The following Statement was made in the House of Commons on Monday 20 November.
“With permission, Mr Speaker, I would like to make a Statement on levelling up. This Government are committed to levelling up and creating opportunities across all regions and nations of the UK. Last year, we set out our 12 levelling-up missions in the levelling up White Paper, all principally aimed at tackling regional inequality, because we believe that people’s opportunities should be the same wherever they live, be it in a city or town, on an island, or in a rural or coastal community. I am proud to say that since 2019 this Conservative Government have committed over £13 billion of local growth funding to levelling up. Through the levelling up fund, the town deal, the UK shared prosperity fund, the future high streets fund and much more, we are regenerating town centres and high streets, improving local transport, funding heritage assets and boosting productivity, jobs and living standards.
Our recently announced long-term plan for towns is providing long-term investment for 55 towns, and the money is to be spent on local people’s priorities. We have launched our investment zone programme: 12 investment zones across the UK will grow key industries of the future and increase jobs. That includes West Yorkshire’s investment zone, announced earlier today, which will focus on life sciences.
We have also made excellent progress on freeports. All freeports in England are now open for business, and we have announced a further four in Wales and Scotland. As Levelling Up Minister, I have been lucky enough to see at first hand how we are using this transformative funding to unlock the potential of local economies and improve the everyday life of people across the UK. We recognise the good that this funding can do, so we have embarked on an ambitious plan to simplify the funding landscape for local authorities, led by my right honourable friend the Secretary of State.
Our simplification plan describes how this Government will deliver our levelling up White Paper’s commitment to streamlining funds in three phases of reform. First, there will be an immediate simplification of existing funds. Secondly, we will establish a funding simplification doctrine, by which central government will abide. Finally, we will implement further reforms at the next spending review. We have already delivered much of the first phase. For instance, we have given local authorities greater freedom to adjust their town deal, future high street and levelling up fund projects. We have also invited 10 local authorities to become part of the fund simplification pathfinder pilot, which will give them greater flexibility to move money between different funds. By increasing local flexibility, we will reduce bureaucracy and inefficiency within the delivery process.
The second phase of our funding simplification plan will see the Government launch a new funding simplification doctrine, which will change how central government gives funding to local authorities. It is clear that funding competitions can drive value for money and help identify the best projects for certain programmes, so we will continue to deploy competitions where they make sense, but we also recognise that bidding into multiple competitions, especially in parallel, can place a disproportionate burden on local authorities. The new government doctrine will therefore ensure that we consider fully the impact on local authorities when designing new funds. Finally, we have committed to further reforms at the next spending review, including giving our trail- blazer mayoral combined authorities in Greater Manchester and the West Midlands single department-style, multi- year settlements.
Of course, our work to give local authorities the right levers to spend funding efficiently is only one part of the picture; of equal importance is the funding itself. As I mentioned earlier, since 2019 we have made more than £13 billion available to local places. As part of that, across rounds 1 and 2 of the levelling up fund we committed £3.8 billion to 216 projects across the country. We have listened to feedback from the first two rounds of the fund, and my right honourable friend the Secretary of State announced in July that we would take a new approach to round 3. As a result, we decided not to run another competition for this round. Instead, we have drawn on the impressive pool of bids that we were not initially able to fund through round 2.
Today, I am delighted to confirm the allocations of the levelling up fund’s third and final round. We are investing £1 billion in 55 projects across England, Scotland and Wales. Copies of the successful allocations have been made available in the Vote Office. The sheer number of high-quality bids is testament to the enthusiasm for levelling up across our country and the hard work of so many honourable Members in supporting their local areas to develop strong plans for renewal. From Chorley, Mr Speaker, to Elgin, and from Doncaster to Rhyl, these local infrastructure projects will restore pride in place and improve everyday life for local people.
We have targeted funding at the places most in need, as identified through our levelling-up needs metrics. We have also ensured a fair geographic spread across Great Britain, including £122 million across six projects in Scotland and £111 million across seven projects in Wales. That means that across all three rounds we have invested more than £1 billion in Scotland, Wales and Northern Ireland, exceeding our original funding commitments. It also means that across all three rounds of the fund, the north-east and the north-west will have received more per capita than any other region in England. They are followed closely by the east Midlands and by Yorkshire and the Humber.
Our round 3 investments double down on two of our key levelling-up missions—pride in place and improving transport—but we also recognise the key role that culture plays in levelling up. We invested £1 billion on projects with a cultural component in rounds 1 and 2, and as part of this round we are setting aside a further £100 million for culture projects to be announced in due course.
We want to get delivery happening quickly. We will work closely with local authorities to confirm that their projects remain viable, and we will provide ongoing support to ensure that local places are able to deliver. We are committed to giving local areas the funding and power they need to deliver transformative change within their communities. We have committed more than £13 billion of local growth funding for communities the length and breadth of our country. We have invested in pride in place and reversed decades of decline. We are taking long-term decisions for a brighter future for our country. I commend this Statement to the House.”
My Lords, there are 51 cities, 935 towns and 6,000 villages in the UK, hundreds of which suffer from considerable inequalities. Although we were delighted for 55 of those places that were successful in this announcement made on Monday, they have been singled out, as before, from many other areas that have equal or more need of funding to support their economic growth, and which will be wondering whether the Government’s approach to them is more like giving up than levelling up.
However, we welcome that the Government have recognised that the Hunger Games approach they were taking to funding has failed. We believe this approach resulted in millions of pounds being spent on consultants to put bids together, and that it was actually perpetuating inequalities between areas by further lining the pockets of those who spent the most on their bids. What discussions took place with the sector about the new methodology of the allocations this time, and what account has been taken of the inflationary factors that may have impacted on their viability in the time since the bids were submitted? What does the funding simplification doctrine, quoted by the Minister in the other place on Monday, actually mean? Does this new doctrine apply across government, or just to DLUHC? If the latter, how has the sector been engaged in its creation? How quickly does the Minister expect that the pilots taking place in relation to this will be evaluated?
Compared with the devastating cuts that local authorities have suffered, these grants to just 55 local authorities feel to the rest of the sector like crumbs from the table. With authorities facing the burden of £1.6 billion of increased housing and homelessness spend and £1.125 billion just for special educational needs, and with £15 billion of cuts from their funding already and the LGA estimating that there will be a £3.5 billion shortfall this year—that may have changed slightly today, but I have not had a chance to look yet—surely, as we asked during our discussions on the now Levelling-up and Regeneration Act, it is time for a radical overhaul of local government funding.
My Lords, this is a sad and disappointing Statement. It is another signal that levelling up, which was the flagship policy of the last Prime Minister but one, is on its dying breath. The Statement was delivered by a junior Minister in the other place. It rehashes announcements that have already been made. It glosses over failures of process and delivery, and it trumpets success when it is in full retreat. It starts with a boast about the £13 billion allocated to the levelling-up task, which is the same £13 billion that had already been announced five times before. But it overlooks what the National Audit Office said in its report published this week: much of the money will never be spent because of the overweening departmental bureaucracy and long ministerial delays in signing off projects with sponsors.
In fairness, the Statement does contain a sort of “sorry, not sorry” section about changing the process in the future, establishing a long-overdue but non-specific “funding simplification doctrine”, of which the noble Baroness just spoke. I am sure it will be a belter when it comes, but the benefit of the new doctrine will be lost by what is perhaps the most gobsmacking piece of double-speak in the Statement. Apparently rounds 1 and 2 have gone so well that, after learning from their successes, round 3 has been cancelled. Usually, back in the real world, if a project goes really well in its first two stages, everyone is eager to get on and do the third stage—but not this time. Instead, the approval threshold for projects is to be lowered and schemes previously rejected in rounds 1 and 2 will be reconsidered. There will be no round 3 and no chance for further bids to be submitted.
The National Audit Office reports that rounds 1 and 2 generated 834 bids, but three-quarters of them were rejected. I have no doubt that there will be some very good schemes among those rejected before that fully justify their approval now. Like the noble Baroness, I welcome the announcements made, but that has been done by pumping money originally intended for round 3 bidders back into the original pool for round 1 and round 2 bidders. This clearly demonstrates that the contention of these Benches was exactly right that the overall size of the pot was always minuscule compared to the need.
My Lords, I thank the noble Baroness, Lady Taylor, and the noble Lord, Lord Stunell, for their questions. I start by challenging a few of the assertions made in their responses to the Statement, particularly about underfunding and the minuscule amounts of money that have gone into this project.
Levelling up is at the heart of this Government’s mission: it has been backed with significant financing through the levelling-up funds and a number of other initiatives, and we have seen more in the Autumn Statement today. For those areas that have bid into the levelling-up fund and have been unsuccessful, it is not the end of the story: we have an agenda across government, whether through devolution, investing in skills, investment zones, freeports, or a whole number of areas where opportunities continue for areas to receive funding for projects that are important to them. On Monday, 55 projects were announced, but the total is 271, which is not an insignificant number of bids. These were across the country, representing areas that are diverse but also in need of this funding.
I also address the point around smaller, less well-resourced councils that felt unable to bid in earlier rounds. Some funding was made available for those who would struggle to put together bids to be able to participate in that process, so that is not the full picture. Also, the feedback that we received on the competitive process for rounds 1 and 2 informed the approach that we took for round 3 and informs our approach to the funding simplification doctrine, which acknowledges the valuable contribution of competitions for driving value for money and identifying the best projects for certain programmes. We will continue to deploy them where they make the most sense, but we encourage the use of allocative approaches where they can best achieve specific outcomes while minimising demands on local authorities. At the heart of that doctrine is our commitment to value for money, which will drive decision- making on the most appropriate choice of funding mechanism.
There is time. I asked questions about Northern Ireland, about inflation and about impact assessments. May I have a response to those in writing?
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Can the Minister comment on the National Audit Office’s report last week, which found, as did the Public Accounts Committee, that no impact assessment had been carried out on levelling-up funding and that just 7% of the first two rounds had been spent so far, with 89% still held in Whitehall? Why has DLUHC not been able to agree the necessary funding arrangements with local authorities? Can we be assured that this process will be simplified so that the money gets to where it needs to go and projects are not held up by departmental delays? What will happen next for the hundreds of projects that have been submitted and not yet funded? We believe that this is the last round of this funding.
I am sure that my noble friend Lady Ritchie will come in on this, but why have councils and people in Northern Ireland been left out of this process? Whatever is happening in Stormont, councils will want their communities held in at least an equal process with the rest of the UK.
The projects funded through this round of levelling-up funding will have been thought through, fought for and, I am sure, welcomed by the successful authorities. However, in the context of cuts to local government funding of 60p in the pound between 2010 and 2020 and a fall in real-term spending power of 27% up to this year, they are a drop in the ocean compared with assessed need. Councillors and their communities watch as their high streets decline and their budgets are torn away from universal services that touch everyone, everywhere, all the time, to the specialist demand-led services that are there only for those with the most complex needs. Our residents are still reeling from the cost of living crisis. Surely it is time for a radical devolution of powers and resources and the flexibility to take the decisions that they know will be in the best interest of their areas. Surely it is time for Labour’s plan, which will genuinely enable that and truly let people take back control.
That leaves some of the most deprived councils, and the smaller and less well-resourced ones, stranded. They are the ones who did not bid in earlier rounds because they could not afford to take the risk of investing time and money in a bid that had only a 1:4 chance of success. Encouraged by the July announcement that a new and simpler process was ready to come into play, they have been ready to step forward and do so, but their chance has now gone. There will be no round 3, no new bids, and no levelling up for them.
I have two questions for the Minister. Will she publish the list of local authority areas that did bid in rounds 1 and 2 but will still not benefit from any funds from any of their bids, despite the clawback of round 3 money to help? I will call that list A. It would give a good map of where the Minister thinks that levelling up is not really needed. Secondly, will she publish a list of those local authority areas from which no levelling-up bids at all have yet been received? I will call that list B. That, I fear, would give a good map of small, under- resourced local authorities that have been left stranded by the cancellation of round 3 and are left out of the picture altogether. Publishing lists A and B would be a long-overdue first step to restoring transparency and trust to what, up to now, has been an opaque and desperately underfunded bureaucratic disaster. I look forward to the Minister’s answers.
The Government have responded to the feedback they had in earlier rounds of the levelling up fund in their approach to round 3. I reject the Liberal Democrats’ proposition that the 55 projects that received funding in this round are somehow of lesser quality than projects that received funding in previous rounds. In fact, we found that a very high number of very high-quality projects had bid into this system, which allowed us to return to those projects for round 3 and make great allocations for very well-deserving projects. To reassure the noble Baroness, we touched base with local areas to ensure that those projects continue to be priorities for them and deliverable. However, having made the formal announcement, we will also recontact every single one of those successful local authorities to reconfirm that they are projects that they would like to pursue and, on the delivery point, meet a delivery timetable that is achievable given the changing circumstances.
Those changing circumstances were a factor acknowledged in the National Audit Office report. We have faced a time of high inflation, particularly for capital projects, and labour shortages. We also acknowledge some challenges in the way we ran the process in government too, so we welcome the work that the NAO has done and have taken significant action to address the points it made. I point out that the data that the NAO used in its report was cut off in March 2023 to allow it to analyse consistently across three different projects that the Government have been running. Since then, we have released a further £1.5 billion of levelling-up funding through the programme, so significant progress has been made.
We have also made changes to how the projects are run—for example, allowing greater decision-making for local authorities to flex their delivery programmes to meet the new circumstances they find themselves in. We have also made £65 million available to ensure that local authorities have the capacity to deliver the levelling up fund projects that they have successfully bid for. The Government acknowledge some of the challenges in the National Audit Office report. We have already taken steps to address some of those points and seen a significant increase in the amount of money disbursed.
Finally, on the funding simplification doctrine and what it will mean, it is a doctrine that will apply from central government to local government in its approach to levelling up. That is primarily from the Department for Levelling Up, Housing and Communities, but it applies across other departments’ delivery of and commitment to our levelling-up agenda with local authorities. We will evaluate the simplification pathfinders as quickly as possible. In all the work we are doing on these new projects and programmes, we seek to learn the lessons from them as we go along, ensuring that we have robust evaluation processes in place that allow us to continue to make these modifications and improvements as we deliver our levelling-up agenda across the whole of the United Kingdom.