Recommendation 3

The Department changed the rules for applying for the Levelling Up Fund during the application process, wasting scarce public resources, disadvantaging some local authorities and hindering transparency. The Levelling Up programme was sub-optimal in this respect and it is important that lessons are learnt. There is as worrying lack of transparency in the Department’s approach to awarding funds with the Department changing the rules for the Levelling Up Fund as it went along. Having seen how many bids were submitted, the Department decided that local authorities that were successful in Round 1 would not be awarded any funds in Round 2. On average, local authorities have historically spent £30,000 pursuing each competitive grant, such as Levelling Up grants, yet we now know that 55 local authorities who had received funding in Round 1 and then bid in Round 2 had, in fact, no chance of being successful in Round 2. The Department also changed the rules for Round 3, deciding it would not run a new competition but instead restrict the allocation of Round 3 funding to unsuccessful Round 2 bids, meaning those waiting to bid in Round 3 missed out. The Department said that, on balance, this was the best approach to remove the significant effort of bidding. But the downside is that local authorities that did not bid under Round 2 (for example, because they were not ready) did not get a chance to fund their projects. In addition, only around 25% of bids across Rounds 1 and 2 of the Levelling Up Fund were successful: the Department should have better anticipated the expected demand for funding and, given the available funding, set sufficiently stringent criteria to help avoid local authorities investing in bids that had little chance of success. Recommendation 3: In its Treasury Minute response the Department should set out the principles it will apply and the decision-making process for awarding future Levelling Up funds for reducing regional inequality. The Department should ca