On 6 September last year the Government announced that 100 Towns across England could bid for up to £25m each from a new Towns Fund. An online piece for The MJ has already suggested that this is not the best way of doing things – but it remains the game to be played.
The process
Local areas have been required to establish a Town Board with representation from local stakeholders including the private sector and also local MPs, with the purpose of creating a ‘Town Investment Plan’.
The submission process has two stages: first, towns must submit a Town Investment Plan (TIP) that outlines priorities for economic growth, the fit with the objectives of the fund, and builds on existing partnerships and a wider strategic approach. It has to be submitted in two sections focused on the strategy and engagement process, and then a prioritised list of projects.
The guidance says that Government expects investment plans to be received in three tranches – at the end of July, in October, and in January 2021. Towns have been asked already to indicate which tranche they intend to submit in.
Once a TIP has been submitted Government intends reviewing this submission on a gateway basis. This assessment will be based on expected impact, the strength of the strategy, and partnerships. If the submission passes this gateway then the projects within the plan will also be assessed – but, critically, full business cases are said not to be required. If accepted, Government will enter a heads of terms arrangement with towns including a funding profile against projects and key conditions.
At this point, a deal will be announced.
A second stage process is then entered which requires towns to develop business cases based on an assurance requirement. The guidance states that this business case and assurance process will be to the standard expected of the Accountable Body (presumably the local authority) based on Green Book requirements, or, for novel projects, an assurance process set by the Ministry of Housing, Communities and Local Government (MHCLG). With this completed, MHCLG will require evidence of the process being followed (described as a summary document).
Money will only flow if Government is satisfied with that evidence submitted and if conditions from the Heads of Terms process have been met. The lead authority will then be responsible for implementation but to a monitoring and evaluation process with the support of the Town Deal Hub.
The Town Deal Hub
An initial practitioner concern was whether MHCLG would have both the capacity and capability to undertake the management of such a process. In January the department tendered for support and subsequently appointed a consortium led by Arup at a reported cost of £8m for a first year of work.
Putting aside what this says about capacity and capability in Government, and whether allocating an additional £80,000 per town may have been a more effective use of funds, the appointment of Arup who has considerable experience in regeneration is seen as positive. It is critically important that the support provided has the real-world capability to inform the approach.
Alongside the Arup-led consortium, Government officials will form a Town Deal Hub to support Towns through their submission process and to assist in the assessments of Town Investment Plans and funding bids.
The issues
Despite the issuing of guidance in June there remains a number of concerns that local government should be focussing on with regard the Town Deal process.
First, there is a lack of clarity about the detail required from towns in the first stage. The guidance implies it is a local consideration to approve business cases in a second stage but to get to that point, government must have enough information to agree a heads of terms. Clarifying expectations on this is an urgent need and many Towns are already raising this issue.
Second, the role and capacity of the Town Deal Hub needs to be made more specific. The guidance implies that the capacity of the consultancy support might be available to help in project development. However, the likelihood is that this capacity will be used to undertake assessments. Given that Government has said there will be no additional capacity funding linked to the Town Fund (yet the most expensive stage of work is likely to be business case development) then the expectations of ‘the Hub’ could be unrealistic. For all parties, this needs to be clear.
Third, the expectation of the guidance is that accountable bodies (presumably, the council who is also the applicant) will be responsible for business case approval to a Green Book standard. This is not something councils are necessarily used to nor is it clear what that standard will be. Government said similar when instigating growth deals in 2014 and then had to retrospectively issue prescriptive guidance. From a good governance point of view, councils need to be monitoring what exactly this expectation may be.
Fourth, the completion of business cases to Green Book standards can be expensive. Local areas need to be aware of this cost. There is no additional revenue fund allocation and it is unlikely the Hub support will undertake such a task so applicants will need to make such a budget provision.
Fifth, where does any cost over-run sit? Towns will be asked to agree a heads of terms with Government after stage one which includes a cost profile ahead, potentially, of detailed scheme design and business case development. This means there is a risk of under-estimating costs (and an incentive to ‘go low’ to be successful) and it is unclear where the liability for over-run costs sits. Councils need to be aware of this as it must be assumed that risk will fall locally. Government should be realistic in allowing for contingency figures within bids to manage this risk.
Finally – spot the politics! The guidance explicitly states that project choices are a ministerial decision while the guidance requires deals to be signed by local authority chief executives (not leaders) and it is local MPs who have received correspondence on processes to date.
Choosing language carefully, this is a process that represents an opportunity, as well as some political risk to be managed!
Mike Palin is a former chief executive at St Helens MBC and a former executive director of a Local Enterprise Partnership (LEP). He is now managing director of GC Consulting – @mikepalinmmp