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Levelling up policy will fail without long-term substantive funding for councils, say MPs

26 May 2023

The laudable aim to level up the country risks failure unless the Government can provide the long-term substantive funding necessary to help local councils to deliver economic growth for their communities, says the cross-party Levelling Up, Housing and Communities (LUHC) Committee in a report published today (Friday).

The Funding for Levelling Up report is critical of the funding, delivery, allocation and funding methods, and the competitive bidding processes involved in levelling up funds. The report finds that the Department for Levelling Up, Housing and Communities has limited strategic oversight and has failed to coordinate these funds across departments.

Chair's comment

Clive Betts, Chair of the Levelling Up, Housing and Communities (LUHC) Committee, said: “There is cross-party consensus in tackling the regional and local inequalities that are holding back communities across the country. But the complexity of the levelling up challenges mean they cannot be remedied by the Government’s current approach of one-off short-term initiatives.

“The Government should heed the lessons of projects such as German reunification which were accompanied by long-term funding and internationally recognised for the benefits delivered in terms of long-term, substantive growth. The levelling up policy requires a long-term and substantive strategy and funding approach, elements this policy currently lacks. Without this shift, Levelling Up risks joining the short-term Government growth initiatives which came before it.

“The Department for Levelling Up, Housing and Communities (DLUHC) is primarily responsible for delivering levelling up but is currently failing to drive forward the policy across Government. It’s concerning that DLUHC does not even appear to know which pots of money across Government contribute towards levelling up. The lack of strategic oversight from DLUHC of how levelling up is delivered across Whitehall raises doubts about whether the policy can be successfully delivered.”

The Committee’s report highlights that local authorities have seen revenue funding from central Government significantly reduced since 2010 and notes that levelling up funds generally do not replace grant funding because they are capital not revenue and that they cover specific projects rather than necessarily covering the priorities of the local authorities.

The report recommends that, as a starting principle, local authorities who most require prioritising within the Levelling Up policy should be allocated money through revenue to achieve objectives in line with their local circumstances and need.

The report recommends a change in approach within DLUHC and across Government when it comes to funding for levelling up to ensure that local authorities are given the flexibility to use allocated funds in the most effective way they can. The report calls on DLUHC to move away from an overemphasis on bid and judgement-based funding pots which may impede effective local decision-making.

The report notes that competitive bidding is a resource intensive and costly activity for councils and makes a series of recommendations for reform, pressing the Government to follow through on its commitment to simplify funding streams and reduce requirements to access competitive funding pots.

The Committee’s report notes, in contradiction to DLUHC’s evidence, that Devolved Governments in Scotland, Wales and Northern Ireland pointed to a stark lack of meaningful consultation and engagement on the creation, compatibility, and implementation of levelling up funds including the UK Shared Prosperity Fund.

The report emphasises concern at the lack of consideration by DLUHC for the circumstances in which the Northern Ireland Executive and its officials operate. The report calls on DLUHC to ensure that, in future, officials in Northern Ireland can engage through the provisions set out at a devolved level with the DLUHC, including in the absence of an Executive.

Further information

Image: UK Parliament / Tyler Allicock