Pagabo’s director of national delivery Karen Carter explores the reasons why projects with government funding have not yet made progress and how these projects can still succeed
While headlines have revealed the small amount of allocated Levelling Up funding that has been spent to date, the Conservative Party has pledged a further £20m for 30 towns over the next 10 years to add to its long-term plan for levelling up.
At a time when many local councils are struggling financially – with some issuing Section 114 notices, and 18 given permission by the government to sell-off assets and delay projects to release cash ahead of the general election – it may come as a surprise that projects with government funding have not yet made progress.
A report published by the Public Accounts Committee has revealed that despite £10.47bn in Levelling Up funding coming from central government, so far only £3.7bn has been given to local authorities. Given the need for allocated funding to be spent between 2020-21 and 2025-26, there has naturally been criticism of the situation. Moreover, as of September 2023, local authorities have only managed to spend £1.24bn.
In reference to the original plan, almost none of the 71 projects that were successful in the first round of funding are on track – despite being due to be complete in March.
Turbulent economic conditions have put increased pressure on public sector projects
While this may paint a fairly bleak picture, it has not been smooth sailing since the first round of successful bidders were announced in October 2021. Unusually high inflation has meant project budgets set by bidders when the government funding was applied for are no longer feasible. Add to this the fact that overall council budgets have become tighter, meaning the risk of starting projects without needing to find additional funding is simply too high.
Bridging the financial gap would be a solution, but a tricky task to do. 18 councils have been given permission from government to sell off assets to bridge budget gaps and avoid any further council bankruptcies ahead of the election – expected to release £1.4bn in capital resources across 2024/25.
The fear here is projects being abandoned altogether, or losing funding allocation due to delays, so another – perhaps more realistic – option is to review project viability and adjust the scope where required. To do this, it’s key that the right people are on board.
From procurement professionals through to contractors and consultants, collaboratively engaging on issues and presenting the problems is the only way to find meaningful solutions. With construction projects, it’s the industry experts that can advise what market opportunities could be released to make a budget work hardest.
Early market engagement is vital to a viable Levelling Up project
From our conversations with the public sector organisations that have secured Levelling Up funding, it’s not that the projects are completely unrealistic – but they need to be very carefully reassessed to ensure every stage from remediation through to delivery can be completed.
Giving credit where its due, the Department for Levelling Up, Housing and Communities (DLUHC) has so far been flexible with projects – allowing many to start late and retain their funding – which is a big relief to local authorities. This flexibility stems from an understanding and awareness of the market changes and challenges that are impacting projects.
We encourage those overseeing projects to be proactive in seeking support and to discuss the challenges they are facing. This begins as early as preparation for project funding and preparing for inevitable changes and movements in scope and costs, which requires the right team as early in the process as possible. Engaging with the market is also vital. The majority are happy to engage and want to support, so let them.
The market is ready and willing to aid in the delivery of public sector projects
Framework procurement for funded projects is one of the main ways you can ensure complete compliance and protection of your project and funding, even before the application is made. There are so many pressures on public sector bodies to deliver success, but they don’t have to bear the weight of that alone – the market wants to be responsible and is best placed to help.
There are multiple compliant procurement solutions covering project analysis support, cost modelling, project recovery, along with contractor and developer engagement options to fully analyse the best way forward for a project. Various tools also offer secondary analyses of social value, stakeholder engagement and return on investment.
Ultimately, it’s not too late for Levelling Up funded projects and it’s definitely not time to panic. The same goes for the 30 towns promised an injection of funding to support their plans for the future. It’s time for open, honest and optimistic conversations about how to mitigate the impact of current challenges and create impactful, long-lasting change for communities.
