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Levelling Up Fund first round: reaching left behind places?

Levelling Up Fund first round: reaching left behind places?

Lucie Bailey & Selina Pazos 29 Oct 2021
Amongst the eagerly awaited announcements from Wednesday’s Autumn Budget and Spending Review were details of the successful bidders from the first round of Government’s £4.8 billion Levelling Up Fund, following launch of the fund’s bidding prospectus earlier this year (for a round-up of key announcements from the Autumn Budget and Spending Review, see Ciaran Gunne-Jones’ blog).
First coined as a key manifesto pledge during the 2019 general election, ‘levelling up’ has developed to become the Government’s flagship policy agenda, encompassing everything from infrastructure and housing to regeneration and net zero. The key focus is on increasing investment and improving life chances for communities in every part of the UK, but particularly in northern and central areas.
In this context, the Levelling Up Fund provides a tangible and timely opportunity for local areas to help realise Government’s ambition to level up ‘left behind’ regions of the UK. It will invest in local infrastructure that has a visible impact on people and their communities, with the first round focused on local transport projects, town centre regeneration, and culture and heritage.
Open to all parts of the UK, funding will be delivered through local authorities in England, Scotland and Wales. Government considers that the most impactful infrastructure projects are often smaller in scale and geography, so the fund will focus investment in projects that require up to £20m of funding; larger high value transport projects will be funded only in exceptional circumstances.
Local authorities were required to submit competitive bids for round one by 18 June, and a total of 305 bids were received, of which 293 passed the ‘gateway’ criteria. To assist with selection and prioritisation, each local authority in the country was placed into one of three priority groups – as shown on the map below – with preference given to bids from higher priority areas based on their need for economic recovery and growth, improved transport connectivity and regeneration.
Figure 1: Levelling Up Fund Priority Index
 
Source: Lichfields
In this blog, we summarise some initial analysis of the successful first round bids, focusing on their spatial distribution, investment ‘theme’ and alignment with Levelling Up Fund priority areas previously assigned.
About £1.7 billion of first round funding was announced on Wednesday for 105 projects across all regions and devolved administrations, just over a third of the total value of the Levelling Up Fund. These range in scale from a music education centre at Nine Elms in Wandsworth (£800,000) to a £49.6m new junction on the A50 in Derbyshire to help unlock development at the South Derby Growth Zone and Infinity Garden Village. The announcement was accompanied by further detail on the assessment and decision-making process followed by the Department for Levelling Up, Housing and Communities.

Geography of investment

The North West has been awarded the largest number of successful projects (12) as well as the greatest value of investment (£232.5m cumulatively). The East Midlands, West Midlands, Yorkshire and the Humber also received a large share of both projects and investment value. By contrast, the North East, East of England, South West and London were all awarded a much smaller share of funding (see Figure 2).
Figure 2: Levelling Up Fund First Round Projects by Region

Source: Lichfields analysis, based on data from the Department for Levelling Up, Housing and Communities 

First round funding was distributed across the regions and devolved administrations as follows:
  • North West (14%)
  • East Midlands (12%)
  • West Midlands (12%)
  • Yorkshire and the Humber (11%)
  • Scotland (10%)
  • South East (9%)
  • South West (8%)
  • Wales (7%)
  • North East (6%)
  • East of England (5%)
  • London (4%)
  • Northern Ireland (3%)

Investment theme

Whilst the full details of specific bids have yet to be released, initial analysis indicates that the majority of successful first round projects relate to the ‘regeneration and town centre investment’ policy theme, equivalent to 57% of projects and 53% of total investment value awarded. Project examples in this category include city centre pedestrianisation schemes, refurbishment of cultural venues such as theatres and art galleries, and public realm improvements.
‘Transport investment’ accounts for a further 26% of projects and 30% of the total £1.7 billion first round value. Projects typically comprise road improvement schemes, along with interventions designed to promote more sustainable travel (such as cycling and walking). Just 17% of projects and funding value directly relate to ‘culture and heritage investment’.

Investment priority areas

Going back to Government’s ‘priority index’ for the Levelling Up Fund, it is unsurprising to see that the majority of successful first round projects fall within priority 1 local authority areas, both in terms of number of projects (63/60%) and investment value (£1.2 billion) (see Figure 3 below). However, lower priority areas have not been discouraged by their comparatively lower ranking, with over £423 million also being invested in priority 2 and 3 areas across the country.
Figure 3: Levelling Up Fund First Round Projects by Priority Area

Source: Lichfields analysis, based on data from the Department for Levelling Up, Housing and CommunitiesNote: 15 of the 105 successful projects fall within areas that were not assigned a Levelling Up Fund priority category, either because they relate to county-wide schemes or projects within Northern Ireland

 

Initial reflections

Our analysis suggests that so far, Levelling Up Fund investment appears to be weighted towards northern parts of the country and the Midlands, but with some notable exceptions in the form of the North East (which has been awarded a much smaller share than its neighbouring regions) and the South East (which secured almost as many successful first round projects as the North West).
The key focus on town centre regeneration, having attracted most funding so far, is likely to be welcomed right across the country as a timely response to the acute economic challenges that many of our high streets and urban centres have faced in the wake of Covid-19, and arguably offers most scope to make a ‘visible impact’ in local areas (a key Government criteria).
It is also interesting to note that of the 123 local authority areas classified by Government as ‘priority 1’ – i.e. deemed in most need of investment through this fund - less than half (50) received any funding through the first round. And just 15% of ‘priority 2’ areas received any funding. Demand is therefore likely to be high for future funding rounds, as will be the political incentive to ensure funding is appropriately distributed to those parts of the country considered by Government itself to be most in need of levelling up. 
 

Header image: View of Bishop Auckland Food Festival from Auckland Tower. Photograph by House of Hues, courtesy of The Auckland Project