Source · Select Committees · Public Accounts Committee
Recommendation 8
8
Accepted
Optimism bias and unrealistic timescales cause significant delays in levelling-up projects.
Recommendation
Our report in 2022 on Local Economic Growth found there was an optimism bias in expectations for Round 1 of the Levelling Up Fund.14 The recent NAO report found that the Department’s monitoring reports are showing that projects are behind where it would expect to be at this stage of the Towns Fund (consisting of Town Deals and the Future High Streets Fund) and Levelling Up Fund.15 We challenged the Department about how it had got the timescales so wrong and queried whether the Department had done enough to understand if projects were able to deliver within the 18 to 24 months they were given. 7 Correspondence from Permanent Secretary, Department for Levelling Up, Housing and Communities, dated 29 January 2024 8 Figures do not sum due to rounding 9 Q 48 10 Qq 41, 48; Correspondence from Permanent Secretary, Department for Levelling Up, Housing and Communities, dated 29 January 2024 11 Q 44 12 C&AG’s Report Para 2.2 13 Qq 61-77 14 Committee of Public Accounts, Local Economic Growth, Fifth Report of Session 2022-23, HC 252, 8 June 2022 15 C&AG’s Report Para 8 12 Levelling up funding to local government For example, we asked the Department whether local authorities should have planning permission, compulsory purchase powers approved or a feasibility study before they bid. The Department told us there is a balance between asking local authorities to have everything ready to go when they bid for funds against its desire for deliverability.16
Government Response Summary
The government agrees and states the recommendation is implemented, having prioritised proposals from places confident of quick starts and requiring robust delivery plans. It has implemented programme-wide measures for managing costs and improving flexibility, including a Project Adjustment Request process, capacity funding, simplified funding through the Funding Simplification Doctrine, and new non-competitive approaches for some funds.
Government Response
Accepted
HM Government
Accepted
2.1 The government agrees with the Committee’s recommendation. Recommendation implemented 2.2 On Levelling Up Fund, the government prioritised proposals from places that were confident of getting started quickly so that local people could experience the benefits as soon as possible. On the Towns Fund, places had longer to prepare. However, in both cases the department sought robust delivery plans from places as a condition of payment. 2.3 The NAO report recognised that wider economic factors have caused delays to projects. The department has implemented several programme-wide measures to support local authorities with managing changing project costs. This included providing greater flexibility through a project adjustment request (PAR) process; funding to improve capacity and capability; and reducing complexity to simplify the funding landscape. These commitments are set out in the Funding Simplification Doctrine. 2.4 The department has reflected on lessons learned through the simplification pathfinder pilot and stakeholder feedback regarding the burden on local authorities. It is moving to a funding system which has a simpler and more streamlined landscape, increased flexibility for local authorities and partners and longer-term funding settlements. 2.5 The department is putting this plan into action. For example, it has taken a new approach to the third round of the Levelling Up Fund, moving away from competition and making use of the large number of high-quality bids submitted in Round 2. This reduces burdens and maximises efficiency. 2.6 The UK Shared Prosperity Fund provides local authorities more flexibility with a three-year allocation that they can spend on local priorities or projects. Its mix of revenue and capital funding can be used to support a wide range of interventions to build pride in place and improve life chances. These can complement capital projects as well as existing business or employment and skills provision. 2.7 Acting on lessons learned, the department has offered greater flexibility and certainty through the 10-year, endowment-style Long-Term Plan for Towns. 2.8 The department creates regular opportunities to share learning with and between its partners, including the annual ‘Towns conference’ and seminars on specialist topics led by expert delivery partners. Further information about Delivery Associates can be found at 5.2.