Half a billion of funding lost from levelling up projects, analysis finds

Research by the Labour Party found that at least £500 million has been lost from funds due to inflation.

Projects funded by Whitehall schemes are now at risk because of the rising costs, with councils taking on additional risk on leisure centres, high street regeneration and public spaces.

The analysis of House of Commons and OBR data, shared with the Guardian, included around £137m lost from the first round of the Levelling Up Fund from round one.

The allocation of money from the second round of the fund caused outrage from Northern leaders last week when it was revealed that Yorkshire had been given around half the funding of the South East of England.

Lisa Nandy, Labour’s Shadow Levelling Up Secretary, said: “As a result of the Tories crashing the economy and pushing UK inflation to nearly the highest rate in the G7, vital projects have been delayed and now many face being downsized or scrapped altogether.

“This is symptomatic of a broken system where communities are forced to go cap-in-hand to Whitehall for small pots of money with strings attached. It leaves them especially exposed to economic shocks – not least those brought on by Tory governments.”

A new swimming pool and leisure centre in Halifax in West Yorkshire are currently on hold for at least a year due to rising costs, with the £12.2M project set to rise by a further £4 million.

Holly Lynch, the local Labour MP, said: “Too many of its first-round projects have had to be paused or shelved because of spiralling costs.

“The government wants the credit for these projects yet the economic landscape they have created is making them impossible to deliver.”

A spokesperson for the Department of Housing, Levelling Up and Communities said: “We are closely monitoring the impact of inflation on projects and working closely with councils and delivery partners to ensure public services are protected and levelling up projects delivered.”

Yesterday Michael Gove, the Levelling Up Secretary, revealed that the Government was now reviewing the submission process for bids to make the process better for councils, with further details expected in the Chancellor’s spring statement in March.