Chancellor reveals £4bn ‘levelling-up’ fund in spending review

Chancellor Rishi Sunak has revealed a £4bn levelling-up fund to allow areas to bid for up to £20m to fund local projects in the government’s spending review. The fund, which will be managed by the Treasury, the Department for Transport and the Ministry for Housing, Communities and Local Government, will give a new “holistic place-based approach to the needs of local areas”, Sunak said. Projects must have “real impact”, garner local support and be delivered within this parliament, Sunak said. Plans which will be eligible for funding include the creation of better high streets and town centres, as well as railway station upgrades and more libraries, museums and galleries. The chancellor said the government’s approach to funding local projects has been too “complex and ineffective”, and that the government is funding “the things people want and places need”. Sunak also announced a new UK infrastructure bank, which will be headquartered in the north of England. It will work alongside the private sector and finance infrastructure projects from spring next year, and the government will spend £100bn on infrastructure. A £7.1bn National Home Building Fund will be established to help provide more housing. Alongside the £12.2bn Affordable Homes Programme, this will mean the government’s total investment in new housing will total nearly £20bn from 2021-22. The government has also introduced reforms to the Public Works Loan Board, which will end local authorities using the board to invest in commercial property “primarily for yield”. In the spending review documents, the government said this presents a “risk for both national and local taxpayers”. The chancellor said the government was investing £12bn to make sure the country reaches its net-zero carbon target by 2050. More than £1.3bn will be spent on creating electric vehicle charging points. In total, the government is set to borrow £394bn this year – the highest level of borrowing during peacetime. Sunak warned that unemployment will peak at 2.6m next year, and said the government would spend £2.9bn on a “restart scheme” to help more than 1m unemployed people find work again. Commenting on the government’s £4bn levelling-up fund, Palace Capital chief executive Neil Sinclair said he welcomed the initiative, which will help to put infrastructure development in the regions “at the heart of the economic recovery efforts post Covid-19”. He added: “The potential of our great northern cities, from Liverpool to Manchester, Leeds, Bradford, Sheffield, Newcastle and York, is enormous, so rebalancing Britain across the board will be key to expediting economic recovery in the post Covid-19 era.” Bruntwood chief executive Chris Oglesby said although more money for the UK’s regions is positive, money won’t be as “effective or deployed as rapidly as we need it to be” unless the devolution agenda is accelerated. “We are worried by recent government comments on devolution and the ongoing delays to the devolution white paper,” he said. “Levelling up, to be truly meaningful, has got to be more than about money but control too. Brexit first taught us this lesson – the pandemic has hammered it home.” Commenting on the new National Infrastructure Bank, Pinsent Masons partner Michael Watson said it has the opportunity to make “significant strides towards the government’s levelling-up agenda”. He added: “The financing and funding of new technology at scale needs to be its number-one priority to kick-start the UK economy and take proactive steps towards net-zero goals.” British Property Federation chief executive Melanie Leech said Sunak set out a number of “welcome decisions” for the country’s post-Covid recovery. Commenting on the Home Building Fund, she said: “The government will need to continue to invest in housing delivery if it is to meet its target of 300,000 homes a year, and it has provided welcome support to ensure that housing delivery continues during the pandemic.” On the PWLB revisions, Colliers International head of national capital markets John Knowles said: “Changes to the PWLB borrowing is a positive move for local authorities looking to undertake regeneration projects in their area. This will help to make these plans more achievable and affordable, and bring about greater town centre investment across the country. “The change in emphasis for these loans from investment to infrastructure improvements fairly reflects the challenges faced by local communities and the real estate market currently.” To send feedback, e-mail lucy.alderson@egi.co.uk or tweet @LucyAJourno or @estatesgazette Picture © Mark Thomas/Shutterstock