Plans to stimulate local economic growth not always effective

The National Audit Office has reported that government policies to stimulate local economic growth are not consistently based on evidence of what interventions are likely to be most effective.

Increasing the risk that billions of pounds awarded to local bodies will not deliver the intended benefits, the report claims that the Department for Levelling Up, Housing and Communities has a limited understanding of what has worked well in previous local growth programmes due to a lack of consistent evaluation or monitoring. By failing to conduct evaluations, DLUHC has wasted opportunities to learn lessons to inform future interventions, and it does not know whether previous policies achieved their aims.

Instead, the NAO says that the government department has built its evidence base for what works in local growth by drawing largely on external sources such as academic studies and evaluations conducted on place-based funding from the European Union.

The NAO found that DLUHC has not consistently applied knowledge and key policy principles from this evidence base. For example, the way the interventions work makes it hard for local authorities to plan the joined-up investment strategies that the government’s research suggests are needed to promote local growth.

To ensure that future interventions achieve maximum impact, the NAO recommends that departments ensure they follow the guidance on developing and appraising business cases at key decision points, documenting how they have evaluated different alternatives to delivering a desired outcome. The government should coordinate the full range of its local growth programmes across Whitehall to manage dependencies between departments’ work and avoid conflicting initiatives. DLUHC should also set out and publish how it intends to formally evaluate the Levelling Up Fund and the UK Shared Prosperity Fund.

Gareth Davies, head of the NAO, said: “The Department for Levelling Up, Housing and Communities has not consistently evaluated its past interventions to stimulate local economies, so it doesn’t know whether billions of pounds of public spending has had the impact intended. With its focus on levelling up, it is vital that the Department puts robust evaluation arrangements in place for its new schemes to promote local growth.”