Levelling-up Fund Round 2: Bidding Process

Alun Cairns Excerpts

Tuesday 7th February 2023 Westminster Hall

[Anne McLaughlin]

It is a scandal. That is exactly what I am saying because that is exactly what we were told and the explanation the council was given. At a time when local authorities are feeling the financial strain more than ever, it was just wrong and, frankly, cruel.

For Glasgow City Council, funded by the Scottish Government—a Government who, unlike this one, have to live within their immediate means and, unlike this one, have to provide a balanced budget—the financial flexibility simply is not there. Glasgow City Council also has other financial pressures, unique to the city, in that when the SNP was elected it finally settled the previous Labour council’s decade-long equal pay dispute with mainly female employees. That was absolutely the right thing to do and I am extremely proud of my SNP councillor colleagues for that, but it was a massive bill that Glasgow will be paying for years to come.

The council was already in an extremely tight financial position because the Scottish Government are in a tight financial position, and that position was even tighter because it is paying the price for the previous council’s 10-year battle with women workers. The council was doing the best it could with the resources it had. Let me say to everyone here that Glasgow City Council’s work is regularly replicated around the UK because it runs some inspirational programmes despite financial constraints. However, given those additional constraints, it was even more galling to see the UK Government wave the carrot of levelling-up funding in front of our noses, only to snatch it away at the last minute.

I said that I do not agree with the way the funding is awarded. Forcing councils to compete against one another is a terrible way to distribute finance that should, by rights, just be given to local authorities to address local problems. Of course, the possibility of securing much-needed investment could not be turned down, so the work was done, and the bids were submitted in good faith.

Glasgow had some fantastic bids. We know this, not because we have seen them—although we have—but because our council officers were told as much by UK civil servants. Until the night before the announcement, the discussions were about which of them were most likely to be successful. I would like the Minister to explain to us exactly what happened in the 24 hours leading up to the final decisions being made.

My own constituency’s bid was for the regeneration of Saracen, Stonyhurst and Allander Streets in Possilpark, creating an urban park and building on the excellent work of the community-led business improvement district. To me, that is the epitome of levelling up—working with communities to build economic prosperity and resilience in areas of deprivation to support and develop what these communities have already started themselves. It is about supporting their empowerment. Instead, Possilpark has been discarded. The people of Possilpark deserve better.

The bid for Easterhouse, another area of Glasgow with historical and generational inequality, was for an incredible project that would have redeveloped the local shopping centre and public realm, not only linking the college and social enterprise hub but improving active travel routes and access to and the promotion of the wonderful Seven Lochs wetland park. It would have been a much-needed boost to the area, which was, statistically, the worst impacted by covid in the whole of Scotland. Again, Easterhouse and the people of Easterhouse were discarded. Again, I say that the people of Easterhouse deserve so much better.

[Alun Cairns (Vale of Glamorgan) (Con)]

In view of the fact that economic development is generally a devolved function, why do the Scottish Government not fund such an important project?

[Anne McLaughlin]

Can I have a little longer to explain this to the right hon. Gentleman? The Scottish Government have a fixed budget. It is fixed by his Government. They decide how much they can spend. As I said earlier, they have to live within their immediate means. If we look at Possilpark, money has been—[Interruption.] The right hon. Gentleman does not seem to be listening to my answer, so why ask the question in the first place? Money does go in from the Scottish Government. If he is suggesting that Scotland is not eligible for this levelling-up funding, that is a different question. Maybe the Minister will confirm that we are eligible for it, because it is our taxpayers’ money as well.

[Alun Cairns]

I congratulate the hon. Lady on securing this important debate and I hope to have the opportunity to make the case for my constituency a bit later. To respond to her specific points, does the Scottish Government not have tax-varying powers? This is quite obviously an exciting project but, by the sound of what the hon. Lady is saying, it is not sufficiently important for the Scottish Government to fund it in Glasgow.

[Anne McLaughlin]

That is utter nonsense. I am not going to repeat what the right hon. Gentleman just said. Lots of funding is going into both areas. That is our taxpayers’ money as well. Why should the Scottish Government increase taxes—they cannot do it in year—when we have already sent the taxes down here? We are supposed to get some of them back; we are supposed to get more of them back than we have been. Incidentally—this is turning into a response to the right hon. Gentleman, although I am not sure he is listening—the people of Scotland voted overwhelmingly to stay in Europe. If we had stayed in Europe, almost double what was available in the levelling-up fund would be available to the whole of the UK. I think he needs to think about what he is saying; I think he is well aware of what he is saying and the implications.

Then we look at who got the funding. While my constituency and other Glasgow constituencies got nothing, the Prime Minister’s wealthy constituency was awarded £19 million. It simply exposes the lie of levelling up for what it is—just another way for the Conservatives to funnel public money to their own pet projects. The idea of spreading the funding evenly around the UK is somehow a fair way to do it is total nonsense. To properly address inequality and deprivation, we have to do more than just throw a few pounds at communities every once in a while. We need to pump money and support into the places that need it, and we need to do it again and again. That takes a level of courage and conviction that the Westminster Government simply are not showing.

That got me thinking that perhaps we are not all on the same page and that the Government have no desire to address underlying inequality and deprivation. I wondered why, and I can only conclude that the UK Government blame the people and communities living with serious levels of deprivation for that deprivation. Do the Government have an ideological belief that it is somehow the fault of the people in those communities, and that they should just leave them to it? I do not know what other conclusion can be reached.

Let me be clear where we in the SNP stand: the systemic problems at the heart of too many of our communities, including Possilpark and Easterhouse, stem from the contraction of people’s incomes and the erosion of the social safety net after 13 years of Tory austerity. The Tory Government are to blame, not the people themselves.

The leader of Glasgow City Council, Susan Aitken, wrote to the Secretary of State for Levelling Up, Housing and Communities to set out just how bad a deal it has been for Glasgow as a whole. She pointed out that only 3.7% of the funding allocated to Scotland was received by Glasgow, but that if that had been based on population size, it should have been three times as much. Councillor Aitken goes on to say that, had the allocation been based on the proportion of people living in deprivation, it would have been an eye-watering 15 times as much. That was the criterion for EU funding, which the levelling-up fund was supposed to replace when we were dragged out of Europe against our will—as I said.

I will end by asking four questions. The Minister should bear in mind that the officers and councillors of Glasgow City Council, Glasgow MPs and MSPs and, most importantly, the people of Glasgow are all waiting for the answers. First, why were we and others told to submit bids and then told that we were not eligible, because we had had a small amount of funding in round 1? Secondly, what is the thinking that says divvy it up equally, despite the fact that people and communities do not live equal lives? Thirdly, will there be a round 3 and, if so, how can we be sure that there is a point to committing the time and money it will take to bid for it? Finally, will the UK Government reimburse Glasgow City Council the estimated £500,000 cost of submitting bids that it could not possibly win, or are the people of Glasgow expected to pay for that themselves?

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[Alun Cairns (Vale of Glamorgan) (Con)]

It is a privilege to serve under your chairmanship, Sir Christopher, and I congratulate the hon. Member for Glasgow North East (Anne McLaughlin) on securing this debate. I am extremely disappointed that Barry Making Waves—a proposal for a marina in Barry—was not successful. Although disappointed, I remain determined to ensure that it is successful in the next round of funding.

I will defend the policy, because when I was Secretary of State for Wales I had a part in shaping the objectives of the successor to European funding. I did that with parts of the country in mind that had been ignored for far too long, and that includes eastern parts of Wales and my constituency. The policy’s objective is right, in that it seeks to support those communities that have been left behind. The policy’s outcome may need further explanation to clarify and highlight why some communities have been successful or not.

Having investigated, spoken to colleagues and worked with my Labour-led local authority to clarify why Barry Making Waves was not successful, it is clear that officials will have scored each individual project. Clearly, my project was not successful, although other neighbouring projects were, so when it is suggested that there is a party political motive in supporting individual projects, that does not stack up credibly.

[Anne McLaughlin]

rose—

[Jon Trickett]

rose—

[Alun Cairns]

I will give way in a moment.

That does not stack up credibly, because my seat, and others I can point to, would have been successful on those grounds, and that would also give rise to a judicial review. So it is obvious that these applications would have been scored according to the policy’s objectives, and officials would have dealt with them individually, rather than according to the party political motive that has been suggested.

The question I will pursue in my contribution is how we can learn the lessons from not having been successful in this round—like the schemes that were unsuccessful in round 1 but successful in round 2. My authority did not bid in round 1 and was unsuccessful in round 2, but it certainly plans to submit an amended scheme in round 3. I want to develop this argument a little further, but I will give way to the hon. Member for Glasgow North East (Anne McLaughlin) , as she was very kind and generous in giving way to me.

[Anne McLaughlin]

With all that the right hon. Gentleman has just said, how does he explain the fact that Glasgow City Council officers were told that their bids were good and were scoring well, that they should expect to get some of them and that it was just a question of how many, but then, at the last minute, Ministers intervened—if this is not party political, I don’t know what it is—and said they were changing the goalposts? Anybody who got funding in round 1—we had had funding for one project—was no longer eligible, which wasted £500,000 of officer time. If that is not political intervention, how does the right hon. Gentleman explain it?

[Alun Cairns]

I will wait for the Minister to respond on that, but if the hon. Lady’s local authority had sufficient grounds to suggest party political interference, a judicial review would clearly find in its favour, and the Minister would have to explain the issue. The alternative is that the hon. Lady is seeking to make party political points but is not prepared to follow them through. I am just as disappointed as she is, but I am determined to learn the lessons in order to ensure that my project—amended and strengthened—succeeds in the next round, in the same way that those that failed in round 1 succeeded in round 2.

In reality, projects in Labour-run Cardiff—in Cardiff South and Penarth and in Cardiff Bay—received £50 million from the scheme, in addition to the £2.5 billion that has been spent in recent years. I want to understand why those projects qualified and not the project in Barry—a community that has been left behind for many years by the Welsh Labour Government—when the policy’s whole purpose and motive is to ensure that communities that have been left behind by various Governments can be successful. Similarly, in the neighbouring authority of Bridgend, a project to rebuild the Grand Pavilion will play a part in attracting further visitors to the area. However, that project does not have the same economic strength as the marina in Barry, which would have attracted at least £50 million of private development.

Will the Minister make officials available to go through the bids line by line, detail by detail, so that we can learn from why we have not been successful—I say that in the most positive way—and why other communities have been? On the face of it, they did not appear to have such strong applications, given what they will have received under wasted European-aided projects in recent years.

Since 1999, Wales has received close to £5 billion in European aid investment. Despite that, under the leadership and stewardship of the Welsh Government, to whom economic development is entirely devolved, Wales’s relative gross value added has fallen back significantly, and Wales has become the poorest part of the United Kingdom. That is why I am determined that the levelling-up fund, or the precursor to what will become the shared prosperity fund, will ensure that we have a much more business-focused, wealth-creating, economically regenerating package of projects, rather than some of the European-aided projects administered and led by the Welsh Government, which are now laughed at.

I remain disappointed, but I am absolutely determined that the Barry Making Waves project will succeed in round 3 with the Minister’s help.

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[Chris Stephens (Glasgow South West) (SNP)]

It is a pleasure to see you in the Chair, Sir Christopher. I will depart from my prepared text, because the allegations made by my hon. Friends the Members for Glasgow North East (Anne McLaughlin), and for Glasgow Central (Alison Thewliss), are so serious that they require an immediate answer from the Minister, when she responds. Local authority officials spend a great deal of time preparing bids, only to be advised at the last minute that because money had been given in a previous round, they were knocked out of the competition. I want the Minister to confirm that was the case. If it was, it is scandalous, and there are grounds for looking at the process legally, as was said. It is astonishing that local authorities have been put in this position. If local authorities were told at the start that a bid was ineligible if the authority received funding in round 1, they would not bother applying for round 2. Or was this a last-minute decision?

[Alun Cairns]

Will the hon. Gentleman give way?

[Chris Stephens]

I am conscious of time; I apologise to the right hon. Gentleman. [Interruption.] He has had more than one bite at the cherry.

This is so serious. Local authorities would not have applied in round 2 if they had been told that because they got something in round 1, they would not be successful. The Minister needs to tell us when local authorities were advised of that.

There are also questions about scoring. We would think that there would be scores, and that any local authority, whether successful or not, could say to the Department for Levelling Up, Housing and Communities, “Can we see our scores, please? Can you tell us where we went wrong, and why we were unsuccessful, so that if we apply in the next round, we can put that right?”. When will local authorities be told their scores? Or is it the case, as my hon. Friends allege, that local authorities were told in the week leading up to the announcement that they would be successful, and then were suddenly told that they would not be? There is something not quite right about the process; something smells here.

Can the Minister tell us how many local authorities were advised that they would get something, and then did not? I have heard that Glasgow officials were told that their bids were excellent—in fact, that they were even told, “Tell us which ones you are prioritising out of the seven.” I hope that the answer was Linthouse, but I do not know whether Glasgow officials suggested it. They were then advised that they were not getting money. That is absolutely scandalous, and it is no wonder that Members from across the House are suspicious about the whole process and the lack of transparency that seems to envelop it, given what appears to be a last-minute change by Ministers.

Knowing who made the decision is critical to this debate. Who said that if a local authority was successful in round 1, it would not get money in round 2? As a principle, that is absolutely wrong. The hon. Member for Clacton (Giles Watling) made the reasonable point that there are areas in the country that are deprived, and I do not see any reason for deciding that because money was allocated to a local authority in round 1, it should be ineligible for round 2. He made a number of points about deprived areas needing a succession of funds, and he argued that position rather well on behalf of his constituency and his local authority. There is no reason at all why a local authority should not qualify in both rounds, so something is not quite right here.

I hope the Minister will answer those questions, because people listen to statements from the current Prime Minister—we have had a number of them over the past year. His comments about taking money away from deprived areas are amplified by the allegations that have been made this afternoon. People now think that the scheme is some sort of pork barrel exercise aimed at returning as many Conservative MPs as possible in the next election. I will leave it there; I hope that the Minister will respond to my points.

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[Dehenna Davison]

I do not have time, I am afraid. Each local authority was then capped at one successful bid in round 2—the highest scoring—noting that that would help to focus resources for delivery in a challenging economic environment. At that point, the highest-scoring projects remaining in Scotland and Wales were funded to ensure a fair spread of projects in Scotland and Wales until the minimum public commitments of 9% and 5% respectively over the first and second rounds were met. The highest-scoring projects remaining in Great Britain were funded until funding any more projects would have exhausted the funding available for Great Britain.

At that stage, there were two international territorial-level regions of Great Britain that had not received any funding in the second round, despite having bids on the shortlist. Again, prioritising the additional considerations of ensuring a fair spread of approved projects and so on, those two were brought into play, with Ministers agreeing to deselect a handful of the lowest-scoring bids across the north-west, London and Wales. Those were the regions and nations that significantly exceeded their guided allocation, taking into account historical regional investment from 2017-2022. As a result, and following a further quality assurance by officials at that stage, 101 bids were successful in Great Britain and 10 were successful in Northern Ireland. To reiterate, Ministers approved the selection of bids without adding or removing any individual bids from the funded list. The process was led by officials, aided by Ministers, to try to achieve the aims that were set out in the original prospectus to ensure a good geographic spread.

[Alun Cairns]

Will the Minister give way?

[Dehenna Davison]

I do not have time, I am afraid.

That brings me on to a point that we absolutely cannot lose sight of in these discussions: there will be a third round of the levelling-up fund. We will be announcing details of that incredibly soon.

[Alun Cairns]

When?

[Dehenna Davison]

I am afraid I cannot commit to a date yet, but we are working at pace to ensure that we draw up a fund that works and is quickly deliverable to ensure that we can get spades in the ground and get some of these projects delivered.

I do not have very long, but I will try to cover off some of the other points that have been made if I can. Feedback was raised by a number of hon. and right hon. Members, including my right hon. Friend the Member for Vale of Glamorgan (Alun Cairns), the hon. Member for Glasgow South West (Chris Stephens), my hon. Friend the Member for Torbay (Kevin Foster) and the hon. Member for Glasgow North East (Anne McLaughlin). Feedback will be coming soon; we are aiming to get it out in writing initially. We want to ensure that the feedback is detailed enough to be of use, so we do not want to rush it. I have missed a lot of points, so I apologise. I will follow up a lot of those in writing, but I am very pushed for time at the moment.