Source · Select Committees · Public Accounts Committee
Recommendation 9
9
Accepted
Repeated deadline extensions granted for Levelling Up and Future High Streets Fund projects.
Recommendation
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
Government Response Summary
The government agrees and states the recommendation is implemented, having prioritised quick-start projects and provided flexibility for deadlines. It has implemented programme-wide measures including a Project Adjustment Request process, capacity funding, and simplified funding through the Funding Simplification Doctrine, and has introduced greater flexibility in the UK Shared Prosperity Fund and the Long-Term Plan for Towns.
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.