The Government’s levelling up policy must improve its significant flaws to provide better support to Northern communities, local authorities have said. 

A damning report by the cross-party Levelling Up, Housing and Communities Committee found a lack of transparency on allocations for the flagship funding project created barriers to progress in addressing regional economic inequality.

The committee found the requirement for councils to bid for funding allocations had drained their resources and one-off Government-prescribed initiatives were often not compatible with local needs.

In response, the government has pledged to reduce competitive bidding and will simplify the funding process. The committee said a lack of transparency on how money from the levelling-up fund was allocated has left the department for levelling up open to criticism over how bids received ministerial sign-off.

The Tees Valley Combined Authority (TVCA), which covers Darlington, criticised the competitive bidding process, which it said can exacerbate inequalities and slow progress, and instead requested more local control over finances and key decision making to help areas thrive. 

TVCA officials said the combined authority has been critical to “kickstarting changes the Tees Valley had waited a generation for, and previous approaches to regional development have been unable to deliver” but admitted it faces funding challenges.

Its Round One bid, which was centred on improvements on the local rail network, was not successful – and officials say it is not clear where resourcing for this project will come from.

The Northern Echo: Tees Valley Mayor Ben Houchen has overseen investment in the region, but has faced criticism for how it has been spent Tees Valley Mayor Ben Houchen has overseen investment in the region, but has faced criticism for how it has been spent (Image: Sarah Caldecott)

Among allegations of Conservative favouritism, the report highlighted the example of a district council in Rishi Sunak’s constituency of Richmond, which received £19 million in the second round of levelling-up funding despite having a high level of prosperity.

Responding to the inquiry, TVCA officials said: “A more co-ordinated systems-based approach to the funding of Levelling Up would help us deliver more with the same amount of national investment. What really matters – and what really works – are locally-led approaches to levelling up. 

“The limitations of a competitive process are clear for all to see. It is unrealistic to expect local areas to achieve long-term change with short-term funding. This funding model can lead to a fragmented and disjointed approach.”

In County Durham, the council’s Round One bid for transport improvements in Bishop Auckland was successful but its five bids for other areas in Round Two all failed.

The authority said the range of differing funding streams with different criteria and spend deadlines, such as Future High Street Funding, Town Centre Diversification, and Levelling Up “can be confusing to partners, and challenging to form coherent business cases and spend profiles”.

To enable economic growth, the council responded by saying: “County Durham needs the ongoing commitment from government to Levelling Up; continued long term funding to build the infrastructure needed; and clear and consistent policy decisions that provide certainty to the investors that are vital in unlocking our potential. Any streamlined process and more localised control of allocated funding would help shift this focus.”

The Northern Echo: In County Durham, the council’s Round One bid for transport improvements in Bishop Auckland was successful but its five bids for other areas, including Stanley (pictured) in Round Two all failed.In County Durham, the council’s Round One bid for transport improvements in Bishop Auckland was successful but its five bids for other areas, including Stanley (pictured) in Round Two all failed. (Image: Stuart Boulton)

Responding to the report, a DLUHC spokesperson said: “Levelling Up is a long-term programme of reform that sits at the heart of our ambition as a Government. It is breathing life into long overlooked communities, whether it is record investment in town centres and high streets or devolving more money and power out of Westminster to the regions.

“Almost £10 billion has been allocated from DLUHC since 2019 to support around 1,000 projects, in addition to the £7.5 billion commitment to the nine city-based Mayoral Combined Authorities in England.

“We are continuing to work towards simpler funding processes to support local authorities and are currently reflecting on the lessons learned from the first two rounds of the Levelling Up Fund allocations to inform the design of Round 3.”