Elected Member Briefing - Round 2 of the UK Levelling Up Fund

About this briefing note

Report by: Alison Seggie, Service Manager - People, Partnerships and External Funding

Date: 24 January 2023 

Subject: Round 2 of the UK Levelling Up Fund

Responsible Officer: Alison Seggie, Service Manager - People, Partnerships and External Funding

Details

Purpose

To inform Elected Members of the publication of the successful applicants to the UK Shared Prosperity Fund in Round 2. 

Briefing Information 

The UK Levelling Up Fund is a capital fund to support investment in places where such investment can make the biggest difference. The Fund was announced in the 2020 Spending Review and a Bid Prospectus document was published in March 2021. The prospectus states that the fund will prioritise bids for investment in areas of need, low productivity, and connectivity. To that end the Treasury has allocated every UK local authority into one of three priority groupings. Priority 1 comprising those areas most in need. Perth and Kinross Council is identified as Priority 3. Of the 32 local authorities in Scotland, 13 were identified as category 1, 12 as Category 2, and 7 as Category 3. 

Funding of £4.8 billion will be allocated to the Levelling Up Fund until 2024/25 with at least £800 million to be invested in Scotland, Wales, and Northern Ireland.  

Round 1 

Round 1 allocations were announced on 27th October 2021, a total of 105 projects across the UK were awarded a total of £1.7 billion. This included a total of £171,711,259 for Scotland, to 8 Local Authorities. See full list further down this page.

The first-round themes were: 

• Transport investment 
• Regeneration and town centre investment  
• Cultural investment  

Unitary authorities such as Perth and Kinross were eligible to submit one transport infrastructure bid in addition to at least one other bid, dependent on how many whole UK constituencies are within the LA boundary.  

The competition targeted funding towards places with the most significant need for recovery and growth, improved connectivity, and regeneration. The 3 bandings will be used as part of the bid assessment criteria however the prospectus makes it clear that projects in Priority 2 and 3 local authority areas will be considered on their own merits in terms of deliverability, value for money and strategic fit, however it states that these will only be considered if they are of exceptionally high quality. 

Under Round 1 Perth and Kinross Council submitted a bid under the "Transport" theme for £11.006M towards the "Perth, People, Place" Active Travel Project initially developed with Sustrans funding, focussing on the Dunkeld Road Corridor. This ambitious project will better connect communities to education facilities, employment opportunities and improve connectivity to key transport sites around the City. 

While the bid was unsuccessful, we received positive feedback on its strategic context and anticipated social, economic and environmental outputs and outcomes. The specific challenge at that time was around our ability to deliver within required timescales, given the procurement framework for design and development was yet to be fully finalised. However, design and development, and additional staff resource has now been secured, and 100% construction funding support now being sought via Scottish Government Active Travel Transformation Fund 2023/24. 

We had originally also planned to submit an additional bid under the Regeneration theme in Round 1 focused on conversion of Debenhams for a Collections Store. This did not progress due to a significant variation in the owner's valuation relative to independent market valuation, and an unwillingness to dispose based on a realistic value.  

Round 2  

The Round 2 prospectus was launched on 23 March 2022, with bids to be submitted by 6 July 2022. It was anticipated the announcement of successful projects would be in the Autumn of 2022, however for several reasons, the funding announcement was delayed. 

Perth and Kinross Council submitted a bid for the Perth West project, a once in a generation sustainable city expansion (Eco Innovation Park) under the Regeneration theme. John Nicolson MP provided support for the bid. The total bid value was £16.2m with a LUF request of £10m. The bid was seeking support to fund infrastructure to create an access to the Perth West development, and particularly to the Perth Eco-Innovation Park. The Park will ultimately provide 25ha of employment land and support business growth and innovation in energy and mobility. 

Round 2 allocations were announced on 19 January 2023 and supported a further 111 areas/projects to a value of £2.1 billion. This included a further £177.2 million for Scotland for projects in ten local authority areas. See full list below. 

Unfortunately, we were not successful in the bid for the Perth West project via Round 2, however we await feedback. 

The press release which announced the Round 2 funding did indicate that there would be a further round to distribute the remaining funds (£1Bn), however no timescales were given.