Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 4
4
Accepted
Prioritise flexible revenue funding for local authorities and reduce bid-based allocations.
Recommendation
As a starting principle, local authorities who most require prioritising within the Levelling Up policy should be allocated money through revenue to achieve objectives that are in line with their local circumstances and need, with the appropriate monitoring and expenditure in place. Local authorities must be given the flexibility to use allocated funds in the most effective way they can. Therefore, we recommend there is a change in approach across Government when it comes to funding for levelling up. The Department should move away from an overemphasis on bid and judgement- based funding pots which may impede effective local decision-making. (Paragraph 19) Competitive Funding
Government Response Summary
The government highlights its published plan for simplifying the funding landscape and its commitment to launch a Funding Simplification Doctrine in 2024, which will encourage allocative approaches over competitive bids where suitable. It cites the UKSPF as a non-competitive fund with a mix of revenue and capital funding, empowering local leaders with flexibility.
Government Response
Accepted
HM Government
Accepted
The Government’s plan for simplifying the funding landscape for local authorities, published on 4 July 2023, sets out a series of concrete steps Government is taking to increase the impact and lessen the administrative burden of funding, supporting local authorities to maximise their return on spending. Government recognises the contribution of competitions in driving value for money and identifying the best projects for certain programmes. We will continue to deploy competitions where they make sense, but we will also encourage use of allocative approaches where they can best achieve specific outcomes while minimising demands on local authorities. The simplification plan commits to launching a Funding Simplification Doctrine in 2024. This new doctrine will require any department developing a local authority fund to assess what type of distribution methodology will be most suitable for delivering their funding objectives. Where a competition does take place, there will need to be a clear rationale for why it delivers value for money. The simplification plan also covers: • A new Simplification Pathfinder Pilot to test the streamlined delivery of capital funding in a small group of local authorities. • DLUHC work to streamline monitoring and evaluation requirements. This includes centralising guidance into one place on gov.uk, strengthening DLUHC-led evaluations to reduce requirements on local places, and rationalising monitoring data requests. • Reforms to be implemented at the next Spending Review, including single departmental- style funding settlements for Greater Manchester Combined Authority (GMCA) and West Midlands Combined Authority (WMCA) to give trailblazer MCAs the autonomy to deliver for their areas. Alongside this, we are looking at how we support local authorities to take a proportionate and consistent approach to subsidy control considerations. The UKSPF is another central pillar of the Government’s ambitious Levelling Up agenda, and a significant component of its support for places across the UK. Launched in April 2022 it provides £2.6 billion of new funding for local investment by March 2025, with all areas of the UK receiving an allocation from the Fund via a funding formula rather than a competition. As set out above, Local leaders have been empowered to shape the design of UKSPF investment plans with local stakeholders. The UKSPF forms part of a suite of complementary Levelling Up funding. Government has made over £10 billion available through the Levelling Up Fund, UKSPF, Towns Fund, Community Renewal Fund and Freeports to support local authorities and places with Levelling Up local areas. The UKSPF’s mix of revenue and capital funding can be used locally to support a wide range of interventions to build pride in place and improve life chances. These can complement larger-scale Levelling Up Fund capital projects, strategic Freeport investments as well as existing employment and skills provision.