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Capital Projects: Spending Decisions

Volume 727: debated on Thursday 9 February 2023

(Urgent Question): Thank you, Mr Speaker, for granting this urgent question. I have lost count of the number of times that we have had to drag Ministers from this shambolic—[Interruption.] To ask the Secretary of State for Levelling Up, Housing and Communities what is his assessment of the capital projects and spending decisions in his Department.

Thank you, Mr Speaker, I am glad we know what question we are being asked. Levelling up is one of the defining missions of this Government. Whether it is moving 22,000 civil servants outside of London by 2030 and backing overlooked town centres and high streets, or devolving power and money away from Whitehall and Westminster, this Government are delivering for the people of this country. There has been significant focus on the mechanics of government in recent days. Even if the question asked today was not that clear at the outset, it is absolutely the case that processes change and may apply at times in different ways.

We are working within a new delegation approach with the Treasury, which involves Treasury sign-off on capital spend. We will always work closely with the Treasury. We value its focus on value for money; it values and shares our mission to level up the country as a whole, and we will continue to do that. We are making good on our promise to spread opportunity across the country, with £9.6 billion of levelling-up funds announced since 2019, on top of the £7.5 billion commitment to the nine city-based mayoral combined authorities in England. That includes £3.2 billion of funding via the towns and high street funds, £3.8 billion from the levelling-up fund, £2.6 billion from the UK shared prosperity fund and £16.7 million from the community ownership fund.

There has been no change to the budgets of the Department for Levelling Up, Housing and Communities, whether capital or revenue; no change to our policy objectives; no dilution of our ambition; and there are no implications for the Government’s policy agenda. Four years ago, this Government promised the British people a stronger, fairer and more united country. It was a promise embodied in levelling up, and it is a promise we are going to keep.

It appears that nothing is going right in this place today. I have lost count of the number of times I have had to drag Ministers from this shambolic, failing Department to the House to account for their failures—failures to deliver and failures to understand the impact of our money that is being spent. An extraordinary report in the Financial Times today suggests that the Secretary of State for Levelling Up, Housing and Communities has been banned from spending any new money on capital projects without approval from the Treasury. It follows a damning National Audit Office report, which provided evidence that the Department had no idea about the impact of the money that it was spending, and the Chair of the Public Accounts Committee made an assessment that billions of pounds of our money were being wasted, because the Government had engaged in a programme without any understanding of the impact of that programme.

If this report is true, we are in the absurd situation of having a Secretary of State who does not even have the authority to sign off on a park bench. Is this true? If so, what is the Government’s assessment of what that means for the levelling-up agenda, of which a third round of spending has just been announced, and for tackling the housing crisis? Is it true that this decision by the Treasury was prompted by unauthorised spending commitments made by the Secretary of State at the convention of the north to spend money on improving appalling housing standards, after the desperate death of a two-year-old boy in Rochdale? I understand that the Secretary of State is in Rochdale today. How can he possibly tell housing associations to sort themselves out if he cannot sort out his own Department? We deserve to know whether the Chancellor of the Exchequer believes that a Secretary of State who is finally—belatedly—spending money on improving housing standards is a Secretary of State who has gone rogue, because that would be very serious.

The rumours are swirling that there is huge underspend in the Department. We are in the midst of a housing crisis, yet I understand that the affordable housing budget has not been spent and that there are levelling-up funds that have not been spent either, which will now be clawed back by the Treasury. Is that true? Will the Government publish the correspondence between the Departments about this matter? It is our money, and we deserve to know.

I thank the shadow Secretary of State for her questions. There was a significant amount of hyperbole in there and a significant amount of suggestion and inference, but the reality remains, as I confirmed in my initial response to her question, that there has been no change to budgets, capital or revenue. There has been no change to our policy objectives, no dilution of our ambition to level up, and no implications for the Government’s policy agenda. [Interruption.] The shadow Secretary of State does what she does best, which is to heckle from a sedentary position, but I will try to answer her questions. She suggests that there has been a failure to deliver. I would talk to the communities up and down the land that have been given these funds, opportunities and possibilities. We see delivery daily. I see it in my constituency; towns are being transformed through the towns fund, which has been providing funding since 2019.

The shadow Secretary of State asked a question about capital spending; I answered it in my last response. She also asked about the implications for the levelling-up agenda. There are no implications for the levelling-up agenda.

I thank my hon. Friend for answering this urgent question. Capital projects across the country may be slipping because they cannot be delivered immediately. Will he confirm that where there is slippage, the capital funds will still be available, and will not be clawed back by the Treasury, so that we do not lose the benefits of capital projects that everyone wants?

I thank my hon. Friend for his question. My understanding is that where commitments have been made, they absolutely will be adhered to; that will be understood, and they will be provided for. In my constituency, there have been commitments of £25 million under the town deal for both Clay Cross and Staveley; we are still expecting that, and are spending. We will still realise the benefits of those two lots of £25 million, which will be spent transforming communities that were ignored for far too long under the Labour party.

Members need only have attended Tuesday afternoon’s Westminster Hall debate on this subject to realise that the levelling-up agenda is unravelling. There was an astonishing admission of last-minute ministerial interference from the Treasury, particularly in Glasgow, where it is reported that £500,000-worth of employee work hours were put into bids that were unsuccessful due to that last-minute interference.

The Treasury’s decision to rein in the Department for Levelling Up, Housing and Communities is far from being standard practice. So far, we have not received an honest reason why that happened. Have the Government given up all pretence of caring about levelling up, or do they no longer have faith in DLUHC to deliver it? Three of the five most deprived areas in Scotland have not received a penny of levelling-up funding. Is the levelling-up project now funnelling money from the poorest areas to the wealthiest? Given the astonishing admission on Tuesday afternoon in Westminster Hall that Ministers interfered at the last minute to take out any round 2 applications from areas that received money, no matter how little, in round 1, will the Minister apologise to the House, and to the local authorities that put so much time and effort into preparing the bids?

The hon. Gentleman is absolutely incorrect to say that the levelling-up agenda is unravelling. Just last month we announced several billion pounds of additional capital spending on levelling-up projects bid for in round 2. As for caring about levelling up, communities up and down the land are getting the opportunity to transform their area, and to make good on promises that were not delivered under successive Governments for many decades. We in this place should celebrate that, rather than focusing on what is being focused on now. I gently say to him that if in Scotland, as in Derbyshire and elsewhere in the country, a number of areas have not been successful in getting funds that were on offer, are being provided and will be spent, I very much encourage those areas to apply when round 3 of the levelling-up fund opens in the coming months.

As a great lady once reminded us, there is no such thing as public money, only taxpayers’ money. Does my hon. Friend agree that we Conservative Members should never apologise for applying the most stringent checks and balances, so that every penny spent is spent wisely?

My hon. Friend is absolutely right. We are seeking to transform areas, including mine, that were ignored for far too long, but are doing so in a way that works for the Government and for taxpayers, so that their hard-earned money is spent in the right place, at the right time, to the right effect.

I congratulate the Minister on a valiant attempt at deflection. He has said that the budget and the policy had not changed, and they have not; what has changed is that the Treasury no longer trusts the Department to spend the money without Treasury approval. That is the change, isn’t it? Normally, surely this would be a matter for conversation between permanent secretaries, or between the Secretary of State and the Chancellor—“Bring yourselves into line, and sort yourselves out.” That presumably has been done, but now there is the strongest public condemnation from the Treasury of the Department’s ability to spend money properly. How can the Minister ever again admonish a council leader, or hold them to account, for not spending money properly?

I am grateful to the Chair of the Select Committee, my constituency neighbour in South Yorkshire and north Derbyshire, for his comments. We had a similar exchange yesterday on the local government finance settlement. I have already outlined what the change is and I understand the point the hon. Gentleman is making, but I have to reiterate that there has been no change to budget or to policy objectives. We continue to look forward to working with the Treasury, and with all other Government Departments, to achieve the outcomes we all want in this House, whichever Bench we sit on.

Given the social and economic division created by the Government over 13 years, the announcement of levelling up led to a reasonable expectation that money would be directed to the areas of greatest deprivation. Having listened to several debates on the subject this week, I now have doubts that that is the case. Will the Minister confirm that the single criterion for the direction of funds will be based on deprivation? Will he publish the details?

The information about the distribution of levelling-up funds has been published. I have seen, across Yorkshire and north Derbyshire in the coalfields that the hon. Gentleman and I both represent, a significant transformative opportunity through the towns fund and the levelling-up fund, which will make a huge difference to those places that traditionally have been left behind and which this Government, and this Government only, have responded to in our policy agenda.

Colleagues will note that the Minister attempts to obfuscate through refusals to address the fundamental question of whether the approval process has changed. What supposedly drew the ire and frustration of the Secretary of State’s colleagues was a speech in Manchester on 25 January suggesting that further funding would be available for some northern councils. What caused more angst in the Treasury: the fact that money was being spent in a rogue manner, or the fact that it went against the Prime Minister’s long-standing ambition to divert money away from deprived areas back towards places such as Royal Tunbridge Wells?

I am grateful to the hon. Gentleman for Stretford and Urmston for his point. He will know, because he has long experience in local government, that that would be a crude and inaccurate misrepresentation of what the Prime Minister said a number of months ago. The hon. Gentleman’s first point was about obfuscation. There was no obfuscation. I was absolutely clear at the beginning of my response about what has changed and why that is the case.

As other Members have noted, it has been reported that the Treasury has intervened in the Department for Levelling Up, Housing and Communities to ban new capital projects—on which the Minister keeps avoiding to give us an answer—because of concerns that the Department is not effectively managing public money. The Government’s most recent decision to create four new Departments could, according to analysis conducted by the Liberal Democrats, cost the public an estimated £60 million. Does the Minister agree that the Government should get their existing Departments in order before making costly decisions to set up four more?

I refer the hon. Lady to my answers at the outset, which explained very clearly the changes and how there is no ultimate change to what is being spent in communities up and down the land to transform areas that have been left behind for a long time.

Let me put it in local government terms for the Minister. When a council is told that it cannot spend any more money without specific approval, it is called a section 114 notice. What is it like for his Department to get the equivalent of a section 114 notice?

Let me put it in terms of reality. This Government’s budgets are not changing, this Department’s objectives are not changing, and this Government’s ambition is not changing on levelling up.

The Secretary of State is not here, but I wonder if the Minister can talk to the Secretary of State so that he can talk to the Treasury about the importance of support for local authorities with capital for repair and maintenance of highly important, much-loved but also sadly rapidly dilapidating existing buildings, such as in Gateshead our leisure centre and swimming pools and even Gateshead International Stadium? The huge withdrawal of revenue support grant, which is of course revenue, has paralysed the financial capacity of local councils like Gateshead to support investment in existing buildings. What will the Minister do about that? Will he talk to the Secretary of State and ask him to talk to the Treasury?

Obviously, I will speak to the Secretary of State; we talk very regularly about some of the challenges that the hon. Gentleman highlights. I know that the hon. Gentleman will have seen yesterday’s local government finance settlement, which makes £60 billion available to councils over the next financial year, both for revenue and for other activities. It is ultimately for councils to make decisions about how they spend that, but I absolutely accept his challenge. That is why we introduced the levelling-up fund and the towns fund: to try to respond to some of those challenges. That funding has already had a significant impact and will continue to do so over its delivery. However, I am happy to pass his points back to my colleagues.

Local councils, now and in the days and weeks ahead, will be going through their budget-making processes. The news that they may not be able to draw down on capital funding, whether it has already been agreed or is to be agreed, will put some of those budget-making processes at risk or add additional layers. I ask the Minister again: does his Department have the authority to release funds for current projects or authorise funds for future projects, or is the report in the Financial Times true—yes or no?

I explained the change at the outset: there is no change to the budgets that we have provided and there is no change to the local government finance settlement, which was announced yesterday.

Let us be under no illusions: this is wealth redistribution, but not the wealth redistribution and investment practised by the EU. This is Tory wealth redistribution, taking from areas that need investment and giving to areas that already have it. My constituency missed out on the towns fund: its bid was rejected. Despite an excellent bid from the Caledonian Railway in Brechin, it got hee-haw out of the levelling-up fund, too.

Will the Minister apologise for this grotesque “you can look, but you can’t touch” form of Tory funding?

We can always trust the Scottish National party to debate something that has already occurred and to take the situation back to the European Union. If that is the comparison that the hon. Gentleman wants to make, let me tell him that my constituency, North East Derbyshire, did not receive any significant money under the European Union in recent years, but as soon as we left the EU it received towns funding and levelling-up funding. That is because the Government have ensured that we are responding to the needs of local areas. We are actually trying to listen to and take heed of those areas that have been left behind, irrespective of the point about the European Union.

The Minister’s Department covers some of the funds that are most vital to our communities. As it is, we do not have enough of them. He has been very clear that there is no change in the budget, but can he be absolutely clear that the Treasury will not stop decisions being made on important projects that we need in our communities?

It was only a few days ago that the Chancellor himself visited a successful levelling-up round 2 budget area, which demonstrates the commitment of the Treasury—just like the commitment of the Department for Levelling Up, Housing and Communities—to deliver on what we say. We intend to do so, because it is so important for these communities to have the transformation that they need and want.

The Minister has said in various answers that the ambition has not changed, the policy has not changed and the budget has not changed. The reality is that the sign-off process has changed: the Treasury now signs projects off for his Department because it does not trust the Secretary of State.

We are shortly due to move to stage 3 of the levelling-up fund. Stage 2 was a farce; stage 1 was a mess. What assurance can the Minister give that stage 3 will start delivering for some of the most deprived communities, including in my Ogmore constituency, which has had nothing?

Just for clarity, the Treasury signs off budgets across Departments without any issue, as it has done under the Labour party, the coalition and the Conservative party.

The hon. Gentleman asks about round 3 of the levelling- up fund. We have given out billions of pounds under rounds 1 and 2. Local communities are excited by the opportunities that the changes will bring. I encourage his area to apply for round 3; I hope it is successful, and I hope he can share in the transformation that will come, which is already being delivered elsewhere.

The first line of the policy paper “Levelling Up Fund Round 2: prospectus” states:

“Investing in infrastructure has the potential to improve lives”.

I am anxious to find out how such infrastructure improvement can take place on coastal roads, where the environmental impact of erosion is leading to the isolation of communities. Will the Minister commit himself to a dedicated levelling-up strategy to address this serious issue?

I should be happy to meet the hon. Gentleman, along with the Under-Secretary of State for Levelling Up, Housing and Communities, my hon. Friend the Member for Bishop Auckland (Dehenna Davison), to discuss that further.

If the hon. Lady had not been complaining about my choices, she would not have been called last.

Thank you, Mr Speaker.

The Minister has talked repeatedly today about the transformative effect of levelling up, but because levelling up is not inflation-proofed, councils that secured funding last October are facing shortfalls of about 30% in funding for projects because of soaring costs. So projects cannot be delivered as was envisaged and so they cannot level up as was envisaged—which is what led to the success of their bids in the first place. Can the Minister explain why levelling-up bids are not inflation-proofed and therefore cannot deliver on the Government’s own criteria?

We are happy to talk to councils about the challenges that they face, and we are happy to accept that inflation is a challenge. This is one of the reasons we need to get inflation out of the system. The difficult decisions made by the Chancellor will allow us to do that and will allow the money to go further, not just in the levelling-up fund but elsewhere in government, and in the private sector as a whole.