Three simple and proactive steps local authorities can take to make use of their Levelling Up funding to support local communities

The recent Government announcement on levelling up has revealed which local authorities have been successful in securing funding that could be crucial to the future of their areas. The Levelling Up Fund (LUF) Round 2 submissions are intended to be a pillar of the Government’s flagship levelling up policy, rebalancing the economy and supporting the growth and regeneration of communities across the UK.

A total of £4.8bn has been promised to support town centre and high street regeneration, local transport projects, and cultural and heritage assets.

What is critical for the local authorities that have been successful is to move quickly and decisively. The deadline for spending the money is March 2025 – a challenging deadline to ensure the money can be wisely allocated to achieve maximum impact for people living in those areas.

The Challenges

The bids were submitted five months ago, and the delay has meant many of the projects may have not yet progressed.

The challenge will therefore be to move projects quickly through the design phases, complete any land acquisition, secure planning approvals, appoint contractors and move into delivery. This process will be made more challenging by:

• Inflation - Whilst many applicants will have made allowances for cost inflation, there is a risk that further movement in the market over the last six months has impacted upon delivery costs. This will be a particular concern for councils who would be expected to fund any cost overruns from already-stretched budgets.
• Stakeholder priorities – Projects are often reliant upon the support of other public or private sector partners. This could be in terms of matched funding, occupancy of completed developments or co-investment in wider regeneration programmes. Given the time since these discussions were initially held, it is possible that some stakeholders’ priorities may have changed.
• Political support and local authority priorities – The ever-rapidly moving political and policy landscape has changed significantly over the last six months. Local Government resources, in particular people and revenue funding, has shifted to other areas such as tackling the cost of living crisis.
• Mobilising the team and procurement – There will be a need to either re-mobilise the team and/or procure professional advisors and contractors quickly. There is also a risk that a LUF Round 2 announcement will create a wave of demand for services and construction work which may both further drive-up prices and leave Local Authorities struggling to attract market interest for their projects.

What steps can Local Government take?

There are three proactive steps that local authorities leaders can take to set projects up for success, utilise all the funding that has been allocated and deliver the outcomes that will support their levelling up ambitions:

1. Review project deliverability – the temptation will be to quickly dust down designs from last year and move them forward quickly. A short, sharp deliverability review should be undertaken to look at the project costs, programme and risks to assess what impact the delay has had on the deliverability of the project. Re-engaging with stakeholders, including politicians, to seek confirmation of their support and commitment will be vital. The review process will allow project boards to make informed decisions about the scope and future of the project.

2. Confirm project governance and delivery approach – A frequent cause of project delays is a lack of clarity around project roles and responsibilities, how decisions will be made and the role and influence of stakeholders. A review of the project delivery structure will confirm the arrangements set out in the LUF application are still appropriate.

3. Procure smartly – Consider the procurement method and strategy for projects so that they are as appealing to the market as possible. Utilising established frameworks that contain trusted suppliers minimises cost and improves attractiveness to the market as well as reducing the timescale for appointment. Consider packaging up projects so that there is a scale or pipeline of opportunity that will attract suppliers. Finally, the wider outcomes and value of levelling up would not be achieved without tangible benefits going to local SMEs. Suppliers who can commit and demonstrate evidence of using a local SME supply chain will be important.

The Government and other funders understand that projects change for a range of understandable reasons. The successful projects are those that quickly understand and evaluate the impact of any changes, put in place measures that demonstrate the business case is still viable and communicate these back using the established reporting and change control procedures.

Arcadis supported 40 Levelling Up Fund applications in Rounds 1 and 2. Over the last three years, we have helped local authorities secure more than £500m from Department of Levelling Up, Housing and Communities funding programmes to support regeneration programmes and are now working with many of them to manage and deliver over £1bn of projects as a result.