Levelling Up: Project Delivery

Baroness Penn Excerpts

Thursday 23rd November 2023 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Penn) (Con)]

My Lords, the department has implemented several measures to support local authorities in their delivery of levelling-up projects. These include committing over £65 million for capacity support to unblock delivery issues and giving authorities greater flexibility over spending decisions. The National Audit Office report covers the progress of projects up to March 2023, and in the eight months since then the department has paid out over £1.5 billion of further funding to local authorities.

[Lord Kennedy of Southwark (Lab Co-op)]

I thank the noble Baroness for her comments. The report from the National Audit Office makes shocking reading: it tells of money allocated but not spent, contracts not signed and projects not delivered. Can the Minister explain to the House how a flagship programme of the Government is in such a mess?

[Baroness Penn (Con)]

My Lords, the report itself highlights a number of issues that have delayed some of the delivery, including rising costs and inflation and other outside factors. That is why we are working with local authorities to address those issues. As I say, in the eight months since the report, the department has paid over £1.5 billion of further funding out to local places. We have already seen several projects completed or near completion, which are making a difference to the lives of people in those communities.

[Lord Young of Cookham (Con)]

Further to the Question asked by the noble Lord, Lord Kennedy, the NAO was not entirely critical of my noble friend’s department. It did say that evaluation was better and that the grant management process had improved. But it also said that a number of projects would not be completed by the proposed deadline. Where there are good reasons for that delay, will there be some flexibility in those deadlines? Otherwise, some very worthwhile projects will be abandoned.

[Baroness Penn (Con)]

I thank my noble friend for drawing out some of the positives of that report, as there were indeed some. He is right that, while we are keen to see the delivery impact of this investment as soon as possible, there have been some delays. For example, we have talked about inflationary pressures, so for the levelling-up fund, the prospectus for both rounds 1 and 2 said that we expected all funding provided to be spent by March 2024 and March 2025 respectively. However, those deadlines can be extended by one year on an exceptional basis. Similarly, for the future high streets fund, we have given a six-month extension for the spend deadline, taking it to 30 September next year, giving local places additional time to deliver their transformational projects.

[Lord Shipley (LD)]

My Lords, I remind the House that I am also a vice-president of the Local Government Association. As has been pointed out, one of the reasons for the problems we have is rising cost pressures, both inflation and interest rate levels, and in some cases, of course, withdrawal of contractors. Will the Minister assure the House that, in such circumstances, it cannot just be an “exceptional case”? I quote the phrase that she used in her previous reply. The NAO has shown that there is an average delay of almost 10 months across projects as a whole. That is simply too much, and I ask the Minister to consider very carefully extra money to support the budgets of projects where there is a case and, secondly, for an automatic extension to the length of budgets, otherwise we will carry on having some of the problems that we have seen.

[Baroness Penn (Con)]

My Lords, as I have said, we are keen to see the delivery impact of the investment as soon as possible. That is why we have not moved to an automatic extension to the deadlines involved. However, we have moved to give local authorities more flexibility about how they spend their money without coming back to central government, to enable delivery. We have also put in place both more funding and more support to local authorities in the delivery of their projects, to help them meet their own deadlines.

[Lord Laming (CB)]

My Lords, the noble Baroness will know that some of the most difficult cuts in local government spending over the last decade were in the support for children and families. The probation inspectorate looked at the number of young people in secure accommodation and reported that many of these young people could be accommodated in the community with the right kind of support. That is not only in the interests of the young people but considerably cheaper. Could the noble Baroness do all that she can to make sure that the money that has been allocated is properly spent?

[Baroness Penn (Con)]

The Government are really focused on ensuring that the levelling-up funds deliver value for money and provide transformative outcomes for the local areas that they deliver for. The Government set out a really clear approach to the evaluation of these projects to make sure that they do just that.

[Lord Wigley (PC)]

My Lords, I draw attention to my interest chairing the slate quarrying levelling-up fund on Gwynedd Council, which is also facing the challenge of meeting the deadline of April 2025. If indeed the pressures arise from a systematic shortage—a capacity shortage—within the system, will the Government lean towards giving the flexibility of an extra year to ensure that worthwhile projects are not lost?

[Baroness Penn (Con)]

My Lords, as I have highlighted, the department is very happy to speak to any project that sees that it is facing perhaps unavoidable delays in delivery. Our first priority should be looking at what we can do to reduce those delays, but, as I have said, we have also put in place flexibility in the system to extend some of the deadlines.

[Lord Adonis (Lab)]

My Lords, will the noble Baroness tell the House how much damage to levelling up is being done by the cancellation of HS2 to Manchester? Is she aware that, once HS2 is built to Birmingham but not to Manchester, it will take 40 minutes from Euston to Birmingham but 2 hours and 10 minutes from Euston to Manchester? What does she think that will do to business investment decisions over the next generation, and does she not see that this will decimate the economic prospects of the north of England?

[Baroness Penn (Con)]

I am afraid I completely disagree with the noble Lord. There is a choice to be made about where that investment goes, and the Government have made the choice to invest in transport projects that will connect towns and cities within the north far better. It will deliver more improvements to more people faster than the continuation of further legs of HS2.

[Lord Scriven (LD)]

My Lords, is not the key finding of all this that centralised Whitehall one-off bidding is not the key to level up across this country?

[Baroness Penn (Con)]

My Lords, we deliver funding to local authorities in all sorts of ways. We are looking to deliver more funding to local authorities. That is why we are taking forward an approach of a single departmental settlement to those mayoral combined authorities in Birmingham and Manchester. We have a commitment to roll that out further to those areas that have directly elected representatives.

[Lord Sahota (Lab)]

My Lords, as the Minister knows, councils up and down the country spent millions of pounds preparing for their application to bid for the levelling-up funds. I am glad that the Government have changed the system now. Do the Government have any idea how many millions these cash-strapped councils have spent on preparing their applications—or maybe the Government did not ask that question because they did not want to know the answer?

[Baroness Penn (Con)]

My Lords, after announcing round 2 of the levelling-up funding, we recognised how many high-quality bids we had from councils that we were not able to meet during that round. That is why we took a different approach in round 3, looked at those existing bids and were able to make the allocations that were announced earlier this week. All in all, over 200 places have benefited from funding from the levelling-up funds. We recognise that there is a cost involved in bidding in these processes. That is why we provided those local authorities that were assessed as most in need in rounds 1 and 2 with additional funding to support the development of the bids in the first place.

[Lord Wallace of Saltaire (LD)]

My Lords, the Government have talked a lot about the need to reduce bureaucracy and to cut the size of the Civil Service. Yet this entire scheme is extremely bureaucratic and takes a great deal of Civil Service time for the competitive allocation of very small funds, and a great deal of local government time in preparing for competitive bids, some of which are unsuccessful. Has not the design been unfortunate? Would it not be better for the Government to do something about devolving spending decisions to local government in a much more thorough way?

--- Later in debate ---

[Baroness Penn (Con)]

My Lords, as I have set out, we took a different approach in round 3 of the levelling-up fund. Instead of having a competitive process, we looked at the existing bids that we had. That is all part of the Government’s funding simplification plan for local government that we published last year, which looks at streamlining the different forms of funding that go to local government, while making sure that it is spent in the most effective way, delivers value for money and that there is accountability for what is spent.