More than 1,000 local council development projects funded by the Conservatives through £10.6bn-worth of levelling-up funding are unlikely to be completed in time, partly due to the government’s inefficiency in allocating funds, a report from the National Audit Office (NAO) has concluded.
Three initiatives in the government’s levelling-up strategy were designed to back “shovel-ready” proposals that would bring quick results – the Towns Fund, UK Shared Prosperity Fund, and the Levelling Up Fund. As of March 2023, only 64 projects out of a total 1,283 funded through the schemes had been completed. Of these, 76 had not even commenced.
The reasoning for this, the report notes, is that the Department for Levelling Up, Housing and Communities (DLUHC), which oversees the process and works with councils on project delivery, “made several funding announcements across the funds later than planned”, meaning that “local authorities delayed starting work [on projects]”.
Over £9.5bn has been allocated by the DLUHC to local councils for various projects across these three levelling-up pots, out of a total £10.6bn. As of March 2023, only £900m has been spent on all approved proposals by regional authorities. The report noted that around 50 per cent of the projects backed in the first round of the £4.8bn Levelling Up Fund, due for completion in March 2024, have not even signed their main construction contracts yet.
“The fact that just £900m has been spent by councils so far out of a total £10.6bn funding pot, and that by March 2023 just 64 out of 1,283 supposedly ‘shovel-ready’ schemes were completed, makes for hard reading,” said Zoë Billingham, the director of the IPPR North think tank. Billingham added that the NAO report highlights “a litany of missed deadlines, moving goalposts and dysfunction in the way levelling-up funds have been allocated to councils as part of the government’s flagship programme.”
The report acknowledges that some of the “delivery problems” that the DLUHC and local councils faced were out of their control, citing “rising costs, skills shortages and supply issues in the construction industry”. DHLUC told the NAO that it continues to keep deadlines “under review”.
Boris Johnson announced levelling up as one of his flagship policies ahead of the 2019 general election. It was developed across several years and secretaries of state. Such instability meant that each of the three main funding pots were designed and announced at different times, resulting in them having “overlapping objectives”, according to the NAO, and local authorities being unable to “align their plans to secure most value [for money]”. Following an internal government report in August 2021 that claimed DLUHC was “not well placed” to handle its grant management processes, new frameworks were put in place that have “significantly improved” governance within the department, the report notes.
The report recommends that DLUHC set out what it will do if levelling-up projects cannot be completed within existing funding deadlines: “This could include resetting expectations for what and when these funds will deliver to take account of rising cost pressures driven by factors including inflation and capacity shortages.”
While DLUHC has become more “flexible” and “has taken steps to understand local authorities’ delivery challenges”, the government’s measures for evaluating the value for money of each project, which “local authorities and local policy-makers may find helpful, are not yet fully developed”, the report concludes. The NAO recommends that the department develop its plans in evaluation to help “build an evidence base of what works to stimulate local economies” that informs future policymaking.
“DLUHC has recognised some of its challenges, including complex processes and slow decision-making,” Meg Hillier, the chair of the Public Accounts Select Committee, said in response to the NAO report, “and responded by simplifying the operation of the funds and improving its fund evaluation.
“However, if these changes are to deliver long-term benefits for people where they live, DLUHC must support local decision-makers to learn from both its evaluation work and each other.”