Levelling-up Fund Round 2: Bidding Process

Debate between Dehenna Davison and Anne McLaughlin

Tuesday 7th February 2023 Westminster Hall

[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)).