“Astonishing delays” have been identified in the delivery of levelling up projects across the country and the Government is unable to provide compelling evidence of what has been achieved, MPs have said.
In a damning report on the progress of key elements of the Government’s flagship pledge to address regional inequalities, the Public Accounts Committee said just over 10% of overall funding available has been spent and is “making a difference on the ground”.
The report highlighted the latest data for September 2023 which showed that of the £10.47 billion in total funding that must be used by 2025/26, local authorities, who are the recipients in most cases, had received £3.7 billion and spent £1.24 billion.
Many projects are said to have been plagued by delays despite being approved on the understanding they were “shovel-ready”.
This would result in 80% of projects funded under round one of the levelling up fund missing their completion deadline of March 2024, the report added.
The Department for Levelling Up, Housing and Communities (DLUHC), which is the lead department for the three existing dedicated funding streams, could not provide “any examples of what had been delivered so far”, the committee said.
But a spokesperson for the department said it was “to be expected” that spending would increase in later years of the programme, adding: “Buildings do not go up overnight.”
When asked about delays to delivery, DLUHC cited a combination of “project specific issues”, the pandemic and inflation as the causes of lower than expected levels of levelling up spending.
The committee also found “optimism bias” meant projects perceived as ready to start were prioritised over those which could have had more long-term impact.
The ensuing project delays reveal flaws in the original assessments, the report added, with the Government forced to extend deadlines for when funding must be spent.
The committee also identified a “worrying lack of transparency” in DLUHC’s processes for awarding funds, which it said had “wasted scarce resources and caused some local authorities to miss out”.
The department changed the rules for allocating money under the levelling up fund “as it went along”, causing confusion and budgets being wasted by local authorities on bids that could not be successful, the MPs said.
The report cited the example of local authorities learning after they had submitted bids for round two of the levelling up fund that they could not secure cash if they had been successful in round one.
This issue led to 55 councils bidding under rules which meant they had no chance of being successful, it added.
Later DLUHC decided it would only choose bids for funding in round three which had not been successful in round two, leading to local authorities which had waited to bid until this stage missing out.
The report said a more consistent process would have saved “considerable time and money in preparing and submitting ineligible bids”, which cost £30,000 on average to develop.
Committee chairwoman Dame Meg Hillier said: “The levels of delay that our report finds in one of Government’s flagship policy platforms is absolutely astonishing.
“The vast majority of levelling up projects that were successful in early rounds of funding are now being delivered late, with further delays likely baked in.
“DLUHC appears to have been blinded by optimism in funding projects that were clearly anything but ‘shovel-ready’, at the expense of projects that could have made a real difference.
“We are further concerned, and surprised given the generational ambition of this agenda, that there appears to be no plan to evaluate success in the long-term.”
Dame Meg added that in changing funding rules “mid-process”, the Government was “wasting time and money and hindering transparency”.
She added: “We will now be seeking to keep a close eye on DLUHC’s progress in unclogging the funding system. Citizens deserve to begin to see the results of delivery on the ground.”
The committee welcomed DLUHC’s aim to simplify the levelling up funding system and reduce administrative burdens, but said the department “needs to continue to do more to embed the changes it has started to make”.
The MPs also said they are “disappointed” that DLUHC has no long-term plans to measure the impact of levelling up funds into the future.
When the levelling up white paper which laid out 12 missions was published in February 2022, the Government pledged to publish an annual report on progress.
The Levelling Up and Regeneration Act 2023 includes a Government commitment to publish a statement of levelling up missions before Parliament on an annual basis.
The first of these was published on January 25 this year and set out the metrics the Government will use to measure progress.
Responding to a the report, Martin Tett, chairman of the Local Government Association’s People and Places Board, said the pandemic and inflation had increased construction costs alongside supply and skills shortages.
Welcoming the Government’s response which provided greater flexibilities on how funding could be spent, he added: “We need to realise the benefits of joined-up, multi-annual, long-term funding and continue to move away from costly competitive bids between areas, so we can save money, drive up productivity and truly deliver levelling up as envisaged.”
Angela Rayner, Labour’s deputy leader and shadow communities secretary, said: “The Conservatives have utterly abandoned any pretence of trying to achieve their mission to level up Britain.
“This report confirms that the Tories’ begging-bowl approach to funding bids has wasted scarce public resources, forcing local authorities to spend previous time, effort and funds to bid for pots of money, many of which they have no chance of getting.
“Labour will start by ending the sticking-plaster approach peddled by the Conservatives and provide long-term funding settlements to local leaders, giving them greater certainty and the ability to plan for the long term.”
A spokesperson for the DLUHC said: “We’re proud that we’ve committed £15 billion since 2019 to often overlooked areas, agreeing historic devolution deals, and shifting power and money out of Westminster.
“This money is regenerating town centres, creating new infrastructure and helping to level up communities across the UK.
“Buildings do not go up overnight and these are multi-year programmes, so it is to be expected that the capital spend ramps up in later years. But we will continue to give export support to councils to tackle any delivery blockers so we deliver these vital projects quickly.”
