The Levelling Up Secretary, Michael Gove (Photo by Ian Forsyth/Getty Images)
“I don’t want to level down, I want to level up,” spelled out Tony Blair, patronisingly, in 1997 explaining his approach to social mobility. Um, who wants to level down? With the exception of that terrifying moment when you’re stuck in a multi-storey car park with no obvious staircase down you would be hard pressed to find someone in Britain to argue in favour of levelling down (though please get in touch with the comment desk’s debate section if that’s you).
That’s the beauty of the phrase, reincarnated in 2019 as a key part of Boris Johnson’s triumphant manifesto. Levelling up has become a semi-religious mantra to which Labour has joined in the ubiquitous chanting. Yet the scheme has been mired in criticism – its selection process was condemned as “corrupt” by Labour and Tory MPs and now a new report has found that local authorities are struggling in droves to actually spend the money given to them by an inflexible and poorly thought out scheme.
When spending money is a struggle
In a strange paradox, authorities, once given the money, are often unable to spend it. If their budget is overstepped – which is likely, due to rampant inflation and supply issues in the construction sector – there is little flexibility for increasing funding.
Only tenth of the £9bn earmarked for specific projects in three key funds has been spent, according to a new survey by the National Audit Office (NAO). The NAO analysed three key funding pots collectively responsible for £10bn. £9bn of this was earmarked on specific projects but as of 31 March 2023 – the latest date for which the NAO says it could get hold of accurate data – only £0.9bn of this had been spent. That is one tenth – suggesting a colossal failure in delivery.
Inflation, skills shortages and wider construction industry supply challenges have apparently complicated plans. But it also seems that the fund was set up in an inflexible way that means that if costs grow for authorities (due to 10 per cent inflation for example) the projects are simply thrown by the wayside.
The agency points to some factors outside of the control of the Department for Levelling Up, Housing and Communities (DLUHC) such as inflation, which has had an undeniable impact. However, the process for accessing the funds has shifted a significant burden onto local authorities, both in terms of time and money.
The government’s “beauty pageant” bidding process was incredibly rigorous yet lacked transparency. It was also very costly for local authorities – the majority of whom failed to win funding (80 per cent of bids were rejected in the second funding round). Overlapping deadlines across funds have prevented local authorities who, hedging their bets, applied to multiple funds, from planning projects or future bids with any certainty.
It can cost up to £30,000 for a local authority to cobble together a bid – indeed Rochdale Borough Council spent over £90,000 on consultants working on its bid. That is an astonishing amount of money at a time when council budgets are tighter than ever.
The selection process for the winning bids is murky: it is, however, time intensive with several rounds of bureaucratic hoops to jump through, based on relatively obtuse criteria decided by . In 2021 after the formula was published, critics said there was a disproportionate weighting on road travel and a failure to include deprivation as a metric.
After investigating, the Public Accounts Committee said it was “concerned over the timing of ministerial input for funding awards” and criticised the lack of transparency over the final criteria – noting DLUHC had not published information on “the location and type of unsuccessful versus successful bids”.
MPs – very reasonably – criticised the fact that ministers decided on the principles for awarding funding only once they knew which bids would win funding.
This has led to accusations of preferential treatment. In January the Guardian found that Tory seats gained significantly more money per person than other areas with similar levels of deprivation. Some MPs called this a “slap in the face”. Rishi Sunak’s wealthy Yorkshire constituency received funding. Some regional leaders accused the government of bribing MPs.
Andy Street, mayor of the West Midlands which largely missed out on funding,slammed “Whitehall’s bidding and begging bowl culture” calling “broken” – and, unsurprisingly, championing devolution.
“The centralised system of London civil servants making local decisions is flawed, and I cannot understand why the levelling-up funding money was not devolved for local decision makers to decide on what’s best for their areas.”
Chris Bryant MP – an expert on parliamentary process – went further, calling the entire process “corrupt”.
Some of DLUHC’s errors were not so hugely egregious but they were inept. DLUHC made several funding announcements later than planned, resulting in many local authorities delaying works. For example, the UK Shared Prosperity Fund was launched in April 2022, local authorities had to submit investment plans by August 2022, but DLUHC did not approve these until December 2022, giving local authorities only three months to spend their 2022-23 allocation.
Communication was poor. The deadline for submitting the first round of Levelling Up Fund bids came before the final confirmation of Town Deals offers. This meant local authorities did not know what funding they may receive from each fund, preventing effective planning and potentially jeopardising value for money.
It is not clear what will happen to the unspent money – though usual protocol suggests it will be returned to the Treasury. This would have a different significance had the bidding process not been so crazily costly.
All this chaos is rather ironic. The Levelling Up Fund aimed to funnel money into “shovel-ready” projects – in what was an ostensibly simple scheme to direct money to the most deserving areas of the UK.
How did it go so wrong?
In fairness, the levelling up fund was the first major project of its style. It was ambitious, despite sounding simple. There was no predecessor.
The Local Government Association published a determinedly positive statement. “We want to see a greater push towards place-based investment and the continued move away from the competitive allocation of short-term funding pots.”
Reading between the lines, that seems like a rather damning critique of the levelling up fund, the nexus of which was short term funding pots, competitively allocated.
However the LGA remain stubbornly optimistic: “We look forward to the next round of the Levelling Up Fund as evidence of the government’s progress in this area and continue to call for councils to be given the opportunity to realise the benefits of joined-up funding, to be made available to every part of the country.”
The NAO was equally keen not to slam the fund too hard, saying it expected the fund to have learned some lessons and adapted for future funding rounds.
Jack Shaw, a researcher at the Bennett Institute for Public Policy at Cambridge University, uncovered data showing 95 per cent of the local authorities that received funding in 2022-23 were unable to spend all of their share. Across the UK, 43 per cent of £429m in funding was not spent. No council in the north of England, Scotland or Wales had spent its full investment.
Shaw said there was a “big risk” of the DLUHC mistakes meaning councils were unable to spend the cash would simply be repeated with an even bigger pot available this financial year.
Whatever happens, this sorry sequence of events has cost councils and the taxpayer hundreds of thousands of pounds. DLUHC points out “a number of projects have completed” yet it could only point to the “redevelopment of the Farnworth Leisure Centre in Bolton, delivered as part of a £13.3m commitment to Bolton Council” and “the Ingenium Centre in Darlington and a digi-tech factory in Norwich”. Perhaps that speaks for itself.
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