The Department for Levelling Up, Housing and Communities needs to do more to help local authorities battling widespread delays with projects designed to help left-behind areas, the National Audit Office has said.
According to a new report from the public-spending watchdog, the vast majority of £10.6bn in levelling-funding announced through three DLUHC programmes as of March had not been distributed to councils – leaving deadlines for the money to be spent “unlikely to be met”.
The NAO said that of allocations announced through the Towns Fund, Levelling Up Fund, and UK Shared Prosperity Fund since 2020, just £2bn had been given to local areas by March and only £900m had been spent on projects it was intened to fund.
It said that half of the main construction contracts for Levelling Up Fund projects due by March 2024 were currently unsigned, with the figure rising to 85% for Levelling Up Fund projects due by March 2025.
Around 4,300 projects – such as infrastructure improvements or giving historic buildings a makeover – are supposed to benefit from the levelling-up funding across the three streams. But the NAO said inflationary pressures, skills shortages, and wider construction-industry supply challenges were calling local authorities’ ability to meet project deadlines into question.
It added that delayed decisions on the part of DLUHC also had knock-on effects for local areas. The NAO said some local authorities were left with only three months to spend their 2022-23 allocations from the UK Shared Prosperity Fund because of the time the department took to approve investment plans for schemes.
The NAO said local authorities had reported that pressure to deliver by existing deadlines could lead to projects being left incomplete or not started at all.
NAO head Gareth Davies said DLUHC had improved significantly in terms of its evaluation of projects to support local growth and had simplified the process for local authorities looking to make changes to projects in progress.
He said the department now needed to set out the further action required if projects cannot be completed within existing deadlines, such as resetting expectations for what and when allocated funds will deliver, taking account of rising cost pressures.
“DLUHC is in a better position to understand the benefits these funds deliver following significant improvements in its approach to evaluation,” Davies said. “But the department and local authorities will need to work together to unblock projects which are delayed or have not started and set realistic expectations for delivery.
“It is important that DLUHC shares the insights from its evaluation work with local decision makers to help them achieve better value for money and reduce regional inequalities by improving the places in which people live.”
Among its recommendations, the NAO said DLUHC should work with the Treasury to ensure that funds for evaluating impact are secured beyond the current spending cycle and explore whether funding deadlines for the current funds can be extended to protect value for money.
DLUHC said it recognised the “challenging economic backdrop” organisations delivering its capital programmes were experiencing and that it had extended delivery deadlines, developed grant-management processes, and was offering greater local flexibility over spending decisions.
The department added that the figures in the NAO report were “out of date” and that a further £1.5bn in funding had been paid out to local authorities since March.
“We continue to work closely with local authorities to support their delivery of their vital projects,” a spokesperson said. “We have committed £13bn to levelling up, supporting projects to improve everyday life for people across the UK – regenerating town centres and high streets, local transport and cultural and heritage assets.”
The spokesperson added: “Major regeneration projects take time to deliver, but a number of projects have completed.”
They cited the Farnworth Leisure Centre in Bolton, the Ingenium Centre in Darlington and a “digi-tech” factory in Norwich as examples.