Policy paper

Government response to House of Lords COVID-19 Committee’s report “Towns and Cities: Local Power is the Path to Recovery”

Published 7 March 2022

Applies to England

Presented to Parliament by the Secretary of State for Levelling Up, Housing and Communities by Command of Her Majesty, January 2022
Command paper number: CP 637
ISBN 978-1-5286-3228-7
© Crown copyright 2022

Introduction

The government welcomes the House of Lords COVID-19 Committee’s Towns and Cities: Local Power is the Path to Recovery report following their inquiry. The report was published on 17 December 2021. We are grateful to the Committee and all those that provided evidence.

The government recognises that this is a challenging time for everyone in the country. COVID-19 has had a significant impact on our communities, businesses and town centres. Levelling up is at the heart of the government’s agenda to build back better after the pandemic.

On 2 February 2022 the government published the Levelling Up White Paper, which sets out our plans to spread opportunity and prosperity to all parts of the UK, including towns and cities. The White Paper provides a clear plan to level up every corner of the UK, underpinned by 12 ambitious “missions” over 10 years and tracked by an annual report that will monitor levelling up progress and ensure the government is held to account. It will address regional disparities across the UK, put more money in the pockets of those who need it most, and transform the UK economy by generating higher paid jobs and new investment. 

Town and City Leaders

Recommendation One

The UK government should, in its Levelling Up White Paper, outline its plans for further financial and legislative devolution of powers, to enable local authority leaders to deliver regeneration policies tailored to the needs of their specific areas.

The government believes that strong and dynamic local leadership is critical to levelling up and regeneration. That is why the Levelling Up White Paper sets out a mission that, by 2030, every part of England that wants a devolution deal will have one.

To help achieve our 2030 mission, we have published a devolution framework in the Levelling Up White Paper that sets out a clear menu of options for places in England that wish to unlock the benefits of devolution. Devolution is a key means to delivering our levelling up missions, whether that is moving towards a London-style transport system to connect people to opportunity, improving local skills provision, or being able to act more flexibly and innovatively to respond to local need. The framework embeds a suite of powers that will enable local leaders to regenerate their areas, including:

• Ability to establish Mayoral Development Corporations (with consent of host local planning authority)
• Devolution of locally-led brownfield funding
• Strategic partnerships with Homes England across the Affordable Housing Programme and brownfield funding
• Homes England compulsory purchase powers (held concurrently)
• UKSPF planning and delivery at a strategic level
• Long-term investment fund, with an agreed annual allocation

While the framework is flexible and allows devolution to be tailored to the context of individual areas, it does place a strong emphasis on the importance of high profile, directly elected local leadership, strong local governance, and joint working across sensible and coherent economic geographies. While not all areas will want a directly elected mayor, those authorities with the stronger decision-making structures will secure greater powers.

We are also delivering on the Prime Minister’s commitment to pursue a flexible approach to devolution. Nine counties have been invited to negotiate historic County Deals, a new devolution model that will spread the benefits of devolution beyond city regions and give local leaders more control over things like transport, infrastructure and skills. In addition, subject to an appropriate legislative opportunity we will seek to establish a new form of combined authority model to be made up of upper tier local authorities only (eg a county council and its associated unitary councils).

A minimum population threshold of 500,000 has been chosen to ensure Combined Authorities and County Deals have sufficient economic and operational scale to be effective in driving levelling up. We expect upper-tier local authorities with a population of less than 500,000 to collaborate with their neighbouring authorities to agree a sensible geography for a devolution deal.

We also want all existing Mayoral Combined Authorities (MCAs) to achieve deeper devolution settlements. The Greater Manchester and West Midlands ‘trailblazer deals’ will set the parameters of what deeper devolution could look like for other MCAs. Trailblazer deals will enable local leaders to present the case for the devolution of strategic functions and decision-making powers. We will consider equipping local leaders with the policy levers they need to deliver well-evidenced, locally tailored strategies, where there is a strong strategic case. This could involve, for example, exploring options to streamline the local funding landscape. Local leaders will get any further autonomy in exchange for demonstrating greater accountability and performance. We look forward to working with other areas soon, particularly those MCAs that have the strongest strategic case.

Recommendation Two

The UK government should issue a statement to all local authority leaders actively encouraging the use of the general power of competence and should work with the Local Government Association to issue detailed guidance notes on the operation of the general power of competence.

The general power of competence provided for in the Localism Act 2011 gives local authorities confidence in their legal capacity to act both for their communities and in their own interest to generate efficiencies and savings. It is a very broad power which is designed to provide councils with freedom to innovate and work together with others to drive down costs. The government does not intend to issue detailed guidance on the operation of the power.

Recommendation Three

The UK government should introduce a three-year rolling local government financial settlement, at an increased level, to replace the current system of one-year settlements, to allow local authority leaders to develop, and deliver, long-term plans for their urban areas.

The government recognises how important multi-year certainty is to local authorities, and we aim to provide that whenever possible.

In 2022 to 2023, we are prioritising stability through a one-year settlement. We will work closely with the sector and other stakeholders to understand the opportunities and challenges facing the sector before consulting on any potential changes to funding allocations.

Recommendation Four

The UK government should end the competitive bidding processes for additional funds and agree with the Local Government Association to create an improved resource equalisation scheme, as a transparent method of assessing those towns and cities most in need and targeting additional central government funding at those areas.

The government recognises the complexity in the existing funding landscape and has taken steps to address this. For example, the Levelling Up Fund provides cross-departmental capital investment in local infrastructure. The UK Shared Prosperity Fund (UKSPF) will provide resource-focused investment to support people, boost pride in place and strengthen communities. But there is more that could be done.

To deliver a more transparent, simple and accountable approach, the government will set out a plan for streamlining the funding landscape later this year. This will include a commitment to help local stakeholders navigate funding opportunities. This review will be guided by the following principles:

• reducing the unnecessary proliferation of individual funding pots with varied delivery approaches
• streamlining bidding, and supporting greater alignment between revenue and capital sources
• ensuring places have robust ongoing monitoring and evaluation plans for the impact and delivery of investments and spending
• tailoring investment and delivery to the local institutional landscape of each nation of the UK

In Scotland, Wales and Northern Ireland, where local partners also need to consider funds led by devolved administrations, effective collaboration on UK-wide policies is important to maximise impact and minimise complexity. To maximise simplification across the country, the government will share lessons from its efforts to streamline funding with devolved administrations.

Accelerating Trends

Recommendation Five

The UK government should provide financial support to local authority leaders to enable the establishment of: Work hubs in towns and cities; Pop-up retail units in towns and cities and; Arts and culture provision in towns and cities.

The government recognises that the retail sector remains a key part of the high street and physical retail will remain an important route to consumers. On 15 July 2021, we published the Build Back Better High Streets Strategy, where we committed to continue working with the retail sector, and the Retail Sector Council in particular, on its long-term strategic needs to ensure that businesses are profitable, resilient, innovative and support local economies in socially and environmentally responsible ways.

The government is providing significant support to the arts, culture, heritage, and creative sectors to help them recover from the impacts of the pandemic. In 2020, the government announced the unprecedented Culture Recovery Fund - the biggest arts funding package in history. To date, over £1.5 billion has been allocated, including funding for the DCMS-sponsored national cultural institutions. The support has reached over 5,000 individual organisations and sites across the country, including those run by local authorities.

Local authorities themselves already invest significantly each year in their local arts and cultural offer, with councils in England spending £2.2 billion net revenue on Cultural Services in 2020 to 2021. In addition, the government has provided and is currently providing more than £200 million in financial support to local places, including local authorities and their leaders, to establish and strengthen the provision of arts and cultural initiatives, activities, and sites like museums and libraries. This support is being provided in a number of ways in towns and cities - as well as to places more widely across the country.

The DCMS’ arms-length body, Arts Council England (ACE), administers the Creative People and Places programme. This uses National Lottery funding, focusing on parts of the country where involvement in arts and culture is significantly below the national average and supporting these places to transform access to arts and culture. Between 2022 and 2025, ACE is supporting a total of 39 projects across England with more than £38 million. In a number of places, including Luton, Doncaster, and Redditch, funding is going directly to project partnerships involving local authorities.

In addition, the first round of the government’s £20 million capital Cultural Development Fund, administered by ACE, is directly supporting Wakefield, Grimsby, Worcester and Plymouth. This funding has allowed these local authorities to invest in cultural infrastructure and provision that maximises culture’s contribution to their local economy - for example, public art and events. The second round of the fund, will also invest in place-based cultural initiatives. Results will be announced later in spring 2022.

The government’s renewed focus on supporting places, including towns and cities, is also signalled in DCMS’ work, alongside ACE, to identify 109 ‘Levelling Up for Culture Places’. These places were announced by the DCMS Secretary of State in February 2022. Organisations in areas that have historically had low investment in arts and culture - like East Lindsey and Tees Valley Combined Authority - will be encouraged to bid for funds.

DCMS’ Secretary of State has instructed ACE to increase investment in these places, with a £75 million boost provided by 2025, to make sure they get a better distribution of arts funding. The 2023 to 2026 National Portfolio funding round is an opportunity to build on the work of previous rounds to increase support for places all over the country. Through collaboration with the local authorities, people, and wider organisations in these places, ACE will help them realise a change in how they approach culture and their cultural heritage.

Public libraries are a key element of a place’s cultural and arts provision, as well as its social infrastructure. Cultural and creative enrichment is noted in the government’s strategy for Libraries, Libraries Deliver: Ambition, as one of the seven outcomes to which library services contribute, which are critical to the people and communities in their area.

There are around 2,900 library branches across England, delivered as a statutory responsibility of local councils and core-funded within the local government finance settlement. Local authorities determine how best to support local provision, taking into account the needs of their local communities. We champion and invest in public libraries. The Libraries Improvement Fund, open to all library services across England, is providing capital investment in local library services to help libraries to adapt to people’s changing needs, by upgrading and improving access to their buildings, or by expanding digital services.

The government is investing in the heritage of local places: Historic England, the government’s statutory adviser on heritage, administers the £95 million High Streets Heritage Action Zones programme in more than 60 high streets in towns and cities across England. It does this by working in direct partnership with local authorities - as well as with wider communities, institutions and businesses - in places such as Leeds, Leicester, Blackpool, and Ryde. It is also supported by a £7 million cultural programme, run by Historic England with the support of the National Lottery Heritage Fund and Arts Council England, which brings cultural and community engagement together on each of those high streets, helping people and communities rediscover pride in their high streets.

High Streets Heritage Actions Zones revive historic buildings and re-engage people with their local heritage, galvanising wider regeneration in towns and cities and unlocking heritage’s social benefits. These include supporting people’s wellbeing, and developing their sense of place, identity and community: 80% of people say that local heritage makes their area a better place to live.

The programme also involves significant community engagement. So far, over 200 consultation events have taken place with an estimated 13,000 attendees. Engagement activities, including online, have reached over 85,000 people. To date, the programme has brought 6,000sqm of commercial floorspace back into productive use, and it is forecast to provide a return of £4.43 for every pound invested.

Local authority museums are also key civic institutions, protecting important collections and helping to shape and tell the histories and identities of places to residents and visitors. These organisations also support the delivery of a range of Local authority priorities including educational attainment, economic regeneration, and improving health outcomes. Local authorities are responsible for running circa 350 museums in England, and the £18.8 million Museum Estate and Development Fund (MEND) supports the provision of accredited regional museums in England, including these local authority-run organisations, helping them with vital infrastructure and maintenance projects. The fund can also enable them to improve visitor access and environmental sustainability - protecting museums for future generations and ensuring they can continue to serve their communities and audiences. Further rounds of MEND funding will be launched in 2022 as part of the £153 million Cultural Investment Fund.

As part of the government’s continued support for current and future projects within museums and galleries, including those operated by local authorities, the Museums and Galleries Exhibitions Tax Relief will see a significant temporary increase in tax relief for all upcoming exhibitions commencing from 27 October 2021. The tax relief’s primary aims, to improve the provision, quality and quantity of exhibitions and galleries, actively support local growth agendas.

Finally, the National Museums, part-funded by DCMS, conduct a range of partnership work with museums operated by local authorities, allowing these museums to attract more, and more varied, audiences, and generating wider local income. Dippy on Tour was a partnership exhibition of the Natural History Museum’s famous Diplodocus cast between the Museum and regional partners. These partners included the council-run Birmingham Museums, which saw an extra £4.2 million spent in the city by visitors during the 107-day Dippy run.

Touring exhibitions, major arts and cultural events - like the UK City of Culture competition - provide a way for places to use cultural provision as the catalyst for investment, driving economic growth and regeneration, as well as promoting social cohesion, instilling pride, and shifting wider perceptions of their place. Three quarters of those who visited Hull in 2017 during its stint as UK City of Culture stated that it changed their perception of the city for the better.

Local authority leaders are often the driving force behind their city’s bid for UK City of Culture. As a commitment to supporting cultural provision and levelling up opportunities across the UK further, in 2022 - for the first time - DCMS are investing £40,000 in each of the longlisted places in the UK City of Culture 2025 competition. The eight UK longlisted places include Armagh, Bradford, Cornwall, Derby, Durham, Southampton, Stirling and Wrexham. Each bidding place in the competition is significantly supported by their local authority, with most acting as the designated accountable organisation.

Destination Management Organisations (DMOs), an estimated third of which (35%) are run as a local authority tourism services department, play an important role in towns and cities by developing and promoting their destinations’ arts, cultural, and wider visitor offer. This includes through bidding for and hosting events and festivals, of the kind the report recommends as a way of attracting visitors to towns and cities. In addition, the £45 million Discover England Fund, administered between 2016 to 2021 by DCMS Arms-Length Body VisitEngland, supported DMOs (including those operating out of local authorities) to develop a wide range of innovative, visitor-focused trails, itineraries and experiences, a number of which are based around places’ culture and heritage - for example, the North of England Cities Experience project, promoting key cultural highlights in cities including Hull, Manchester, and Newcastle.

More widely, a number of recent government place-based funding initiatives have directed funding to local authorities in towns and cities, enabling them to develop and strengthen their place’s cultural and heritage offer. The £4.8 billion Levelling Up Fund, aiming to improve everyday life through infrastructure investment, included culture and heritage assets as a priority, and this was strongly reflected in the range of successful projects led by local authorities in towns and cities across the country. For example, Wakefield is receiving £20 million of Levelling Up Funding supporting the creation of new cultural and creative destinations in the city, including a new museum and gallery - building on previous investment in the city from DCMS’ Cultural Development Fund. Bognor Regis is expanding its seafront Alexandra Theatre, to increase local cultural participation and attract new visitors to the town, and Chesterfield will be restoring the Grade-II listed Stephenson Memorial Hall and opening it to the wider community.

Similarly, through the £220 million Community Renewal Fund - which enables local authorities to lead innovative projects in their places - the town of Hastings is developing using technology to drive cultural recovery, including by supporting local arts festivals and visitor attractions, while York’s Street Life project, led by the City Council, is using pop-up cultural and heritage activities to drive engagement and renewal on the central Coney Street.

Finally, the £3.6 billion Towns Fund has supported towns across England to strengthen their arts and cultural provision as part of wider local regeneration plans, with Bolton redeveloping and modernising its Central Library, Museum, and Aquarium, and Newark renovating its Grade-I listed Castle to establish it as a major visitor attraction. Going forwards, lessons learnt from deployment of the Towns Fund will be fed into the ongoing Levelling Up Fund, including into the creation of an overarching local growth monitoring and evaluation framework across several local growth funds which can incorporate the recommendations from this report.

Recommendation Six

The UK government should work with local authorities to develop a blended approach to housing in our towns and cities. We want to see the UK government providing increased financial support for the conversion of commercial properties into residential properties and building homes on derelict sites in town and city centres, as well as matching investment in those neighbourhoods in the greatest need.

The government is committed to regenerating towns and city centres. As set out in the Levelling Up White Paper, we are making a new offer to support local leaders to deliver transformational regeneration in up to 20 towns and cities across the country. We’ve announced our support for the first two of those places – Wolverhampton and Sheffield.

The government is committed to supporting high streets and town centres and delivering the housing the country needs. In September 2020 we introduced a new Commercial, Business and Service planning use class (Class E) which allows uses listed within it to change between these uses without planning permission.

A new permitted development right has now been introduced to allow for the change of use from vacant buildings, or parts of buildings, in Class E to residential use to create new homes to buy or to rent. This means that a wider range of commercial buildings can now change to residential use without the need for a planning application. We have also legislated to ensure that all new homes delivered under permitted development rights must, as a minimum, meet the Nationally Described Space Standards and have access to adequate natural light in all habitable rooms. Together these measures support our high streets and town centres as places where people shop, use services, spend their leisure time and live.

The government strongly encourages the re-use of suitable brownfield land – especially for development to meet housing need and regenerate our high streets and town centres – and we welcome the report’s recommendations on utilising suitable existing town centre properties to boost housing supply. We are committed to making the most of brownfield land, in line with our policies in the National Planning Policy Framework which set out that planning policies and decisions should give substantial weight to the value of using suitable brownfield land within settlements.

DLUHC and Homes England regularly engage with urban areas to support delivery of homes on brownfield, and the government is providing significant financial support for the take-up and completion of brownfield redevelopment. This includes through the £4.3 billion Housing Infrastructure Fund; the around £5 billion Home Building Fund; the £550 million Brownfield Housing Fund; and the £75 million Brownfield Land Release Fund. The Chancellor announced at the 2021 Autumn Budget and Spending Review a further £300 million of locally-led grant funding that will be distributed to MCAs and local authorities to unlock smaller brownfield sites for housing and improve communities in line with their priorities.

Local authorities have a comprehensive range of levers to deliver housing that best fits the need of their local area. This includes a package of reforms which gives councils more freedom on how they spend the money they receive from selling homes through the Right to Buy, and the abolition of the Housing Revenue Account (HRA) borrowing cap in 2018, enabling local authorities to borrow for building.

The Government’s £11.5 billion Affordable Homes Programme will deliver up to 180,000 affordable homes, should economic conditions allow. In order to support delivery right across the country, more funding is available outside of London compared to the current programme (Affordable Homes Programme 2016 to 2022), up from 55% to 65%. The rules on social rent have been relaxed, so grant funding is now available for social rent anywhere in England, and with higher grant rates available in high-cost areas where it is needed the most.

DLUHC works together with BEIS on its clean heat programmes that involve local authorities as vital delivery partners. These include the delivery of heat networks through the Heat Network Transformation Programme and a number of grant funding initiatives such as the Green Homes Grant Local Authority Delivery scheme, Home Upgrade Grant, and Social Housing Decarbonisation Fund. These schemes provide funding to support energy efficiency improvements and the transition to low carbon heating for low-income households.

Recommendation Seven

The UK government should work with local authorities to develop a blended approach to public service provision in urban areas. We want to see the UK government providing increased financial support for the provision of public services in town and city centres, as well as matching investment in those neighbourhoods in the greatest need.

The government is already committed to ensuring the right blend of opportunities in its financial support for the provision of public services in town and city centres.

The government recognises the benefit of empowering local actors to deliver on local priorities and is working to identify the right opportunities for integrating their role in public service delivery. Directly-elected mayors in 9 city regions have powers, budgets and responsibilities in many areas of public service provision with a strategic role for delivering services including in social care, adult education and housing and land use.

The Levelling Up White Paper sets out a new devolution framework for England. It also includes a mission to extend, deepen and simplify devolution across England so that by 2030, every part of England that wants one will have a devolution deal with powers at or approaching the highest level, with a simplified, long-term funding settlement.

The government is also committed to directing investment to those areas with greatest need, as reflected by the prioritisation of investment at Spending Review 2021. To name but two examples, the £4.8 billion Levelling Up Fund prioritises bids from places in highest need of investment in infrastructure. The government published an index which categorised places according to their need alongside the Levelling Up Fund prospectus, and supported local authorities most in need of levelling up to apply by providing around £20 million of capacity funding to support the development of their bids. Funding for the Supporting Families programme, at £695 million over the next 3 years in England, is also allocated based on need, ensuring that areas with higher levels of deprivation receive additional funding.

Recommendation Eight

The UK government should work with local authorities to develop a blended approach to public transport in urban areas. Such an approach should ensure that public transport provision within town and city centres, and within neighbourhoods in the greatest need is prioritised, with central government investment to ensure that public transport provides a regular, reliable, and affordable service in these areas.

The government agrees with the recommendation and is working with all local authorities in England to improve local transport planning and reform the way funding is awarded. This will support levelling up and ensure local investment decisions are prioritised based on strong local plans for bus services, road and active travel improvements.

The £4.8 billion Levelling Up Fund is investing in infrastructure that improves everyday life across all countries and regions of the UK. It will deliver genuine local priorities for communities, including regenerating town centres and high streets, upgrading local transport, and investing in cultural and heritage assets.

In March 2021, the Department for Transport published England’s long-term National Bus Strategy, setting out a bold vision for bus services across the country. The National Bus Strategy asked that all English local transport authorities, outside London, publish Bus Service Improvement Plans by 31 October 2021 and all have done so, setting out local visions for the step-change in bus services that is needed, driven by what passengers and would-be passengers want.

Strong local plans, delivered through Enhanced Partnerships between authorities and bus operators, or franchising arrangements, are crucial to achieving this. DfT has been clear that Enhanced Partnerships or franchising arrangements must deliver more comprehensive services, including those which are socially or economically necessary, to drive forward the government’s levelling-up agenda.

At the 2021 Budget, £1.2 billion of new dedicated funding was announced for bus transformation deals, part of over £3 billion of new spend on buses over this Parliament. More details on this will be announced in due course.

Over the course of the pandemic, bus operators and local transport authorities have been provided with financial support to maintain service levels and compensate for lost passenger revenue. Over £1.5 billion has been paid out in revenue support, and DfT is currently administering the £226.5 million Bus Recovery Grant to operators and local transport operators. Together, this funding has enabled high service levels of around 90% and ensured communities continue to have access to bus travel.

The City Region Sustainable Transport Settlements (CRSTS) programme is a 5-year £5.7 billion government investment in the transport networks of 8 city regions across England from 2022 to 2023.

This funding will be delivered through consolidated transport settlements agreed with central government and based on delivery programmes put forward by city regions. The funding will deliver improvements to local transport networks, enhancing productivity and user experiences. The key aims of the fund are:

• driving growth and productivity
• levelling up
• decarbonising transport

The CRSTS is available to eight MCAs and aims to create a more consolidated and devolved model of transport funding, delivering significant improvements for users. Whilst the government has been clear on the overall objectives, Mayors, working in collaboration with the local authorities across the city region, are able to use their unique place-based perspective to prioritise on the basis of need. Improved public transport and active travel are at the heart of the fund and proposals should include ambitious bus and cycling priority measures.

DfT is in the process of creating a new guidance document to support local areas to update or create their local transport plans. We will consult on the draft local transport plan guidance this year. The new guidance will steer local transport authorities to develop plans that align with government priorities, and it will also provide them with the support to create a clear, holistic vision for local transport in their areas.

As well as setting out the existing statutory duties, the guidance will include a clear expectation for how interventions across local transport will support priority outcomes such as growing and levelling up the economy, reducing environmental impacts, and improving transport for the user. The guidance will set out key requirements that will need to be in place to access future funding.

The government is providing £30 million per year of funding to boost capability and capacity in all local authorities so that they are in a position to build high quality networks as soon as possible. Local authorities will be supported by a new Executive Agency, Active Travel England, who will help drive up standards and support development of Local Cycling and Walking Infrastructure Plans (LCWIPs) to ensure that cycling and walking infrastructure is built where it is most needed. Improvements from LCWIPs will be funded as part of the £460 million of funding over three years provided at Spending Review 2021.

Recommendation Nine

The UK government should provide local authorities with additional funding to improve the condition of existing urban green spaces, and create new parks in town and city centres, and those neighbourhoods in the greatest need.

The government recognises the vital importance of town and city parks, parklets and play areas to urban communities. We also recognise that access to quality green space is not equal. This is why we launched the £9 million Levelling Up Parks Fund at Spending Review 2021, which will provide additional funding to over 100 places throughout the UK to significantly improve neighbourhood spaces. The Levelling Up White Paper also announced a new £30 million parks fund will deliver up to £1 million to at least 30 local parks in England for refurbishment with an emphasis on facilities for young families.