Policy paper

Secretary of State’s annual report on devolution 2021 to 2022

Published 30 March 2023

Applies to England

Presented to Parliament pursuant to Section 1 of the Cities and Local Government Devolution Act 2016, February 2022

Unnumbered command paper

ISBN 978-1-5286-3978-1

© Crown copyright 2023

1. Introduction

1.1 This Annual Report on Devolution has been laid before both Houses of Parliament by the Secretary of State for Levelling Up, Housing and Communities pursuant to Section 1 (Devolution: annual report) of the Cities and Local Government Devolution Act 2016 (‘the 2016 Act’).

1.2 This Annual Report brings together updated information about devolution agreements reached or implemented between government and areas between 1 April 2021 and 31 March 2022.

1.3 These devolution agreements, in response to proposals from areas, are agreements in which the government undertakes to devolve powers and budgets to an area in return for changes in local governance and local political accountability.

1.4 Devolution within England aims to provide local areas the levers they need to boost productivity in local economics and improve and integrate public services.

1.5 These devolution arrangements form part of the government’s plans to level up across the country, and we will continue to engage with local areas looking to agree new devolution deals in the year ahead.

2. Areas with agreements

Legislative requirement: Section 1 (2)(a) of the 2016 Act requires the Report to provide information on the areas of the country where agreements have been reached.

2.1 Between 1 April 2021 and 31 March 2022, the government confirmed no agreements with new areas. 

3. Areas that have submitted proposals

Legislative requirement: Section 1 (2)(b) of the 2016 Act requires the Report to provide information on the areas of the country where proposals have been received by the Secretary of State and negotiations have taken place but agreement has not yet been reached.

3.1 On 15 July 2021, the then Secretary of State wrote to all councils inviting them to submit expressions of interest in an early county devolution deal. The letter set out the four key principles on which the government would prioritise deals: coherent geography; strong local leadership; governance; and reform proposals. Three further factors were also communicated: the deliverability of a deal; the need for areas to submit substantive proposals on powers and flexibilities and not just a list of funding asks; and the guiding desire to reflect the variety of places across England.

3.2 The government received 18 expressions of interest and out of those, nine were invited to start formal negations for a County Deal. The 9 were listed in the Levelling Up White Paper as: Cornwall; Derby and Derbyshire; Devon, Torbay and Plymouth; Durham; Leicestershire; Hull and East Yorkshire; Norfolk; Nottingham and Nottinghamshire; and Suffolk. The North East and York and North Yorkshire were also invited to negotiate devolution deals for expanded and new mayoral combined authorities (MCAs) respectively. It was also confirmed that other areas, particularly those with broadly similar circumstances to York and North Yorkshire, would have the opportunity to consider their interest in an MCA devolution deal.

3.3 The government received devolution proposals in response to their invitation in the Levelling Up White Paper^{[footnote 1]} from the following areas: Cornwall; Derbyshire and Derby, Nottinghamshire and Nottingham^{[footnote 2]}; Devon, Plymouth, and Torbay; Hull and East Yorkshire; Leicestershire, Leicester, and Rutland^{[footnote 3]}; Norfolk; Suffolk; the North East^{[footnote 4]}; and York and North Yorkshire. The submission window for proposals continued into the early part of financial year 2022-23. As such, an additional proposal was also received in the same window from Durham.

3.4 As set out the in Levelling Up White Paper, the government is committed to ensuring that by 2030, every part of England will have a devolution deal that wants one.

3.5 The government also opened negotiations with the West Midlands and Greater Manchester MCAs on the publication of the Levelling Up White Paper, with the aim of agreeing trailblazer devolution deals. As of 31 March 2022, negotiations were ongoing.

4. Functions exercisable by a Minister of the Crown that have been devolved

Legislative requirement: Section 1 (2)(c) of the 2016 Act requires the Report to provide information on functions exercisable by a Minister of the Crown that have been devolved as a result of agreements so as to become exercisable by a mayor for the area of a combined authority (including information as to any such functions that remain exercisable by a Minister of the Crown as a result of an agreement providing for functions to be exercisable jointly or concurrently).

4.1 Between 1 April 2021 and 31 March 2022, one statutory instrument (SI) was made to implement devolution agreements between the government and areas. This SI conferred additional borrowing powers on three mayoral combined authorities (North of Tyne, South Yorkshire, and West Yorkshire Combined Authorities) that have each agreed a debt agreement also known as a “debt cap” with HM Treasury to allow them to borrow in respect of all their existing functions.

4.2 The following SI was made on 22 March 2022:

The Combined Authorities (Borrowing) Regulations 2022 (SI 2022/358)^{[footnote 5]}

5. Additional financial resources and public functions that have been devolved

Legislative requirement: Section 1 (2)(d) of the Act requires the Report to provide information on additional financial resources and public functions (so far as not falling within paragraph (c)) which have been devolved as a result of agreements.

5.1 Financial resources devolved to devolution deal areas between 1 April 2021 and 31 March 2022

Funding stream: Investment funds
Description: Capital and Revenue funding agreed through devolution deals for local investment. Forms part of the single pot arrangement.
Accountable government department: Department for Levelling Up, Housing and Communities
Place(s) affected and amounts received in 2021-22: Cambridgeshire & Peterborough: £20m
Greater Manchester: £30m
Liverpool City Region: £30m North of Tyne: £20m
South Yorkshire: £30m
Tees Valley: £15m
West Midlands: £36.5m
West of England: £30m
West Yorkshire: £38m
Total amount paid in 2021-22: £249.5 million
Payment schedule: £7,485 million over 30 years^{[footnote 6]}
Commentary: Payments made by Section 31 grant.
The National Local Growth Assurance Framework provides guidance for how MCAs should appraise, monitor, and evaluate schemes to achieve value for money^{[footnote 7]}.

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Funding stream: Multi-Year Transport Grants
Description: For 2021/22 this is made up of the Integrated Transport Block (ITB), the Pothole Fund and the Highways Maintenance Block (HMB)^{[footnote 8]} . For this report only these are to be treated as part of a flexible Single Pot. See reference for composition.
Accountable government department: Department for Transport
Place(s) affected and amounts received in 2021-22: Cambridgeshire & Peterborough: £28m
Greater Manchester: £51m
Liverpool City Region: £31m
North of Tyne/North East^{[footnote 9]}: £14m^{[footnote 10]}
South Yorkshire: £24.2m
Tees Valley: £16.6m
West Midlands: £38.1m
West of England: £21.1m
West Yorkshire: £49.7m
Total amount paid in 2021-22: £274 million
Payment schedule: £274 million for 2021/22
Commentary: Payments made by Section 31 grant, apart from Greater Manchester and West of England, as their HMB and ITB transport grants are rolled into separate 100% Business Rates Retention arrangements.
For MCAs eligible for CRSTS, funding equivalent to annual HMB, ITB and Potholes for 2021/22 will be consolidated into their multi-year funding allocations from April 2022.

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Funding stream: Transforming Cities Fund
Description: Capital grant funding to support and promote sustainable and public transport; and is part of the single pot.
Accountable government department: Department for Transport
Place(s) affected and amounts received in 2021-22: Cambridgeshire & Peterborough: £30m
Greater Manchester: £99m
Liverpool City Region: £54m
North East/North of Tyne: £77.3m (see right)
South Yorkshire: £64.75m
Tees Valley: £24m
West Midlands: £101m
West of England: £32m
West Yorkshire: £123.75m
Total amount paid in 2021-22: £528.5 million
Payment schedule: £1.6 billion over 5 years from 2018/19 to 2022/23.
Commentary: The final year of the Transforming Cities Fund allocation, in 2022/23, has been consolidated within CRSTS for eligible places.
North East and North of Tyne’s TCF grant is paid collectively to Transport North East on behalf of the North East Joint Transport Committee.

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Funding stream: Adult Education Budget
Description: Devolved budget which funds qualifications and programmes for learners aged 19+.
Accountable government department: Department for Education
Place(s) affected and amounts received in 2021-22: Cambridgeshire & Peterborough: £12m
Greater Manchester: £98m
Liverpool City Region: £54m
North of Tyne: £24m
South Yorkshire: £25m^{[footnote 11]}
Tees Valley: £31m
West Midlands: £133m
West of England: £16m
West Yorkshire: £41m^{[footnote 12]}
Total amount paid in 2021-22: £434 million
Payment schedule: Annual payment
Commentary: Payments made by Section 31 grant.

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Funding stream: Free Courses for Jobs
Description: Ring-fenced funding transferred in the financial year 2021-22 for the delivery of the Free Courses for Jobs Level 3 offer in devolved areas.
Accountable government department: Department for Education
Place(s) affected and amounts received in 2021-22: Cambridgeshire & Peterborough: £0.83m
Greater Manchester: £6.7m
Liverpool City Region: £3.7m
North of Tyne: £1.6m
South Yorkshire^{[footnote 13]}: £2.1m
Tees Valley: £2.1m
West Midlands: £9.1m
West Yorkshire^{[footnote 14]}: £3.4m
West of England: £1.1m
Total amount paid in 2021-22: £30.8 million
Payment schedule: Annual payment^{[footnote 15]}
Commentary: Section 31 grant determination (ring-fenced).

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Funding stream: Work & Health Programme
Description: Funding for locally commissioned programmes aimed at long term jobseekers and claimants with disabilities
Accountable government department: Department for Work & Pensions
Place(s) affected and amounts received in 2021-22: Greater Manchester: £3.2m
Total amount paid in 2021-22: £3.2 million Payment schedule: Maximum indicative amount over 8 years
£30 million.^{[footnote 16]}
Commentary: Payments are made by Section 31 grant.
Funding determined by DWP on receipt of the contractual performance profiles and unit prices agreed between Greater Manchester and their suppliers.

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Funding stream: Work and Health Programme Job Entry Targeted Support (JETS)
Description: JETS was introduced as part of the DWP “Plan for Jobs” in response to the impact of the Covid-19 Pandemic, it aims to provide relatively light touch support to those unemployed for 13 weeks or more, many of this client group have become unemployed as a direct result of the pandemic.
Accountable government department: Department for Work & Pensions
Place(s) affected and amounts received in 2021-22: Greater Manchester: £10.9m
Total amount paid in 2021-22: £10.9 million
Payment schedule: Maximum indicative amount was increased to £19.7 million^{[footnote 17]}.
Commentary: Payments are made by Section 31 grant.
Funding for 2021/22 determined by DWP on receipt of the contractual performance profiles and unit prices agreed between Greater Manchester and their suppliers.

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Funding stream: Fire and Rescue Service
Description: Fire National Resilience
Accountable government department: Home Office
Place(s) affected and amounts received in 2021-22: Greater Manchester: £342,000^{[footnote 18]}
Total amount paid in 2021-22: £342,000
Payment schedule: Annual payment
Commentary: Payments are made by Section 31 grant.

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Funding stream: Policing Grants
Description: Provided where Mayor has Police & Crime Commissioner powers as part of devolution agreement.
Accountable government department: Home Office
Place(s) affected and amounts received in 2021-22: Greater Manchester: £495m
West Yorkshire: £362.7m
Total amount paid in 2021-22: £858 million
Payment schedule: In 12 monthly instalments
Commentary: Payments made under Section 46 of the Police Act 1996.
Grants breakdown provided in footnote^{[footnote 19]}

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This section provides information on significant financial resources that are delivered by combined authorities but have not been devolved as a result of their devolution deals.

Funding stream: Brownfield Fund
Description: The Brownfield Housing Fund aims to create more homes by bringing more brownfield land into development. The Fund is allocated to 7 mayoral combined authorities (MCAs) in the Midlands and North.
Accountable government department: Department for Levelling Up, Housing and Communities
Place(s) affected and amounts received in 2021-22: Greater Manchester: £49.3m
Liverpool City Region: £23.0m
North of Tyne: £8.1m
South Yorkshire: 14.0m
Tees Valley: £8.0m
West Midlands: £65.1m
West Yorkshire: £20.0m
Total amount paid in 2021-22: £187.5 million capital
Payment schedule: £550 million capital over 5 years from 2020/21 to 2024/25.
£8.0 million revenue in 2020/21 only.
Commentary: Payments made by Section 31 grant.
The fund has been increased to £550 million (from the £400 million included in last year’s report).

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Funding stream: Getting Building Fund
Description: The Getting Building Fund aimed to target the areas facing the biggest economic challenges as a result of the pandemic.^{[footnote 20]}
Accountable government department: Department for Levelling Up, Housing & Communities
Place(s) affected and amounts received in 2021-22: Cambridgeshire & Peterborough: £7.3m
Greater Manchester: £27.1m
Liverpool City Region: £13m
North of Tyne: £0m^{[footnote 21]}
Sheffield City Region (South Yorkshire): £16.8m
Tees Valley: £8.7m
West Midlands: £33m
West of England: £6.85m
West Yorkshire: £26.3m
Total amount paid in 2021-22: £139.1 million
Payment schedule: Second and final payment, made in May 2021. Values given represent half the total amount.
Commentary: Payments made by Section 31 grant.
The National Local Growth Assurance Framework provides guidance for how MCAs should appraise, monitor, and evaluate schemes to achieve value for money^{[footnote 22]} .

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5.2 Capacity funding paid to devolution deal areas between 1 April 2021 and 31 March 2022

Funding stream: Mayoral Capacity Fund
Description: Available to MCAs with elected mayors. This fund supports mayors by boosting their capacity and resources to deliver for their local area.
Accountable government department: Department for Levelling Up, Housing & Communities
Place(s) affected and amounts received in 2021-22: Cambridgeshire & Peterborough, Greater Manchester, Liverpool City Region, North of Tyne, South Yorkshire, Tees Valley, West Midlands, West of England, West Yorkshire

All received £1 million
Total amount paid in 2021-22: £9 million
Payment schedule: £9 million in 2021/22
Commentary: Payments made by Section 31 grant.

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Funding stream: Skills Advisory Panel
Description: To analyse their local needs and priorities, which could include employing a labour market analyst.
Accountable government department: Department for Education
Place(s) affected and amounts received in 2021-22: Cambridgeshire & Peterborough, Greater Manchester, Liverpool City Region, North of Tyne, South Yorkshire, Tees Valley, West Midlands, West of England, West Yorkshire

All received £75,000
Total amount paid in 2021-22: £675,000
Payment schedule: Annual payment
Commentary: Payments made by Section 31 grant.

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Funding stream: Adult Education Implementation Funding
Description: Funding to assist preparations for the devolution of the Adult Education Budget.
Accountable government department: Department for Education
Place(s) affected and amounts received in 2021-22: South Yorkshire: £220,880
West Yorkshire: £40,405
Total amount paid in 2021-22: £261,285
Payment schedule: Payments for 1 April - 31 July 2021, prior to the areas having responsibility for devolved AEB with effect from 1 August 2021.
Commentary: Payments made by Section 31 grant.

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Funding stream: City Region Sustainable Transport Settlement (CRSTS) Capacity Funding
Description: £50m resource funding was available to the 8 CRSTS MCAs to build capacity and support the preparation of their delivery proposals. Funding for the North East was not allocated, as appropriate governance arrangements with the city region remain outstanding.
Accountable government department: Department for Transport
Place(s) affected and amounts received in 2021-22: Greater Manchester: £8.6m
Liverpool City Region: £5.6m
South Yorkshire: £5.2m
Tees Valley: £3.5m
West Midlands: £8.9m
West of England: £4.1m
West Yorkshire: £7.4m
Total amount paid in 2021-22: £43.3 million
Payment schedule: £43.3 million
Commentary: Payments made by Section 31 grant

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5.3 Financial resources paid to devolution deal areas for pilot agreements between 1 April 2021 and 31 March 2022

Funding stream: Housing First Pilot
Description: Housing First is an intensive housing led intervention developed for individuals with the most complex support needs. The pilots are testing whether this specific approach works within an English context and at scale.
Accountable government department:
Place(s) affected and amounts received in 2021-22: Department for Levelling Up, Housing & Communities
Total amount paid in 2021-22: Greater Manchester: £2.8m
Liverpool City Region: £2.4m
West Midlands: £1.0m
Payment schedule: £6.2 million
Commentary: Made over two tranches in April and September/ October.
Payments made by Section 31 grant.

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Funding stream: Wave 2 Skills Bootcamps
Description: To meet the Ministerial and No10 ambition of an expansion of skills bootcamps across England.
Accountable government department: Department for Education
Place(s) affected and amounts received in 2021-22: Cambridgeshire & Peterborough: £0.2m
Greater Manchester: £1.0m
Liverpool City Region: £1.0m
North of Tyne: £0.2m
Tees Valley: £0.2m
West Midlands: £1.0m Total amount paid in 2021-22: £3.5 million
Payment schedule: Regular grant & contract payments over the FY.

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6. Consideration of devolving powers to local government

Legislative requirement: Section 1 (2)(e) of the Act requires the Report to provide information on the extent to which consideration has been given by a Minister of the Crown to the principle that powers should be devolved to combined authorities or the most appropriate local level except where those powers can more effectively be exercised by central government.

6.1 The Levelling Up White Paper, published 2 February 2021, outlined this government’s intention to extend, deepen and simplify devolution across England so that by 2030, every part of England that wants one will have a devolution deal.

6.2 Over the reporting period, the government undertook discussions with areas in line with the above, including negotiations on deeper devolution with West Midlands and Greater Manchester MCAs.

6.3 As part of the Levelling Up White Paper, the government presented a devolution framework that indicates of the types of powers and functions that will be considered for each devolution level, bringing together policies from across government. Detail is outlined on the following page in line with the following structure:

Level 1. Local authorities working together across a Functional Economic Area (FEA) or whole county area e.g. through a joint committee.

Level 2. A single institution or county council working with a directly elected mayor (DEM), across a FEA.

Level 3. A single institution or county council working with a DEM, across a FEA or whole county area.

Future editions of this report will provide an update on any changes to the devolution framework.

Devolution framework

Detail	L1	L2	L3
Function: Strategic role in delivery services
Host for government functions best delivered at strategic level involving more than one local authority e.g. Local Nature Recovery Strategies	✔	✔	✔
Opportunity to pool services at a strategic level	✔	✔	✔
Opportunity to adopt innovative local proposals to deliver action on climate change and UK’s Net Zero targets	✔	✔	✔
Function: Supporting local businesses
LEP functions including hosting strategic business voice		✔	✔
Function: Local control of sustainable transport
Control of appropriate local transport functions e.g. local transport plans*		✔	✔
Defined key route network*			✔
Priority for new rail partnerships with Great British Railways – influencing local rail offer, e.g. services and stations.			✔
Ability to introduce bus franchising		✔	✔
Consolidation of existing core local transport funding for local road maintenance and smaller upgrades into a multi-year integrated settlement			✔
Function: Investment Spending
Detail	L1	L2	L3
UKSPF planning and delivery at a strategic level		✔	✔
Long term investment fund, with ana greed annual allocation			✔
Function: Giving adults the skills for the labour market
Devolution of Adult Education functions and the cored Adult Education Budget		✔	✔
Providing input in Local Skills Improvement Plans		✔	✔
Role in designing and delivering future contracted employment programmes			✔
Function: Local control of infrastructure decisions
Ability to establish Mayoral Development Corporations (with consent to host local planning authority)			✔
Devolution of locally-led brownfield funding			✔
Strategic partnerships with Homes England across the Affordable Housing Programme and brownfield funding			✔
Homes England compulsory purchase powers (held concurrently)		✔	✔
Function: Keeping the public safe and healthy
Detail	L1	L2	L3
Mayoral control of Police and Crime Commissioner (PCC) functions where boundaries align(**)			✔
Clear defined role in local resilience*		✔	✔
Where desired offer MCAs a duty for improving the public’s health (concurrently with local authorities)			✔
Function: Financing local incentives for residents and business
Ability to introduce mayoral precepting on council tax*			✔
Ability to introduce supplement on business rates (increased subject to ballot)			✔

*refers to functions which are only applicable to combined authorities
**refers to functions which are currently only applicable to mayoral combined authorities

Annex A: Underpinning legislation

The Cities and Local Government Devolution Act 2016 (the 2016 Act) received Royal Assent on 28 January 2016. It amends the Local Democracy, Economic Development and Construction Act 2009 to facilitate the implementation of far more ambitious and wide-ranging devolution agreements with combined authority areas and with other areas. It is enabling legislation which provides a legislative framework which can be applied flexibly to different areas by secondary legislation. In particular, secondary legislation may:

• confer any local government function on a combined authority;
• confer any public authority function on a combined authority;
• provide for an elected mayor for a combined authority’s area who would exercise specified functions individually and chair the authority;
• provide for the mayor to undertake the functions of Police and Crime Commissioner (PCC) for the combined authority area (in place of the Police and Crime Commissioner); and
• confer any public authority function on a county council or district council.

In addition, the 2016 Act’s amendments to the 2009 Act streamline the process for establishing and changing the area of a combined authority, remove geographical limitations as to the establishment of combined authorities, and provide for streamlined governance reforms where these are agreed by one or more of the councils involved.

1. Levelling Up the United Kingdom, published 2 February 2022. ↩

2. Though named separately in the Levelling Up White Paper, Derbyshire & Derby and Nottinghamshire & Nottingham held negotiations as one, and later agreed a deal for the East Midlands. ↩

3. Leicestershire was named individually in the Levelling Up White Paper, but the proposal received was from Leicestershire County Council, Leicester City Council and Rutland County Council as one. ↩

4. The North East area constitutes Gateshead, Newcastle, North Tyneside, Northumberland, South Tyneside, and Sunderland. ↩

5. The Combined Authorities (Borrowing) Regulations 2022 ↩

6. 30 years commences from the signing of each agreement. Payments subject to 5 yearly ‘Gateway Review’ assessments whereby an independent panel of experts will assess investments’ impact on economic growth. ↩

7. National local growth assurance framework ↩

8. Breakdown available: Highways maintenance funding formula allocations, 2021 to 2022 ↩

9. In the North East, transport delivery is led on behalf of the North East Joint Transport Committee (NEJTC) by Transport North East. The Committee brings together North of Tyne and North East Combined Authority (NECA). As part of this arrangement, grant payments are made to NECA, not North of Tyne. ↩

10. Funding from the HMB and Potholes fund is given to the constituent Local Authorities in NECA, whereas NECA retains ITB as agreed in the Devolution Deal. ↩

11. Payments to South Yorkshire & West Yorkshire cover the period 1 August 2021 (the date these elements of their devolution deals came into effect) to March 2022. ↩

12. Payments to South Yorkshire & West Yorkshire cover the period 1 August 2021 (the date these elements of their devolution deals came into effect) to March 2022. ↩

13. Payments to South Yorkshire & West Yorkshire cover the period 1 August 2021 (the date these elements of their devolution deals came into effect) to March 2022. ↩

14. Payments to South Yorkshire & West Yorkshire cover the period 1 August 2021 (the date these elements of their devolution deals came into effect) to March 2022. ↩

15. Details: MCA ring fenced s31 level 3 adult offer funding for 2021 to 2022 (PDF, 265 KB). Payments are recovered if not spent as detailed in the Section 31 ringfenced grant letter. This is achieved by reducing the FY grant in line with under-delivery in the previous AY, so FY 22-23 payment has been reduced by the amount of under delivery in AY 20/21. ↩

16. Subject to future Spending Review. ↩

17. JETS was extended in September 2021 for a one-year period in England and Wales, including in Manchester. The maximum indicative amount was increased compared to previous indications. ↩

18. Broken down as follows: New Dimensions Grant - £87k, Firelink Grant - £200k, Risks Grant - £55k ↩

19. Police Grant report: 2021 to 2022 ↩

20. Specific projects within each area can be found here – Getting Building Fund Guidance ↩

21. The North of Tyne was the only MCA not to receive money through the scheme. However, £23.5m was distributed to the North East LEP, the area of which includes the North of Tyne MCA. Source: North East LEP Getting Building Fund (PDF, 232 KB) ↩

22. National local growth assurance framework ↩