Recommendation 9

We asked for assurance that Round 1 projects of the Levelling Up Fund would be able to spend their government funds by the 31 March 2024 deadline. The department told us that it had provided flexibility to local authorities and allowed them to extend Round 1 projects to March 2025 and Round 2 projects to March 2026.17 For Future High Streets Fund projects, the deadline has been extended from 31 March 2024 to 31 September 2024.18 The Department told us its position is to extend deadlines as this protects value for money for a project that has already been invested in.19 For Round 3 of the Levelling Up Fund the Department told us that it is sticking to the March 2026 deadline but it could not assure us that these projects would not suffer delivery issues.20 When the Department wrote to us after our evidence session, it confirmed that so far 60 out of 71 Levelling Up Fund Round 1 projects had extended their spending into 2024–25, and it expected some more of the remaining 11 to also extend their spending.21 We had already been told that if a local authority was struggling to deliver their project because of inflation, then they could rescope it.22 We therefore asked the Department what would happen if a local authority could not complete a project with the money available and whether it expected to see an emerging pattern of unfinished projects. It told us while it did not want to see unfinished projects, there was no extra money for these funds. The Department told us it would be able to absorb financial pressures that fall into a following financial year through its day-to-day management of its budgets.23 It did not feel there was an emerging problem because its spending is beginning to match its budgeted spend much more closely.24