MHCLG ‘jeopardised civil service impartiality’ with £3.6bn Towns Fund, say MPs

MPs say lack of transparency raises concerns choice of places invited to bid was “politically motivated”
Spot the ball: Boris Johnson on a campaign stop in Cheadle during the 2019 general election. Cheadle was identified as the least deprived place on the Towns Fund programme. Photo: PA

By Jim Dunton

11 Nov 2020

The Ministry of Housing, Communities and Local Government’s handling of a £3.6bn economic development initiative to boost “left behind” towns was secretive, partisan and has put the civil service’s reputation for impartiality at risk, according to MPs.

A Public Accounts Committee report on the Towns Fund, launched last summer, has said the rationale for selecting places invited to take part was unconvincing,  with “vague” ministerial justifications “based on sweeping assumptions” that raised concerns decisions were politically motivated.

Potential Towns Fund beneficiaries were picked through a departmental exercise in the summer of 2019 that restricted selection to the half of towns in England with the highest levels of income deprivation. While the 40 towns classified as “highest priority” were automatically selected for funding, ministerial discretion was used in selecting 49 “medium priority” towns  and 12 “low priority” recipients. 

The PAC said that of the 541 towns identified as eligible for the Towns Fund, some places chosen by ministers were at the “very lowest priority” end of the scale. It said one town selected ranked 536 out of 541. A National Audit Office report on the programme published in July identified Cheadle as the least deprived place on the programme, which offers up to £25m for most towns but can provide up to £50m in "exceptional" circumstances.

MPs said the selection process for places invited to create a “Town Deal” via the fund had not been impartial.

“Ministers chose most of the towns from a large group deemed eligible, based on assumptions and broad criteria,” they said. 

“Although departmental officials scored and ranked all towns across England against a set of criteria, such as income deprivation, the selection process gave ministers discretion to choose which individual towns would be eligible to bid.”

MHCLG permanent secretary Jeremy Pocklington defended the department’s handling of the programme at an evidence session in September. He said a “robust evidence-based approach” had underpinned ministers’ decisions on the places other than the most-deprived 40 that were invited to put together a Town Deal via the fund.

But PAC members said MHCLG had not been open about the process it followed and would not disclose the reasoning for selecting or excluding towns. 

“This lack of transparency has fuelled accusations of political bias in the selection process, and is a risk to the civil service’s reputation for integrity and impartiality,” MPs said.

“Although the department’s permanent secretary confirmed he was satisfied the selection process met the requirements of propriety and regularity, a summary of the accounting officer assessment provided to the committee – which sets out compliance with the legal framework for managing public money – remains unpublished.”

Committee members said they wanted to see the full version of the assessment within the next month.

PAC chair Meg Hillier said the committee’s work on the government’s response to Covid-19 was beginning to reveal “the grim, potentially huge costs of public spending made in haste and without all the usual legal checks and controls”.  

“That makes it all the less acceptable to now be looking at billions of pounds handed out in an opaque process that has every appearance of having been politically motivated – long before Covid struck,” she said.

“Now, when every penny counts, and when some towns that won funding will almost certainly have to redirect it to fill the massive holes the pandemic has blown in their budgets, MHCLG must be open and transparent about the decisions it made to hand out those billions of pounds of  taxpayers’ money, and what it expects to deliver.”

MPs said MHCLG had “exacerbated” concerns about the Towns Fund by “misrepresenting” the NAO report on the programme in statements to the press which said that the public-spending watchdog had concluded the selection process had been “robust”.

“The report includes no such statement,” the committee said.

Responding to the report, an MHCLG spokesperson said: “We completely disagree with the committee’s criticism of the Town Fund selection process, which was comprehensive, robust and fair.

“The Towns Fund will help level up the country, creating jobs and building stronger and more resilient local economies.”

The spokesperson said that the Towns Fund was central to government’s ambition to level up the country selection criteria took into account factors such as the number of people in a town who have no formal qualifications or are out of employment.

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