North East Devolution and Levelling Up
Penshaw Monument

MPs hit at ‘alphabet soup’ of levelling-up funds

The government committed more than £28bn of UK and European Union funding to local economic growth policies in England between 2010 and 2020 but still does not have a strong understanding of what works, MPs have concluded.

In spite of all the money spent and the efforts of successive governments to tackle longstanding spatial disparities, the UK remains less productive than its main competitors, shows regional disparities that are some of the largest among developed countries and inequality within the UK’s regions is even greater than it is between them, say the MPs.

When the first £1.7m of the £4.8bn Levelling Up Fund (LUF) was allocated to local authorities last autumn, principles for awarding funding were only finalised by ministers after they knew who, from the 170 shortlisted bidders, would win according to today’s report by the House of Commons Public Accounts Committee (PAC).

The Committee also says that they are concerned that some bidders may have been successful on the basis of unrealistic claims about how ‘shovel ready’ their projects were to deliver, at the expense of other, more realistic, bids from elsewhere.

North East winners among the 105 successful bidders on that occasion were Durham County Council, which received £20m for transport infrastructure improvements at Bishop Auckland; Sunderland, which received the same amount for a housing eco-system; Stockton South, which received £20m for town centre regeneration; and Newcastle which got two awards of £20m for regenerating the Grainger Market, Blackett Street and Old Eldon Square and £19.8m for a sport and wellbeing hub at West Denton.

The PAC does not say which projects should not have been first-round winners. However, it is known that plans to pedestrianise Blackett Street face a public inquiry following objections from bus operators, and the scheme is not expected to start until 2023 at the earliest.

Plans to pave over Old Eldon Square are also in doubt after they were questioned by the new City Council leader, Councillor Nick Kemp, who told The Journal that he wanted to keep it as green as possible.

Today’s PAC report says that the way money was allocated by the Department for Levelling Up, Housing and Communities (DLUHC) from the LUF was unsatisfactory and: ‘The Department has past form with this. In November 2020, we reported that the selection process for awarding the [£3.2bn] Towns Fund had not been impartial and we raised concerns about the lack of transparency over the selection process.’

Civil servants are reported to have reassured the PAC that the party of the local MP played no part in the decision-making but that there was a small allowance in the scoring for where a bid had demonstrated local MP support.

‘However’, says the PAC, ‘the Department did not publish sufficient information for us to determine, as we would expect in the interests of openness and transparency, how much discretion ministers had. For example, it did not publish lists of shortlisted or unsuccessful bidders, neither did it publish any information on how the Department had scored the bids.’

The PAC is also critical of the large number and apparently uncoordinated nature of levelling-up funds: ‘There is an “alphabet soup” of central government programmes, totalling billions of pounds, introduced since 2011 to support local economic growth. In 2021–22 alone, the [National Audit Office’s] report identified ten live funds, though the Department told us that only a small number of those still had future money to be allocated.’