Levelling Up

Baroness Taylor of Stevenage Excerpts

Wednesday 22nd November 2023 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

My Lords, there are 51 cities, 935 towns and 6,000 villages in the UK, hundreds of which suffer from considerable inequalities. Although we were delighted for 55 of those places that were successful in this announcement made on Monday, they have been singled out, as before, from many other areas that have equal or more need of funding to support their economic growth, and which will be wondering whether the Government’s approach to them is more like giving up than levelling up.

However, we welcome that the Government have recognised that the Hunger Games approach they were taking to funding has failed. We believe this approach resulted in millions of pounds being spent on consultants to put bids together, and that it was actually perpetuating inequalities between areas by further lining the pockets of those who spent the most on their bids. What discussions took place with the sector about the new methodology of the allocations this time, and what account has been taken of the inflationary factors that may have impacted on their viability in the time since the bids were submitted? What does the funding simplification doctrine, quoted by the Minister in the other place on Monday, actually mean? Does this new doctrine apply across government, or just to DLUHC? If the latter, how has the sector been engaged in its creation? How quickly does the Minister expect that the pilots taking place in relation to this will be evaluated?

Compared with the devastating cuts that local authorities have suffered, these grants to just 55 local authorities feel to the rest of the sector like crumbs from the table. With authorities facing the burden of £1.6 billion of increased housing and homelessness spend and £1.125 billion just for special educational needs, and with £15 billion of cuts from their funding already and the LGA estimating that there will be a £3.5 billion shortfall this year—that may have changed slightly today, but I have not had a chance to look yet—surely, as we asked during our discussions on the now Levelling-up and Regeneration Act, it is time for a radical overhaul of local government funding.

Can the Minister comment on the National Audit Office’s report last week, which found, as did the Public Accounts Committee, that no impact assessment had been carried out on levelling-up funding and that just 7% of the first two rounds had been spent so far, with 89% still held in Whitehall? Why has DLUHC not been able to agree the necessary funding arrangements with local authorities? Can we be assured that this process will be simplified so that the money gets to where it needs to go and projects are not held up by departmental delays? What will happen next for the hundreds of projects that have been submitted and not yet funded? We believe that this is the last round of this funding.

I am sure that my noble friend Lady Ritchie will come in on this, but why have councils and people in Northern Ireland been left out of this process? Whatever is happening in Stormont, councils will want their communities held in at least an equal process with the rest of the UK.

The projects funded through this round of levelling-up funding will have been thought through, fought for and, I am sure, welcomed by the successful authorities. However, in the context of cuts to local government funding of 60p in the pound between 2010 and 2020 and a fall in real-term spending power of 27% up to this year, they are a drop in the ocean compared with assessed need. Councillors and their communities watch as their high streets decline and their budgets are torn away from universal services that touch everyone, everywhere, all the time, to the specialist demand-led services that are there only for those with the most complex needs. Our residents are still reeling from the cost of living crisis. Surely it is time for a radical devolution of powers and resources and the flexibility to take the decisions that they know will be in the best interest of their areas. Surely it is time for Labour’s plan, which will genuinely enable that and truly let people take back control.

[Lord Stunell (LD)]

My Lords, this is a sad and disappointing Statement. It is another signal that levelling up, which was the flagship policy of the last Prime Minister but one, is on its dying breath. The Statement was delivered by a junior Minister in the other place. It rehashes announcements that have already been made. It glosses over failures of process and delivery, and it trumpets success when it is in full retreat. It starts with a boast about the £13 billion allocated to the levelling-up task, which is the same £13 billion that had already been announced five times before. But it overlooks what the National Audit Office said in its report published this week: much of the money will never be spent because of the overweening departmental bureaucracy and long ministerial delays in signing off projects with sponsors.

In fairness, the Statement does contain a sort of “sorry, not sorry” section about changing the process in the future, establishing a long-overdue but non-specific “funding simplification doctrine”, of which the noble Baroness just spoke. I am sure it will be a belter when it comes, but the benefit of the new doctrine will be lost by what is perhaps the most gobsmacking piece of double-speak in the Statement. Apparently rounds 1 and 2 have gone so well that, after learning from their successes, round 3 has been cancelled. Usually, back in the real world, if a project goes really well in its first two stages, everyone is eager to get on and do the third stage—but not this time. Instead, the approval threshold for projects is to be lowered and schemes previously rejected in rounds 1 and 2 will be reconsidered. There will be no round 3 and no chance for further bids to be submitted.

The National Audit Office reports that rounds 1 and 2 generated 834 bids, but three-quarters of them were rejected. I have no doubt that there will be some very good schemes among those rejected before that fully justify their approval now. Like the noble Baroness, I welcome the announcements made, but that has been done by pumping money originally intended for round 3 bidders back into the original pool for round 1 and round 2 bidders. This clearly demonstrates that the contention of these Benches was exactly right that the overall size of the pot was always minuscule compared to the need.

That leaves some of the most deprived councils, and the smaller and less well-resourced ones, stranded. They are the ones who did not bid in earlier rounds because they could not afford to take the risk of investing time and money in a bid that had only a 1:4 chance of success. Encouraged by the July announcement that a new and simpler process was ready to come into play, they have been ready to step forward and do so, but their chance has now gone. There will be no round 3, no new bids, and no levelling up for them.

I have two questions for the Minister. Will she publish the list of local authority areas that did bid in rounds 1 and 2 but will still not benefit from any funds from any of their bids, despite the clawback of round 3 money to help? I will call that list A. It would give a good map of where the Minister thinks that levelling up is not really needed. Secondly, will she publish a list of those local authority areas from which no levelling-up bids at all have yet been received? I will call that list B. That, I fear, would give a good map of small, under- resourced local authorities that have been left stranded by the cancellation of round 3 and are left out of the picture altogether. Publishing lists A and B would be a long-overdue first step to restoring transparency and trust to what, up to now, has been an opaque and desperately underfunded bureaucratic disaster. I look forward to the Minister’s answers.

[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.

[Noble Lords]

Oh!

[Baroness Taylor of Stevenage (Lab)]

There is time. I asked questions about Northern Ireland, about inflation and about impact assessments. May I have a response to those in writing?

[Baroness Penn (Con)]

My apologies; I think I answered about the impact of inflation and the fact that we have adjusted the project delivery processes to help take that into account with local authorities. The pathfinders are under way and we will assess the outcomes of those as soon as we can, but I also said that we will seek to learn the lessons as we are implementing, not just waiting for the final evaluation at the end of the process.

On Northern Ireland, the noble Baroness is absolutely right that there were no allocations in round 3 of the fund; I reassure noble Lords that this funding has not been reallocated to other parts of the UK and will remain reserved for and be provided to Northern Ireland. We will continue to work closely with the projects that have already been awarded the £120 million in the first two rounds of the fund. We are working towards the restoration of the Northern Ireland Executive and will work with a restored Northern Ireland Executive to find the best approach for them going forward.

I am happy to have another look. If there are any points that I have missed, I will make sure that I write to both noble Lords on them.