Guidance

Levelling Up Fund Round 2: technical note

Updated 13 July 2022

Section 1: Information for Applicants

Introduction

This technical note sets out further guidance on eligibility, the role of Members of Parliament (MPs), and the application and assessment process for the second round of the Levelling Up Fund (LUF) for Great Britain (GB) and Northern Ireland (NI). It is designed to support applicants to prepare their LUF application.

The LUF is a capital only fund, administered by the Department for Levelling Up, Housing and Communities (DLUHC), Department for Transport (DfT) and HM Treasury (HMT). References to the ‘Secretary of State’ are to the Secretary of State for Levelling Up, Housing and Communities, Secretary of State for Transport, and the Chancellor of the Exchequer.

Applicants should prepare their application in line with the information and guidance provided in this technical note. The application portal opened on 15 July and bids must be submitted by midday on 2 August. A link to the portal can be found on our application page, along with guidance on how to complete the various questions in the portal.

Applications received after the deadline will not be assessed and will not be eligible to be considered for funding. The guidance in this technical note should be read alongside the Levelling Up Fund prospectus, which sets out the objectives of the fund and how it will be delivered and the application guidance.

Applicants should note that we will publish Frequently Asked Questions (FAQs) after the webinars conducted by officials to provide an overview of the Fund, which will take place in late April/early May 2022. Applicants must ensure they are using the most up to date versions of all documents, which will be available on GOV.UK.

Important dates

Late April/early May 2022: Webinars conducted by officials to provide an overview of the Fund

Late April/early May 2022: FAQs published at GOV.UK

15 July 2022: Application window opens

15 June 2022 (12:00 noon): Deadline for applicants to submit questions to lufteam@levellingup.gov.uk

2 August 2022: Deadline for applicants to submit bids

The outcome of bids will be announced in the autumn of 2022.

How do you communicate with us?

Applicants will be able to send questions to lufteam@levellingup.gov.uk no later than 12:00 noon on Wednesday 15 June 2022, although technical support and troubleshooting on using the online application portal will still be available after this date, if necessary. Further details regarding technical support and troubleshooting will be made available in due course. We will respond to all queries received by 12:00 noon on Wednesday 15 June 2022 prior to the application deadline. Applicants should note that departmental officials will not provide advice or guidance on the specific contents of any individual bids.

Applications received after the deadline will not be assessed and will not be eligible to be considered for funding. When we have received an application, the applicant will be notified.

Webinars conducted by officials to provide an overview of the Fund will also be held in April/May 2022 and FAQs will be published following these.

We will provide feedback on unsuccessful bids once the outcome of the second round of funding has been announced. Arrangements for this will be confirmed with relevant applicants after the announcement.

Subsidy control, state aid, Public Sector Equality Duty and compliance with UK legislation

Bids supported by the LUF must comply with all relevant UK legislation.

The UK Internal Market Act 2020 allows the UK government to provide financial assistance for economic development and to support communities throughout the UK. All proposals in England, Scotland, Wales, and Northern Ireland must fall within the scope of the financial assistance power in the UK Internal Market Act 2020.

From 1 January 2021, an interim UK subsidy control Regime replaced the EU State aid scheme, which will no longer apply to the UK except under limited circumstances in Northern Ireland.

All funding administered by a public authority must take account of subsidy control obligations (or for Northern Ireland both the subsidy control regime and state aid law) as well as all other relevant legal obligations such as procurement law (together “relevant laws”).

Where applicants do not adequately demonstrate that the LUF award is compliant under the UK subsidy control regime or state aid rules then the project could be considered ineligible, and the application may be rejected.

Please see Annex G for information and guidance related to subsidy control and state aid.

In Great Britain, the public sector equality duty under the Equality Act 2010 requires public authorities in exercising their functions to have due regard to the need to: eliminate discrimination, harassment, victimisation, and any other conduct that is prohibited by or under the Act; advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it; foster good relations between persons who share a relevant protected characteristic and persons who do not share it. The protected characteristics under the Act are age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation.

In Northern Ireland, section 75 of the Northern Ireland Act 1998 requires public authorities in carrying out their functions relating to Northern Ireland to have due regard to the need to promote equality of opportunity between the nine equality categories of persons of different religious belief, political opinion, racial group, age, marital status or sexual orientation; men and women generally; persons with a disability and persons without; and persons with dependants and persons without. In addition, public authorities should have regard to the desirability of promoting good relations between persons of different religious belief, political opinion and racial group.

Section 2: How the Fund will operate in England, Scotland, and Wales

Who is eligible to bid

In England, Scotland and Wales, the institutions that are eligible to apply remain the same as the first round. These fall into one of the following three groups, with different eligibility rules as follows:

A) Unitary authorities (including metropolitan borough councils), London borough councils and district councils in two tier areas in England are eligible to submit bids in line with the number of constituencies falling wholly or partially within their boundaries.

B) All unitary authorities in Scotland and Wales (all of whom have transport powers), and those unitary authorities in England with transport powers, can submit bids in line with the number of constituencies falling wholly or partially within their boundaries, as for places in group A above, and can in addition submit one further “transport only” bid (which must be for at least 90% transport by value – see below).

C) County councils with transport powers, combined authorities, mayoral combined authorities, and the Greater London Authority (GLA) are able to submit one “transport-only” bid (which must be for at least 90% transport by value – see below).

Any successful bids a place has had in the first round will be subtracted from their allowance in the second round (see below).

The number of constituency-based and transport-only bids each local authority is able to submit can be found in the table at Annex F. This table takes into account successful bids in first round of the LUF.

Constituency-based allowance

For local authorities falling into groups A and B above, the number of bids they can submit is determined by the number of constituencies falling wholly or partially within their boundaries. Local authorities in group B can additionally submit a “transport-only” bid, as detailed above. In the second round, no distinction is drawn between whole and partial constituencies for the purposes of bid allowances. This means if a local authority has one whole and two partial constituencies within its boundaries, it can submit three bids in the second round (subject to whether it had any successful bids in the first round, see below).

Bids of this type can be for any combination of the Fund’s three investment themes – transport, regeneration, and culture.

In the first round, partial constituencies were treated differently; the local authorities containing parts of the same constituency were asked to designate a lead applicant, who received an additional bid. This is no longer the case for the second round and there is no requirement for lead authorities to be nominated in cases of overlap, as all local authorities will receive one bid each for the constituency in question. This is subject to whether the local authority had any successful bids in the first round (see below).

Transport allowance

Local authorities in groups B and C above can submit “transport-only” bids that are separate from constituency-based allowances.

Local authorities in group B can submit one “transport-only” bid that is additional to their constituency-based bids, allocated as per the above process. Local authorities in group C can, without exception, submit one “transport-only” bid.

To help achieve the Fund’s purpose of supporting high priority and high impact transport projects in local areas, any “transport-only” bids should be for at least 90% transport (as defined by the percentage of project costs associated with activity in support of a bid’s investment theme). Applicants will be asked in the application form how much investment is in each theme. The remaining investment must be related to the transport element of the bid.

Effect of first round bids

Any successful bids a place has had in the first round will be subtracted from their bid allowance in the second round. For example, if a local authority with three bids submitted three bids in the first round, and was successful in each of them, they will not be eligible to bid in this round. If the local authority was successful in two out of the three, they would be able to put in one further bid in this round.

Those applicants that were unsuccessful in the first round that still have a bid allowance are eligible to re-apply with a version of their bid in this round, noting the changes to the application, assessment, and decision-making processes or with a completely new and different bid.

Role of Members of Parliament (MPs) in bidding

Formal Priority Support (for applicants in England, Scotland and Wales)

MPs can provide formal priority support to two bids in this round. This means MPs who provided formal priority support to unsuccessful and successful bids in the first round can provide formal priority support to two bids in this round.

Formal priority support will be recognised and reflected in the assessment although applicants should note that formal priority support is not a condition or requirement for a bid to be successful.

To provide formal priority support for a bid, the MP must complete the pro forma of Priority Support found in Annex D. This pro forma must be submitted by the applicant with the application via the online application portal. Formal priority support will not be accepted in any other format or via any other channel.

Building on the lessons from the first round, there are some important points for MPs and applicants to bear in mind:

• Formal priority support for a bid will be reflected once in the assessment for each bid. Bids will gain no advantage from submitting multiple Member of Parliament Pro Forma of Priority Support documents. If a bid is given priority support from multiple MPs, all those MPs that offered priority support would have used part of their bid allowance (of up to two bids) in this round.
• If it is not made clear in the Member of Parliament Pro Forma of Priority Support document which bid the priority support relates to, it will not be counted in the assessment.
• If an MP offers formal priority support to more than two bids, no bids supported by the MP will be considered as having formal priority support. We will instead for each bid, consider the support as evidence of wider stakeholder support.

General support

MPs also have the opportunity to signal their general support for one or more bids as other stakeholders can. This should be demonstrated through a signed letter (the Member of Parliament pro forma of priority support document must only be used for formal priority support) that is submitted by the applicant and uploaded onto the online application portal. General support will be considered within the stakeholder engagement and support section of the Strategic Fit assessment.

There are no restrictions on the number of bids that an MP can support in this way. Multiple MPs can also offer general support to the same bid.

Separate to MP support, in Scotland and Wales, Members of the Scottish Parliament (MSPs) and Members of the Senedd can provide general support to one or more bids. This will again be considered within the stakeholder engagement and support section of the Strategic Fit assessment and should be evidenced through a signed letter submitted by the applicant through the online application portal.

MSPs and Senedd Members cannot provide formal priority support for a bid. Applicants are encouraged to consult with MSPs and Senedd Members respectively when preparing their bids; however, their support is not a condition or requirement for a bid to be successful.

Capacity funding

The second round of the Fund will continue to use the Index of Priority Places for England, Scotland and Wales, with the Index itself updated in the second round to use the latest available datasets. Eligible local authorities that move up to Category 1 as a result of the update and have at least one bid remaining will, in line with the first round of the Fund, receive £125,000 of capacity funding to support the preparation and submission of high-quality bids. Places that already received this funding in the first round will not receive further capacity support.

This one-off capacity funding only applies to the ‘new’ Category 1 areas that are still eligible to bid. The eligible local authorities are listed at Annex H.

As with capacity funding made available in the first round, the primary intention of this capacity funding is supporting these local authorities to develop their bids. This revenue funding will not be ringfenced and is expected to be used by applicants to assist them to build capacity. Further information on how and when this funding will be paid will be published in our FAQs at GOV.UK.

Section 3: The bidding process in England, Scotland and Wales

Preparing and submitting applications

Local authorities are invited to submit bids via the online application portal. A capital bid can be for an individual project or a package of up to three projects, up to £20 million in grant value per bid. As in the first round, we are prepared to fund large transport projects, between £20 million and £50 million, in exceptional cases. For the second round, we are prepared to fund large culture projects between £20 million and £50 million by exception, with no more than two funded across England, Scotland, and Wales.

The application form aligns to HM Treasury’s Green Book which sets out guidance on how to appraise projects. In completing their application, local authorities should have regard to the Green Book including its Annex A2: Place Based Analysis as well as specific Project business case guidance.

Local authorities submitting individual, joint, package and large bids can contain proposals within a single investment theme, or across multiple investment themes, so long as they form part of a coherent, consistent proposal. When identifying the percentage of themes within a bid, applicants should define this according to project costs associated with activity in support of each theme. For example, if 75% of a bid’s total value contained project costs associated with activity in support of a regeneration output or outcome, with 25% costs associated with activity in support of a culture output or outcome, it would be defined as being a 75% regeneration and 25% culture bid.

There is no minimum LUF grant value that applicants can apply for.

The second round of the LUF is open to projects that can demonstrate spend from the Fund in the 2022-23 financial year. We would expect all funding provided from the Fund to be spent by 31 March 2025, and by 2025-26 on an exceptional basis.

All bids must be submitted in full, with all supporting documentation on the online application portal. Any bids or supporting documentation submitted after the deadline will not be assessed and will not be eligible to be considered for funding. Bids will be assessed and scored based on the information that has been submitted by the applicant. Information that is not provided or incomplete will have an impact on the assessment of the bid.

Package bids

A package bid is made up of two or three projects from one applicant. Package bids must clearly explain how their component elements are aligned with each other and represent a coherent set of interventions. They will be assessed together at the bid level rather than as individual projects. Applicants must present a coherent set of interventions in line with the aims of the Fund.

Summaries of individual projects, including details of their strategic link to the overall bid, should be included in the application in the case of package bids.

We need to be able to assess how packages of projects work together. If there are weaknesses in one of the projects, places should be mindful that it could adversely impact on the overall score of their bid.

Joint bids

A joint bid is made up of a single project, or up to three projects that represent a coherent set of interventions, from multiple applicants. This may be appropriate where a project(s) cross administrative boundaries including across borders within Great Britain.

A joint bid will count towards the number of bids that each applicant is eligible to submit. Each local authority can request a maximum of £20 million of funding in a joint bid. For example, a joint bid from two local authorities could request a maximum of £40 million. The maximum total investment for a joint bid is £60 million.

Where a joint bid is for a set of up to 3 projects, no more than £50 million of investment may be requested for any one individual component project within a joint bid. When assessing joint bids on the “Index of Priority Places” criterion we will reflect the index category that relates to the location of where the majority of the project, or projects, are delivered.

Large bids

Large transport bids requiring up to £50 million

Bids will be accepted for large transport bids on an exceptional basis. These must be for at least 90% transport, and the remaining investment must be related to the transport element of the bid. Such bids will need to be between £20 million and £50 million and can be submitted by any applicant (provided they have the support of the authority with statutory responsibility for transport – evidenced by a completed pro forma).

An application should be submitted via the online application portal for all large bids in the same way as for other bids for the second round of the Fund.

For successful bids a more detailed business case will need to be appraised before funding can be confirmed. These business cases will be assessed once announcements have been made. DfT will advise, after considering the application form, what further information is needed as part of a more detailed business case review. Further guidance on large transport projects and the development of business case submissions will be made available in due course. Business case approval will be required before all the funding can be issued.

Large culture bids requiring up to £50 million

In addition, for the second round of the Fund, we are prepared to fund within England, Scotland and Wales a total of two large bids for up to £50 million under the Fund’s culture theme. Such bids will need to be between £20 million and £50 million in grant value. These must be for at least 90% culture (as defined by the percentage of project costs associated with activity in support of a bid’s investment theme), and the remaining investment must be related to the culture element of the bid. It should also be in line with the Fund’s focus on highly visible interventions that boost local pride in place.

Applications for large culture bids should be submitted via the online application portal in the same way as other bids are submitted.

Large culture bids in England, Scotland and Wales will be subject to the same assessment and decision-making processes as other bids. Applicants should note that that the level of detail provided in the application should be proportionate to the amount of funding that the applicant is requesting.

For successful bids, a more detailed business case will need to be approved before funding can be issued. These will be assessed once announcements have been made. DLUHC will advise, after considering the application form, what further information is needed as part of a more detailed business case review. Further guidance on large culture projects and the development of business case submissions will be made available in due course.

Information that is additional to the application form

Whilst there are some annexes that we ask applicants to complete (via the pro forma documents supplied) and some additional documents we request as evidence, applicants must point to specific additional text that they have submitted if they wish it to be considered in the assessment. Any answer referencing any information contained in annexes must be relevant to a specific question in the application form and referenced within the answer.

For any attachments, please take note of the following:

• applicants will not be able to submit more than 25 annexes in total. Further information about submitting annexes will be provided in a user guide.
• we cannot accept embedded links or file sharing, and information submitted in this way will not be considered.
• a folder with a number of pro forma documents that applicants should use to supply specific annexes is available

This list sets out the additional information we would expect applicants to submit. Please note it is not exhaustive:

• a costing and planning workbook (for package bids, please complete the Costings and Planning Workbook for package bids)
• MP pro forma 6 of formal priority support (not applicable to NI applicants)
• evidence of stakeholder engagement including general MP support, MSPs or Senedd members support for this bid
• a theory of change document
• evidence of confirmed match funding, provision of land from third parties as part of a local contribution and evidence in the form of a letter from an independent valuer to verify the true market value of the land
• a delivery plan
• evidence relating to statutory consents/land acquisition
• a copy of the risk register
• an explanatory note on how the Benefits-Cost Ratio (BCR) has been calculated
• a GIS file (recommended for projects that cover multiple locations) and a map defining the investment area
• a statement of compliance signed by the Chief Financial Officer like the S151 officer for all public authorities in England and Wales, and the S95 officer in Scotland via the pro forma supplied

Specific to joint bids:

• evidence of support from participating local authorities (via pro forma 2 supplied)

Specific to large transport bids (above £20 million):

• integrated Assurance and Approval Plan
• an Option Assessment Report

Specific to transport projects:

• evidence from the responsible authority or body confirming their support (via pro forma 1 supplied for England, Scotland and Wales applicants)
• other evidence to support answers provided in the Economic Case section. This could include, if proportionate to the size of the bid they are submitting, an appraisal summary table, relevant modelling, forecasting and data reports, Active Mode Appraisal Toolkit (AMAT) spreadsheets, Transport Users Benefit Appraisal (TUBA) outputs and small scheme appraisal toolkits
• for large transport bids, evidence an applicant may include in support of their answers could include and Integrated Assurance and Approval Plan and an Option Assessment Report.

Gateway, assessment and decision-making

There will be a three staged approach to assessment and decision making.

Stage 1. Gateway

The first stage is a pass/fail gateway. Information regarding bid eligibility must be supplied, including all necessary documentation. The minimum criteria to proceed to the assessment phase are as follows:

• Bids must be submitted via the online application portal.
• Bids must confirm that some LUF grant funding will be defrayed in the 2022/23^{[footnote 1]} financial year.
• Applicants must not apply above the maximum allowable grant value for LUF. This includes joint and package bids. Package bids should not contain more than three proposals.
• Bids must not exceed the maximum bid allowance number per applicant.
• Applicants must satisfy the subsidy control/state aid risk assessment.
• All bids with a transport element must include a pro forma of support from the relevant authority with statutory responsibility for transport unless the applicant has statutory responsibility (via pro forma 1 supplied)
• Joint bids must include evidence of support from all of the bidding authorities to verify the combined proposal (via pro forma 2 supplied)
• Bids must be signed-off by the Chief Finance Officer (such as the S151 officer in England and Wales and S95 officer in Scotland).

Applicants should note that information assessed at Stage 1 Gateway sits outside the scoring framework but will affect how the bid is processed. Bids that fail one or more of the gateway criteria will not be assessed and will not be eligible to be considered for funding. The departments reserve the right to reject bids on the basis of checks conducted on the information supplied for assessment at Stage 1 Gateway, including if the information provided is not submitted on time or the information supplied is insufficient.

Stage 2. Assessment and shortlisting bids

Bids will be assessed against the criteria set out in the prospectus to deliver a shortlist of the strongest bids. To create a shortlist, applications will be assessed at the bid level against Index of Priority Places, Strategic Fit, the Economic Case and Deliverability. Table 1 below provides detailed guidance on what bids will be expected to demonstrate against Strategic Fit, Deliverability, and the Economic Case sections in their application form. These three criteria, together with the Index of Priority Places criteria will carry equal weighting during assessment. Unless otherwise stated, the sub-criteria under Strategic Fit, Deliverability and Economic Case also carry equal weighting. Different weightings for these criteria may be applied when making final funding decisions in line with the published wider considerations. The sub criteria within each criteria are outlined at Table 1. Applicants should note that where package bids are submitted, if there are weaknesses in one of the projects, it could adversely impact on the overall score of their bid.

A funding shortlist for England, Scotland and Wales will be drawn up from those bids that score the highest overall, and who score at least average or above on Strategic Fit, the Economic Case (with a minimum “value for money” rating), and Deliverability.

Applicants should note that in the second round of the LUF, there are differences to how we will assess the Economic Case (previously named the Value for Money criteria in the first round). In the second round, the Economic Case criteria has been simplified from five sub-criteria to four. The “Appropriateness of data sources and evidence” and “Effectiveness of proposal in addressing problems” each contribute 20% towards the overall Economic Case score; and “Analysis of costs and benefits” and “Value for money of proposal” each contribute 30% towards the overall Economic Case score. Finally, there is a new minimum assessment score set for the “value for money of proposal” sub-criteria. These changes all contribute to giving greater emphasis to the overall value for money of the bid.

Stage 3. Decision making

Once bid assessment and moderation has concluded, and the shortlist is drawn up, Ministers will make funding decisions. In making these decisions, Ministers may take account of some or all of these additional considerations:

• Ensuring a reasonable thematic split of approved projects (e.g. across regeneration and town centre, transport and culture and heritage);
• Ensuring a fair spread of approved projects across Great Britain within, and between, individual nations and regions, and between rural and urban areas;
• Ensuring a fair balance of approved projects across places in need;
• Prioritisation of either ‘strategic fit’ or ‘deliverability’ or ‘economic case’ over the other criteria (noting this must be applied consistently to all projects);
• Taking into account other investment in a local area, including investment made from the first round of the Fund to encourage a spread of levelling up funds across places.

Over the first and second round of the Fund at least 9% of total UK allocations will be set aside for Scotland, 5% for Wales, and 3% for Northern Ireland, subject to a suitable number of high-quality bids being submitted.

We expect to make announcements regarding the outcome of bids in the autumn of 2022.

Table 1: Assessment Framework for assessing, scoring and shortlisting bids

Strategic fit

MP endorsement (factors that will be considered)

If formal priority support has been provided, you should give the name of the MP expressing formal priority support in this funding round, and submit a signed pro forma (see Annex D) by way of evidence.

Please note that this is not applicable to NI bids.

Stakeholder engagement and support (factors that will be considered)

There is an expectation of engagement with all relevant stakeholders. The range of relevant stakeholders will vary and therefore there is no list of stakeholders for whom evidence of support must be provided, with the exception of where the local MP is supporting the bid as a priority (see section above). General MP support (that is, not formal priority support) should be demonstrated here.

We are looking for applications that set out:

• What engagement has been done with local stakeholders and the community.
• How you have identified those stakeholders, and the efforts you have made to reach those that might not normally engage.
• The methods you have used, including innovative virtual methods in light of the COVID-19 pandemic.
• The extent to which this engagement has informed the bid, including how the feedback (positive and negative) has shaped the development of the bid.
• The range of feedback as a result of the engagement activities should be clearly explained and evidenced, including links to any current/ongoing consultations, community forums, etc.
• Where success of the bid is reliant on the cooperation and support of stakeholders and/or the local community, that should be made clear and evidenced in the response.

For transport bids, we need to know who has statutory responsibility for delivering the bid, and if it is not the applicant we will require confirmation that the applicant has the support of relevant authorities via the pro forma supplied.

For transport projects in Northern Ireland, the Northern Ireland Executive holds many of the relevant powers. Where they are the lead applicant, they must engage with, and secure the support of, the relevant local council for the area in which the bid is based in order to be considered for funding. For any bids in Northern Ireland with transport elements, support from the relevant local council and the Northern Ireland Executive is an eligibility requirement.

The case for investment (factors that will be considered)

We are looking for applications to set out a strong case for investment and a realistic theory of change demonstrating:

• Evidence of the local challenges/barriers to growth and context to which the bid is seeking to respond.
• A clear explanation of what you are proposing to invest in.
• How the proposed interventions in the bid will address those challenges and barriers, with evidence to support that explanation, in the form of a theory of change.
• We would expect to understand the rationale for the location that the bid is focusing on. This will be reviewed alongside how places have been categorised on the Index of Priority Places.
• All applicants should set out the different options considered as part of the process of deciding on the intervention chosen, and justify why the proposed solution is the preferred option above others. As part of this, applicants should justify why the proposed location of the investment is the preferred option above others. For large transport bids (£20 million - £50 million), applicants should submit an Option Assessment Report (OAR).
• Set out what your planned outputs and outcomes are and how you will deliver the outputs and confirm these results are likely to flow from the interventions.
• Applicants may wish to refer to Annex B: Intervention framework, which provides an illustrative summary of the outputs and outcome indicators based on likely interventions that fall within the scope of this fund.
• Please provide an explanation of why government investment is needed (what is the market failure).
• Please explain whether/ how other public and private funding will be leveraged.

For package bids, an explanation of how the component elements are aligned with each other and represent a coherent set of interventions.

Alignment with the local and national context (factors that will be considered)

We are looking for applications that explain how the bid aligns to and supports:

• Relevant and current local strategies (such as Local Plans, local economic strategies, Local Transport Plans or local culture strategies) and local objectives for investment, improving infrastructure, local economic development and levelling up.
• UK Government policy objectives including the missions set out in the Levelling Up White Paper, legal and statutory commitments, such as delivering Net Zero carbon emissions and improving air quality. Bids should set out how they will minimise any negative environmental impact and where they are promoting positive environmental choices. Bids for transport projects in particular should clearly explain their carbon benefits.
• Relevant policy and/or strategies developed by devolved administrations (this is only applicable to applicants in Scotland, Wales, and Northern Ireland).
• Other investments from different funding streams. This should include (but is not limited to) – recent levelling up investments (including Freeports, Towns Fund, and Future High Streets Funding), forthcoming UKSPF investment plans and funding made available from the first round of LUF.
• Existing and planned investment made available by devolved administrations (this is only applicable to applicants in Scotland, Wales, and Northern Ireland).

The government’s expectation is that all local road projects will also deliver or improve cycling and walking infrastructure and include bus priority measures (unless it can be shown that there is little or no need to do so). Bus priority proposals should be consistent with the relevant Bus Service Improvement Plan and be based on evidence from bus operators or other sources (such as the Analyse Bus Open Data service). They should include bus lanes wherever there is a frequent bus service, congestion, and the physical space to install one. Cycling elements of proposals should comply with the relevant national cycling and walking design guidance which sets out the standards required.

• Cycleway design guidance for England and Northern Ireland
• For Scotland
• For Wales

Economic case

Appropriateness of data sources and evidence (factors that will be considered)

The quality of data analysis and evidence for explaining the scale and significance of local problems and issues (see Annex C for examples of metrics that could be included):

• Quality of data analysis and evidence is sufficient to demonstrate the scale and significance of local problems and issues.
• Data collection and survey methods are sufficient to ensure data is robust and unbiased.
• Data is comprehensive in coverage, i.e., the area of interest.

Effectiveness of proposal in addressing problems (factors that will be considered)

Analysis and evidence of how the proposals will address existing or anticipated future problems and evidence of whether the proposal is likely to resolve the issue identified/meet its strategic objective.

Quantifiable impacts should, where appropriate, be reported using a suitable model. Key factors are:

• Robustness of the forecast assumptions, methodology and model outputs.
• Quality of the analysis or model (in terms of its accuracy and functionality).
• Theory of Change should be identified and referenced, as appropriate.

Analysis of costs and benefits (factors that will be considered)

• The economic benefits of the proposal are properly measured. These should, where possible, be explained in terms of outcomes. For example, the economic case analysis for transport bids could estimate how they will reduce journey times, support employment, or reduce carbon emissions. For regeneration bids, direct and wider land value uplift, amenity, air quality may be relevant. Employment effects should be adjusted for leakage, substitution and displacement as set in the HMT’s Green Book.
• Economic costs should be consistent with the costs in the financial case but adjusted for the economic case. The costs should be adjusted to an appropriate price base year, including adjustment for risk and optimism bias.
• Explanation of how benefits and costs are analysed and estimated, and of how this approach to the analysis is proportionate for the proposal being considered.
• Applicants should reference all monetised and non-monetised impacts (costs and benefits) of the proposal.
• Any non-monetised impacts should be evidenced appropriately, indicating the likely net impact and the scale of the impact.

All costs and benefits must be compliant or in line with HMT’s Green Book, DfT Transport analysis guidance and DLUHC appraisal guidance

Value for money of proposal (factors that will be considered)

A summary of the overall value for money of the proposal.

• This should include reporting of Benefit Cost Ratios (BCR).
• If a BCR has been estimated there should be clear explanation of how this is estimated i.e. a methodology note
• The size and significance of the non-monetised impacts of the proposal should be included. These impacts should be evidenced and properly assessed.
• A summary assessment of risks and uncertainties that could affect the overall Value for Money.

Further details of requirements for Value for Money assessment are provided in Annex C: Economic case guidance.

Deliverability

Financial (factors that will be considered)

Provide details of:

• Costs and spend profile at the project and bid level, including how the costs have been determined and any assumptions.
• The whole funding package, setting out clearly what funding is secured from other sources and any major interdependencies where funding has not yet been secured. Any gaps in the funding must be clearly identified and evidence provided of any wider public or private sector co-funding commitments (that is letters, contractual commitments).
• The main financial risks and how they will be mitigated, including for example how cost overruns will be dealt with and shared between non-UKG funding partners, and the legal/governance structures that you intend to put in place with project partners who have a financial interest in the project.

Local match funding contributions will be taken into account during assessment. A local contribution of 10% or higher (local authority and/or third party) of the bid costs is encouraged.

A contribution is expected from private sector stakeholders, such as developers, if they stand to benefit from a specific bid.

Commercial (factors that will be considered)

Provide a robust procurement strategy which covers the full procurement lifecycle. This should also set out the rationale for the route selected, the other options considered and discounted alongside an explanation as to why it is appropriate for a bid of this scale and nature.

All procurements must be made in accordance with relevant legal requirements, including for example the Modern Slavery Act and government initiatives such as the Sourcing Playbook. Applicants must describe their approach to ensuring full compliance in order to discharge their legal duties.

Sustainability and green measures should be incorporated into procurement plans, wherever possible, aligned with the government’s Net Zero Strategy.

Management (factors that will be considered)

A delivery plan which demonstrates:

• clear milestones, key dependencies and interfaces, resource requirements, task durations and contingency;
• an understanding of roles and responsibilities (of the core team and wider delivery team), skills, capability, or capacity needed;
• arrangements for managing any delivery partners and the plan for benefits realisation;
• engagement of developers/occupiers (where needed);
• the strategy for managing stakeholders and considering their interests and influences;
• confirmation of statutory approvals for example planning permission and details of information of ownership or agreements of land/ assets needed to deliver the bid;
• please also list any powers/consents etc needed/obtained, details of date acquired, challenge period (if applicable) and date of expiry of powers and conditions attached to them; and
• the ability to spend some LUF funding in 2022/23.

A detailed risk assessment for the whole project life cycle which covers the main risks (these should be wide-ranging including for example health and safety and environmental risks) setting out:

• the barriers and level of risk to the delivery of your bid.
• appropriate and effective arrangements for managing and mitigating these risks
• a clear understanding on roles / responsibilities for risk

Evidence of a track record and past experience of delivering schemes of a similar scale and type.

Monitoring and evaluation (factors that will be considered)

A proportionate monitoring and evaluation (M&E) plan which sets out:

• Bid level M&E objectives and research questions.
• Outline of bid level M&E approach.
• Overview of key metrics for M&E (covering inputs, outputs, outcomes and impacts), informed by bid objectives and Theory of Change.
• Resourcing and governance arrangements for bid level M&E, including any commitment of resource / budget, and whether there are clear plans for dissemination and use of results.

Please review Annex E: Levelling Up Fund monitoring and evaluation guidance for more information and guidance.

Section 4: How the Fund will operate in Northern Ireland

We are taking a different approach to delivering the Fund in Northern Ireland, which reflects the different local government landscape compared to England, Scotland and Wales.

Who is eligible to bid?

Recognising the different local government landscape in Northern Ireland, different organisations will be eligible to bid compared to in England, Scotland and Wales. The UK government will accept bids from a range of local applicants, including but not limited to businesses, universities, voluntary and community sector organisations, district councils, the Northern Ireland Executive, and other public sector bodies.

For transport projects specifically, the Northern Ireland Executive holds many of the relevant powers. Where they are the lead applicant, they must engage with, and secure the support of, the relevant local council for the area in which the bid is based, in order to be considered for funding.

Northern Ireland Executive Departments are not eligible to bid for projects under the culture and regeneration themes, where the lead applicant should operate at a more local level.

In all cases, the applicant will need to have the powers and/or relevant consents to deliver the projects that form part of their bid.

The role of MPs is also different in NI – though they cannot provide formal priority support to bids as part of the assessment process as in England, Scotland and Wales, they can provide general support as part of the wider stakeholder engagement process. Applicants are encouraged to consult with both local MPs and Members of the Legislative Assembly when preparing their bids, however this support is not a condition or requirement for a bid to be successful.

As a wider range of organisations can apply to the Fund in NI, we will expect applicants to demonstrate through two additional gateway criteria that they have the capacity and capability to deliver capital projects. See the section on assessment and decision-making below.

Unlike for England, Scotland and Wales applicants, NI bid allowance numbers for applicants across the different types of bids are not determined by the eligibility criteria used in England, Scotland and Wales. NI applicants are encouraged to prioritise bids by submitting those that applicants believe will have the highest impact. Unsuccessful applicants from the first round of LUF are eligible and welcome to re-apply with a version of their bid in this round, noting the changes to the application, assessment and decision-making processes in this round, or with a new and different bid.

Risk detection and financial due diligence checks

As a public funding body both DLUHC and DfT have a duty to assess the level of risk associated with any funding proposal or projects that we support. To monitor and manage this risk, a series of checks are undertaken throughout the process that help us to assess the level of risk associated with applicant organisations (unless they are deemed to be exempt).

Applications from public funded organisations

The following public funded organisations will be exempt from these Stage 1 checks:

• government departments; 
• non-departmental public bodies; 
• arms-length bodies; 
• public corporations; 
• local authorities, regardless of structure (e.g. county, borough, district, city, unitary); 
• organisations (including private sector organisations) which are majority owned or controlled by a public sector organisation or a combination of public sector organisations in the UK. ‘Majority owned’ shall mean a public organisation:
  • is the beneficial owner of greater than 50% of that organisation’s share capital or equivalent,
  • has the ability to appoint those in control, or who determines the policy of the entity; and/or
  • has a right to be consulted over such appointments or to have a veto over appointments; and/or
  • has the provision of funding accompanied by rights of control over how that funding is spent; and/or
  • has a general right to control the day-to-day running of the body

Risk check (not applicable to public funded organisations):

Checks will be completed on all non-public funded organisations including all supporting organisations you are jointly working with that are also non-public organisations. Where the lead applicant is a public funded organisation, they must be satisfied that any non-public funded entities they jointly work with meet the necessary risk and financial due diligence checks as identified in this technical note.

The type of checks that we will conduct include but are not limited to:

• verifying information the applicant has supplied about the organisation against information available via public records such as Companies House, Charity Commission etc.
• conducting an identity check of senior management such as chief executives, directors, company secretaries against public records.
• completing financial due diligence checks against details available to us via credit record agencies and the applicant’s financial accounts.
• completing background verification checks to provide assurance that it would be safe to entrust public funds to the applicant’s organisation. This will be completed using a government due diligence tool that has pre-defined risk indicators.
• undertaking online checks of the applicant’s organisation website, social media pages.

This information will be used to evaluate the level of risk. Where concerns or unacceptably high risks have been identified, we reserve the right to decline applications at the Stage 1 Gateway. It is important that the information provided in applications is accurate and up to date.

Collaborative projects involving public and non-public funded organisations

Where the lead applicant is a public funded organisation and there are plans for the grant to be shared amongst project partners, we expect lead applicants to undertake appropriate due diligence checks including financial risk assessments. When submitting applications, the applicant’s Chief Finance Officer will be responsible for declaring adequate checks have been completed, and confirming that robust governance controls and legal arrangements will be in place to protect the use of public funds.

If applicants are intending to share the grant with third parties via a sub-grant arrangement, applicants will be required to explain this in the application. The Fund reserves the right to request further information about applicants’ project partners prior to proceeding to issuing a grant agreement. We may also decide to undertake additional due diligence checks to verify project partners should we consider this necessary.

Non-public funded applicants

For delivery in NI, all participating applicants for bids except for those where the sole or lead applicant is a public sector organisation will be subject to a financial due diligence check. If a joint bid application is submitted with a lead applicant that is a public sector organisation with partner applicants that are non-public sector organisations, the lead applicant must be satisfied that all the non-public sector applicants meet the necessary risk and due diligence checks (as identified in this technical note) as they will not be subject to additional financial due diligence checks by the department.

A non-public sector organisation is majority owned by private groups or people, usually as a means of establishment for profit or non-profit, rather than being owned by or under majority control by the government.

The following are examples of organisations that shall be deemed by the department to be non-public sector: 

• private sector businesses or joint ventures (whether limited by shares or guarantee); 
• partnerships / Limited Liability Partnerships; 
• voluntary organisations (regardless of charitable or non-charitable status); 
• community interest companies; 
• higher and further education colleges and equivalent; 
• universities

DLUHC and DfT have a zero-tolerance policy towards the misuse of public funds and fraud. If we establish a fraud risk during our evaluation of the application, we will decline the application and may report this to Police and National Crime Agency.

If the application is successful and it is established that fraudulent activity has occurred whilst managing the grant, we will implement measures to recover the funds. We will also withdraw any future payments and will report this to authorities. Project assurance and due diligence checks will be undertaken by us at key stages throughout. The applicant must not provide false or misleading information in the application or at any point in the life of the grant project.

Grant recipients must ensure they have adequate governance and financial controls in place to prevent and mitigate fraud or misuse of the grant funds, including measures to avoid and mitigate conflicts of interests. We expect recipients (including project partners) to adhere to ethical and professional standards and best practice principles set out in the Code of Conduct for Public Grant Recipients.

We will undertake audit checks as part of our project assurance measures, further information on this will be provided to successful applicants when we set up the grant.

Applicants are required to describe the governance procedures under the Deliverability section within the application form.

Financial accounts

All applicants (including those listed as joint applicants in joint bids) that are not exempt from the Stage 1 Gateway check, are required to submit audited Financial Statements covering the latest three financial years. Charities registered in Northern Ireland are required to submit the last three financial years annual accounts that have been independently examined/audited. To comply with this aspect, applicants who submit either no financial accounts, audited Financial Statements (or audited annual accounts for registered charities) covering less than three financial years or only unaudited accounts, would be deemed to have failed to meet the Gateway requirement.

Demonstration of capital project management

All applicants (including those listed as joint applicants in joint bids) who are not exempt are also required to provide evidence demonstrating that they have directly delivered two capital infrastructure projects of a similar size and scale of the project as a whole. These projects must have started and completed within the last five years and be delivered within a similar geographical context. This evidence will be used as part of our Stage 1 Gateway checks to determine applicants’ former financial and operational capability.

This differs from the Deliverability section of the assessment framework, which focuses on the proposed partnership arrangements. Where non-exempt bids are not supported with evidence of delivery, they would be deemed to have failed to meet Gateway criteria.

Capacity funding

A one-off capacity funding payment of £125,000 has been paid to all local authorities in Northern Ireland with the primary intention of supporting these local authorities to develop their bids throughout the lifetime of the Fund. No further capacity payments will be made available.

Section 5: The bidding process in Northern Ireland

Preparing and submitting applications

As with bidding authorities in England, Scotland, and Wales, NI applicants are invited to submit a capital bid via the online application portal. A capital bid can be for an individual project or a package of up to three projects, up to £20 million in grant value per bid. Large transport and culture bids of up to £50 million will be considered by exception.

The application form aligns to HM Treasury’s Green Book. In completing their application, local authorities should have regard to the Green Book including Annex A2: Place Based Analysis as well as specific Project business case guidance.

Applicants submitting individual, joint, package and large bids can contain proposals within a single theme, or across multiple themes, so long as they form part of a coherent, consistent proposal. When identifying the percentage of themes within a bid, applicants should define this according to project costs associated with activity in support of each theme. For example, if 75% of a bid’s total value contained project costs associated with activity in support of a regeneration output or outcome, with 25% costs associated with activity in support of a culture output or outcome, it would be defined as being a 75% regeneration and 25% culture bid.

There is no minimum LUF grant value that applicants can apply for.

The second round of the LUF is open to projects that can demonstrate spend from the Fund in the 2022-23 financial year. We would expect all funding provided from the Fund to be spent by 31 March 2025, and by 2025-26 on an exceptional basis.

All bids must be submitted in full, with all supporting documentation on the online application portal. Any bids or supporting documentation submitted after the deadline will not be assessed and will not be eligible to be considered for funding. Bids will be assessed and scored based on the information that has been submitted by the applicant. Information that is not provided or incomplete will have an impact on the assessment of the bid.

Package bids

A package bid is made up of two or three projects from one applicant. Package bids must clearly explain how their component elements are aligned with each other and represent a coherent set of interventions. They will be assessed together at the bid level rather than as individual projects. Applicants must present a coherent set of interventions in line with the aims of the Fund.

We therefore need to be able to assess how packages of projects work together. If there are weaknesses in one of the projects, places should be mindful that it will adversely impact on the overall score of their bid.

Joint bids

Applicants may wish to submit a joint bid. A joint bid is made up of a single project, or up to three projects that represent a coherent set of interventions, from multiple applicants. This may be appropriate where a project or set of projects cross administrative boundaries. Each applicant can request a maximum of £20 million of funding in a joint bid. For example, a joint bid from two applicants could request a maximum of £40 million. The maximum total investment for any joint bid is £60m. Where a joint bid is for a set of up to three projects, no more than £50 million of investment may be requested for any one individual component project within a joint bid.

Large bids

Large transport bids requiring up to £50 million

As with applicants in England, Scotland and Wales, bids will be accepted for large transport projects on an exceptional basis and must be “transport-only” bids. Such bids will need to be between £20 million and £50 million in grant value and can be submitted by an applicant provided they have the support of the authority with statutory responsibility for transport – evidenced by a completed pro forma.

An application should be submitted via the online application portal for all large bids in the same way as for other bids for the second round of the Fund. Large transport bids in England, Scotland and Wales will be subject to the same assessment and decision-making processes as other bids. Applicants should note that the level of detail provided in the application should be proportionate to the amount of funding that the applicant is requesting. For successful bids, a more detailed business case will need to be appraised before funding can be confirmed. These business cases will be assessed once announcements have been made. DfT will advise, after considering the application form, what further information is needed as part of a more detailed business case review. Business case approval will be required before all the funding can be issued.

For transport projects specifically, the Northern Ireland Executive holds many of the relevant powers. Where they are the lead applicant they must engage with and secure the support of the relevant local council for the area in which the bid is based, in order to be considered for funding. For any bids in Northern Ireland with transport elements, support from the relevant local council and the Northern Ireland Executive is an eligibility requirement.

Large culture bids requiring up to £50 million

In addition, in the second round of the Fund, we are prepared to fund large bids for up to £50 million under the Fund’s culture theme within NI. These bids will be funded on an exceptional basis to ensure the Fund’s focus of investing in smaller scale, local projects and the consideration of a fair spread across NI. Such bids will need to be between £20 million and £50 million in grant value. These must be at least 90% culture (as defined by the percentage of project costs associated with activity in support of a bid’s investment theme), and the remaining investment must be related to the culture element of the bid. It should also be in line with the Fund’s focus on highly visible interventions that boost local pride in place.

An application should be submitted via the online application portal for all large bids in the same way as for other bids for the second round of the Fund.

Large culture bids in NI will be subject to the same assessment and decision-making processes as other bids. Applicants should note that that the level of detail provided in the application should be proportionate to the amount of funding that the applicant is requesting.

For successful bids a more detailed business case will need to be approved before funding can be confirmed. These will be assessed once announcements have been made. DLUHC will advise, after considering the application form, what further information is needed as part of a more detailed business case review.

Information that is additional to the application form

Whilst there are some annexes that we ask applicants to complete (via the pro forma documents supplied) and some additional documents we request as evidence, applicants must point to specific additional text that they have submitted if they wish it to be considered in the assessment. Any answer referencing any information contained in annexes must be relevant to a specific question in the application form and referenced within the answer.

For any attachments, please take note of the following:

• applicants will not be able to submit more than 25 annexes in total. Further information about submitting annexes will be provided in the user guide.
• we cannot accept embedded links or file sharing, and information submitted in this way will not be considered.
• a folder with a number of pro forma documents applicants should use to supply specific annexes is available

This list sets out the annexes and attachments we would expect applicants to submit (although it is not exhaustive):

• a costings and planning workbook (for package bids, please complete the costings and planning workbook for package bids)
• evidence of stakeholder engagement
• a Theory of Change document
• evidence of confirmed match funding, provision of land from third parties as part of a local contribution and evidence in the form of a letter from an independent valuer to verify the true market value of the land
• a delivery plan
• evidence relating to statutory consents/land acquisition
• a copy of the risk register
• an explanatory note on how the Benefits-Cost Ratio (BCR) has been calculated
• a GIS file (recommended for projects that cover multiple locations) and a map defining the investment area
• a statement of compliance signed by the Chief Financial Officer (via the pro forma supplied)

Specific to joint bids:

• evidence of support from each partner to verify the combined proposal (via pro forma 3)

Specific to transport projects:

• a pro forma of support from the relevant authority with statutory responsibility for transport (via pro forma 4)
• other evidence the applicant believes will support answers provided in the Economic Case section. This could include for example, if proportionate to the size of the bid they are submitting, an appraisal summary table, relevant modelling, forecasting and data reports, AMAT spreadsheets, TUBA outputs and small scheme appraisal toolkits
• for large transport bids, evidence an applicant may include in support of their answers could include an Integrated Assurance and Approval Plan and an Option Assessment Report

Additional requirements specific to NI applicants:

• audited financial statements (or audited annual accounts for registered charities) covering the last three financial years from all non-public applicants (including those non-public sector listed as joint applicants in joint bids)
• evidence demonstrating direct delivery of two capital infrastructure projects of a similar size and scale from all applicants (including those non-public sector listed as joint applicants in joint bids)
• evidence of support from the NIE and the relevant local council with responsibility for transport (via pro forma 4)
• a detailed statement demonstrating how they will deliver the LUF activities compliantly under the UK subsidy control regime and/or State aid rules (for all non-public sector applicants)

Gateway, assessment and decision-making

As with England, Scotland and Wales bids, applications for NI will also be assessed in a three staged approach.

As with England, Scotland and Wales applicants, applicants in NI should refer to Table 1 for information regarding the framework for assessing, scoring and shortlisting bids.

Stage 1. Gateway

The first stage is a pass/fail gateway criterion, where all NI bids will be assessed against the following criteria:

• Bids must be submitted via the online application portal.
• Bids must confirm that some LUF grant funding will be defrayed in the 2022/23^{[footnote 1]} financial year.
• Bids must not apply above the maximum allowable grant value for LUF. This includes joint and package bids.
• Joint bids must be supported by evidence of support from the other party or other parties to verify the combined proposal (via pro forma 3 supplied).
• Applicants must satisfy the subsidy control/state aid risk assessment.
• All bids with a transport element must include a pro forma of support from the relevant local council with statutory responsibility for transport (via pro forma 4 supplied for NI applicants).
• Bids must be signed-off by the Chief Financial Officer (such as the S54 officer for local authority applicants).

In NI, for feasibility reasons, for single and joint bids where the participating applicants are from non-public organisations each applicant must:

• provide audited financial statements covering the last three years. Registered charities must be supported with the last three years audited or independently examined accounts (depending on the charity’s gross income);
• provide evidence demonstrating that they have directly delivered two capital infrastructure projects of a similar size and scale of the project as a whole. These projects must have started and completed within the last five years;
• pass the financial due diligence checks as set out above.

Applicants should note that information assessed at Stage 1 Gateway sits outside the scoring framework but will affect how the bid is processed. Bids that fail one or more of the gateway criteria will not be assessed and will not be eligible to be considered for funding. The departments reserve the right to reject bids on the basis of checks conducted on the information supplied for assessment at Stage 1 Gateway, including if the information provided is not submitted on time or the information supplied is insufficient.

Stage 2. Assessment and shortlisting

Bids will be assessed against 3 of the 4 criteria set out in the prospectus. This is because there is no Index of Priority Places in Northern Ireland for the second round. NI applications will be assessed against strategic fit, the economic case and deliverability in the same way as England, Scotland and Wales bids (see Table 1 above for details), with the exception of MP support which will not be reflected in the assessment, as MPs are not being asked to offer priority backing to bids. The three criteria carry equal weighting. Unless otherwise stated, the sub-criteria under Strategic Fit, Deliverability and Economic Case also carry equal weighting. The sub criteria within each criteria are outlined at Table 1. A funding shortlist for NI will be drawn up from those bids that score the highest overall and who score at least average or above on strategic fit, the economic case (with a minimum “Value for Money” rating), and deliverability.

As with applicants in England, Scotland and Wales, applicants should note that in the second round of the LUF, there are differences to how we will assess the Economic Case (previously named the Value for Money criteria in the first round). In the second round, the Economic Case criteria has been simplified from five sub-criteria to four. The “Appropriateness of data sources and evidence” and “Effectiveness of proposal in addressing problems” each contribute 20% towards the overall Economic Case score; and “Analysis of costs and benefits” and “Value for money of proposal” each contribute 30% towards the overall Economic Case score. Finally, there is a new minimum assessment score set for the “value for money of proposal” sub-criteria. These changes all contribute to give greater emphasis to the overall value for money of the bid.

Stage 3. Decision making

After bid assessment and moderation has concluded, and the shortlist has been drawn up, ministers will the make funding decisions from the NI shortlist of bids. Ministers may also factor some or all these additional considerations into their decision making:

• ensuring a reasonable thematic split of approved projects (e.g. across regeneration and town centre, transport and culture and heritage)
• ensuring a fair spread of approved projects across Northern Ireland, and between rural and urban areas
• ensuring a fair balance of approved projects across places in need
• prioritisation of either ‘Strategic Fit’ or ‘Deliverability’ or ‘Economic Case’ over the other criteria (noting this must be applied consistently to all projects)
• taking into account other investment in a local area including investment made from the first round the Fund to encourage a spread of levelling up funds across places.

Over the first and second round of the Fund at least 9% of total UK allocations will be set aside for Scotland, 5% for Wales, and 3% for Northern Ireland, subject to a suitable number of high-quality bids being submitted.

Annex A: Glossary

Individual bid

Submission made up of one project from one bidding entity/local authority

Package bid

A submission made up of two or three projects from one bidding entity/local authority

Joint bid

A submission made up of one project or a package of up to three projects by more than one bidding entity or local authority

OAR

Options Assessment Report

Cost-Benefit Analysis (CBA)

Analysis which assesses the value of as many of the costs and benefits of a proposal as feasible, including items for which the market does not provide a satisfactory measure of economic value.

Appraisal

Refers to the assessment made before decisions are taken of the economic, social, environmental, public account and distributional impacts that an intervention may have.

Benefit-Cost Ratio (BCR)

Given by PVB / PVC and indicates how much benefit is obtained for each unit of cost, with a BCR greater than 1 indicating that the benefits outweigh the costs.

Present Value of Costs (PVC)

The sum of discounted costs and revenues to the budget available over the appraisal period and gives the value of these impacts in the prices of a given base year.

Present Value of Benefits (PVB)

The sum of all discounted benefits and dis-benefits not included in the definition of the PVC over the appraisal period, and gives the value of these impacts in the prices of a given base year

Distributional Impacts (DIs)

Considers the variance of intervention impacts across different social groups.

Optimism Bias (OB)

The demonstrated systematic tendency for appraisers to be over-optimistic about key project parameters, including capital costs, operating costs, works duration and benefits delivery.

Formal Priority Support

Refers to the way MPs can select up to two bids to champion in the second round for the LUF (even if their bid was successful in the first round) for project(s) that directly benefits the MP’s constituency. This prioritisation is recognised and submitted as part of an application

A Quantified Risk Assessment (QRA)

Allows an expected value (defined as the average of all possible outcomes, taking account of the different probabilities of those outcomes occurring) of the cost of the proposal to be calculated. This expected value should form the ‘risk-adjusted’ cost estimate.

Evaluation

A systematic analytical process which examines the effectiveness of a project based on actual results. This can include what difference it made (impact evaluation), whether its benefits justified its costs (economic evaluation) and how it was delivered (process evaluation).

Annex B: Intervention framework

The second round of the Fund will focus on the same three core investment themes as the first round: smaller transport projects that make a genuine difference to local areas; town centre and high street regeneration; and support for maintaining and expanding the UK’s world-leading portfolio of cultural and heritage assets.

The specific interventions (or activities) will determine the outputs delivered and, subsequently, the outcomes and impacts that are realised by the place and, collectively, by the Fund overall. The tables below present lists of outputs, outcomes and impacts, which applicants can use to help inform the design of their bids. Applicants may wish to refer to this framework when developing the information submitted in their bid including their theory of change, which will be assessed.

Table B1 is a list of “standard” outputs that featured in the first round of the Fund. Places are strongly encouraged to design their bids so that the outputs delivered align with this list where possible – although it is recognised that some novel projects may produce outputs not featured in this list.

Table B2 is a list of outcomes and impacts that we would expect to be realised through the Fund and therefore applicants are encouraged to design bids that align with these – although the list is not exhaustive.

Table B1 – LUF Standard Outputs

Transport - standard outputs

• New public transport routes
• Transport nodes with new multimodal connection points
• Public transport improvements
• New or improved cycle ways
• New or improved pedestrian paths
• Roads converted to pedestrian or cycling ways
• Newly built roads
• Resurfaced/improved roads
• New or improved car parking spaces
• Alternative fuel charging/re-fuelling points

Regeneration - standard outputs

• New or improved residential units
• Green retrofits to existing residential units (i.e., improving energy efficiency and/or transitioning to clean heat)
• Green retrofits to existing non-residential units (i.e., improving energy efficiency and/or transitioning to clean heat)
• Dilapidated buildings improved
• Sites cleared
• Land rehabilitated
• Public realm created or improved
• Green or blue space created or improved
• New trees planted
• Public amenities/facilities created, improved, or relocated
• Floor space rationalised
• Increased 5G coverage
• New public Wi-Fi hotspots installed
• Additional commercial units with broadband access of at least 30Mbps
• Additional residential units with broadband access of at least 30Mbps
• Healthcare space created or improved
• Educational space created or improved
• Community centre space created or improved
• Sports centre space created or improved
• Retail space created or improved
• Hospitality space created or improved
• Office space created or improved
• Industrial space created or improved
• Other commercial space (not captured elsewhere) created or improved

Culture - standard outputs

• Cultural space created or improved
• Heritage buildings renovated/restored
• Volunteering opportunities supported

Table B2 – LUF Outcomes and Impacts

Transport - outcomes and impacts

• Change in cycle flow
• Change in pedestrian flow
• Change in vehicle flow
• Change in vehicle journey time
• Change in passenger numbers
• Change in vehicle delay
• Change in public transport reliability
• Mode shift
• Change in passenger experience/satisfaction
• Change in Electric Vehicle (EV) take-up
• Change in air quality

Culture - outcomes and impacts

• Change in the number of visitors to cultural venues
• Change in the number of cultural events
• Change in the audience numbers for cultural events
• Change in consumer spending at cultural venues

Regeneration and cross-cutting - outcomes and impacts

• Change in footfall
• Change in productivity and pay
• Change in employment rate
• Change in vacancy rates
• Change in perceptions of place (business, residents and visitors)
• Change in business investment
• Change in business sentiment
• Change in consumer spending
• Change in the number of students enrolling/completing FE and HE courses
• Change in the health of residents (physical and/or mental)

Annex C: Economic case guidance

Applicants will need to provide an economic case to demonstrate that their proposal delivers on the stated objectives and will generate value for money.

The economic case assessment should provide suitable and proportionate evidence of the expected impacts, benefits and costs, and overall value for money, and associated risks and uncertainties.

The economic case should be developed in a way that is consistent with the HM Treasury Green Book and with relevant departmental guidance. For transport bids, the economic case analysis should be consistent with guidance in DfT’s Transport analysis guidance. For regeneration projects and cultural projects, the economic case should be consistent with DLUHC appraisal guidance. There are further sources of appraisal guidance published by DfT or DLUHC that applicants may use to provide appropriate analysis for specific types of projects. For example, DFT’s Active Mode Appraisal Toolkit can be used for cycling and walking interventions. Templates for appraisal tables for transport projects (including the Appraisal Summary Table) are also available.

In line with the principles of these sources of appraisal guidance listed above, benefits should, where possible, be explained in terms of outcomes, For example, the economic case analysis for transport proposals could demonstrate how they will reduce journey times, support economic growth, or reduce carbon emissions.

In line with appraisal guidance, applicants should consider the extent of the analysis required to support their bid, which should be proportionate to the size of the scheme.

The economic case should include the following:

• for all projects, data analysis and evidence that demonstrate the scale and significance of local issues and the extent to which the bid contributes to addressing these issues, local objectives and levelling-up. Applicants should aim to justify that the data supplied is robust, unbiased, and that the level of evidence supplied is sufficient to explain local problems. The metrics and/or evidence supplied could include:
  • Socio-economic metrics. These metrics demonstrate whether the proposed investment is focused on an area which is a priority for levelling-up. For example:
  • Gross weekly earnings
  • Unemployment rate; Employment rate
  • Proportion of population educated to degree level or equivalent.
  • Multiple Index of Deprivation Ranking
  • Transport metrics. These metrics present comparative data on the performance of the transport network in the targeted area. For example:
  • Connectivity Measures such as the National Infrastructure Commission’s Connectivity dataset
  • Economic Impact metrics. The metrics provide insight on the potential impact of the proposed investment on the local economy. For example:
    • Transport User Benefits
    • Wider Economic Impacts (where these have been estimated in the business case)
• Evidence of whether the project is likely to meet its strategic objectives, referencing to and consistent with the assessment provided in the strategic case. Where appropriate, quantifiable impacts should be reported. This could include the use of a suitable appraisal model. Relevant case studies or examples of similar interventions that have been carried out previously could be referenced.
• appropriate identification and estimation of relevant impacts, benefits, and costs. There should be clear justification provided for which types of impacts, benefits and costs are considered, and that the analysis of these is proportionate for the impacts and proposal being considered. The analysis should be consistent with the Green Book guidance and the relevant departmental appraisal guidance. In the economic case all costs and benefits should be reported on a present value basis, adjusting for inflation and discounting to an appropriate base-year.
• a summary of the overall value for money of the proposal. This includes the monetisable and non-monetisable benefits that the project aims to deliver. Benefit Cost Ratios (BCRs) should be reported if they can be estimated, and these should be consistent with the relevant departmental appraisal guidance. As per both DfT and DLUHC appraisal guidance, an initial BCR and an adjusted BCR can be supplied. Monetised impacts calculated using an established methodology should be included in the initial BCR. Monetised impacts calculated using valuation methods that are not considered widely accepted, or are not consistent with departmental guidance, can be included in an adjusted BCR calculation. If it is not possible to estimate a BCR for the specific project, a clear explanation and justification should be provided of why not. The likely scale and significance of any non-monetisable benefits should be evidenced fully.
• there should be appropriate identification and analysis of risks and uncertainties that could affect the project impacts, benefits, costs, and overall value for money. This includes appropriate adjustments for optimism bias and sensitivity analysis of the key assumptions underpinning any calculations to estimate the benefits.
• A range of benefits could be considered in the value for money assessment of bids. This includes potential to boost local economic growth, environmental benefits (including contribution to achieving the UK Government’s Net Zero carbon commitments and improving local air quality), greater employment opportunities, reduced travel times to key services, increased footfall in town and city centres, crime reduction and social value to local communities. Bids for transport proposals should include clearly explaining their carbon benefits.
• The level of detail provided should be in proportion to the amount of funding that is requested. Bids will need to include comprehensive but proportionate assessment. This will vary according to the cost of the proposal and the outcomes at stake.

Applicants can also draw on the Department for Transport Levelling up toolkit. This toolkit is designed to help business case authors engage with and assess how a transport proposal contributes towards delivering the DfT strategic priority to Grow and Level Up the Economy. The toolkit can be used in the strategic dimension of the business case, where ‘levelling up’ is a relevant strategic objective of the transport programme or project.

Annex D: Member of Parliament pro forma of priority support – illustrative copy (for England, Scotland and Wales applicants only)

Please note this is an illustrative copy of the downloadable pro forma document, which should be used by applicants and can be found on the application guidance page.

Levelling Up Fund: MP pro forma of priority support

The government recognises the important role of Members of Parliament (MPs) in championing the interests of their constituents. MPs can provide formal priority support to up to two bids only in the second round of the Levelling Up Fund, including MPs who supported a successful or unsuccessful bid in the first round.

Where an MP provides priority support to a bid, they must copy the table below to a blank editable document. Please fill in the blank sections, insert a signature and send to the applicant local authority who must attach this with the application by the submission date. This must not be submitted in any other way.

A separate proforma must be submitted for each individual bid being provided with priority support. If multiple bids are set out on the same proforma, none of those bids will be considered as having formal priority support.

Name of MP

MP constituency

Bid name

Name of local authority

By completing and signing this pro forma of Support, I confirm:

i) which bid I am providing formal priority support to for the second round of the Levelling Up Fund and,
ii) that I am providing support to this bid as it directly benefits the economic, social and/or environmental considerations within my constituency.

On this basis I am providing formal priority support to this bid in the second round of the Levelling Up Fund.

If you wish, please state your reasons for providing priority support for this bid or any additional information you wish to supply (please note that we do not a require an explanation or any additional information):

Date

Signed

Annex E: Levelling Up Fund monitoring and evaluation guidance

The UK government is committed to levelling up across the whole of the United Kingdom to ensure that no community is left behind, particularly as we recover from the COVID-19 pandemic.

The LUF provides a unique opportunity to better understand whether, and how, small-scale infrastructure projects can be effective in driving prosperity and community pride in places experiencing a high level of economic challenge. To take advantage of this opportunity we will be undertaking rigorous monitoring and evaluation of LUF. Monitoring and evaluation of the Levelling Up Fund will involve a combination of national-level evaluation activity (led by DLUHC) with project-level monitoring and evaluation (led by local areas). In terms of national-level evaluation, our M&E strategy sets out the department’s plan for monitoring and evaluation of the LUF at a programme level.

This section outlines what M&E is and why we are doing it; our approach for programme-level M&E; and what we expect from successful applicants in terms of M&E, at both the programme- and project-level.

Large bids (those which request between £20 million and £50 million of investment from the Fund) will be subject to additional monitoring and evaluation requirements.

For Transport these are set out in the Local Authority Major Schemes Monitoring and Evaluation Framework. For other themes these will follow.

What M&E is and why we are doing it?

Monitoring and evaluation are closely related, and a typical evaluation will rely heavily on monitoring data. Monitoring observes programme implementation and performance through a continuous and systematic process of collecting data. It enables early intervention to take place if progress is slower than expected.

Evaluation is a systematic assessment of the design, implementation, and outcomes of an intervention (e.g., programme or project). It involves understanding how an intervention is being, or has been implemented and what effects it has, for whom and why. It identifies what can be improved and estimates its overall impacts and cost-effectiveness. Monitoring will demonstrate what has been delivered whereas evaluation will assess its impact.

A rigorous M&E approach is important to ensure accountability for public funding. It enables us to be accountable for delivering the funds and realising the policy aims for which funding was allocated; and it also provides accountability to places to ensure agreed projects are delivered.

The M&E approach is complemented by an Assurance and Performance Framework which sets out the Fund’s approach to assurance and accountability. The M&E requirements will form part of the Memorandum of Understanding (MoU) / Grant Funding Agreement (GFA) between us and the applicant. Adherence to the Fund’s M&E requirements will be taken into consideration when payments are made.

Programme-level M&E

Our overall approach to M&E includes:

• Ongoing monitoring of all projects with some mandatory requirements and significant standardisation of indicators to enable comparison and learning across places, while also allowing for some flexibility.
• Evaluation of the LUF programme as a whole (i.e., programme-level evaluation) as well as evaluation of individual projects at the local level.
• Responsibilities for these different components will be split between DLUHC/DfT and successful applicants (see “What we expect from successful applicants” below).

Monitoring

The monitoring process will involve the collection of data covering inputs, activities, outputs, outcomes, and impact. Inputs are the resources, financial and non-financial (e.g., in-kind contributions), that enable a project to take place. Outputs are evidence that a project activity has taken place, e.g., kilometres of cycle pathway constructed. Outcomes are the short-term and medium-term changes that arise from an activity taking place e.g., improved fitness of residents. Impact is the longer-term change that arises e.g., improved wellbeing of residents.

Evaluation

As part of the programme-level evaluation, we intend to undertake three types of evaluation set out below. These have been selected due to the type of learning we wish to gain from the programme. Further information can be found in the Magenta Book (HMT 2020).

• Process evaluation – to assess the efficiency and effectiveness of the Fund’s decision making and delivery
• Impact evaluation – to fully assess and understand the additional outcomes and impacts that have been achieved including intangible benefits identified in the programme’s business case
• Value for money evaluation – to measure the economic outcomes and benefits of the interventions and the programme’s cost-effectiveness.

Where possible, we aim to share data collected from outcomes and impacts with places, as this will allow for a richer understanding and use of the data collected.

What we expect from successful applicants

We have divided responsibilities for M&E in a way that enables successful applicants to focus on collecting data for monitoring purposes and for DLUHC to lead on programme-level evaluation.

Monitoring

Places will need to collect data on inputs, activities, outcomes and outputs. We will require preliminary information to be provided ahead of inception meetings taking place. Subsequent quarterly reporting will primarily focus on project expenditure, project progress, project changes and stakeholder engagement. Every 6 months, places will also have to report on outputs and outcomes. This includes several mandatory indicators and a selection of indicators which the applicant will decide based on the project mix. All of this should be built into the applicant’s project management activities.

DLUHC will lead on data collection for outcomes and impacts but in some instances, we will require some assistance from the applicant to collect data where alternative data sources are not available to DLUHC. Depending on the objectives of the applicant’s project(s), this could include data that is not routinely collected at the local authority level (or lower) – for example, to baseline cycle counts or air quality levels before project implementation. The collection of baseline data is time sensitive as it is important to ensure data is collected prior to the project starting to enable the impact of the project to be estimated upon its completion.

Evaluation

DLUHC will lead the programme-level evaluation, which will look at the Fund as a whole. Applicants will undertake their own project evaluations to further their own understanding of what works, and why, in their local area. Adoption of standard output and outcome indicators (further guidance on indicators will be issued in due course) will increase the complementarity of project evaluations with the programme-level evaluation led by DLUHC. Plans for project evaluations should be proportionate to the scale of the project.

On the programme-level evaluation it is also worth noting that we will require assistance from successful applicants to carry out the programme-level evaluation. This could include facilitating access to sites, identifying stakeholders for study teams and/or participation in focus groups or interviews. As mentioned, there may also be a small number of outcome indicators that we require from applicants to collect data on.

Application

As part of the application, we would like applicants to carefully consider how they will ensure the timely collection and reporting of data as part of the monitoring process; and what evaluation applicants can undertake at a local level that will both complement the programme-level evaluation and provide useful insights for applicants about what works, and why, in the local area.

We expect applicants to cover each of the following points within their application – although this list is not exhaustive, and applicants may want to provide further details on their plans for monitoring and evaluation:

• What you want to achieve through your project-level M&E, e.g., what are the key learning questions that you want to answer?
• Your overall approach to M&E, e.g., do you intend to undertake process, impact and/or value for money evaluations covering all projects?
• What will be the key deliverables (e.g., interim and final reports) and how will these be used and disseminated?
• The data that you will need, or want, to collect for both the programme- and project-level M&E, referring to your theory of change to identify key inputs, activities, outputs, outcomes, and impacts. It would be particularly useful if you’re able to identify any local data sources that could complement national data sources relating to outcomes and impacts. It would also be useful to understand how you plan to collect baseline data in a timely manner.
• How you will resource both the monitoring and evaluation elements, e.g., who will collect the data? Who will undertake the evaluation activities?
• What processes will you put in place to ensure data collection is both timely and accurate, e.g., what evidence will you collect to support the data reported?

As mentioned above, the data successful applicants submit to DLUHC and DfT as part of the programme-level monitoring process will need to be standardised as much as possible to enable aggregation at the programme-level. Therefore, we ask applicants to try to frame the outputs, outcomes and impacts in their application to align with those set out in Annex B, as this will aid the subsequent selection of indicators for tracking progress.

M&E resources that applicants may find useful:

1. Levelling Up Fund: monitoring and evaluation strategy

2. Better Evaluation

3. The Magenta Book

4. The What Works Centre for Local Economic Growth

Annex F: A guide to bid allowance (for England, Scotland and Wales applicants only)

This table sets out the remaining number of constituency-based and transport-only bids each eligible local authority in England, Scotland, and Wales is able to submit, taking into account successful bids in the first round of LUF.

Information on the institutions that are eligible to apply, and how bid allowances have been determined, is available.

The latest Ward to Westminster Parliamentary Constituency to Local Authority District to Upper Tier Local Authority Lookup published by the Office for National Statistics has been used to determine the location of constituencies and whether local authority and parliamentary constituency boundaries overlap. As set out in the technical note, no distinction is made between whole and partial constituencies for the purposes of determining the remaining constituency bid balances.

Those successful bids from the first round that represent an investment of at least 90% in transport have been deducted from an applicant’s transport allowance where available. All other successful bids from the first round have been deducted from the applicant’s constituency balance.

Local Authority (LA) name	Step 1: LA type	Constituency balance	Transport balance	Total remaining
Aberdeen City	Unitary Authority	2	1	3
Aberdeenshire	Unitary Authority	3	1	4
Adur	District Council	1	0	1
Allerdale	District Council	3	0	3
Amber Valley	District Council	3	0	3
Angus	Unitary Authority	3	1	4
Argyll and Bute	Unitary Authority	1	1	2
Arun	District Council	2	0	2
Ashfield	District Council	2	0	2
Ashford	District Council	1	0	1
Babergh	District Council	1	0	1
Barking and Dagenham	London Borough	2	0	2
Barnet	London Borough	3	0	3
Barnsley	Metropolitan Borough	4	0	4
Barrow-in-Furness	District Council	0	0	0
Basildon	District Council	3	0	3
Basingstoke and Deane	District Council	3	0	3
Bassetlaw	District Council	2	0	2
Bath and North East Somerset	Unitary Authority	2	0	2
Bedford	Unitary Authority	3	1	4
Bexley	London Borough	3	0	3
Birmingham	Metropolitan Borough	7	0	7
Blaby	District Council	2	0	2
Blackburn with Darwen	Unitary Authority	2	1	3
Blackpool	Unitary Authority	2	1	3
Blaenau Gwent	Unitary Authority	1	1	2
Bolsover	District Council	1	0	1
Bolton	Metropolitan Borough	2	0	2
Boston	District Council	1	0	1
Bournemouth, Christchurch and Poole	Unitary Authority	5	1	6
Bracknell Forest	Unitary Authority	2	1	3
Bradford	Metropolitan Borough	4	0	4
Braintree	District Council	2	0	2
Breckland	District Council	2	0	2
Brent	London Borough	2	0	2
Brentwood	District Council	1	0	1
Bridgend	Unitary Authority	2	1	3
Brighton and Hove	Unitary Authority	2	1	3
Bristol, City of	Unitary Authority	4	0	4
Broadland	District Council	2	0	2
Bromley	London Borough	4	0	4
Bromsgrove	District Council	0	0	0
Broxbourne	District Council	1	0	1
Broxtowe	District Council	2	0	2
Buckinghamshire	Unitary Authority	5	1	6
Burnley	District Council	0	0	0
Bury	Metropolitan Borough	0	0	0
Caerphilly	Unitary Authority	3	1	4
Calderdale	Metropolitan Borough	1	0	1
Cambridge	District Council	2	0	2
Cambridgeshire and Peterborough	Combined Authority	0	1	1
Camden	London Borough	2	0	2
Cannock Chase	District Council	0	0	0
Canterbury	District Council	2	0	2
Cardiff	Unitary Authority	4	1	5
Carlisle	District Council	2	0	2
Carmarthenshire	Unitary Authority	1	1	2
Castle Point	District Council	1	0	1
Central Bedfordshire	Unitary Authority	3	0	3
Ceredigion	Unitary Authority	0	1	1
Charnwood	District Council	2	0	2
Chelmsford	District Council	3	0	3
Cheltenham	District Council	2	0	2
Cherwell	District Council	3	0	3
Cheshire East	Unitary Authority	5	1	6
Cheshire West and Chester	Unitary Authority	5	1	6
Chesterfield	District Council	1	0	1
Chichester	District Council	2	0	2
Chorley	District Council	2	0	2
City of Edinburgh	Unitary Authority	4	1	5
City of London	London Borough	1	0	1
Clackmannanshire	Unitary Authority	1	1	2
Colchester	District Council	3	0	3
Conwy	Unitary Authority	2	1	3
Copeland	District Council	1	0	1
Cornwall	Unitary Authority	6	1	7
Cotswold	District Council	1	0	1
County Durham	Unitary Authority	5	0	5
Coventry	Metropolitan Borough	3	0	3
Craven	District Council	1	0	1
Crawley	District Council	1	0	1
Croydon	London Borough	3	0	3
Cumbria	County Council	0	1	1
Dacorum	District Council	2	0	2
Darlington	Unitary Authority	2	0	2
Dartford	District Council	1	0	1
Denbighshire	Unitary Authority	3	1	4
Derby	Unitary Authority	3	1	4
Derbyshire	County Council	0	0	0
Derbyshire Dales	District Council	1	0	1
Devon	County Council	0	1	1
Doncaster	Metropolitan Borough	2	0	2
Dorset	Unitary Authority	5	1	6
Dover	District Council	2	0	2
Dudley	Metropolitan Borough	5	0	5
Dumfries and Galloway	Unitary Authority	2	1	3
Dundee City	Unitary Authority	2	1	3
Ealing	London Borough	2	0	2
East Ayrshire	Unitary Authority	2	1	3
East Cambridgeshire	District Council	2	0	2
East Devon	District Council	3	0	3
East Dunbartonshire	Unitary Authority	3	1	4
East Hampshire	District Council	2	0	2
East Hertfordshire	District Council	3	0	3
East Lindsey	District Council	3	0	3
East Lothian	Unitary Authority	1	1	2
East Renfrewshire	Unitary Authority	1	1	2
East Riding of Yorkshire	Unitary Authority	5	1	6
East Staffordshire	District Council	2	0	2
East Suffolk	District Council	3	0	3
East Sussex	County Council	0	0	0
Eastbourne	District Council	0	0	0
Eastleigh	District Council	2	0	2
Eden	District Council	1	0	1
Elmbridge	District Council	2	0	2
Enfield	London Borough	3	0	3
Epping Forest	District Council	3	0	3
Epsom and Ewell	District Council	1	0	1
Erewash	District Council	2	0	2
Essex	County Council	0	1	1
Exeter	District Council	2	0	2
Falkirk	Unitary Authority	2	0	2
Fareham	District Council	2	0	2
Fenland	District Council	1	0	1
Fife	Unitary Authority	5	1	6
Flintshire	Unitary Authority	2	1	3
Folkestone and Hythe	District Council	1	0	1
Forest of Dean	District Council	0	0	0
Fylde	District Council	1	0	1
Gateshead	Metropolitan Borough	4	0	4
Gedling	District Council	2	0	2
Glasgow City	Unitary Authority	7	1	8
Gloucester	District Council	1	0	1
Gloucestershire	County Council	0	0	0
Gosport	District Council	1	0	1
Gravesham	District Council	1	0	1
Great Yarmouth	District Council	1	0	1
Greater London Authority	Greater London Authority	0	1	1
Greater Manchester	Combined Authority	0	1	1
Greenwich	London Borough	3	0	3
Guildford	District Council	4	0	4
Gwynedd	Unitary Authority	2	1	3
Hackney	London Borough	2	0	2
Halton	Unitary Authority	2	0	2
Hambleton	District Council	2	0	2
Hammersmith and Fulham	London Borough	2	0	2
Hampshire	County Council	0	1	1
Harborough	District Council	3	0	3
Haringey	London Borough	2	0	2
Harlow	District Council	1	0	1
Harrogate	District Council	3	0	3
Harrow	London Borough	3	0	3
Hart	District Council	2	0	2
Hartlepool	Unitary Authority	1	0	1
Hastings	District Council	1	0	1
Havant	District Council	2	0	2
Havering	London Borough	3	0	3
Herefordshire, County of	Unitary Authority	2	1	3
Hertfordshire	County Council	0	1	1
Hertsmere	District Council	1	0	1
High Peak	District Council	1	0	1
Highland	Unitary Authority	2	1	3
Hillingdon	London Borough	3	0	3
Hinckley and Bosworth	District Council	1	0	1
Horsham	District Council	2	0	2
Hounslow	London Borough	2	0	2
Huntingdonshire	District Council	2	0	2
Hyndburn	District Council	1	0	1
Inverclyde	Unitary Authority	1	1	2
Ipswich	District Council	2	0	2
Isle of Anglesey	Unitary Authority	1	1	2
Isle of Wight	Unitary Authority	0	1	1
Isles of Scilly	Unitary Authority	1	0	1
Islington	London Borough	2	0	2
Kensington and Chelsea	London Borough	2	0	2
Kent	County Council	0	1	1
King’s Lynn and West Norfolk	District Council	2	0	2
Kingston upon Hull, City of	Unitary Authority	2	1	3
Kingston upon Thames	London Borough	2	0	2
Kirklees	Metropolitan Borough	4	0	4
Knowsley	Metropolitan Borough	3	0	3
Lambeth	London Borough	3	0	3
Lancashire	County Council	0	1	1
Lancaster	District Council	2	0	2
Leeds	Metropolitan Borough	7	0	7
Leicester	Unitary Authority	0	1	1
Leicestershire	County Council	0	1	1
Lewes	District Council	1	0	1
Lewisham	London Borough	3	0	3
Lichfield	District Council	2	0	2
Lincoln	District Council	1	0	1
Lincolnshire	County Council	0	0	0
Liverpool	Metropolitan Borough	4	0	4
Liverpool City Region	Combined Authority	0	0	0
Luton	Unitary Authority	1	1	2
Maidstone	District Council	2	0	2
Maldon	District Council	2	0	2
Malvern Hills	District Council	1	0	1
Manchester	Metropolitan Borough	4	0	4
Mansfield	District Council	1	0	1
Medway	Unitary Authority	2	1	3
Melton	District Council	1	0	1
Mendip	District Council	2	0	2
Merthyr Tydfil	Unitary Authority	2	1	3
Merton	London Borough	2	0	2
Mid Devon	District Council	2	0	2
Mid Suffolk	District Council	2	0	2
Mid Sussex	District Council	3	0	3
Middlesbrough	Unitary Authority	2	0	2
Midlothian	Unitary Authority	1	1	2
Milton Keynes	Unitary Authority	2	1	3
Mole Valley	District Council	2	0	2
Monmouthshire	Unitary Authority	2	1	3
Moray	Unitary Authority	1	1	2
Na h-Eileanan Siar	Unitary Authority	1	1	2
Neath Port Talbot	Unitary Authority	2	1	3
New Forest	District Council	2	0	2
Newark and Sherwood	District Council	1	0	1
Newcastle upon Tyne	Metropolitan Borough	1	0	1
Newcastle-under-Lyme	District Council	4	0	4
Newham	London Borough	0	0	0
Newport	Unitary Authority	2	1	3
Norfolk	County Council	0	1	1
North Ayrshire	Unitary Authority	2	0	2
North Devon	District Council	1	0	1
North East	Combined Authority	0	1	1
North East Derbyshire	District Council	2	0	2
North East Lincolnshire	Unitary Authority	2	1	3
North Hertfordshire	District Council	3	0	3
North Kesteven	District Council	2	0	2
North Lanarkshire	Unitary Authority	5	1	6
North Lincolnshire	Unitary Authority	3	1	4
North Norfolk	District Council	2	0	2
North Northamptonshire	Unitary Authority	4	1	5
North of Tyne	Combined Authority	0	1	1
North Somerset	Unitary Authority	2	1	3
North Tyneside	Metropolitan Borough	2	0	2
North Warwickshire	District Council	2	0	2
North West Leicestershire	District Council	1	0	1
North Yorkshire	County Council	0	1	1
Northumberland	Unitary Authority	5	0	5
Norwich	District Council	2	0	2
Nottingham	Unitary Authority	3	0	3
Nottinghamshire	County Council	0	1	1
Nuneaton and Bedworth	District Council	2	0	2
Oadby and Wigston	District Council	1	0	1
Oldham	Metropolitan Borough	3	0	3
Orkney Islands	Unitary Authority	1	1	2
Oxford	District Council	2	0	2
Oxfordshire	County Council	0	1	1
Pembrokeshire	Unitary Authority	1	1	2
Pendle	District Council	0	0	0
Perth and Kinross	Unitary Authority	2	1	3
Peterborough	Unitary Authority	1	0	1
Plymouth	Unitary Authority	3	0	3
Portsmouth	Unitary Authority	1	1	2
Powys	Unitary Authority	0	1	1
Preston	District Council	3	0	3
Reading	Unitary Authority	2	1	3
Redbridge	London Borough	4	0	4
Redcar and Cleveland	Unitary Authority	2	0	2
Redditch	District Council	1	0	1
Reigate and Banstead	District Council	3	0	3
Renfrewshire	Unitary Authority	2	0	2
Rhondda Cynon Taf	Unitary Authority	2	0	2
Ribble Valley	District Council	1	0	1
Richmond upon Thames	London Borough	2	0	2
Richmondshire	District Council	1	0	1
Rochdale	Metropolitan Borough	2	0	2
Rochford	District Council	2	0	2
Rossendale	District Council	2	0	2
Rother	District Council	2	0	2
Rotherham	Metropolitan Borough	1	0	1
Rugby	District Council	2	0	2
Runnymede	District Council	1	0	1
Rushcliffe	District Council	2	0	2
Rushmoor	District Council	1	0	1
Rutland	Unitary Authority	1	1	2
Ryedale	District Council	1	0	1
Salford	Metropolitan Borough	2	0	2
Sandwell	Metropolitan Borough	4	0	4
Scarborough	District Council	2	0	2
Scottish Borders	Unitary Authority	2	1	3
Sedgemoor	District Council	2	0	2
Sefton	Metropolitan Borough	3	0	3
Selby	District Council	1	0	1
Sevenoaks	District Council	3	0	3
Sheffield	Metropolitan Borough	4	0	4
Shetland Islands	Unitary Authority	1	1	2
Shropshire	Unitary Authority	4	1	5
Slough	Unitary Authority	2	1	3
Solihull	Metropolitan Borough	2	0	2
Somerset	County Council	0	0	0
Somerset West and Taunton	District Council	2	0	2
South Ayrshire	Unitary Authority	2	1	3
South Cambridgeshire	District Council	2	0	2
South Derbyshire	District Council	1	0	1
South Gloucestershire	Unitary Authority	3	0	3
South Hams	District Council	2	0	2
South Holland	District Council	1	0	1
South Kesteven	District Council	3	0	3
South Lakeland	District Council	2	0	2
South Lanarkshire	Unitary Authority	4	1	5
South Norfolk	District Council	3	0	3
South Oxfordshire	District Council	2	0	2
South Ribble	District Council	2	0	2
South Somerset	District Council	2	0	2
South Staffordshire	District Council	2	0	2
South Tyneside	Metropolitan Borough	2	0	2
South Yorkshire	Combined Authority	0	1	1
Southampton	Unitary Authority	3	1	4
Southend-on-Sea	Unitary Authority	1	1	2
Southwark	London Borough	3	0	3
Spelthorne	District Council	1	0	1
St Albans	District Council	3	0	3
St. Helens	Metropolitan Borough	2	0	2
Stafford	District Council	2	0	2
Staffordshire	County Council	0	1	1
Staffordshire Moorlands	District Council	2	0	2
Stevenage	District Council	2	0	2
Stirling	Unitary Authority	1	1	2
Stockport	Metropolitan Borough	4	0	4
Stockton-on-Tees	Unitary Authority	1	0	1
Stoke-on-Trent	Unitary Authority	0	1	1
Stratford-on-Avon	District Council	2	0	2
Stroud	District Council	2	0	2
Suffolk	County Council	0	1	1
Sunderland	Metropolitan Borough	2	0	2
Surrey	County Council	0	1	1
Surrey Heath	District Council	1	0	1
Sutton	London Borough	2	0	2
Swale	District Council	2	0	2
Swansea	Unitary Authority	3	1	4
Swindon	Unitary Authority	2	1	3
Tameside	Metropolitan Borough	2	0	2
Tamworth	District Council	1	0	1
Tandridge	District Council	1	0	1
Tees Valley	Combined Authority	0	1	1
Teignbridge	District Council	2	0	2
Telford and Wrekin	Unitary Authority	2	1	3
Tendring	District Council	2	0	2
Test Valley	District Council	2	0	2
Tewkesbury	District Council	2	0	2
Thanet	District Council	0	0	0
Three Rivers	District Council	3	0	3
Thurrock	Unitary Authority	2	1	3
Tonbridge and Malling	District Council	2	0	2
Torbay	Unitary Authority	2	1	3
Torfaen	Unitary Authority	2	1	3
Torridge	District Council	1	0	1
Tower Hamlets	London Borough	1	0	1
Trafford	Metropolitan Borough	3	0	3
Tunbridge Wells	District Council	2	0	2
Uttlesford	District Council	1	0	1
Vale of Glamorgan	Unitary Authority	2	1	3
Vale of White Horse	District Council	2	0	2
Wakefield	Metropolitan Borough	3	0	3
Walsall	Metropolitan Borough	3	0	3
Waltham Forest	London Borough	3	0	3
Wandsworth	London Borough	2	0	2
Warrington	Unitary Authority	2	1	3
Warwick	District Council	2	0	2
Warwickshire	County Council	0	1	1
Watford	District Council	1	0	1
Waverley	District Council	2	0	2
Wealden	District Council	4	0	4
Welwyn Hatfield	District Council	2	0	2
West Berkshire	Unitary Authority	3	1	4
West Devon	District Council	2	0	2
West Dunbartonshire	Unitary Authority	0	1	1
West Lancashire	District Council	2	0	2
West Lindsey	District Council	0	0	0
West Lothian	Unitary Authority	2	1	3
West Midlands	Combined Authority	0	1	1
West Northamptonshire	Unitary Authority	4	1	5
West of England	Combined Authority	0	1	1
West Oxfordshire	District Council	1	0	1
West Suffolk	District Council	3	0	3
West Sussex	County Council	0	1	1
West Yorkshire	Combined Authority	0	1	1
Westminster	London Borough	2	0	2
Wigan	Metropolitan Borough	4	0	4
Wiltshire	Unitary Authority	5	1	6
Winchester	District Council	2	0	2
Windsor and Maidenhead	Unitary Authority	2	1	3
Wirral	Metropolitan Borough	3	0	3
Woking	District Council	1	0	1
Wokingham	Unitary Authority	4	1	5
Wolverhampton	Metropolitan Borough	2	0	2
Worcester	District Council	1	0	1
Worcestershire	County Council	0	1	1
Worthing	District Council	2	0	2
Wrexham	Unitary Authority	1	1	2
Wychavon	District Council	3	0	3
Wyre	District Council	3	0	3
Wyre Forest	District Council	0	0	0
York	Unitary Authority	2	1	3

Annex G: A guide to subsidy control and state aid

An introduction

From 1 January 2021, an interim UK Subsidy Control Regime has replaced the EU State aid scheme which will no longer apply to the UK except under limited circumstances in Northern Ireland.

All funding administered by a public authority must take account of subsidy control obligations (or for Northern Ireland both the subsidy control regime and State aid law) as well as all other relevant legal obligations such as procurement law (together “relevant laws”). This means that as the LUF awarding department, DLUHC is responsible for ensuring that the funding it provides complies with relevant laws. As part of this compliance, DLUHC requires all applicants to confirm if the LUF award has the potential to constitute a subsidy, and where it does, explain how that subsidy can be provided compliantly. Similarly, where applicable, applicants must demonstrate how the LUF award is State aid compliant.

Where the lead applicant has plans to allocate some of the grant funds to third parties, such as project partners working with applicants to deliver the project, (e.g., sub-granting), applicants must ensure any further disbursement of the grant is done so in accordance with any applicable subsidy control or State aid rules. Applicants are responsible for ensuring appropriate legal agreements are in place with project partners, with adequate clawback provisions to protect public funds should it be later found that the rules have not been followed correctly or awards have been made based on incorrect or misleading information.

Applicants must also be aware that public authorities are required to record how the terms of any award meet the appropriate subsidy control and/or State aid laws, including how they are delivered. The Department for Business, Energy and Industrial Strategy has developed a new publicly accessible transparency database for public authorities to record subsidies. For record keeping purposes, all public authorities including DLUHC will be required to record and submit information on any subsidies awarded, either on the UK database or, where applicable, the EU State aid database(s).

In the first round of the LUF, all applicants were approached separately to confirm if their bid constituted a subsidy or State aid. For the second round of the LUF, the application form includes a new section specifically devoted to subsidy control and State aid. All applicants must complete this part of the application - none are exempt.

This guidance applies to all applicants.

How we will assess information on Subsidy Control / State Aid

Whilst the application form now includes a dedicated section for subsidy control/State aid, the assessment will not be limited to this section, and we will also consider the applicant’s responses across the wider application (particularly the Deliverability section). The subsidy control/State aid assessment will sit independently (it will not be considered as part of the scoring framework). Responses will be subject to a risk RAG rating process, where a bid presents an unacceptable risk where proposals clearly cite non-compliant delivery then the bid may fail the assessment and could be recommended for rejection on the grounds of ineligibility.

Where applicants do not adequately demonstrate that the LUF award is compliant under the UK Subsidy Control Regime or State aid rules then the project could be considered ineligible, and the application may be rejected at Gateway.

Application requirements under the UK Subsidy Control Regime

All applicants must consider if the LUF investment will be used to provide a direct subsidy in line with UK’s obligations on subsidy control as per UK Government guidance.

UK Subsidy Control guidance has been issued for public authorities to help them interpret the subsidy control principles, this is also applicable for non-public organisations to understand how these principles must be applied. All applicants please see the guidance for further information:

Firstly, all applicants must establish whether any of the planned activities detailed in the LUF bid could constitute a subsidy. There are four key characteristics of a support measure that are likely to indicate that it would be considered a subsidy, all of which would need to be met:

1. first, the support measure must constitute a financial (or in kind) contribution such as a grant, loan or guarantee and must be provided by a ‘public authority’, including, but not limited to, central, devolved, regional or local government;

2. second, the support measure must confer an economic advantage on one or more economic actors;

3. third, the support measure is specific insofar as it benefits, as a matter of law or fact, certain economic actors over others in relation to the production of certain goods or services; and

4. finally, the support measure must have the potential to cause a distortion in or harm to competition, trade, or investment.

“Economic actor” means an entity or a group of entities constituting a single economic entity, regardless of its legal status, that is engaged in an economic activity by offering goods or services on a market.

Applicants must consider whether any of the planned activities detailed in their LUF bid meet all four of these characteristics. Where the characteristics are all met, applicants are then asked to explain how the subsidy could be provided compliantly. This will involve consideration of the how the subsidy can be provided in accordance with the following subsidy control principles listed in the Subsidy Control Act:

1. subsidies should pursue a specific public policy objective to remedy an identified market failure or to address an equity rationale such as social difficulties or distributional concerns (“the objective”)

2. subsidies should be proportionate and limited to what is necessary to achieve the objective.

3. subsidies should be designed to bring about a change of economic behaviour of the beneficiary that is conducive to achieving the objective and that would not be achieved in the absence of subsidies being provided.

4. subsidies should not normally compensate for the costs the beneficiary would have funded in the absence of any subsidy.

5. subsidies should be an appropriate policy instrument to achieve a public policy objective and that objective cannot be achieved through other less distortive means.

6. subsidies should be designed to achieve their specific policy objective while minimising any negative effects on competition or investment within the United Kingdom.

7. subsidies’ positive contributions to achieving the objective should outweigh any negative effects, in particular the negative effects on trade or investment between the Parties.

If the proposed LUF activities do represent a subsidy but all principles have not been met, the LUF application will be considered non-compliant and may be rejected.

Applicants are strongly advised to seek legal advice before completing this part of the application form.

Additional application requirements specific to public sector applicant organisations

Where local authority applicants are using LUF monies directly, they are expected to complete the subsidy control sections of the application form.

However, where local authorities are intending to grant LUF monies to a third party they must provide evidence that the process they will follow is compliant. From 1 January 2021 all funding administered by a local authority must take account of subsidy control obligations, this applies to any onward award of LUF monies to third party organisations. Where the department is delegating this responsibility to local authorities the department must be satisfied that the local authorities will award compliantly. In this instance the authority’s Chief Finance Officer must provide a signed statement of compliance verifying compliant delivery.

Application requirements under Subsidy Control and State aid law delivery in Northern Ireland

All organisations in Northern Ireland (public and non-public) will be subject to the subsidy control and State aid rules. EU State aid rules will continue to apply to the UK in respect of measures which affect trade in goods and electricity between NI and the EU and will primarily apply to aid for manufactures and sellers of goods located in Northern Ireland that trade with the EU.

Some subsides granted in Great Britain are in scope where there is a clear benefit from and a genuine, direct link between the subsidy in Great Britain and companies in Northern Ireland. See further guidance.

In Northern Ireland, the department will be the direct aid granter to all applicants; public and non-public. We will require all applicants to set out how they will manage a compliant State aid/subsidy control scheme.

For bids in Northern Ireland which include activities considered to be State aid, applicants are required to explain at the outset the basis on which they would be receiving aid. This could be, for example, aid given under the General Block Exemption Regulation (GBER).

Where an applicant believes that a subsidy may be in scope DLUHC as the responsible public authority, may seek further guidance from the BEIS subsidy control team.

The applicant must apply the State aid tests to each organisation which may benefit from the LUF award. To do this, the applicant must list each entity which has the potential to have an economic advantage as a result of the funding. The applicant must then apply each of the four tests to each beneficiary to establish where the award will constitute State aid. All four tests which would need to be met:

• Is the support granted by the state or through state resources?
• Does the support confer a selective advantage to an undertaking?
• Does the support distort or have the potential to distort competition?
• Does the support affect trade between Member States?

Applicants must consider whether the award meets all the tests for each beneficiary. If all four tests are met and the aid affects trade in goods or electricity between Northern Ireland and the EU then the award constitutes State aid and must comply with the State aid law.

Applicants must also set out how they will monitor and manage the delivery of the aid to demonstrate how the provision of the aid will continue to be delivered compliantly for audit purposes.

Where the applicant is a beneficiary and is subject to a State aid recovery, the applicant must supply the details explaining the terms of the recovery and brief details.

Any unlawful award of State aid is likely to result in the recovery of the aid from the beneficiary with compound interest backdated to the date of the award. To reduce the risk of non-compliance all non-public sector applicants are required to submit a detailed statement demonstrating how they will deliver the LUF activities compliantly Where applicants are using State aid they must set out the basis in which aid will be provided. Where applicants are looking to apply on the basis of a specific GBER they must demonstrate how the project meets each of the conditions. The statement must be aligned to the applicant’s response on State aid

Where a non-public sector applicant’s project is successful for funding, the State aid approach referenced in the application will form part of a Grant Funding Agreement (GFA). The GFA will also include clawback provisions for non-compliant activity under State aid rules and the UK Subsidy Control Regime. All successful projects will be subject to targeted and random compliance checks where an officer will conduct a series of checks which will include a review of the State aid and subsidy control approaches adopted and how these are being implemented and monitored.

Annex H: List of new local authorities in Category 1 to receive capacity funding (for England, Scotland and Wales applicants only)

Local authority (region)

• Maldon (East of England)
• North Norfolk (East of England)
• Brent (London)
• Hackney (London)
• Waltham Forest (London)
• Allerdale (North West)
• Chorley (North West)
• Copeland (North West)
• Wirral (North West)
• Coventry (West Midlands)
• Herefordshire, County of (West Midlands)
• Malvern Hills (West Midlands)
• Nuneaton and Bedworth (West Midlands)
• Redditch (West Midlands)
• Kirklees (Yorkshire and The Humber)

1. Eligible expenditure in 2022-23 could include capital development costs ↩ ↩²