A central theme of the 2019 general election and flagship programme of the Johnson premiership, the ‘Levelling Up’ agenda was proposed as a measure to redress social and economic inequalities across the UK through strategic and measured funding. To benefit from the agenda, local authorities would be encouraged to submit bids to receive pots of money for public projects, including (but not limited to):
- Improved and new transportation links, including highways, smaller roads, cycling and walking routes
- Development of more affordable housing and regeneration of existing properties, particularly for housing associations and accommodation for the retired and elderly
- Improvements to culturally significant sites, such as listed buildings, art galleries and historical sites
- Provision of adult up-skilling programmes to provide high-skilled candidates
- Retrofit and decarbonisation works to improve energy efficiency in line with the government’s Net Zero by 2050 target.
Furthermore, the Levelling Up agenda purported to introduce a plethora of opportunities in the public sector procurement. Improvements to existing infrastructure translated to a greater need for services from private companies in order to deliver on commitments leading to a ‘trickle-down’ of public funds which would further benefit deprived and disadvantaged areas.
Nearly four years on from the general election and a year after the publication of a government white paper, it is appropriate to assess the changes and effects Levelling Up has made on purchasing authorities and overall procurement spend. Determining whether substantial changes have been made to practices will be crucial in adapting to future directions of public procurement.
With 14 years’ experience and over 7,000 public sector tenders completed on behalf of clients, Executive Compass are well placed to provide analysis of the Levelling Up agenda and its initiatives.
Providing an overview
The phrase ‘levelling up’ has a long history within UK politics – however, it first took its current guise following the release of a central government white paper in 2017 titled ‘Unlocking Talent, Filling Potential.’ It was here where the phrase was initially deployed – ‘we have a national mission to level up opportunity across this country and build a fairer society.’
In his first speech as Prime Minister, Boris Johnson defined levelling up as ‘closing the opportunity gap’ between discrete regions of the UK. Less than six months later, it became a crucial platform of the Conservative Party manifesto in the general election, with levelling up mentioned as part of measures to close skills gaps, create a national skills fund and launch major infrastructure and transport projects.
Following the Conservatives’ victory in the general election, the official Levelling Up Fund (LUF) was established in the winter of 2020, as part of the Treasury’s annual spending review. To provide a framework for prospective applicants, the LUF organised ‘investment themes’ for opportunities, consisting of:
- Transport investments: including public transport, active travel, repairs to bridges and roads, major structural maintenance and accessibility improvements, with a target to minimise carbon emissions, improve air quality, reduce congestion and support economic growth.
- Regeneration and town centre investment: supplementing the Town Deals Fund, which provides qualifying towns with up to £25 million for regeneration and infrastructure. Funding is directed towards upgrading dated infrastructure, developing brownfield sites and improving community spaces in towns and city centres.
- Cultural investment: involving the maintenance, regeneration and repurposing of museums, visitor attractions and heritage assets, thereby supporting local and national arts, cultural spaces and areas with a strong visitor economy.
Green Paper
As those experienced within the public procurement sector will undoubtedly know, the incoming Procurement Bill is set to streamline and modernise procurement regulations. In December 2021, the central government released the Green Paper, a response to consultation from stakeholders across the procurement landscape. The Green Paper briefly mentioned Levelling Up as an opportunity to further implement social value within procurement by ‘encouraging contracting authorities to give more consideration to social value when procuring public contracts.’
Levelling Up Prospectus
In March 2021, the Department of Levelling Up, Housing and Communities (DLUHC) released a prospectus which outlines advice and guidance for prospective bidding authorities, including allocating a minimum of 9% of funding for Scotland, 5% for Wales and 3% for Northern Ireland. Further guidance consisted of the following:
- How funding will be targeted towards areas most in need across the UK, measured by an Index of Priority Places which considers the need for economic growth and recovery, improved transport connectivity and regeneration.
- How the LUF Delivery Model will be managed, including relevant central government authorities such as HM Treasury, DLUHC and the Department for Transport.
- How local authorities should construct proposals by comprehensively considering community needs, the size of the bid and potential joint submissions with other local authorities.
- How bids will ultimately be assessed based on four essential criteria – characteristics of local areas, overall deliverability, strategic alignment with local and LUF priorities and economic value to the area.
Notable initiatives
A total of £4.8 billion was allocated across three rounds of the LUF, divided in the following manner:
| Round 1 | £1.7 billion allocated to 105 projects across the UK |
| Round 2 | £2.1 billion allocated to 111 projects across the UK |
| Round 3 | £1 billion allocated, with the bidding window for projects currently expected to open in late April or May |
Local authorities were permitted to submit one bid for every MP constituency within their administrative boundaries, for a maximum of £20 million per project; the only exceptions were for cross-local authority bids (£20 million per authority) and ‘large transport schemes’ (up to £50 million). To qualify for consideration, authorities were required to provide a minimum of 10% funding to match contributions from the LUF.
Over the course of Round 1 and Round 2, notable projects and initiatives which have received funding from the LUF include:
| Location and Region | Project title | Description | Funding amount |
| Barnsley, Yorkshire and The Humber | Town centre | New outdoor activity park, revamped youth centre, new music facility for young people and further development of civic arts centre | £10,243,422 |
| Gwynedd, Wales | Regeneration | Upgrade to walking and cycling routes for National Slate Museum and Neuadd Ogwen arts centre | £18,830,189 |
| Inverclyde, Scotland | Greenock | Overhaul of A78 dual carriageway to reconnect and transform Greenock town centre | £19,390,000 |
| Copeland, North West | Industrial Solutions Hub | Funding to drive industrial development | £20,000,000 |
| Derbyshire, East Midlands | South Derby Growth Zone and Infinity Garden Village | Developing a new junction on the A50 to provide connections to East Midlands Freeport, and the creation of a new link road from the junction into the Infinity Garden Village and the Rolls Royce Factory | £49,597,972 |
| Newcastle-upon-Tyne, North East | Grainger Market, Old Eldon Square and Blacket Street (Regeneration) | Securing the future of two of the city’s most iconic and treasured cultural assets while improving the environment and connectivity to the city centre | £20,000,000 |
| Thanet, South East | Ramsgate Future | Supporting economic growth through new opportunities in The Royal Harbour and creating a new Green Port | £19,840,000 |
| Wolverhampton, West Midlands | Wolverhampton City Learning Quarter | Building a high-quality learning space for A-level and higher education classes, serving 45,000 students and 7,500 apprenticeships | £20,000,000 |
As evidenced, the LUF was successful in identifying and awarding funding across a wide range of geographic and thematic bids. Overall, £670 million was award to improving transport, £821 million to regeneration/town centre investments and nearly £600 million to the restoration and maintenance of cultural heritage sites and assets.
Challenges to distribution
Geographic inequality
Although the majority of funding has been distributed away from Greater London and the South East in accordance with Levelling Up objectives, there has still been a marked asymmetry in the geographic distribution of awarded LUF projects.
As evidenced above, more deprived areas of the country – such as the North East and Northern Ireland, the two poorest regions of the UK by GDP and median annual salary – received less funding than Greater London and the South East, the two most affluent regions in both categories. However, analysing total funding per capita in each region generates different insight:
Overall, LUF funding favours more deprived regions of the UK, with Wales (£104) coming on top followed by the North West (£80) and North East (£78). London and the South East receive the least amount of funding per head, at £24 and £39 respectively. However, a closer scrutiny of funds demonstrates how little the highly touted £4.8 billion fund reaches when applied to the entire population.
Slow release of funds
Despite the ambitious plans and arduous bidding process, gaps, challenges and delays have emerged in the distribution of Levelling Up funding. For example, a 2022 report from Northumbria University academics identified that only 3% of the £4.8 billion in total funding had been released to the successful bidders following Round 1 funding. On 28 March, Shadow Secretary of State for DLUHC Lisa Nandy claimed that just 8% of total funding had been spent, despite over 80% of funds being formally allocated and all successful Round 2 bidders being notified. According to a clause in the LUF, all funding must be spent by 31 March 2025, meaning the clock is winding down.
Oversubscribed or under resourced?
The central government has yet to publish any unsuccessful bids for Round 1 or 2 – however, the number of submitted bids can be easily searchable. Across the UK, only 21% of submitted projects received funding – 111 of 525 projects in total. From this, the North of England only received 38% of requested funding from Round 1 – £520 million from £1.36 billion.
In another critical blow to the project, funding to support the Levelling Up agenda is expected to be worth £560 million less than the original budget due to the effects of inflation – £340 million lost from the LUF and £220 million from the Shared Prosperity Fund, an initiative meant to support local investment by March 2025.
Overall impact
Although LUF funding and the Levelling Up agenda have yet to be completed, the overall impact on public procurement has been negligible. This is due to the size of the agenda, which is insufficient to meet neither the funding needs of all local authorities nor per capita spend needed to make a tangible impact. With £379 billion spent on public procurement during the 2021–22 financial year, a 7% increase from the previous year, the LUF represents just 1.2% of annual procurement spend. Furthermore, as illustrated in the previous section, total spend per capita over Rounds 1 and 2 translates to between £24 (Greater London) and £104 (Wales) per head – hardly enough to make the ‘transformative change’ touted by the central government.
However, budget cuts to sub-central authorities in the past decade are also to blame for the unrealistic expectation of Levelling Up’s impact on public procurement and subsequent ‘trickle-down’ opportunities for private sector businesses. For example, annual government funding to councils and local authorities has fallen from £41 billion to £26 billion over the last decade.
While the north of England experienced an average of £346 in funding cuts per capita in the decade preceding 2018–19, Levelling Up funding translates to £66 per head in Yorkshire & The Humber, £80 in the North West and £78 in the North East. Lastly, with only 8% of total LUF funding spent to date, Labour estimates total funding would not be delivered until 2048, evidencing a distinct lack of immediate impact to deprived areas in addition to a shortage of procurement opportunities promised by the central government as part of various projects.
Future directions
As the third and final round of LUF funding is expected to open within the month, prospective bidders will be keen to know if future opportunities will be generated as part of the central government’s Levelling Up agenda. With roughly £1 billion remaining in funding, this translates to between 50–70 projects selected for funding based on current estimates. However, due to the track record in releasing funding and overall value of contracts, prospective suppliers should not rely on Levelling Up projects to deliver transformative change or a steady stream of revenue to support business functions.
