‘Town against town’: how cash-strapped councils have had to spend millions to bid for levelling up funding

Cash-strapped councils in England have spent at least £27 million producing bids for levelling up funding in recent years, with many not being awarded a penny from the government, NationalWorld can reveal.

Local and regional leaders have hit out at the process of competitive bidding for funds, which has been used to distribute cash to councils for special projects as part of the levelling up agenda, describing it as “a lottery” which “pitches town against town” and represents “poor value for money”.

Dozens of councils have spent money and time producing bids for funding which have resulted in no payout, despite local authority budgets being under increasing pressure, with many smaller councils disadvantaged by a system which requires a large input of resources with no promise of a return from government.

Figures obtained by NationalWorld show councils have spent at least £26.9 million on bids, with the vast majority getting raked in by external consultants. However the true cost is likely to much higher, as this does not including the full cost of time spent by council staff working on the highly-complex and time-consuming bids.

Some senior figures in local government have raised concerns about the criteria on which winning bids have been selected, while others have reported a lack of feedback on why their bids were unsuccessful prior to producing further bids.

Consultants and private firms hired by local authorities to help produce bids for levelling up funding have had “a field day”, according to one local government source, with some councils spending hundreds of thousands of pounds on individual bids which proved to be unsuccessful.

More than £5 million on unsuccessful bids

Since 2019, the Department for Levelling Up, Housing and Communities (DLUHC) has run a number of competitive bidding processes, with councils producing proposals for funding based on specific criteria to receive money from central government.

Based on data obtained by NationalWorld under the Freedom of Information Act (FOI) from 245 upper and lower-tier local authorities in England, we can reveal for the first time the vast amount of resources councils have had to deploy to bid for levelling up money, in some instances resulting in no return whatsoever.

The main four funding pots administered by DLUHC which have distributed cash to councils are the Community Renewal Fund (CRF), the Future High Streets Fund (FHSF), round one of the Levelling Up Fund (LUF) and the Town Deals. A small number of councils which responded to NationalWorld’s FOI requests also included the amount they have spent so far on producing bids for round two of the LUF, the winners of which are due to be announced imminently.

Councils have spent £26.9 million on bids, the vast majority of which was spent on external consultants, with most councils unable to provide an estimate for the internal costs of producing bids, such as time spent by local authority staff.

Of this total, around £13 million was spent on bids funded entirely from council budgets, with the remaining bids benefitting from at least some central government funding. Areas deemed to be of the highest priority were provided with relatively large sums to put toward the production of bids, although many councils had to spend beyond this amount externally, and the funds did not cover internal resources.

In total, councils have spent £5.4m producing bids for funding which were ultimately unsuccessful. In addition to this, dozens of councils produced bids which likely involved extensive internal resources, but were unable to provide a figure for the cost of producing them, while 88 out of the 333 councils approached did not respond, meaning the true cost overall to councils is significantly higher.

‘Town against town’

Regional leaders and local politicians have previously criticised aspects of the competitive funding process, suggesting that it is inefficient and goes against the principles of devolution, concentrating decision–making power over which parts of the country receive more funding in the hands of officials in Whitehall.

Experts have also raised concerns that some councils are put off even applying for funds in the first place because they cannot risk what little resources they have without a guaranteed return, or because they do not have the internal resources, such as specialist staff, required to produce effective bids.

Rossendale, in the North West, is among the highest spending local authorities and has not been awarded any funding from the pots that have been announced so far. The council has spent more than £600,000 bidding for two funds, including round two of the Levelling Up Fund, the winners of which are yet to be announced. The authority spent £400,000 on preparing a bid for the Future High Streets fund. This was more than any other council. Rossendale’s Future High Street’s bid was unsuccessful.

Rossendale has received a total of £275,000 from central government toward producing the bids, with £125,000 allocated to round two of the Levelling Up Fund. However, the council has still had to spend large amounts from its own budget on external contractors, as well as using internal resources.

Alyson Barnes, leader of Rossendale Council and lead member for economic development, told NationalWorld the council is “disappointed that the majority of Government funding to improve town centres is subject to a competitive bidding process”.

She said the process amounts to “pitching town against town, when what we really need is improved core funding from the government to spend locally on making our town centres better for business”. She added: “We know locally what our priorities are and have produced robust plans to improve each of our town centres’.

There were 75 councils which spent money from their own budget on producing at least one bid and received no support from central government, but got nothing in return. These include Shropshire, which spent £107,700 on an LUF bid, and Wyre, which spent £101,500 in total on bids for the FHSF and LUF.

Councils are ‘under huge pressures’

Newcastle-Under-Lyme Council reported spending more on producing bids than any other council, at more than £1 million, with the majority spent on the Town Deals. Cornwall Council was the second highest spender and has been awarded the most funding of any local authority in England so far from the four funds analysed. The council spent more than £985,000, including internal officer time, and saw a return of just over £100 million, with the majority of this coming from four Town Deals.

After Cornwall, the highest spending authorities on the four funding pots already announced were Calderdale, Dudley and Rotherham. Between them, these councils spent more than £2 million on producing bids, but were awarded over £185 million. These councils were successful in almost every case where they applied for funding, although Dudley did miss out on the LUF, despite being a priority area and receiving £125,000 from central government to produce a bid.

Andrew Burns, associate director at the Chartered Institute of Public Finance and Accountancy (CIPFA), told NationalWorld that competitive bidding is “not the best way to fund local authorities”.

He said: “Councils are under huge pressures at the moment, while only the biggest and most well-off can afford to spend time and money on putting together quality bids, which is deeply unfair. This also diverts precious resources away from other work such as tackling inflation, adult social care reforms and ensuring services are stable and high quality. Competitive bidding represents poor value for money and unfortunately often results in those that most need the funding getting the least.”

CIPFA has called for the government to move away from competitive funding pots and instead switch to “stable, long-term fair funding that lets councils plan their future spending effectively”

A DLUHC spokesperson said: “Our £4.8 billion Levelling Up Fund is transforming areas and restoring local pride in communities across the UK. It is only right we have a rigorous application process in place to ensure taxpayers’ money is spent wisely. Unsuccessful bidders are also provided feedback and will be able to bid again.”

To read more in this investigation on levelling up funding click here.