A s local authorities across the country will be aware, another round of bidding for the levelling up fund is approaching.
Attracting investment requires specialist knowledge and skill, but there are practices that can be put in place to maximise the chance of securing grant monies. CIPFA has a long history of supporting public bodies, especially local authorities, to secure grants and distribute the money effectively to enhance value for the taxpayer.
Local authorities may not have experience in creating business cases or conducting economic analysis to best position their bid. CIPFA has recently written and issued a series of reports on addressing regional inequalities, which are important when considering bidding for levelling up funding. Full details about how the fund will operate can be found in the Levelling Up Fund Round 2: prospectus.
As well as the bidding process, there are also follow-on funding and grant arrangements that need to be completed, which include the Shared Prosperity Fund and Environmental, Social and Governance (ESG) investment chasing projects. With this in mind, it's crucial that public bodies assemble their levelling up programmes, projects and business cases in advance.
The business case
Round 2 of the Levelling Up Fund comes amid a range of other issues, but the availability for grant money should not be the initial catalyst for public bodies to consider projects they may wish to fund. Grant submission deadlines can be extremely tight and require a comprehensive bid to be put together, so preparation is key.
CIPFA recommends that public bodies should have a stock of projects ready to go that align with their existing strategy, all with robust business cases. The business cases should explore the various funding, financing and commercial delivery models, with the range of money available to support regeneration and net zero projects.
The commercial and finance case
The economic case supporting a levelling up programme or project is also important to consider. However, when it comes to property, infrastructure or capital projects, there needs to be a focus on delivery – especially against a challenging construction supply chain. For some project delivery options, alternate financing may be necessary, particularly when the value for money case is based upon the commercial model that is chosen.
Where a public body possesses borrowing powers, the value for money case to use financing other than Public Works Loan Board (PWLB) must be based on the financing being lower cost than PWLB. This is the case with some impact investment bonds and ringfenced finance arrangements. CIPFA encourages organisations to consider a range of financing options and believes risk should be held by the party best able to manage it. Also, the partner may bring innovation, integration or due diligence to balance higher cost alternative finance.
CIPFA uses the training workstream lead for the Treasury green book review, which has now been updated to support decision making around levelling up. One important green book concept associated with levelling up is granular socioeconomic distributional analysis, which considers the groups that will benefit and how they will benefit.
In addition, CIPFA's publication Commercial Models and Attracting Investment has been produced for the Department for Levelling Up, Housing and Communities (DLUHC). It focuses on the towns fund in relation to commercial models and attracting investment. The guidance supports the need to attract matching alternative investment and draws on the better business case approach and public private partnership theory.
The management case
As with the commercial and finance cases, the importance of the management case cannot be overstated. The management case will set out the ongoing governance and management arrangements to track the benefits, costs and risks of a particular project. Historically, it is acknowledged that not enough work has been done to track the benefits of various regeneration schemes and grant funds.
Final reflections
A core aspect of CIPFA's mission is to support good public financial management. This includes sharing best practice, training and development and we will soon be launching a range of free-to-air micro e-learning modules, which cover topics such as levelling up, net zero, ESG investment and commercial models. Having the relevant skills and experience to support your bid for levelling up funding will be key to ensuring it is successful.
Mark Williams is CIPFA senior consultant
@CIPFA
