Levelling up projects hit by delays, warns watchdog

Levelling up projects aimed at reducing regional inequality have been beset by delays, the spending watchdog has said.

Following the 2019 election, ministers allocated £9.5bn to schemes to boost towns, local transport and culture.

The NAO said rising costs, a shortage of skilled workers, and delays in decision-making meant some projects had not started or were behind schedule.

Responding to the report, the Department for Levelling Up said that, since March, another £1.5bn had been distributed to local authorities to spend.

It added that major regeneration projects would "take time to deliver", but pointed to a number of completed projects including a leisure centre in Bolton and a "digi-tech" factory in Norwich.

The promise to "level up" the country sprung from a desire to tackle the UK's long-standing regional inequalities which has seen the country's wealth concentrated in London and south-east England

The policy formed an important part of the Conservative's successful 2019 general election pitch to voters in traditional Labour areas in the Midlands and the north of England.

To implement its manifesto promises, the government has established three funds - the UK Shared Prosperity Fund, the Towns Fund, and the Levelling Up fund. The latter two projects were designed to provide money for "shovel-ready" projects.

However, in its report, the NAO, which monitors government spending, said of the 1,300 projects supported by these two funds, just 64 had been completed, and 76 had not been started.

It also found that, as of March 2023, 50% of the main construction contracts for Levelling Up Fund projects due to be completed in March 2024 were unsigned.

The figure rose to 85% for projects due to be completed by March 2025.

The watchdog concluded that it was "unlikely" local authorities would be able to complete schemes by the original deadlines.

Examining the reasons for the delay, the NAO said the cost of projects had risen "significantly" because of inflation, and that many schemes proposed by local authorities and approved by central government were now "unrealistic given the changed economic circumstances".

Local authorities raised concerns with the watchdog that pressure to meet deadlines could lead to "sub-optimal decisions".

The NAO also identified fund administration as another cause of early problems.

It said the Levelling Up Department had lacked the capacity to assess multiple bids in a short time frame.

Gareth Davies, the head of the NAO, said the Levelling Up Department was "in a better position to understand the benefits these funds deliver following significant improvements in its approach to evaluation".

He added that the department and local authorities would "need to work together to unblock projects which are delayed or have not started and set realistic expectations for delivery".

Angela Rayner - Labour's deputy leader - said: "This dysfunctional government promised shovel-ready projects but has failed to get spades in the ground.... the Conservatives' flagship levelling up scheme has been exposed as a sham and a scam."