Fifth Report - Local economic growth

Select Committee

Public Accounts Committee HC 252 8 June 2022

Report Status Government responded

Conclusions & Recommendations 27 items (8 recs)

Source View on Parliament website

Government Response (AI assessment · 19 of 27 classified)

Accepted 2

Accepted in Part 1

Acknowledged 14

Not Addressed 2

Recommendations

8 results

2 Not Addressed

The Department does not yet have a strong understanding of what works for local growth...

Recommendation

The Department does not yet have a strong understanding of what works for local growth but we welcome its belated commitment to evaluating local growth interventions. It is disappointing that, despite billions spent on local growth over many decades, government … Read more

Government Response Summary

The response does not address the recommendation of updating on progress with local growth evaluation commitments, and instead discusses internal performance measures and consultations with the sector.

HM Treasury

3 Accepted

We are concerned that optimism bias has meant realistic bids to the Levelling Up Fund...

Recommendation

We are concerned that optimism bias has meant realistic bids to the Levelling Up Fund have missed out at the expense of ‘shovel-ready’ projects that have since been beset with delays. The Department told us that, four weeks from year … Read more

Government Response Summary

The government agrees, and has a robust process in place to safeguard value for money and ensure deliverability, and has worked with successful applicants to ensure necessary baselining and preparedness for delivery, so they are already addressing the issue.

HM Treasury

4 Acknowledged

There remains considerable uncertainty for Local Authorities around funding, structures and responsibilities for local economic...

Recommendation

There remains considerable uncertainty for Local Authorities around funding, structures and responsibilities for local economic growth. The Department extols the virtues of local plans for coordinating and achieving value for money from central government funding. However local authorities’ attempts at … Read more

Government Response Summary

The government recognises the local growth funding landscape has been complex and fragmented, and will set out a plan for streamlining the funding landscape this year; a new Levelling Up Cabinet Committee has also been established.

HM Treasury

5 Accepted in Part

It is unclear how the Department is reconciling tensions between devolved responsibilities and administering local...

Recommendation

It is unclear how the Department is reconciling tensions between devolved responsibilities and administering local growth funding on a UK-wide basis. Economic development is a devolved power but the Department is administering the Levelling Up and UK Shared Prosperity funds … Read more

Government Response Summary

The department agrees, but disagrees with the conclusion. For LUF, at least 9% of the total allocation will be set aside for Scotland, 5% for Wales, and 3% for Northern Ireland, subject to a suitable number of high-quality bids coming forward. Officials established an Interministerial Group to discuss issues of mutual interest, and the inaugural meeting of the Interministerial Standing Committee was held.

HM Treasury

6 Acknowledged

Accountability for levelling up outcomes remains unsatisfactory.

Recommendation

Accountability for levelling up outcomes remains unsatisfactory. This Committee has reported before that government’s accountability arrangements had failed to keep pace with increasingly complex ways of delivering policies and services. and that this had weakened accountability to Parliament for the … Read more

Government Response Summary

The department has implemented a new architecture across central government to support delivery including the Levelling Up Cabinet Sub-Committee and will write to the Committee separately with further details once arrangements have been confirmed with new ministers.

HM Treasury

7 Acknowledged

The Department does not yet know how it will measure performance on a consistent basis...

Recommendation

The Department does not yet know how it will measure performance on a consistent basis across different geographical areas and timescales. We are concerned that data availability and quality is not yet adequate to track progress against the Levelling Up … Read more

Government Response Summary

The government agrees with the Committee’s recommendation but disagrees with the conclusion on which it is based, and describes the role of the Spatial Data Unit and ONS in measuring progress against levelling up missions.

HM Treasury

23 Acknowledged

The Department has been considering an overarching monitoring and evaluation framework for local growth to...

Recommendation

The Department has been considering an overarching monitoring and evaluation framework for local growth to include common objectives and outcomes, within which individual programme-level frameworks would sit. This would enable it to compare the relative effectiveness of similar initiatives and … Read more

Government Response Summary

The department agrees with the recommendation and will continue to fill evidence gaps through engagement and learning from evaluations; processes to feed evaluation findings into local growth activity and wider levelling up agenda is at the design stage.

HM Treasury

24 Acknowledged

When we asked what success would look like for people in areas where, for example,...

Recommendation

When we asked what success would look like for people in areas where, for example, it is hard to get a job or the High Street is struggling, the Department highlighted the importance of taking a broad definition of growth.71 … Read more

Government Response Summary

The government agrees with the recommendation but disagrees with the conclusion. They will continue to measure progress for most missions consistently, and are undertaking further work to develop those that are exploratory. The Spatial Data Unit will produce indicators, address current data gaps and measure progress.

HM Treasury

Conclusions (19) Observations and findings — click to expand

1 Conclusion Not Addressed

On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Levelling Up, Housing & Communities (the Department), HM Treasury, the Department for Transport and the Department for Business, Energy & Industrial Strategy about Supporting local economic growth.1

Government Response Summary

Acknowledges the report and the evidence session, no commitment to action.

8 Conclusion

LEPS, the business led-partnerships that have been an important part of the local growth landscape over the past decade, will take a back seat going forward as government delivers more funding through local authorities. The Department told us it is encouraging the integration of LEPs and their business boards into …

9 Conclusion

Economic development is a devolved power and, since the late 1990s, local growth funding in the devolved nations has been managed by the Scottish and Welsh Governments and the Northern Ireland Executive.24 Since 2020 however, central government’s principle local growth programmes have been UK-wide. The Towns Fund, announced in July …

10 Conclusion Acknowledged

We asked the Department how the part played by the devolved governments on the UK Shared Prosperity Fund compared to their part in deciding the allocation of the European funds it is replacing. The Department explained that for the European Structural Funds, the Devolved National Governments had been the “managing …

Government Response Summary

The department agrees with the committee's recommendation, but disagrees with the conclusion it is based on and states its priority is delivering effective investment in all parts of the UK and describes existing mechanisms for working with devolved administrations.

11 Conclusion Acknowledged

The Department reassured us that it was expecting to work very closely with each of the devolved Governments and with the individual local authorities responsible for delivery. We were, however, sceptical about how close past cooperation with devolved Governments had really been and the extent to which it enabled national …

Government Response Summary

The department agrees with the committee's recommendation, but disagrees with the conclusion it is based on and states its priority is delivering effective investment in all parts of the UK and describes existing mechanisms for working with devolved administrations.

12 Conclusion

We questioned the Department on whether the way in which it was awarding funding might mean some areas missed out multiple times across the various funding pots while others were given several opportunities to get funding.31 The Department explained that successful bidders from round 1 of the Levelling Up Fund …

13 Conclusion

We reminded the Department that when we reported previously on the Towns Fund we had raised concerns over the opacity over some of its decision making.34 In November 2020, we reported that the selection process for awarding the Towns Fund had not been impartial. We said that a lack of …

14 Conclusion

The Department’s accounting officer reasoned that we had discussed and reported on the Towns Fund at quite considerable length and that he felt it had a been a valid and fair process.37 In respect of the Levelling Up Fund, he said that there had been a very high level of …

15 Conclusion

We questioned the Department on the nature and timing of the role for Ministers in making final decisions for the Levelling Up Fund.40 The NAO’s report explains that following an initial pass/fail gateway, officials scored and ranked bids against published criteria and then passed a shortlist of the highest scoring …

16 Conclusion

According to its business case, the Department expected to allocate £720 million of the total £4.8 billion budget in the first round of the Levelling Up Fund. In October 2021, government announced 105 successful bids totalling £1.7 billion for the first round.47 The Department told us that there had been …

17 Conclusion

We queried whether making “up to” £600 million available for 2021–22 at the Spending Review 2020 had set an expectation about the amount that would be awarded in the first year.51 The Department explained that this £600 million was the amount it expected bidders to spend in the first year …

18 Conclusion Accepted

The Department told us that getting started on delivery was, in many cases, taking longer than expected but that it did not want to penalise places now that they had got through the assessment process. We heard that delays have often been for good reasons such as areas taking more …

Government Response Summary

The government agrees, and has a robust process in place to safeguard value for money and ensure deliverability, and has worked with successful applicants to ensure necessary baselining and preparedness for delivery, so they are already addressing the issue.

19 Conclusion Acknowledged

This Committee reported in 2016 that government’s accountability arrangements had failed to keep pace with increasingly complex ways of delivering policies and services and that this had weakened accountability to Parliament for the use of public funds.56 Noting the long timescales and magnitude of the delivery challenge, we questioned witnesses …

Government Response Summary

The department has implemented a new architecture across central government to support delivery including the Levelling Up Cabinet Sub-Committee and will write to the Committee separately with further details once arrangements have been confirmed with new ministers.

20 Conclusion Acknowledged

We heard that a lot of the missions were cross-cutting and would require leadership from several departments while others were more focussed and there would be more of a role for a lead department.59 For example, the Accounting Officer from the Department for Business, Energy and Industrial Strategy told us …

Government Response Summary

The government agrees, and will implement a new architecture across central government to support delivery, including the Levelling Up Cabinet Sub-Committee. The department and HM Treasury will write to the Committee separately with further details once arrangements are confirmed with new ministers.

21 Conclusion Acknowledged

We questioned the Department on why, despite billions of pounds spent on it over the years, there was so little evidence on what works for delivering local economic growth, particularly outside London. The Department’s Accounting Officer pointed to the inherent complexity of understanding how local economies grow, and that the …

Government Response Summary

The department agrees with the recommendation and will continue to fill evidence gaps through engagement and learning from evaluations; processes to feed evaluation findings into local growth activity and wider levelling up agenda is at the design stage.

22 Conclusion Acknowledged

In 2019, this Committee reported that the Department did not understand what impacts its £12 billion Local Growth Fund had had on local economic growth yet had decided not to evaluate it.65 We were encouraged to learn that the Department has now decided to reverse that decision but, as the …

Government Response Summary

The department has a strong understanding of what works for local growth, is filling evidence gaps through engagement and forthcoming evaluations, and has established the Spatial Data Unit.

25 Conclusion Acknowledged

Two of the missions in the Levelling Up White Paper are ‘overarching’ missions. The first is around living standards and includes measures of productivity, pay and jobs and the second is around measures of well-being.73 With reference to the first, we asked the Department how it intended to measure local …

Government Response Summary

The government agrees with the Committee’s recommendation but disagrees with the conclusion on which it is based, and describes the role of the Spatial Data Unit and ONS in measuring progress against levelling up missions.

26 Conclusion Acknowledged

When we asked the Department whether it expected to be able to get this data quickly enough to be able to measure what impact the funds under its levelling-up agenda were having, the Department told us it would be able to make some progress quickly but some of it would …

Government Response Summary

The government agrees with the Committee’s recommendation but disagrees with the conclusion on which it is based, and describes the role of the Spatial Data Unit and ONS in measuring progress against levelling up missions.

27 Conclusion Acknowledged

We asked the Department how it intended to pull together all this data to show a big picture, as well as a local picture, to demonstrate the effectiveness of government’s levelling up agenda. The Department told us it had committed to reporting annually on levelling up and its performance against …

Government Response Summary

The government agrees with the Committee’s recommendation but disagrees with the conclusion on which it is based, and describes the role of the Spatial Data Unit and ONS in measuring progress against levelling up missions.