UK levelling up: Public spending spread too thin to make an impact

·Finance Reporter, Yahoo Finance UK
·3-min read
UK levelling up:  Secretary of State for Levelling Up, Housing and Communities Minister for Intergovernmental Relations Michael Gove during the Conservative Party Spring Forum at Winter Gardens, Blackpool. Picture date: Friday March 18, 2022.
UK levelling up: Michael Gove’s department is accused of ‘retrofitting the criteria for success’. Photo: PA

The government needs to increase funding to its levelling up agenda if it wants to improve economic prospects across the country, a think tank has warned.

The much-hyped levelling up strategy has been undermined by chancellor Rishi Sunak’s refusal to commit any extra spending, and the absence of new policies in a white paper, according to the Institute for Government (IfG).

“Devolution is a necessity in order to deliver [the strategy] but also what is a necessity is a great amount of money,” Paul Swinney, director of policy and research at the Centre for Cities, said.

Speaking at an event organised by the IfG, he warned that the sheer breadth of the levelling up agenda required extra money.

“The figure for bringing East and West Germany back together is €2tn and still counting,” he said.

Read more: What is levelling up and what it means for where you live

Without claiming that this is the amount the UK requires to push its levelling up agenda, he did say “that gives us a yardstick in the very least that we have around £5bn and Treasury has not signed any extra money [to the strategy] so we’re out of pocket and there needs to be more funding behind it”.

The idea behind the strategy is that people and communities that have been left behind get a chance to catch up.

Wolverhampton and Sheffield are the first of 20 areas picked to benefit from a "radical new regeneration programme" launched by the Department for Levelling Up, Housing and Communities (DLUHC) as part of the government's Levelling Up White Paper.

But ministers have been accused of gambling taxpayers' money on policies amounting to "little more than a slogan" according to a report by MPs into how £1.7bn in levelling-up funds were shared out.

Ministers “retrofitted” the criteria for winning bids to the £4.8bn fund for reducing regional economic inequalities and then failed to evaluate the effects of grants that were awarded, according to a report published on Wednesday by the House of Commons public accounts committee.

Despite billions spent on a series of schemes to boost local growth over recent years the government "still does not have a strong understanding of what works", it said.

Read more: UK levelling up should focus on improving quality of low-skilled jobs, think tank urges

Meg Hillier, the chair of the committee, said: “It’s hard to avoid the appearance that the government is just gambling taxpayers’ money on policies and programmes that are little more than a slogan, retrofitting the criteria for success.”

"We are also concerned that some bidders may have been successful on the basis of unrealistic claims about how ready their projects were to deliver, at the expense of other, more realistic, bids from elsewhere," the report added.

A DLUHC spokesperson said: “The assessment process was transparent, robust and fair, and the criteria included the need for projects to be deliverable and to fuel regeneration and growth to level up areas most in need.”

Watch: Ministers accused of gambling billions on 'little more than a slogan' in levelling-up funds report

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