Recommendation 2

We are concerned the Department did not do enough to understand the readiness of project proposals and the challenges facing local authorities before it awarded funds. As we have found before, optimism bias has put impactful bids to the Levelling Up Fund at risk of missing out at the expense of so-called ‘shovel-ready’ projects. The Department gave many reasons why projects are delayed and how it needed to balance deliverability against requiring local authorities to have everything in place to start building as soon as they are awarded funds. But this optimism has meant the Department has had to allow local authorities to extend the deadline to spend their money for all projects in the Levelling Up Fund Rounds 1 and 2 and the Future High Streets Fund. So far, the vast majority (60 out of the 71) of Levelling Up Fund Round 1 projects which were due to have spent their government funds by the end of 2023–24 have reprofiled their spend into 2024–25 and the Department expects some of the remining 11 to do so as well. We found this astonishing given Round 1 of the Levelling Up Fund was awarded to ‘shovel-ready’ projects that were supposed to be completed and delivering for local people by March 2024. As Round 3 of the Levelling Up Fund has been allocated to those unsuccessful bids made under Round 2, the Department could not assure us these same delays would not be repeated. Furthermore, the Department could have been much more inquisitive about the realistic delivery timetable of each project it funded, for example in regard to obtaining planning permission and acquisition. Levelling up funding to local government 7 Recommendation 2: In its Treasury Minute response, the Department should set out what it has learnt to ensure proposals have the best chance of timely success, and how it will ensure this learning is applied to future funds. It should also set out how it is sharing its experiences with the Levelling Up programme both within the Department and across governm