Levelling Up

Lord Young of Cookham Excerpts

Wednesday 22nd November 2023 Lords Chamber

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

My Lords, I thank the noble Baroness, Lady Taylor, and the noble Lord, Lord Stunell, for their questions. I start by challenging a few of the assertions made in their responses to the Statement, particularly about underfunding and the minuscule amounts of money that have gone into this project.

Levelling up is at the heart of this Government’s mission: it has been backed with significant financing through the levelling-up funds and a number of other initiatives, and we have seen more in the Autumn Statement today. For those areas that have bid into the levelling-up fund and have been unsuccessful, it is not the end of the story: we have an agenda across government, whether through devolution, investing in skills, investment zones, freeports, or a whole number of areas where opportunities continue for areas to receive funding for projects that are important to them. On Monday, 55 projects were announced, but the total is 271, which is not an insignificant number of bids. These were across the country, representing areas that are diverse but also in need of this funding.

I also address the point around smaller, less well-resourced councils that felt unable to bid in earlier rounds. Some funding was made available for those who would struggle to put together bids to be able to participate in that process, so that is not the full picture. Also, the feedback that we received on the competitive process for rounds 1 and 2 informed the approach that we took for round 3 and informs our approach to the funding simplification doctrine, which acknowledges the valuable contribution of competitions for driving value for money and identifying the best projects for certain programmes. We will continue to deploy them where they make the most sense, but we encourage the use of allocative approaches where they can best achieve specific outcomes while minimising demands on local authorities. At the heart of that doctrine is our commitment to value for money, which will drive decision- making on the most appropriate choice of funding mechanism.

The Government have responded to the feedback they had in earlier rounds of the levelling up fund in their approach to round 3. I reject the Liberal Democrats’ proposition that the 55 projects that received funding in this round are somehow of lesser quality than projects that received funding in previous rounds. In fact, we found that a very high number of very high-quality projects had bid into this system, which allowed us to return to those projects for round 3 and make great allocations for very well-deserving projects. To reassure the noble Baroness, we touched base with local areas to ensure that those projects continue to be priorities for them and deliverable. However, having made the formal announcement, we will also recontact every single one of those successful local authorities to reconfirm that they are projects that they would like to pursue and, on the delivery point, meet a delivery timetable that is achievable given the changing circumstances.

Those changing circumstances were a factor acknowledged in the National Audit Office report. We have faced a time of high inflation, particularly for capital projects, and labour shortages. We also acknowledge some challenges in the way we ran the process in government too, so we welcome the work that the NAO has done and have taken significant action to address the points it made. I point out that the data that the NAO used in its report was cut off in March 2023 to allow it to analyse consistently across three different projects that the Government have been running. Since then, we have released a further £1.5 billion of levelling-up funding through the programme, so significant progress has been made.

We have also made changes to how the projects are run—for example, allowing greater decision-making for local authorities to flex their delivery programmes to meet the new circumstances they find themselves in. We have also made £65 million available to ensure that local authorities have the capacity to deliver the levelling up fund projects that they have successfully bid for. The Government acknowledge some of the challenges in the National Audit Office report. We have already taken steps to address some of those points and seen a significant increase in the amount of money disbursed.

Finally, on the funding simplification doctrine and what it will mean, it is a doctrine that will apply from central government to local government in its approach to levelling up. That is primarily from the Department for Levelling Up, Housing and Communities, but it applies across other departments’ delivery of and commitment to our levelling-up agenda with local authorities. We will evaluate the simplification pathfinders as quickly as possible. In all the work we are doing on these new projects and programmes, we seek to learn the lessons from them as we go along, ensuring that we have robust evaluation processes in place that allow us to continue to make these modifications and improvements as we deliver our levelling-up agenda across the whole of the United Kingdom.

[Lord Young of Cookham (Con)]

My Lords—

[Baroness Taylor of Stevenage (Lab)]

My Lords, before the Minister sits down, can I ask her some very quick questions? I am happy to take answers in writing.

--- Later in debate ---

[Lord Young of Cookham (Con)]

I apologise to the noble Baroness, Lady Taylor, for barracking her when she quite rightly asked a supplementary question. I warmly welcome my noble friend to her new responsibilities and say how much she will be missed at the Treasury. We hope she will be able to adopt a less restrictive approach to her new portfolio than the one she was obliged to adopt at the Treasury.

Many of us found the tone of the earlier intervention somewhat grudging, and I know these funds will be warmly welcomed by the communities to which they are targeted. Will my noble friend confirm that it is the Government’s firm policy to streamline all these different pots of money which go from central to local government, and really have proper devolution? The Statement mentions the levelling up fund, town deals, the shared prosperity fund, the future high streets fund and others. Can we streamline things without having a fund simplification pathfinder pilot? Perhaps it could be simpler than doing that.

Finally, the Statement refers to new funds and the principles that could be applied to them. Do we really need any new funds, given the ones we already have? The objective should be to reduce rather than to add.

[Baroness Penn (Con)]

I thank my noble friend for his warm welcome to this role. I reassure him that the department is absolutely committed to simplifying our funding approach when it comes to levelling up and local authorities. I reassure noble Lords that the funding simplification doctrine will be implemented from 1 January next year. Its aim is to embed our commitment to simplifying the funding landscape by ensuring that government departments consider the principles of funding simplification when designing new funding for local authorities. To the noble Baroness’s point, the idea is that it extends beyond the reach of my department alone. The doctrine will cover all new funds that are made available exclusively to local authorities by central government, but it excludes funding within the local government finance settlement and services mandated by statute. That gives a better idea of the shape of that approach.

However, it is right that where there are specific problems that may need to be addressed with specific parameters, the concept of a new fund is not entirely ruled out from that approach. The pathfinders, which are important in allowing us to make sure we learn as we go and then apply the approach more generally, are looking at what flexibilities can be applied across those different funding streams, and at putting local authorities in the driving seat in identifying where their priorities are and using the funding made available from central government more flexibly.