First round of Levelling Up Fund spending has been extended to March 2025
The first round of the £4.8bn Levelling Up Fund has been extended to March 2025, the Public Accounts Committee (PAC) heard yesterday.
Cash from the pot was initially due to be spent by 31 March this year, but Sarah Healey, permanent secretary at the Department for Levelling Up, Housing and Communities (DLUHC) said the speed of delivering projects had “not matched the expectations of the department”.
Alongside the extension of round one of the Levelling Up Fund, round two has been extended to March 2026, having originally been scheduled to be spent by March 2025.
Healey said the department had now spent a third of the £10.6bn allocated across three funding streams, as a further £1.5bn in funding has been allocated since March 2023.
The £1.5 billion allocated consists of £274 million across the Levelling Up Fund, £566 million across the Shared Prosperity Fund and £803 million across the Towns Fund.
Prior to March 2023, the department had spent £2bn across the three levelling up funding pots, meaning a total of £3.5bn has been allocated to local authorities.
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The three funding streams are the Towns Fund, a fund for the regeneration of town centres and high streets, the Levelling Up Fund, dedicated to local infrastructure projects, and the UK Shared Prosperity Fund, allocated to “reduce inequalities between communities”.
Between them, these funds are worth up to £10.6 billion and aim to allocate £9.5 billion to local places to be spent by 31 March 2026.
The PAC heard that delays to projects had been caused by construction inflation, which Healey noted had been at 10% at one stage, as well as supply chain delays, site condition issues and issues with utility provision not being able to be secured quickly enough.
Healey stated that these factors “changed assumptions local authorities had to make about what they could do with money in front of them”.
She added that “we look to offer some flexibility on deadlines” and that “we do a lot of things to help facilitate faster delivery”.
On the rescoping of projects, Healey said: “Once a project has been allocated funding on a reasonable basis we would want to continue to try and deliver that project rather than pull funding except in extremis”.
Jess Blakely, director for major levelling up programmes and Will Garton, DLUHC’s director general for levelling up highlighted that the priority would be on rescoping, which involves area teams working closely with local authorities to facilitate project delivery and ensure it provides value for money.
Garton said: “If funds have already been committed it would be poor value for money to then stop the whole thing”.
In terms of allocation of funding, Healey said that while £186m of the Towns Fund was spent in the first year, three times that was spent in 2023, stating that spend tends to go up towards the end of a funding programme.
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