Levelling-up Fund Round 2: Bidding Process

Anne McLaughlin Excerpts

Tuesday 7th February 2023 Westminster Hall

[Anne McLaughlin (Glasgow North East) (SNP)]

I beg to move,

That this House has considered the Levelling Up Fund round 2 bidding process.

It is a pleasure to serve under your chairmanship, Sir Christopher. Round two of levelling up: what on earth was that all about? [Laughter.] Is that an intervention already?

It seems like a lifetime ago that Boris Johnson stood on the steps of 10 Downing Street promising that he was going to level up the UK with money to areas that had been left behind, ravaged by successive Tory Governments—those might not have been his exact words—and bearing the brunt of each and every austerity measure, where the poor pay for the excesses of the rich, as per usual. Two Prime Ministers later and we have just had the announcement of the second phase of the levelling-up fund.

Glasgow submitted seven bids to the second round, many of which would have helped to redevelop some of the most deprived communities in Scotland. Officers and councillors spent months preparing the bids to give our communities the best possible chance of securing funding, and the latest estimates are that around £500,000-worth of officer time went into them. That is why I have secured this debate. It was a complete waste of effort and a complete waste of the energy, skills and knowledge that Glasgow City Council professionals and councillors alike poured into the bids. I pay tribute to them for the incredible work they did; however, as I said, it was a complete waste of their time and a shameful waste of half a million pounds that my local authority simply cannot afford.

It was waste, but not because they were not successful. I accept that if funding is going to be provided in that way—I do not agree with it and will come to that—there are no guarantees. The reason why it was a waste of time and money is that it was not possible for them to be successful as the Government changed the rules at the eleventh hour. My understanding is that Ministers intervened at the last minute to say that if a local authority had been awarded funding of any amount in the first round, no bids could be awarded funding in this round. That sudden and inexplicable shifting of the goal posts ruled all of Glasgow’s bids ineligible for funding.

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

Is my hon. Friend seriously telling the Chamber that local authorities had spent hours and months preparing a bid and that at the last minute the scorings were changed by ministerial interference because a local authority may have had funding in round one and was then automatically disqualified in round two? That is a scandal.

[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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[Jon Trickett (Hemsworth) (Lab)]

Thank you for your guidance, Sir Christopher, and for your generosity in giving us an extra seven minutes. I am grateful to the hon. Member for Glasgow North East (Anne McLaughlin) for initiating this important debate.

I object to the whole process: the Government created the divisions in our society that the levelling-up programme is meant to repair. Those divisions are so deep, and the cuts so vast, particularly in more deprived areas, that the proposed programme is simply a competition among areas of deprivation for crumbs off the Government’s table. It is not acceptable that the Government have set out the programme as they have. If they really want to deal with levelling up—clearly, they do not—they need to change the entire market-led, “Government stand back” approach and make serious interventions.

I represent a community that is among the most deprived—if we are not careful, we will be into a “Four Yorkshiremen” sketch, as we share details of deprivation. We do not want to get into that, and it is not right that that is how the Government have structured the competition for funding. The average weekly wage in my area is £495; in London it is £728—each worker on average pay earns £12,0000 a year more in London. In terms of NVQ level 4, we are at 22%, whereas in the Prime Minister’s constituency it is twice as many people. In terms of professional and managerial jobs, we have half as many as in London, and since 2010, weekly earnings have increased by only 6% in my area, as opposed to 22% in London. Areas such as mine have been devastated by successive Tory Governments, starting with the closure of the collieries without a proper industrial strategy. So by any criteria those areas should be gaining access to additional funding if the Government are serious about dealing with deprivation.

Notwithstanding my objections, we put together a bid for South Kirkby, one of the poorest areas of my constituency. It was put together with a private sector firm that is quite the most remarkable company I have seen. It was built from nothing. Adrian and Lee are behind it, and they realised that there is big money in the industry of rock and roll. They are producing a series of activities, and the company is unique in Europe—there are only two such companies in the world. We put a bid together with them. The average pay on the campus they have set up is more than £40,000, whereas average pay in the village is £18,000.

We all recognised that we needed to build a bridge between the deprivation in South Kirkby and the immensely successful private sector development at the top of the hill. They have raised £50 million of investment. We then put in a bid for £20 million, which would have levered in a further £30 million—that could have had a dramatic effect, and it was private-sector led. Apart from the whole process being a disgrace, I feel so annoyed because a Government Minister—of course under a previous Prime Minister, if Members can remember back to last June—told the House that we were getting our £20 million. Work had been done, and further work had been carried out not simply by the council but by other officers and by the firm I referred to—it is called Backstage Academy—on the basis of a promise made to this House. What happened, Minister?

People in our area know that I am not allowed to say that the Ministers were liars, and I would not dream of saying that, but they are saying that I should say that we were cheated of that money and the opportunities and life chances that we might have had. Those people have grown up in villages that were left devastated all that time ago with the closure of the pits.

[Anne McLaughlin]

Does the hon. Member agree that it is not the individual who makes the promise who is supposed to keep it, but whoever inherits that position? They are not speaking in a personal capacity; they are speaking in a ministerial capacity.

[Jon Trickett]

I totally agree. The Prime Minister changed and the politics of the country changed, and they suddenly saw an opportunity to dip their hands into a bag of funds that a previous Prime Minister had created and to use those for their own political purposes. It is a disgrace.

We are dealing with the poorest people in the country. Is the Minister aware that women in my constituency are now dying younger than ever before? I think the average is 66 years of healthy life. They are dying before men, which is very unusual, and that number is declining. We need something to be done as a matter of urgency. Will the Minister at least send us a courtesy letter—we have not had one—as to why we were betrayed in the way we were?

[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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[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Dehenna Davison)]

It is a pleasure to serve under your chairmanship, Sir Christopher. I congratulate the hon. Member for Glasgow North East (Anne McLaughlin) on securing this debate. The issue matters to every single Member of the House, whether or not they are present today.

Levelling up is about how we rewire the economic geography of the whole country, and how we create growth and opportunities in areas that have been starved of both those things by successive Governments for years. That is what levelling up is all about. I found it personally offensive when the hon. Member for Glasgow North East suggested that this Government believe that those living in deprived areas are effectively there though their own choices and actions. That is absolutely not the case. I grew up in a deprived area. I lived through that and witnessed it, and I know exactly what it is about. I find it personally offensive for her to suggest that is what this Government are about, when we have put levelling up at the core of our policy and agenda.

[Anne McLaughlin]

I am sorry to have offended the Minister personally, but I am very surprised to hear her say that she does not recognise that this is ideological, or that people in these deprived communities are being blamed. She needs to spend more time sitting in the main Chamber and listening to the language that her colleagues use. They absolutely do blame the most vulnerable people for the situation that they are living in, and the evidence is that the Government are not doing anywhere near enough to help them. The evidence is right in front of us.

[Dehenna Davison]

To say it is ideological is absolute nonsense. I will not be taking further interventions on that point, because I do not think we will find agreement in the Chamber today.

The levelling-up fund is one of the centrepiece interventions that the Government have put in place to try to tackle levelling up, and to breathe new life into some of the areas that really need it. I say “one of” deliberately, because it is set against the backdrop of a whole range of other interventions, some of which I will come on to later. I know that Members across the House, in conjunction with their local councils and other local stakeholders, have put an awful lot of time and effort into submitting bids to the levelling-up fund. I express my personal thanks to every council officer who put their time and energy into it. I know it is a tough process, and I am grateful to them for that time.

It matters to me as the levelling-up Minister, and I hope it matters to the hon. Members present, that the decision-making process is a sound one that is free from political interference and undue influence. I am glad to have the opportunity to outline how the decision-making process has worked.  I assure Members that even if the bid was not successful, their efforts by absolutely no means were wasted.

In the short time I have left, the obvious place to start is with the actual process itself. I know local leaders and hon. Members have seen with their own eyes the impact that the first round of levelling-up funding has had so far, with 105 bids receiving £1.7 billion to drive regeneration and growth in overlooked areas. That impact is the reason we received such an overwhelming response to the second round, with over 500 bids received, totalling almost £9 billion. To put that into perspective, that compares with about 300 bids received in the first round.

Given the large discrepancy between the value of bids received and the amount available to allocate, sadly we were never going to be able to fund projects in every area. That being said, the fund has a clear and transparent process for determining how bids are selected. Each bid is assessed by Government officials, both in my Department and in the Department for Transport, against published assessment criteria, with the highest-scoring bids being shortlisted.

To ensure that there is a fair spread of bids across the UK, funding decisions were made by Ministers based on the assessment score and by applying wider considerations, such as geographic spread and previous investments. All of that was part of the technical notes we published along the way. The relative need of a place is also baked into the process. In this round, 66% of investment went to category 1 places—that figure was actually higher in round 1. The second round will be funding areas in Great Britain that have not received funding before to ensure that investment reaches as many places as possible across rounds 1 and 2.

As we did for round 1 of the fund, we published an explanatory note after the announcement with details of our assessment and the decision-making process. It was published on gov.uk, and it made crystal clear that Ministers did not add or remove bids from the funded list. For completeness, I will cover both the assessment and the decision-making processes described in the explanatory note. Each application was assessed impartially by officials against four criteria in Great Britain and three criteria in Northern Ireland. These were the economic case and if it was worth the cost; deliverability and if it could really be done and delivered; the strategic fit, how it would further levelling up in the area and if it would be in the interests of the community; and characteristics of place, or how much the place needs that type of investment—that was a consideration purely for Great Britain.

Officials then provided shortlisting advice to Ministers, who agreed the approach in line with the published guidance. More specifically, they agreed that the Great Britain and Northern Ireland shortlists should comprise bids that scored the highest overall and those that scored at least average or higher across strategic fit, value for money and deliverability, with a minimum value for money score. They also agreed cut-off scores for both shortlists. I recognise that it is an incredibly time-consuming process, and I appreciate the frustrations of Members who backed bids that were not shortlisted. Although it does not change the outcome on this occasion, full feedback will be coming, and I will try to touch on that more if I have a little time left.

During the final stage of the assessment and decision-making process, Ministers from my Department, the Department for Transport and His Majesty’s Treasury met to agree the final list of successful bidders. Again, we noted that the value of even the shortlisted bids was far in excess of the £2.1 billion available and, unfortunately, difficult decisions would therefore be needed. To achieve that, Ministers took the following sequential decisions. They took account of which local authorities had received funding in the first round, noting that that would help to maximise the geographic spread of investment across rounds 1 and 2, in line with the two wider considerations originally published in the fund’s prospectus. These were

“taking into account other investment in a local area”

and

“ensuring a fair spread of approved projects”.

[Anne McLaughlin]

Will the Minister take a brief intervention?

[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.

--- Later in debate ---

[Anne McLaughlin]

We do not really need feedback. The Minister has just given us the feedback. The feedback is: the Minister has come in at the last minute and said, “If you have had round 1 funding, you are not getting round 2 funding.” I just want her to answer my question: is she going to cover the £500,000 that Glasgow City Council has had to pay to do this when there was absolutely zero point? Where is that money supposed to come from? I do not think it should come from the people of Glasgow.

[Dehenna Davison]

Capacity funding was made available to local authorities in Scotland to help draw up bids. That is relevant to the point the hon. Lady is making.

[Anne McLaughlin]

Not for Glasgow.

[Dehenna Davison]

There was. Every local authority received it.

[Anne McLaughlin]

We did not get it.

Question put,

That this House has considered the Levelling Up Fund round 2 bidding process.

The Chair’s opinion as to the decision of the Question was challenged.

Question not decided (Standing Order No. 10(13)).