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PAC “not convinced by rationale” for opaque and “not impartial” Towns Fund selections

11 November 2020

The £3.6 billion Towns Fund was introduced at pace by the Ministry of Housing, Communities and Local Government (MHCLG) in summer 2019. Ministers selected towns to receive funding from a ranked list prepared by officials.

MHCLG claims it had good reasons for this approach, but in a report published today, Wednesday 11 November 2020, the Public Accounts Committee says it is “not convinced by the rationales for selecting some towns and not others”, finding the justification offered by ministers for selecting individual towns to be “vague and based on sweeping assumptions” and raising concerns over the decisions being politically motivated.  

In some cases, towns were chosen by ministers despite being identified by officials as the very lowest priority - for example, one town selected ranked 535th out of 541 towns.  

Lack of transparency

MHCLG has also not been open about the process it followed and would not disclose the reasoning for selecting or excluding towns. This lack of transparency has fuelled accusations of political bias in the selection process, and is a risk to the Civil Service’s reputation for integrity and impartiality.

Although the Department’s Permanent Secretary confirmed he was satisfied the selection process met the requirements of propriety and regularity, a summary of the Accounting Officer assessment provided to the Committee - which sets out compliance with the legal framework for managing public money - remains unpublished, and the Committee is asking to be provided with the full version of the assessment.

MHCLG says that it wanted to give money to towns which it deemed unlikely to have the expertise to succeed at bidding for funding through an open competition; which also raises concerns about whether those towns will have the capacity to spend the money well. 

The impact of Covid-19

The impact of Covid-19 means that some towns will likely need to reconsider how best to spend the money, and that financially stretched towns will find it even harder to come up with match funding.  

It is still far from clear what impact MHCLG expects from the Towns Fund, when it expects to see the benefits, and how it will measure success both at the town level and across the whole programme. With much remaining unclear about how the programme will be delivered or how MHCLG will oversee progress, the Committee will keep a watching brief on the scheme and expects regular updates to hold Government to account for how it has used taxpayers’ money in the Towns Fund.

Chair's comments

Meg Hillier MP, Chair of the Committee, said:

“In our programme of work on the Government response to the Covid pandemic, we have begun to see the grim, potentially huge costs of public spending made in haste and without all the usual, legal checks and controls. That makes it all the less acceptable to now be looking at billions of pounds handed out in an opaque process that has every appearance of having been politically motivated - long before Covid struck.

“Now, when every penny counts, and when some towns that won funding will almost certainly have to redirect it to fill the massive holes the pandemic has blown in their budgets, MHCLG must be open and transparent about the decisions it made to hand out those £billions of taxpayers’ money, and what it expects to deliver.”

Further information

Image: PA/John Birdsall