‘Levelling up’ fund rules allow ministers to hand billions to favoured areas, MPs warn

Criteria for success decided only after Michael Gove’s team knew which bidders ‘would win and who would not’

Michael Gove’s department is accused of ‘retrofitting the criteria for success’ (EPA)

Ministers are accused today of drawing up rules that allow billions of pounds of “levelling up” cash to be handed to their favoured areas.

A stinging report revealed that the “principles” for successful awards from a flagship £4.8bn fund were decided only after the government knew which of 170 bidders “would win and who would not”.

The process suggested Michael Gove’s department was “retrofitting the criteria for success”, the chair of the Commons public accounts committee alleged.

The controversy follows the outcry over the “naked pork-barrel politics” that saw almost all of £1bn in Towns fund grants going to Tory-held constituencies last year.

Now a similar accusation has been made over the first £1.7bn of allocations from the £4.8bn Levelling Up fund, which is also administered by the Department for Levelling Up, Housing and Communities.

“The department has past form with this,” the report by the committee states, adding: “We remain concerned over the timing of ministerial input for final awards.”

Meg Hillier, the chair of the committee, said: “It’s hard to avoid the appearance that the government is just gambling taxpayers’ money on policies and programmes that are little more than a slogan, retrofitting the criteria for success.”

The report also warns that:

• Only around £100m of an expected £600m of funding had been awarded with just four weeks to go before the end of the 2021-22 financial year

• “Realistic bids” were rejected in favour of projects that claimed to be “shovel-ready” but have “since been beset with delays”

• The government lacks “a strong understanding of what works” – despite “billions spent on local growth over many decades”

• Local councils are unable to plan properly because of the “unpredictability of the ‘alphabet soup’ of funding pots to support regeneration”

Ms Hillier added: “The nation is being squeezed harder than it has for decades; there is no more to throw away like this. The government must learn again to account to taxpayers for its use of their money.”

And Kevin Bentley, chair of the Local Government Association’s People and Places Board, said: “Turning levelling up from a political slogan into a reality will only be achieved if councils have the powers and funding they need.”

But a spokesperson for Mr Gove’s department said: “The assessment process was transparent, robust and fair, and the criteria included the need for projects to be deliverable and to fuel regeneration and growth to level up areas most in need.”

The much-hyped levelling up strategy has been undermined by Rishi Sunak’s refusal to commit any extra spending, and the absence of new policies in a white paper.

Mr Gove, the levelling up secretary, is also quietly taking on the power to abandon the key tests of whether the strategy is working, by arguing that they are “no longer appropriate”.