Ministry of Housing, Communities and Local Government permanent secretary Jeremy Pocklington has defended the processes employed to select areas invited to agree Towns Fund deals in a £3.6bn package launched last year.
Pocklington was answering questions about the fund before members of parliament’s Public Accounts Committee this week. He was asked about concerns that the allocation of some of the aid had been politically motivated, as some towns lined up for cash were seen as battleground areas for last year’s general election.
Pocklington was also asked about a National Audit Office review that noted MHCLG had not published the selection criteria on which the 101 areas invited to take part had been selected – or the criteria used to reject funding for others of up to £25m.
Appearing remotely at Monday's session, Pocklington said the whole idea for the Towns Fund, which aims to provide economic development opportunities for struggling towns, was to take a “deals-based” approach rather than launch a competition.
“The reason for doing that was because we thought that the towns most in need of investment may be least ready to prepare a competitive bid. And we did not want to have a process that was unfair on those towns,” he said.
“We judged that many of these towns, some of which are relatively small, may lack the resources, the capacity and the experience of working with the department. Or in some cases [they may have lacked] the leadership to enter a competitive bid process.
“What a deals-based approach based on a selection does is enables us to provide advice and support to help towns develop their bid and build capacity.”
Pocklington said MHCLG officials had started with 1,082 eligible towns before whittling the figure down to 541. They analysed the extent to which they had difficulties and made recommendations to ministers on which should be “high”, “medium” and “low” priority for the fund.
“Ministers accepted our recommendation to agree all 40 higher-priority towns,” he said. “Then on the medium and lower-priority towns they had the results of our scoring, but ministers were able to apply their own qualitative assessment of those towns and their eligibility for funding.”
PAC members said concerns were raised by some MPs over the lack of transparency of in the selection process for the 101 towns identified for deals last September. They noted that “some observers” had suggested the selection was politically motivated.
Pocklington said it was “very clear that ministers wanted a geographical spread” within regions and between different types and sizes of towns.
“We took a robust, evidence-based approach, based on multiple criteria to guide ministers decisions,” he said.
“Yes, it was one that recognised the complexity and the qualitative judgments that were involved, including on issue like investment opportunities and exposure to particular industries in decline.”
Pocklington gave MPs details of the background to the inclusion on the scheme for two towns described as among the “low priority” candidates: Morley near Leeds and Stocksbridge near Sheffield. Both were in important electoral battlegrounds
He said that when looking at the lower-priority options, ministers had often been focused on towns with a specific investment opportunity. Morley, for example, was looking to invest in its transport hubs. He said Stocksbridge was considered a vulnerable town because it was reliant on the steel industry.
Pocklington was also asked why MHCLG had not published the rationale for its decisions on which towns were invited to bid last year. He accepted the omission had been the source of debate with the NAO, the public-spending watchdog.
“The reason we took that decision is that we had always been clear that we want to have a competitive round at the end of this process, so those towns that haven’t been selected are eligible to bid for funding through the Towns Fund,” he said.
“We didn’t want to raise expectations or perhaps even distort behaviour in advance of that competitive round. That’s why we decided not to publish the scoring for all of the 541 towns at this stage.”
Pocklington said the NAO had prepared its review and “took a different view on where the public interest lay”. He said he had accepted the judgement of NAO head Gareth Davies.
But he added: “The concern was raising expectations a ‘near miss’ town that scored highly but didn’t quite make the higher priority category would automatically receive funding through the competitive process.”
Elsewhere in Monday’s session Pocklington was asked about the financial robustness of England’s local authorities, amid concerns that Covid-19 has driven some to the brink of issuing Section 114 notices, warning they are unable to balance their books.
A Section 114 notice means an authority is not permitted any new spending, apart from that needed for safeguarding vulnerable people and statutory services.
Pocklington said MHCLG was “having conversations” with a “small number” of local authorities about the financial support the department could offer.
“I’d rather not go into individual details,” he said. “There’s a range of local authorities and a range of sizes I’m aware of. It’s not one particular pattern.”
Pocklington said authorities that did issue Section 114 notices under the Local Government Act 1988 would do so transparently. He urged any councils planning to issue such a notice to speak to MHCLG first, however.