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The Government announced the results of the second round of the Levelling Up Fund on 19 January 2023, awarding £2.1 billion to 111 projects. Combined with first round results, announced in October 2021, the Levelling Up Fund has awarded £3.8 billion to 216 projects.
This insight looks at the background to the Levelling Up Fund and analyses where this funding has been allocated.
What is the Levelling Up Fund?
The Levelling Up Fund was announced in November 2020 as part of the 2020 Spending Review. The purpose of the Fund is to invest in “local infrastructure that has a visible impact on people and their communities and will support economic recovery.” The Fund is worth £4.8 billion.
The Levelling Up Fund is part of the wider “levelling up” agenda, a loosely connected set of policies designed to address the longstanding problem of the UK’s regional economic disparities.
The first two funding rounds have focused on three investment themes – transport projects, town centre and high street regeneration and cultural investment.
What happened in the first round of funding?
The government published a prospectus alongside the March 2021 Budget. This stated funding would focus on the areas “most in need of levelling up”. The areas are determined by an index ranking local authorities by on a scale of 1 to 3, with those ranked 1 considered most in need.
The ranking system did not apply to Northern Ireland, as bids were also open to businesses, voluntary and community organisations, the Northern Ireland Executive and other public sector bodies.
The ranking system was based on three criteria:
- need for economic recovery and growth.
- need for improved transport connectivity.
- need for regeneration.
Every local authority was eligible to submit at least one bid, up to a value of £20 million, though county councils with transport powers, combined authorities, mayoral combined authorities and the Greater London Authority were eligible to submit one transport bid with a value of between £20 million and £50 million.
Applications for the first round of the Levelling Up Fund were open between March and June 2021. A full list of successful bidders was published on 27th October 2021.
305 bids were received, of which 105 were successful, with a total value of £1.7 billion. The largest successful bid was worth just under £50 million.
What happened in the second round of funding?
The opening of the second round of the Levelling Up Fund was announced in the 2022 Spring Statement.
An updated prospectus and new priority index were published. Places were able to move up to a higher priority category and the number of priority category 1 places was expanded, with the intention of capturing areas whose levels of need had increased since the Fund’s launch, for example due to impacts of the covid-19 pandemic.
A full list of successful bidders was published on 19th January 2023.
529 bids were submitted, of which 111 were successful, with a total value of £2.1 billion. The two largest successful bids were worth £50 million each, while a further two bids worth just under £50 million were also successful.
Which areas received awards?
Looking at both rounds combined, 834 bids were submitted, of which 216 were successful.
156 awards were made to local authorities in England, with a value of £3.0 billion, 78% of all funding awarded. Awards made to Scotland, Wales and Northern Ireland across both rounds have a combined value of £798 million.
As shown in the chart below, the North West region of England had the highest number of successful bids across both rounds. It received 27 awards with a combined valued of £586 million, 16% of all funding awarded.
Northern Ireland has received the lowest level of funding, though had the third highest number of successful bids. The average value of a successful bid in Northern Ireland was £5.7 million, compared to £17.5 million for the UK as a whole.
What area received the most per head?
Looking at funding per head, Wales is the most successful part of the UK, with funding of £106 per head across both rounds. Despite being awarded the most funding, the North West received £79 per head.
As shown in the chart below, London received the lowest level of funding per head in both rounds, at £7 per head in the first round and £17 per head in the second round.
What was awarded by priority category?
Across both rounds, 121 of 216 awards were made to priority 1 areas. These awards had a combined value of £2.2 billion, 59% of all funding awarded. The North West and Wales had the highest number of successful category 1 bids, with 20 each, while London and the South West had the lowest number of successful category 1 bids, with five each.
Has there been any criticism of the Fund?
Conservative Mayor of the West Midlands, Andy Street, has criticised the bidding process and the “centralised system” of allocating funding, arguing the process should be “devolved for local decision makers to decide on what’s best for their areas.”
Similarly, Lisa Nandy, Shadow Secretary of State for Levelling Up, Housing and Communities has criticised the bidding process and the “Hunger Games-style beauty contest for levelling up funds.”
The government has confirmed there will be a third round of the Levelling Up Fund, although no further details on when this will open have been published.
- House of Commons Library: Local Growth Funds, January 2023
- House of Commons Library: Levelling up: What are the Government’s proposals? February 2022
About the author: Matthew Ward is a researcher at the House of Commons Library, specialising in economic policy and statistics.
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