Projects funded by the Government’s Levelling Up funds are unlikely to be finished on time, with only 5 per cent out of its 1,300 programmes completed so far, the public spending watchdog has found.

A “damning” report by the National Audit Office (NAO) published today said that despite £9.5 billion of investment, spiralling costs, skills shortages and delayed decision making meant that projects are struggling to finish on time or within budget.

Money from the Towns Fund, Levelling Up Fund and UK Shared Prosperity Fund was meant to support the mission set out in Boris Johnson’s 2019 manifesto and subsequently help hold on to Northern seats that were won at the last general election.

However, the NAO has found that as many as 75 projects were yet to begin, and concluded that the original deadlines set by Michael Gove’s department were “unlikely to be met”.

Levelling Up Secretary Michael Gove leaves Downing Street, London, following a Cabinet reshuffle.

It said that 50 per cent of the main construction contracts for projects due to be completed by March next year had not been signed a year before the deadline, with the bulk of the money allocated to projects left unspent.

The Department for Levelling Up, claiming data in the report was out of date, clarified that around 28 per cent of the total money allocated under the three pots of funding has now been spent.

Zoe Billingham, director of the think tank IPPR North, said: “This report includes a litany of missed deadlines, moving goalposts and dysfunction in the way levelling up funds have been allocated to councils as part of the Government’s flagship programme.”

David Pendlebury, of the New Economics Foundation, said: “This report is damning and shows everything that’s wrong with the way Whitehall works – or refuses to work – with communities.

“The Government’s lack of trust in local authorities resulted in a deeply muddled approach to levelling up, in which cash-strapped councils were tempted with the promise of much-needed investment, only to have their hopes dashed.”

The NAO blamed a range of factors for the delays, including the rampant inflation of the past two years, skills shortages in the construction sector, and delays in decision-making by DLUHC, with an average delay of 10 months across the projects.

At the end of October it was revealed that councils are cutting back on their plans for Levelling Up projects due to rising inflation.

The Local Government Association warned that “crucially important projects” were “at risk” without further support from the Treasury.

Rebecca McKee, a senior researcher at the Institute for Government said that the findings showed key issues with the way the funding is delivered.

She said: “Ring-fenced and time-limited pots of money are inflexible and don’t allow for changing circumstances – the greatest of which has been the steep rise in costs due to inflation which will have disrupted many of these projects.”

A DLUHC spokesman said: “We have committed £13 billion to levelling up, supporting projects to improve everyday life for people across the UK, regenerating town centres and high streets, local transport and cultural and heritage assets.

“Major regeneration projects take time to deliver, but a number of projects have completed.”

Levelling Up projects won't be finished on time, public spending watchdog warns