January 29, 2023

Donalds Hobby

World Finance Reviews

Levelling Up Fund: accounting officer assessment

Background and Context

The Levelling Up Fund brings together the Department for Transport (DfT), the Department for Levelling Up, Housing and Communities (DLUHC), and Her Majesty’s Treasury (HMT) to invest £4.8 billion in high value local infrastructure across the three investment themes of Transport; Town Centre Regeneration; and Culture. The Fund was first announced at the 2020 Spending Review, with the first round launched on 3 March 2021. All areas across the UK can access the Fund, with local authorities in Great Britain eligible to apply.  In Northern Ireland, recognising the different local authority landscape a range of public and private sector applicants are eligible to apply. The DfT and DLUHC share accounting officer responsibility for the Fund, with DfT accountable for majority transport projects, and DLUHC accountable for majority town centre and regeneration and culture projects.

The outcome of the first round of the Levelling Up Fund was announced on 27 October 2021 allocating c.£1.7 billion to 105 projects across the UK. The first round is delivering over £170 million of funding in Scotland, £120 million in Wales, and £49 million in Northern Ireland.

Building on the success of the first round, the second round of the Fund was launched in March 2022 and will continue to invest directly in communities across all parts of the UK.

Assessment against the Accounting Officer Standards

Regularity

There are no regularity concerns because the department holds the powers to issue grants to successful applicants across the UK through the new financial assistance powers in the United Kingdom Internal Market Act 2020.

Overall assessment

My assessment is that the regularity test is satisfied.

Propriety

The advice covered a number of key areas including arrangements for decision making and recusal, and the allocation of capacity funding to assist local authority applicants develop high quality bids.

A published assessment framework was used by officials, with assessment scores moderated to ensure consistency and setting out that only bids from the shortlist were considered by the three decision making ministers (the Chancellor of the Exchequer, the Levelling Up Secretary and the Parliamentary Under Secretary of State for Transport (on behalf of the Secretary of State for Transport).  An equalities impact assessment was undertaken and submitted to ministers prior to decisions being finalised. Further details on the decision-making process can be found in the Levelling Up Fund explanatory note. A published list of successful applicants is available.

Appropriate arrangements for recusal, which would see ministers recuse themselves from any decision that could be seen to affect their constituency were also considered within the advice, however no recusal was necessary.

Overall assessment

My assessment is that the propriety test is satisfied.

Value for Money

Value for money (VfM) considerations were embedded in the LUF assessment and decision-making frameworks. The LUF value for money assessment considered monetised and non-monetised benefits, and that those assessments were subject to moderation.  To ensure value for money, only the highest scoring bids, and those that scored average or higher across value for money, strategic fit, and deliverability were shortlisted.

When considering which bids to fund from the Great Britain shortlist, the decision-making ministers agreed to prioritise bids in general that scored at least 75/100 to give precedence to the highest quality bids but ensure a fair spread of successful projects across Great Britain, and across the 3 investment themes. In Scotland and Wales, two projects were selected that scored below 75/100 but still the high quality bar of 70/100. In Northern Ireland, to prioritise a strong allocation for the country all bids on the shortlist were selected except for two that were ruled out due to deliverability concerns. Further detail is set out in the published explanatory note.

To further safeguard value for money, reporting and evaluation requirements placed on grant recipients will help monitor delivery of expected outputs and outcomes. Further details on this are set out in the published LUF monitoring and evaluation strategy.

Overall assessment

My assessment is that the value for money test is satisfied.

Feasibility

There were some feasibility challenges, particularly around the assessment of LUF bids given the potential number of applicants. We therefore advised that the department was looking to secure additional administrative budget from HMT to expand its organisational capacity to manage that process. The department received additional funding of £12.3 million for the financial year 2021-22 for a number of new levelling up funding programmes including LUF.

Following the detailed assessment of bids (including deliverability), DLUHC concluded that the delivery of 105 projects in this first round is feasible and that learning can be used to inform the process for later rounds.

Overall assessment

My assessment is that the feasibility test is satisfied.

Conclusion

The above represents a summary of the key points which informed my decisions. If any of these factors change materially during the lifetime of this project, I undertake to prepare a revised summary, setting out my assessment of them.

This summary will be published on the government’s website (GOV.UK). Copies will be deposited in the Library of the House of Commons and sent to the Comptroller and Auditor General and Treasury Officer of Accounts.

Jeremy Pocklington

26 May 2022