The delivery of the UK’s Government levelling up strategy has serious failings says a cross-party committee of MPs who highlight evidence that the replacement to EU structuring funding has left Wales and other nations significantly worse off.
A report by the Levelling Up, Housing and Communities Select Committee, says the UK Government needs to communicate more effectively with the devolved administrations over its levelling up funding programmes, including the UK Shared Prosperity Fund (UKSPF) and the Levelling Up Fund.
It also identifies weaknesses in the funding, delivery, allocation and funding methods, as well the competitive bidding processes involved in levelling up funds. The strategy is being driven by the Department for Levelling Up, Housing and Communities (DLUHC) under cabinet minister Michael Gove, and is aimed at reducing geographic, economic, social and health inequalities - many areas that though are devolved.
The select committee concludes:“The method of delivering funding, the allocation process, and the extent to which different funds have been compatible with the needs of communities, in the short and long-term, is creating several obstacles for the policy’s success.”
In its manifesto pledge in 2019 the UK Government committed to replace and “at a minimum match the size” former EU funding in each nation of the UK. Last year the Welsh Government said the replacement to EU regional and social funding support will leave Wales £1.1bn worse off from 2020-25 than if the UK had remained in the EU. It calculated that EU funding would have been worth £1.4bn to Wales from January 2021 to March 2025.
The Cardiff Bay administration said the UK Government has so far only committed £585m in UKSPF to Wales up to 2025. This it said includes £101m which is being top sliced to support the UK Government’s adult numeracy programme Multiply, which it has criticised for cutting across existing schemes in Wales where education and adult learning is a devolved matter. With funding from the pilot to the UKSPF, the Community Renewal Fund, it identified a £772m shortfall - although since the analysis more projects in Wales have secured funding from the Levelling Up Fund.
It arrived at its £1.1bn deficit figure by also including a claimed £243m shortfall in EU farming funding. The EU allowed for funding to be carried over to the next seven year funding period. The UK Government said that parity will be achieved over the long-term as EU funding is tapered off.
While the committee failed to arrive at a definitive position on the shortfall disagreement, citing the challenge of the UK and devolved government providing different data, it says: “All the evidence we have received has said that the UKSPF is not a sufficient replacement. This view indicates there has been a serious deficit of collaboration and communication between the DLUHC and recipients on this issue, resulting in the lack of a shared understanding of the methodology the government has used to calculate UKSPF.”
It adds: "There is an overwhelming sense that the DLUHC is unwilling to collaborate and adhere to devolved agreements in which the governments of Northern Ireland, Scotland and Wales operate.”
With UKSPF being allocated for three years compared to seven for the EU structural funding, the committee’s report said the shorter time frame “has caused difficulties for many organisations who require a long-term in which to achieve the interventions for which they are seeking funding.”
It adds: “If the government does not find a way to provide funding over a longer period many organisations will find their programmes to be unviable, and a lot of important work will go undone. Therefore, we call on the Government to commit to a long-term funding programme.
A Welsh Government spokesman said: “We welcome this report and share the committee’s serious concerns. The levelling up process has left Wales with less say over less money within a chaotic system that is failing to support the jobs, projects and services in the places that need them. The UK approach has also rolled back devolution by centralising all decisions in Whitehall.
“Wales is £1.1bn worse off as a result of the UK Government’s failure to meet its pledge to replace previous EU funds in full. The Welsh Government previously used these funds to help tackle unemployment, deliver apprenticeships, invest in new industries and build new schools among other investments.
"Universities were also supported in a system that provided certainty for those pioneering the creation of skilled, quality employment. Under the UK levelling up regime, more than 1,000 high quality jobs in research and innovation are being lost in Wales as universities cannot access these funds.”
The select committee reports also highlights as an area of “serious concern’ the dearth of data available with the DLUCHC conceding it doesn’t have “sufficient data’ in relation to Whitehall department expenditure on the full range of levelling up funds or combined authority or expenditure.
The committee, which is made up of six Tory MPs and five Labour, say: “We cannot understand how the DLUHC can make significant policy decisions in relation to priority areas, funding allocations or the measurement of the success or failure of the levelling up policy in achieving its objectives, if there is not adequate data to support these tasks.”
Labour MP and chair of the Levelling Up, Housing and Communities (LUHC) Committee, Clive Betts, said: “There is cross-party consensus in tackling the regional and local inequalities that are holding back communities across the country. But the complexity of the levelling up challenges mean they cannot be remedied by the government’s current approach of one-off short-term initiatives.
“The government should heed the lessons of projects such as German reunification which were accompanied by long-term funding and internationally recognised for the benefits delivered in terms of long-term, substantive growth. The levelling up policy requires a long-term and substantive strategy and funding approach, elements this policy currently lacks. Without this shift, Levelling Up risks joining the short-term Government growth initiatives which came before it.
“The DLUHC is primarily responsible for delivering levelling up, but is currently failing to drive forward the policy across government. It’s concerning that DLUHC does not even appear to know which pots of money across government contribute towards levelling up. The lack of strategic oversight from DLUHC of how levelling up is delivered across Whitehall raises doubts about whether the policy can be successfully delivered.”
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