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The Government’s reliance on competitive pots is wasting huge amounts of time and resources in local authorities and undermining local policy-making. Government must rationalise competitive grants and reduce their numbers if local authorities are to use their resources better and deliver more impactful policies.
Spurred by Michael Heseltine’s “no stone unturned” report in 2012, competitive grants have become a favourite tool of recent governments, with at least 117 used between 2015 and 2018. However, the system has become unwieldy, with pots spread across siloed central government departments (and even teams within departments) without their details being consistently recorded.
In theory, competitive grants encourage local authorities to improve their projects and make sure that funding goes to the best ones. In practice, however, they don’t always work like this. They leave central government in control of the purse-strings, baking-in its decisions about what should be funded despite having a poor understanding of what worked well in the past.
There are process problems with the competitions too. ‘Shovel-ready’ projects are selected instead of the best ones because local authorities are often only given very short time-frames to prepare bids. How well a bid is written and political favouritism are seen as deciding which bids get funding, instead of how impactful a project is.
Relying on competitive pots disrupts how local authorities work and plan policies. They can’t easily think long-term, or join up-strategies across policy areas, because they can’t rely on winning the numerous ring-fenced bids at different times that are needed to fund these strategies. Instead, local projects and strategies must be tailored to central government’s priorities and timelines, despite local authorities understanding the context and challenges better.
Competitive pots are also wasting the already scarce time and resources of local authorities. Consultants were needed to help prepare 90% of bids, and local government spent £63 million on preparing bids for just three funds (Levelling Up Round 1, Future High Streets Fund, and Towns Fund). That’s excluding substantial costs to their own staff’s time. Even for bids which are unlikely to be successful, local authorities report facing political pressure to spend resources on preparing bids rather than leave funding on the table.
If the Government wants local authorities to use resources more effectively and deliver more impactful projects and policies, it needs to stick to commitments it made in February’s Levelling Up White Paper to produce a plan that reduces the proliferation of grants and streamlines and rationalises bidding. It then needs to act on this plan as soon as possible. In the long term, moving towards a single funding pot for local areas should be part of the solution to the deeper financial and structural problems in local government.
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