Fifth Report - Local economic growth

The Department does not yet have a strong understanding of what works for local growth but we welcome its belated commitment to evaluating local growth interventions. It is disappointing that, despite billions spent on local growth over many decades, government … Read more The Department does not yet have a strong understanding of what works for local growth but we welcome its belated commitment to evaluating local growth interventions. It is disappointing that, despite billions spent on local growth over many decades, government does not yet have a strong understanding of what works. In 2019, the committee highlighted how the Department did not understand what impacts its £12 billion Local Growth Fund had had on local economic growth and yet had also decided not to evaluate it. While we are pleased that it has now reversed that decision, designing an evaluation at the end of a scheme is not ideal. Activities, such as establishing a baseline against which to assess impact, will be extremely difficult. It is inherently complicated to understand the impact of place-based policies and central government funding is only one part of the wider levelling up agenda. But understanding what part these policies play will be essential to ensuring continued improvement and value for money. It is encouraging that evaluation features prominently in government’s Levelling Up White Paper and that the Department is committed to improving its track record in this area, but it is disappointing that it has not yet developed the promised overarching monitoring and evaluation framework for local growth. 6 Local economic growth Recommendation: The Department should update us on progress with its local growth evaluation commitments (including for the Local Growth Fund) and set out how it intends to feed evaluation findings back into its ongoing local growth activity and to the wider levelling up agenda. Show less

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We are concerned that optimism bias has meant realistic bids to the Levelling Up Fund have missed out at the expense of ‘shovel-ready’ projects that have since been beset with delays. The Department told us that, four weeks from year … Read more We are concerned that optimism bias has meant realistic bids to the Levelling Up Fund have missed out at the expense of ‘shovel-ready’ projects that have since been beset with delays. The Department told us that, four weeks from year end, it had paid out around £100 million of the “up to” £600 million it made available in 2021–22 for the first round of the Levelling Up Fund. Since deliverability was one of the criteria for the first round (£1.7 billion) and the Department required bidders to be able to spend some funding in the 2021–22 financial year (through a pass/fail gateway criteria), this figure should be higher. We are concerned that some bidders may have got through the selection process by being overoptimistic about how ‘shovel ready’ their projects were, while other—more realistic—bidders may have missed out. Local authorities unused to presenting bids in this way, such as those in the devolved administrations, may have been at a particular disadvantage. Recommendation: The Department should set out: • Spending profiles for the first round of funding, confirming how much have spent in 2021–22 against the £600 million it anticipated paying; and • Its assessment of optimism bias in authorities’ deliverability plans. Show less

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There remains considerable uncertainty for Local Authorities around funding, structures and responsibilities for local economic growth. The Department extols the virtues of local plans for coordinating and achieving value for money from central government funding. However local authorities’ attempts at … Read more There remains considerable uncertainty for Local Authorities around funding, structures and responsibilities for local economic growth. The Department extols the virtues of local plans for coordinating and achieving value for money from central government funding. However local authorities’ attempts at long-term planning have been frustrated by the timing, co-ordination, and unpredictability of the “alphabet soup” of funding pots to support regeneration in recent years. Unlike Whitehall departments, local authorities do not know what is coming next and have to dedicate time and resource to respond piecemeal to each new announcement, with no guarantee of success. Further uncertainty arises from delays in awarding some of this funding, and the patchy integration of Local Enterprise Partnerships (LEPs) into existing structures. While the Department is now consolidating funding and says there are now “indicative allocations” for the UK Shared Prosperity Fund, the scheme itself has yet to be announced. The Department plans to introduce Levelling Up Directors to improve relations between central and local government. However there is, as yet, no clarity on when they will be in place, and limited information on what they will be doing. Recommendation: In its Treasury Minute response, the Department and HM Treasury should set out how they intend to provide greater certainty to Local Authorities to enable them to plan the integrated capital, skills and community investment needed to drive growth in their areas. Show less

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It is unclear how the Department is reconciling tensions between devolved responsibilities and administering local growth funding on a UK-wide basis. Economic development is a devolved power but the Department is administering the Levelling Up and UK Shared Prosperity funds … Read more It is unclear how the Department is reconciling tensions between devolved responsibilities and administering local growth funding on a UK-wide basis. Economic development is a devolved power but the Department is administering the Levelling Up and UK Shared Prosperity funds (UKSPF) on a UK-wide basis. We Local economic growth 7 are concerned that decisions were taken without sufficient consideration of devolved governments’ priorities. These include on how much to allocate, what the criteria were, when to open and close bidding, and how to score bids,. The Department assures us that it is expecting significant collaboration with the devolved governments and with the local bodies responsible for delivery. However, it has not yet convinced us that that this collaboration will be effective in ensuring that priorities of the devolved administrations are adequately taken on board. Recommendation: The Department should set out: • How it will ensure that the processes for awarding funding for future rounds of Levelling Up Fund and the UKSPF will address the prioritisation of devolved nations. • How it plans to ensure ongoing engagement with the devolved administrations. Show less

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Accountability for levelling up outcomes remains unsatisfactory. This Committee has reported before that government’s accountability arrangements had failed to keep pace with increasingly complex ways of delivering policies and services. and that this had weakened accountability to Parliament for the use of public funds. The cross-government nature of the levelling …

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The Department does not yet know how it will measure performance on a consistent basis across different geographical areas and timescales. We are concerned that data availability and quality is not yet adequate to track progress against the Levelling Up missions, either at a local level or to allow comparison …

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On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Levelling Up, Housing & Communities (the Department), HM Treasury, the Department for Transport and the Department for Business, Energy & Industrial Strategy about Supporting local economic growth.1

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LEPS, the business led-partnerships that have been an important part of the local growth landscape over the past decade, will take a back seat going forward as government delivers more funding through local authorities. The Department told us it is encouraging the integration of LEPs and their business boards into …

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Economic development is a devolved power and, since the late 1990s, local growth funding in the devolved nations has been managed by the Scottish and Welsh Governments and the Northern Ireland Executive.24 Since 2020 however, central government’s principle local growth programmes have been UK-wide. The Towns Fund, announced in July …

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We asked the Department how the part played by the devolved governments on the UK Shared Prosperity Fund compared to their part in deciding the allocation of the European funds it is replacing. The Department explained that for the European Structural Funds, the Devolved National Governments had been the “managing …

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The Department reassured us that it was expecting to work very closely with each of the devolved Governments and with the individual local authorities responsible for delivery. We were, however, sceptical about how close past cooperation with devolved Governments had really been and the extent to which it enabled national …

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We questioned the Department on whether the way in which it was awarding funding might mean some areas missed out multiple times across the various funding pots while others were given several opportunities to get funding.31 The Department explained that successful bidders from round 1 of the Levelling Up Fund …

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We reminded the Department that when we reported previously on the Towns Fund we had raised concerns over the opacity over some of its decision making.34 In November 2020, we reported that the selection process for awarding the Towns Fund had not been impartial. We said that a lack of …

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The Department’s accounting officer reasoned that we had discussed and reported on the Towns Fund at quite considerable length and that he felt it had a been a valid and fair process.37 In respect of the Levelling Up Fund, he said that there had been a very high level of …

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We questioned the Department on the nature and timing of the role for Ministers in making final decisions for the Levelling Up Fund.40 The NAO’s report explains that following an initial pass/fail gateway, officials scored and ranked bids against published criteria and then passed a shortlist of the highest scoring …

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According to its business case, the Department expected to allocate £720 million of the total £4.8 billion budget in the first round of the Levelling Up Fund. In October 2021, government announced 105 successful bids totalling £1.7 billion for the first round.47 The Department told us that there had been …

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We queried whether making “up to” £600 million available for 2021–22 at the Spending Review 2020 had set an expectation about the amount that would be awarded in the first year.51 The Department explained that this £600 million was the amount it expected bidders to spend in the first year …

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The Department told us that getting started on delivery was, in many cases, taking longer than expected but that it did not want to penalise places now that they had got through the assessment process. We heard that delays have often been for good reasons such as areas taking more …

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This Committee reported in 2016 that government’s accountability arrangements had failed to keep pace with increasingly complex ways of delivering policies and services and that this had weakened accountability to Parliament for the use of public funds.56 Noting the long timescales and magnitude of the delivery challenge, we questioned witnesses …

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We heard that a lot of the missions were cross-cutting and would require leadership from several departments while others were more focussed and there would be more of a role for a lead department.59 For example, the Accounting Officer from the Department for Business, Energy and Industrial Strategy told us …

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We questioned the Department on why, despite billions of pounds spent on it over the years, there was so little evidence on what works for delivering local economic growth, particularly outside London. The Department’s Accounting Officer pointed to the inherent complexity of understanding how local economies grow, and that the …

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In 2019, this Committee reported that the Department did not understand what impacts its £12 billion Local Growth Fund had had on local economic growth yet had decided not to evaluate it.65 We were encouraged to learn that the Department has now decided to reverse that decision but, as the …

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The Department has been considering an overarching monitoring and evaluation framework for local growth to include common objectives and outcomes, within which individual programme-level frameworks would sit. This would enable it to compare the relative effectiveness of similar initiatives and minimise the data collection burden on local authorities. The Department …

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When we asked what success would look like for people in areas where, for example, it is hard to get a job or the High Street is struggling, the Department highlighted the importance of taking a broad definition of growth.71 We heard that that success would include people having access …

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Two of the missions in the Levelling Up White Paper are ‘overarching’ missions. The first is around living standards and includes measures of productivity, pay and jobs and the second is around measures of well-being.73 With reference to the first, we asked the Department how it intended to measure local …

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When we asked the Department whether it expected to be able to get this data quickly enough to be able to measure what impact the funds under its levelling-up agenda were having, the Department told us it would be able to make some progress quickly but some of it would …

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We asked the Department how it intended to pull together all this data to show a big picture, as well as a local picture, to demonstrate the effectiveness of government’s levelling up agenda. The Department told us it had committed to reporting annually on levelling up and its performance against …

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