Levelling up department 'has wasted opportunities’ to learn where spending could have biggest impact

NAO warns billions could be wasted if DHLUC does not improve its evaluation
Levelling up funds are intended to create opportunities and regional growth across the UK

By Tevye Markson

02 Feb 2022

The government risks wasting billions of pounds of levelling up funds if it does not improve its evaluation, the National Audit Office has warned.

The spending watchdog has once again slammed the government for failing to base its plans on robust evidence, this time criticising levelling up preparations.

Due to a lack of evaluation of previous policies, the NAO says the Department for Levelling Up, Housing and Communities does not know if the billions of pounds it is spending is having the intended impact.

The department will release its levelling up white paper today, setting out how the department plans to put the government’s flagship policy into action.

But an NAO report released today has raised concerns about DLUHC's preparations, saying the department has “wasted opportunities to learn which initiatives and interventions are most effective”.

Instead of learning from past decisions, the department has based its decisions on external sources such as academic studies and lessons from EU funding, the watchdog added.

The NAO also warned that, despite the department’s promise to improve on its lack of past evaluation, DLUHC had failed to adequately scrutinise new spending plans.

DLUHC has responsibility for “raising productivity and empowering places so that everyone across the country can benefit from levelling up”.

The government has committed £11bn to support the regeneration of towns and communities across the UK between 2020 and 2026, including £4.8bn for the Levelling Up Fund, £2.6bn for the UK Shared Prosperity Fund and £3.2bn for the Towns Fund.

The NAO said it would have expected “even greater scrutiny” than usual when spending such a large amount of money with such a limited evidence base.

However, the government merged the standard three stages of its business case for the Levelling Up Fund into one, raising alarm bells at the audit office.

The business case, approved by the Treasury, also did not consider alternative options for achieving the levelling up aims.

“This reduces our confidence that the interventions will have the best possible chance of delivering value for money,” NAO said.

“In view of this, it is even more important that the department should follow through rapidly on its recent commitments to improve measurement and evaluation in local growth.”

The watchdog said DLUHC has spent money on improving how it monitors and evaluates its most important local growth policies and committed to evaluating past schemes such as the Local Growth Fund and the Towns Fund.

However, the NAO said these plans are at an early stage, while it criticised the lack of progress on introducing an overarching Local Growth Framework with common metrics for evaluating local growth initiatives.

A DLUHC spokesperson said: “This report does not take into account any of the raft of measures published today in our landmark levelling up white paper, setting out a blueprint for how we will reverse this country’s geographical inequalities, spread opportunity and transform communities across the UK.

“To deliver change on this scale we will take a radical new approach to decision making, delivering clearer, fairer funding and unleashing a data revolution to help us understand what works.”

Last month, the NAO reported that just 8% of the government’s major projects are properly evaluated, while 64% are not evaluated at all.

And NAO head Gareth Davies warned in a piece for The Times earlier this month that the government is “not learning from its successes or failures” because departments do not face serious consequences for failing to evaluate their own work.

And Davies warned earlier this month that the government is “not learning from its successes or failures” because departments do not face serious consequences for failing to evaluate their own work.

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