Levelling up agenda will fail unless long-term funding provided, MPs warn

The Levelling Up, Housing and Communities Committee has said the Government's levelling up commitments will fail unless they are supported by a "long-term, substantive strategy and funding approach".

In a report that conveyed the findings of the committee's inquiry into the flagship Government policy, the cross-party group of MPs said the method of delivering funding, the allocation process, and the extent to which different funds have been compatible with the needs of communities in the short and long-term is "creating several obstacles for the policy's success".

The report also raised "serious concern" about a lack of data available from the Department for Levelling Up, Housing and Communities (DLUHC), noting that DLUHC has said it lacks "sufficient data" in relation to Whitehall departmental expenditure on the full range of levelling up funds or on combined authority income or expenditure.

"We cannot understand how the DLUHC can make significant policy decisions either in relation to priority areas, funding allocations or the measurement of the success or failure of the Levelling Up policy in achieving its objectives if there is not adequate data to support these tasks," the report reads.

Overall, the report notes that levelling up policy is "unlikely to be successful given the Government's current approach to funding".

It adds that DLUHC "does not know which pots of money across Government contribute towards levelling up, nor does DLUHC appear to have oversight of how these objectives can be delivered strategically through departmental co-ordination".

"As a result, the Government's current approach is characterised by one-off short-term initiatives, and this will be insufficient if the geographic, economic, social and health inequalities are to be reduced and ultimately, overcome.

"To change this, the policy requires a long-term, substantive strategy and funding approach, things this policy currently lacks. Without such, Levelling Up risks joining the short-term Government growth initiatives which came before it."

The Government's approach to its Investment Zone policy, which offers to provide relaxed tax and regulatory rules for certain councils, was also called into question.

According to the report, the policy had to be re-opened and re-framed after more than a hundred councils applied for the scheme.

"This change in approach and re-framing of the original policy after submissions had been made, speaks to a significant waste of local authorities' resources at a time when resources are finite," the report reads.

Cllr Kevin Bentley, Chairman of the Local Government Association's People and Places Board, criticised the Government's approach to awarding levelling up funding.

Cllr Bentley said: "Levelling up has the potential to transform people's lives and livelihoods, with councils best placed to make this happen.

"This should be locally led by evidence of where crucial investment needs to go to, not based on costly competitive bids between areas, as this important report confirms.

"Awarding relatively small pots of cash is not a sustainable approach to economic development or public service delivery. It also falls short of the challenge set out by the Levelling Up White Paper and the ambitions of local leaders for their residents and places."

He said the Government could boost local sustainable productivity and save money, by building on the White Paper's commitment to streamline the long list of individual local growth funds.

Cllr Bentley added: "It should also commit to providing better information about total public spending in a local area, to support a greater co-ordinated approach across Government and with local leaders.

"Greater powers for councils with local and national support, without them needing to negotiate costly funding competitions, will also help make levelling up a reality."

A DLUHC spokesperson said: “Levelling Up is a long-term programme of reform that sits at the heart of our ambition as a Government. It is breathing life into long overlooked communities, whether it is record investment in town centres and high streets or devolving more money and power out of Westminster to the regions.

“Almost £10 billion has been allocated from DLUHC since 2019 to support around 1,000 projects, in addition to the £7.5 billion commitment to the nine city-based Mayoral Combined Authorities in England.

“We are continuing to work towards simpler funding processes to support local authorities and are currently reflecting on the lessons learned from the first two rounds of the Levelling Up Fund allocations to inform the design of Round 3.”

Adam Carey