending in a local area, to support a greater co-ordinated approach across government and with local leaders.
“Greater powers for councils with local and national support, without them needing to negotiate costly funding competitions, will also help make levelling up a reality.”
The full Levelling Up, Housing and Communities Committee report can be read here.
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