Levelling Up Fund: Frequently asked questions

Question 1

Putting together proposals

Accepted Answer

1. How many bids do I have?

All areas in the UK are able to access the Levelling Up Fund. Specifically, in Great Britain:

Unitary authorities (including metropolitan borough councils), London borough councils and district councils in two tier areas in England; and unitary authorities in Scotland and Wales are eligible to submit bids of all types.
In addition, all unitary authorities in Scotland and Wales, and unitary authorities in England with transport powers are able to submit one additional bid which must be for transport.
County councils with transport powers, combined authorities, mayoral combined authorities and the Greater London Authority (GLA) are eligible to submit one transport bid only.

The number of bids that local authorities in the first bullet can make will relate to the number of Members of Parliament (MPs) in their area. Accordingly, local authorities can submit one bid for every MP whose constituency lies wholly within their boundary. Every local authority can submit at least one bid worth up to £20 million.

Where an MP’s constituency crosses multiple local authorities, one local authority should take responsibility as the lead bidder and local areas should work together to designate that lead bidder. Annex A sets out how local authorities of all types in Great Britain can work out the number of bids they are eligible to submit.

2. What level of spend are you looking for in 2021-22?

As the prospectus published at Budget sets out, for the first round of the Fund we will prioritise bids which are able to demonstrate investment or begin delivery on the ground in this financial year (2021-22).

We are not specifying a percentage to be spent this financial year, but we do require (through a pass/fail gateway criteria) that bidders must be able to spend some funding in this financial year. Our assessment of a place’s bid will take account of the ability to spend some funding this financial year.

Eligible expenditure in 2021-22 could include capital development costs.

3. Can Levelling Up Fund funding be used in subsequent years up to 2024?

We would expect all funding provided from the Fund to be spent by 31 March 2024, and, exceptionally, into 2024-25 for larger schemes.

4. What type of funding is eligible to be a local financial contribution representing at least 10% of total bid costs?

As set out in Table 1 of the technical note, we encourage a minimum contribution of 10% which can come from a local authority or other third party (public or private sector). This funding cannot be “in kind”. Any contribution made must be in the form of an actual financial contribution.

5. Can a local authority have more than one successful bid?

In Great Britain, local authorities can only have one successful bid for each of their allocated number of bids over the lifecycle of the Fund. So, if a local authority with three bid slots submits three bids in the first round, and is successful in each of them, they will not be eligible to re-bid in the following rounds. If the local authority is successful in two out of the three, they would be able to put in one further bid in the next round, and so on.

6. Capacity funding: can you provide more details on when it will be paid out, what it can and can’t be used for and the time period it is meant to cover.

We are providing £125,000 of capacity funding to all eligible local authorities which are the 93 English local authorities in category 1 of the index of priority places, all local authorities in Scotland, Wales and Northern Ireland. There are no plans to have an application process for this funding.

This revenue funding will not be ringfenced and the primary intention is to support the relevant local authorities to develop their bids for later rounds of the Levelling Up Fund. As such, capacity funding will not be paid before the deadline for submitting bids on 12 noon 18 June 2021. We will make payments later this year.

7. What MP support is required for additional transport only bids from eligible local authorities, Combined Authorities, Mayoral Combined Authorities and the Greater London Authority?

MPs have the option of providing formal written support for one bid which they see as a priority. The lead authority must submit that letter of priority support along with their application. In places with additional transport only bids, the MP can provide formal written support for this bid but will therefore not be able to provide formal written support to any other bid. A bid may have priority support from multiple MPs and local stakeholders.

In addition to formally backing one bid, MPs may also want to support any or all schemes that would have a benefit to their constituencies in the usual way.

However, individual MPs should not provide a letter offering their priority support to more than one bid. We will not be able to consider formal priority support in the assessment process if an MP offers this to more than one bid.

8. Are pinch point schemes counted as part of the number of bids a place is eligible to submit?

Local authorities in England are encouraged to consider prioritising submitting bids for the first round of the Fund for projects that were developed for the local pinch point fund which has now been superseded by the Levelling Up Fund. See further information on the local pinch point fund.

Pinch point schemes should be submitted by local authorities for the first round of the Fund in the same way as other bids. Pinch point bids will be subject to the same assessment process and therefore, the Levelling Up Fund’s application form will need to be submitted by 12 noon on 18 June 2021 for any pinch point bids for the first round of funding.

Where there are multiple local authorities interested in delivering a pinch point scheme, they should collaborate on how best to submit a bid for the project. Pinch point bids can be submitted by any local authority (provided they have the support of the authority with responsibility for transport).

Any funding provided for pinch point bids will count towards the total amount local authorities can bid for in the same way as other bids.

9. How can bids be submitted for larger transport schemes that request between £20m and £50m?

Bids will be accepted for larger transport schemes, by exception, such as investments in the local road network. Such bids will need to be between £20 million and £50 million and can be submitted by any bidding local authority (provided they have the support of the authority with responsibility for transport).

We are clarifying our approach for appraising larger transport schemes through these FAQs. The application form should be submitted by 18 June for all larger transport project bids. It is expected that a more detailed business case will need to be appraised before funding can be confirmed for larger transport schemes. Therefore, DfT will assess the application form for larger transport project bids and advise whether they should be developed further and a more detailed business case should be prepared for review.

If available, a more detailed business case may be submitted for larger transport project bids by 18 June in addition to the application form. The assessment of more detailed business cases will occur at a later stage before funding can be confirmed for larger transport project bids.

Please note that more detailed business cases for larger transport projects should be in a transport business case format and be compliant with the Green Book’s five-case model and the Department for Transport’s guidance on transport analysis (TAG). More detailed business cases should include information requested in the Application Form and more comprehensive plans and information for relevant projects. A checklist of the relevant information and materials that should be provided in more detailed business case submissions is at Annex D in the technical note.

10. What is a large transport scheme?

A “large transport scheme” is any eligible transport project that requests between £20 million and £50 million of investment from the Fund. Larger transport bids will be subject to a more detailed business case process and will need to score highly overall.

All bids should have the approval of the relevant authority responsible for delivering them.

11. Are cross-constituency and cross-local authority bids encouraged?

Bidding authorities are encouraged to collaborate with neighbouring authorities on cross boundary schemes and to submit joint proposals across their local areas where appropriate.

Eligible local authorities may wish to submit a joint bid, where two or more local authorities are collaborating on a project or a package bid of up to 3 projects. This may be appropriate where a project or projects cross administrative boundaries.

Joint bids will count towards the maximum number of bids that each local authority is able to submit. Each local authority can submit a maximum of £20 million (i.e. one bid’s worth) of funding to a joint bid. For example, a joint bid from two local authorities could request a maximum of £40 million. A joint bid may not request more than £50 million of investment for any individual project.

We expect local authorities submitting multiple bids to spread these fairly and equitably within the authority boundary and across their full range of constituencies, targeting pockets of deprivation as appropriate.

Unitary authorities in Scotland and Wales are eligible to submit bids of all types including transport projects (either on their own or as part of a package). All bids should have the approval of the relevant authority or body responsible for delivering them.

Unitary authorities in Scotland and Wales, and unitary authorities in England with transport powers are able to submit one additional bid which must be for transport. As elsewhere, bids can request up to £20 million in funding, or up to £50 million by exception for larger transport projects.

Both individual and package bids can contain proposals within a single theme, or across multiple themes, so long as they form part of a coherent, consistent proposal.

13. Can bidding authorities that are eligible to receive an additional transport only bid join together with another bidding authorities’ additional transport only bid to submit a larger transport bid?

Eligible local authorities may wish to submit a joint bid, where two or more local authorities are collaborating on a project or a package bid of up to 3 projects.

This may be appropriate where a project or projects cross administrative boundaries. Joint bids will count towards the maximum number of bids that each local authority is able to submit. Each local authority can submit a maximum of £20 million (i.e. one bid’s worth) of funding to a joint bid. For example, a joint bid from two local authorities could request a maximum of £40 million. A joint bid may not request more than £50 million of investment for any individual project.

Local authorities that receive additional transport only bids can collaborate on submitting joint transport only bids.

14. Can we bid for a project to add onto an existing programme/project?

Yes, however applications to the Levelling Up Fund must meet the pass/fail gateway criterion where bids will be assessed against whether they can deliver some LUF expenditure in 2021-22, and demonstrate how they fit with the criteria set out in the prospectus and technical guidance.

15. Are you still eligible to bid for funding for a project you have already received government funding for?

Yes, but as part of the strategic fit assessment we ask that bidders set out very clearly the case for further government investment.

16. Site acquisition is stated as being an eligible cost for this fund. Where such a proposal is put forward, would the applicant have to show that they had approved plans in place for the future redevelopment and use of the site?

The case for investment and management case of the application will need to demonstrate the strategic fit and deliverability of the proposal. Table 1 of the technical note sets out the types of areas that we would expect to see covered.

Question 2

Package bids

Accepted Answer

17. Package bids: What can be submitted as part of a package bid, can projects be divided into sub-projects and what is meant by “a coherent set of interventions”?

Package bids can have up to two or three projects only. Package bids must clearly explain how their component elements are aligned with each other and represent a coherent set of interventions. Package bids can include a mix of projects from the Fund’s three investment themes but should not include multiple unrelated investments.

Projects within a package bid should support common objectives and be mutually supportive so that the package delivers greater benefits than the individual projects would achieve in isolation. For example, a transport intervention and public realm regeneration project in an area may together support greater footfall and access to a local high street.

Package bids can be concentrated in a specific location or cover a wider area as long as the component projects represent a coherent set of interventions.

18. Do all projects within a package bid need to demonstrate investment or that they will begin delivery in 2021-22?

For the first round of funding, the technical note and prospectus ask that bids demonstrate some spend in 2021-22. The prospectus also makes clear that for the first round of funding we will prioritise bids that can begin delivery on the ground in 2021-22.

The first stage of the assessment is a pass/fail gateway criterion where bids will be assessed against whether they can deliver some Levelling Up Fund expenditure in 2021-22.

Additionally, in Northern Ireland, for feasibility reasons bidders from non-government organisations will also need to demonstrate: two years of audited accounts, and evidence that they have delivered two capital projects of a similar scale and scope in the last five years.

19. Will government select one or two projects for appraisal from a package bid?

Applications to the Levelling Up Fund will be appraised and considered at the bid level rather than as individual projects. If there are weaknesses in one of the projects, places should be mindful that it will adversely impact the overall score of their bid.

20. Does an MP have to support the whole package bid or can they just support individual projects?

Package bids (those with two or three projects) must clearly explain how their component elements are aligned with each other and represent a coherent set of interventions. In this instance, they will be assessed together at the bid level rather than as individual projects therefore MP support must be at a bid level, rather than project level.

21. Can additional transport only bids be for a package of up to three projects and do they have to form part of a coherent, consistent proposal?

Transport bids can be for an individual project or for a package of transport interventions. Transport package bids can include up to three projects. They can also include projects that relate to different modes for example bus, cycling or local road.

As with other package bids, transport package bids must clearly explain how their component elements are aligned with each other and represent a coherent set of interventions.

Question 3

Bid assessment

Accepted Answer

22. Can you provide more detailed guidance on the Value for Money (VfM) assessment for smaller transport projects?

Annex B provides further guidance on how to capture the VfM assessment for smaller transport projects.

23. Are you able to provide us with further details on the weighting to be assigned to the four criteria?

To create a shortlist, as outlined in the technical note, the four criteria – characteristics of place, strategic fit, deliverability and value for money – will carry equal weighting.

24. Can you provide more details of the transport appraisal criteria to see what level of data and analysis will be required in the bids?

The level of detail provided in bids should be in proportion to the amount of funding requested. The technical note and application form outlines what level of analysis is needed for transport bids and provides further advice.

25. Monitoring and evaluation: how much resource are we expecting local authorities to put into this?

Further detail on the approach to monitoring and evaluation, and what we will be expecting of local authorities and delivery partners will be provided in early summer as part of supplementary guidance.

26. If, as a lead authority in category 2 or 3, you submit a joint bid with one or more local authorities in category 1 – does that mean your bid is now assessed as a category 1 bid?

When assessing joint bids against the characteristics of place criterion we will reflect the index category that relates to the location of where the majority of the project or projects are being delivered in terms of spend.

27. Will Net Zero and climate change mitigations play a role in the assessment process?

As set out in the technical note, as part of strategic fit, alignment with the local and national context will be assessed. For example, UK government policy objectives, legal and statutory commitments, such as delivering Net Zero carbon emissions and improving air quality. Bids for transport projects in particular should clearly set out their carbon benefits.

The government’s expectation is that all local road projects will also deliver or improve cycling and walking infrastructure and include bus priority measures (unless it can be shown that there is little or no need to do so). Cycling elements of proposals should follow the government’s cycling design and guidance which sets out the standards required.

The value for money assessment of bids will consider a wide range of benefits. For example, the economic case analysis for transport bids, could estimate how they will reduce journey times, support economic growth, or reduce carbon emissions. For regeneration bids, direct and wider land value uplift, amenity and air quality may be relevant.

28. What can local authorities in Scotland and Wales expect in terms of the Devolved Administrations involvement in the assessment of their bid?

Where appropriate, MHCLG and DfT will seek advice from the relevant devolved administrations at the shortlisting stage on projects that will be delivered in their geographical areas, including on deliverability and alignment with existing provision.

29. Can you assure us that our Value for Money calculations do not require land value uplift requirements?

The Value for Money assessment will carry equal weight with the other criteria: Strategic Fit, Deliverability and Place Characteristics.

The value for money assessment has five sub-criteria: Appropriateness of data sources and evidence, effectiveness of proposal in addressing problems, economic costs of proposal, analysis of monetised costs and benefits, Value for Money of proposal. Each of these sub-criteria also have equal weight. Thus, the value for money assessment is not simply about the Benefit Cost Ratio (BCR) estimated for a bid.

Benefits to be included in the BCR estimate need to be consistent with HM Treasury Green Book and MHCLG and/or DfT appraisal guidance. Land value uplift can and should be included in the Value for Money assessment where this is appropriate, along with other benefits which can be monetised, and is consistent with departmental guidance.

30. The guidance states that there needs to be approval by the relevant Mayoral Combined Authority of local authority transport bids. Will there be further guidance on this?

Any eligible local authority can submit bids for transport interventions. However, where the local authority does not have the powers or responsibilities to deliver their bid, they should clearly demonstrate the support and approval of the relevant authority or body responsible for its delivery. For example, metropolitan boroughs within Mayoral Combined Authorities may submit transport bids, but they should have the support of the Mayoral Combined Authority where it is responsible for the bid’s delivery.

31. Will feedback be provided so that any unsuccessful scheme can be developed further for submission in future rounds?

Yes. Feedback will be provided to bidding authorities where bids pass the gateway criteria and progress to full assessment. This is to help the development of bids for future rounds of the Fund. Bids that are unsuccessful in the first round of the fund can be resubmitted for future rounds if so desired.

32. How will the value for money of bids be assessed?

Levelling up fund bids will be assessed on four main criteria: Strategic fit, Value for Money (VfM), deliverability and place characteristics.

As the technical guidance set out, the value for money assessment should provide suitable and proportionate evidence of the expected impacts, benefits and costs, and overall value for money, and associated risks and uncertainties. Moreover, the economic case should be assessed in a way that is consistent with the HM Treasury Green Book and with relevant departmental guidance.

The economic case should include the following:

appropriate identification and estimation of relevant impacts, benefits and costs. There should be clear justification provided for which types of impacts, benefits and costs are considered, and that the analysis of these is proportionate for the impacts and proposal being considered.
a summary of the overall value for money of the proposal. Benefit Cost Ratios (BCRs) should be reported if they can be estimated, and these should be consistent with the relevant departmental appraisal guidance. If it is not possible to estimate a BCR for the specific project, a clear explanation and justification should be provided of why not.
there should be appropriate identification and analysis of risks and uncertainties that could affect the project impacts, benefits, costs, and overall value for money.
evidence of whether the project is likely to meet its strategic objectives, referencing to and consistent with the assessment provided in the strategic case.

A range of benefits could be considered in the value for money assessment of bids. This includes potential to boost local economic growth.

The VfM assessment will carry equal weighting as Strategic Fit, Deliverability and Place Characteristics. The sub-criteria of VfM will also carry equal weighting. The VfM sub-criteria are listed below. The VfM sub-criteria are:

Appropriateness of data sources and evidence
Effectiveness of proposal in addressing problems
Economic costs of proposal
Analysis of monetised costs and benefits
Value for money of proposal

33. How should the BCR for regeneration and cultural investments be calculated?

The economic appraisal should seek to capture all the impacts (i.e. benefits and costs) associated with an intervention. This will include both private impacts and wider social impacts. In line with the new Green Book, regeneration projects should be assessed at a local level.

Benefits included in the BCR need have a strong underlying evidence base where they have been monetised consistently within published government guidance (i.e. Green Book, Green Book Supplementary and relevant Departmental guidance).

The formula for calculating regeneration and cultural projects’ BCR is:

BCR =
total discounted benefits minus total discounted private sector costs
divided by
total discounted social costs

The summary table below sets out how places should present their benefits, costs and BCR calculation. For clarity and to ensure places are following guidance, bids should label total benefits and costs, and set out the formula for calculating their BCR, as set out in the table below.

Summary template for presenting costs and benefits

Total net additional benefits	Preferred Option (NPV, 2021-22 prices)
Benefits for the BCR
Land value uplift (LVU)	£m
Wider LVU	£m
Amenity value	£m
Air quality (if applicable)	£m
Transport benefits (e.g. time savings)	£m
Other applicable and robustly evidenced benefits*	£m
Total benefits for the BCR (A)	£m
Costs
LUF cost/funding (B)	£m
Co-funding local authority cost (including borrowing) (C)	£m
Total cost (LFU + Co-funding) (D)	£m
Private sector cost (E)	£m
BCR calculation formula	(A-E) / D

*See MHCLG appraisal guide (Annex F, page 81)

For non-market benefits of culture please see DCMS Culture and Heritage Capital Framework. This provides further guidance on the estimation of the welfare impact of culture and heritage. DCMS and its Arm’s Length Bodies have produced values for a small set of culture and heritage assets.

Note: negative externalities should be subtracted from the benefits (numerator) – e.g loss of amenity value if there is development of a greenfield site, or transport external costs if the intervention causes an increase in traffic.

The benefit cost ratio estimate requires separating funding sources to cover the costs of the investment/project. Funding sources could be the Levelling Up Fund ask, other public sources of funding or from private sector funding. These different funding sources are treated differently in the BCR estimate. The numerator in the Levelling Up Fund BCR is relative to public sector funding/budget, i.e. the Levelling Up Fund ask plus other public sources of funding.

All costs should include optimism bias in line with HMT Green Book guidance. Where projects include private sector funding, and this funding is included as a cost in the LVU calculation, then private sector costs are assumed to have been netted off in the above formula.

Costs and benefits should be discounted to 2021-22 and use the social discount rate of 3.5%. The appraisal period should cover the useful life of the asset under consideration. This may be as little as 10 years. Regeneration and cultural projects should not exceed an appraisal period of more than 30 years. Transport projects may have a longer appraisal period.

34. How should additionality be accounted for the in the BCR?

The basis for the BCR estimate is that the economic benefits included in the appraisal are those that result as a consequence of the investment and are thus additional to what would have happened in the absence of the investment. Thus, land value uplift or wider land value uplift benefit included in the BCR have to be additional to what would have happened in the counterfactual (base case). To estimate these impacts properly, account of what would have happened in the absence of the investment has to be done.

To accurately assess additionality, the analysis must account for deadweight (what would have happened anyway); displacement (accounting for reduced economic activity elsewhere), and leakage (accounting for impacts occurring outside the target area).

The scope and level of detail required in estimating additionality depends on the nature of the programme of activities and an assessment of the evidence base. But care should be taken to understand the baseline projections that would happen in the absence of the investment. In particular, the size of the invest relative to the induced impact should be carefully considered.

Guidance on additionality, displacement and leakage are included in the MHCLG appraisal guide.

35. How should wider and non-monetised benefits not included in the BCR be accounted in the VfM assessment?

The value for money assessment should, where appropriate, identify non-monetised benefits and benefits that are not included in the BCR. These should be identified and included as part of the sub-criteria ‘value for money of proposal’.

Question 4

Northern Ireland

Accepted Answer

36. What is the approach in Northern Ireland?

We are taking a different approach to delivering the Levelling Up Fund in Northern Ireland. Recognising the different local government landscape in Northern Ireland, different organisations will be eligible to bid compared to in Great Britain. The UK government will accept bids from a range of local applicants including but not limited to businesses, voluntary and community sector organisations, district councils, the Northern Ireland Executive and other public sector bodies.

For transport projects specifically, the Northern Ireland Executive holds many of the relevant powers. Where they are the lead bidder they must engage with and secure the support of the relevant district council for the area in which the bid is based in order to be considered for funding.

Northern Ireland Executive Departments are not eligible to bid for projects under the other two investment themes, where the lead bidder should operate at a more local level. In all cases the lead bidder will need to have the powers to deliver the projects that form part of their bid.

37. What types of projects are Arm’s-Length Bodies in Northern Ireland eligible to bid for?

The Fund is targeted at interventions taking place at the most local level.

For culture and regeneration projects this will mean we are accepting bids from district councils or local applicants operating at that level, which may include Arm’s-Length Bodies.

For transport projects specifically, we recognise the Northern Ireland Executive holds many of the relevant powers, so will be eligible to bid for these projects. Where they are the lead bidder they must engage with and secure the support of the relevant district council for the area in which the bid is based, to be considered for funding.

38. How will local areas with the highest level of need be identified and have funding targeted towards them to address existing regional disparities and imbalances given that Northern Ireland is not part of the index?

For the first round of Levelling Up Fund, bids from Northern Ireland will only be assessed against strategic fit, value for money and deliverability. As part of the strategic fit part of their applications, Northern Ireland applicants will be expected to provide evidence of the specific local challenges and barriers to growth that exist. We expect bids that are able to explain this best, including how they will target funding at areas of need, to be most likely to be successful.

39. Are there restrictions on the number of successful bids an eligible applicant in Northern Ireland can have over the lifecycle of the Levelling Up Fund?

For the first round of the Levelling Up Fund there are no limits to the number of bids from bidding entities in Northern Ireland. We will publish more details about future rounds of the Fund, including limits on bid numbers, later this year.

40. Is the £20 million indicative for Northern Ireland for the first round an annual figure or a total?

For the first round of the Levelling Up Fund, allocations for projects in Northern Ireland will be made from a ringfenced pot that is in the region of £20 million. This ringfenced pot is an indicative amount and is subject to the quality of bids we receive. The number of projects we fund will be dependent on the bid assessment process, which we have published details of in the technical note.

As set out in the prospectus, for the first round of funding, 3% of total UK allocations will be set aside for Northern Ireland. Across the whole fund, at least £800 million will be set aside for Scotland, Wales and Northern Ireland over four years from 2021-2022 to 2024-2025.

41. Why can Executive Departments not bid for the other two themes?

The Fund is targeted at interventions taking place at the most local level.

For culture and regeneration projects this will mean we are accepting bids from district councils or local applicants operating at that level.

For transport projects, we recognise the Northern Ireland Executive holds many of the relevant powers, so will be eligible to bid for these projects.

Question 5

General

Accepted Answer

42. Are we expecting annual rounds? When will more information be available about this?

Further detail on how future rounds of the Fund will operate from 2022-23 onwards will be set out later this year.

43. The application form word limits are too small, can technical documentation be submitted separately?

The word limit applies to the application form where the data/evidence should be summarised. By exception, any further material should be referred to in the application form.

Any separate technical documentation should be annexed and sent with the application form to levellingupfund@communities.gov.uk.

44. Will category 1 places in the first round of funding retain their category 1 status in future rounds?

Further detail on how the future rounds of the Fund will operate from 2022-23 onwards will be set out later this year. For these future rounds, the parameters set out in the prospectus published at Budget will be kept under review, including updates to reflect any operational feedback and wider changes in government policy.

45. What if local government reorganisation is happening in my area?

Bids should be submitted as set out in the prospectus. We would expect any new unitary council(s) to take on all local government functions, and for all assets, properties, rights and liabilities to transfer to the new council(s).

Question 6

Annex A: Process for determining the number of bids that local authorities in Great Britain can submit

Accepted Answer

The following series of questions, and accompanying flowchart is intended as a decision tree to assist local authorities in calculating the potential number of bids that they can submit for the Levelling Up Fund. Each individual bid as referred to in the below decision tree and flowchart is worth up to £20 million, or up to £50 million by exception for large transport projects.

1. What type of body is the local authority in question?

a. Type 1: District council, unitary authority, London or metropolitan borough – go to steps 2-5 to determine bid numbers.

b. Type 2: Combined and Mayoral Combined Authority, the GLA, or upper-tier county councils outside Combined Authorities - can put in one transport bid only, steps 2-5 not required.

Decision tree for type 1 local authorities

2. Does the local authority have any whole constituencies within its boundaries?

a. If yes, the local authority gets one bid for each of these.

b. If no, the local authority gains no bids for this step.

3. Does the local authority have any partial constituencies within its boundaries?

a. If yes, the local authority should work with the other local authorities that include parts of that constituency to designate a single lead authority. The local authority gains one bid for every one of these partial constituencies for which they are designated the lead authority.

b. If no, or if the local authority is not designated the lead authority in any cases of partial constituency overlap, the local authority gains no extra bids for this step.

4. If and only if the local authority has gained no bids via steps 1-3, it will receive one bid for projects of all types, to ensure every place is able to bid at least once.

5. Is the local authority within Greater London, a Combined Authority, Mayoral Combined Authority or County Council area?

a. If yes, the local authority gains no extra bids for this step.

b. If no, the local authority gains one additional bid that must be for transport (this includes all local authorities in Scotland and Wales).

Bid numbers flowchart for local authorities identified as ‘type 1’ above

*As set out in the prospectus, where an MP’s constituency crosses multiple local authorities, one local authority in the area should take responsibility as the lead bidder, and relevant local areas should work together to designate that lead bidder.

Question 7

Annex B: Additional guidance on economic case and value for money assessment for smaller transport projects

Accepted Answer

Publication of appraisal toolkits

The Levelling Up Fund application form sets out a series of requests for information, data and analysis that can be used by bidders and by government to assess the economic case for specific bids, and to obtain an overall assessment of value for money.

The economic case and value for money assessment for transport projects should be consistent with DfT’s Transport Analysis Guidance (TAG). TAG sets out detailed guidance that should be applied as relevant.

The transport appraisal process has been designed based on HM Treasury’s Green Book, including on the principle of proportionality. On proportionality, the Green Book states that all new proposals should be subject to comprehensive but proportionate assessment, wherever practicable, so as best to promote public interest. This should be applied in the transport appraisal process at two levels. Firstly, the guidance recommends that a lighter-touch appraisal is applied in the early appraisal stage of options development. Secondly, a lighter-touch appraisal can be applied for smaller interventions than for larger interventions.

The Department for Transport will, in May, be making available a set of Toolkits to support appraisal of smaller projects (up to £20 million cost) and completion of applications to the Levelling Up Fund. These can be used where this analysis can be demonstrated to be appropriate for analysis of specific project. The use of these Toolkits is recommended and is intended to provide a required standard that the analysis in applications is expected to meet. Bidders can choose to use other modelling and appraisal methods that are consistent with TAG. The following toolkits are available for bidders to use when preparing bids. If these are used, then applications should include a completed Toolkit, together with a summary of the input assumptions and results from the analysis.

Small Scheme Appraisal Toolkit: this can be used to calculate BCRs for small road and/or public transport schemes.

Local Highways Maintenance Small Scheme Appraisal Toolkit: this can be used to calculate BCRs for local highways maintenance small schemes.

Active Mode Appraisal Toolkit: this can be used to calculate BCRs for active mode, cycling and walking schemes.

Given the complexities of the transport system and the scope of most schemes, it is generally expected that a transport model will be required for road and public transport schemes, but a small transport intervention may be simple enough to warrant a simplified approach, if it can be demonstrated that this is proportionate for providing the data and analysis requested for the application form.

The most appropriate modelling approach for any specific scheme will depend on the type of scheme, the circumstances, its purpose or objectives and the stage of the appraisal and decision-making process. The modelling and scheme appraisal at each stage needs to be related to the decisions it informs and to the scale of the scheme.

Care should be taken to consider whether the use of simplified models and appraisal methods give rise to unrealistic estimates of benefits that are unlikely to result from a more detailed approach to modelling and appraisal.

Small Scheme Appraisal Toolkit

The Small Scheme Appraisal Toolkit is under development to support promoters in assessing small highway schemes and/or public transport schemes. The Toolkit will enable an estimate of the Present Value of Benefits and Present Value of Costs of a scheme based on the forecast impacts in the scheme opening year.

To estimate scheme benefits, the Toolkit requires inputs for the Do-Minimum and Do-Something scenarios of demand, and depending on the scheme type, inputs also include total travel time, total travel distance and changes to bus infrastructure. All inputs are required for the scheme opening year, or a proxy year that is as close to the scheme opening year as possible (preferably within 3 years, or if unavailable, adjusted to reflect the opening year). Based on those inputs, the Toolkit will provide an estimate of the benefits/disbenefits of the scheme, including highway / PT journey time, highway vehicle operating costs, indirect tax and public transport journey quality factors.

The Toolkit will also provide an estimate of the scheme impacts on noise, local air quality, greenhouse gases, accidents and infrastructure, using a marginal external cost approach. The inputs to the Toolkit can be based on modelled outputs (including operational assessment models and simple spreadsheet models) or observed data, but will require an assessment of both the Do-Minimum and Do-Something to enable an estimate of the overall Present Value of Benefits.

Scheme costs can be included in the Toolkit, and the Present Value of Costs will be calculated for the scheme and used in a Benefit Cost Ratio (BCR) calculation.

Where the scheme is made up of multiple discrete elements which have been assessed separately, then multiple versions of the Toolkit will need to be run (noting there will need to be aggregation of benefits across schemes to obtain the total BCR). However if multiple scheme impacts are assessed in a single model these can be entered into a single Toolkit.

The Toolkit will be released toward the end of May, however a proforma showing the required input is provided with this guidance. All inputs to the proforma should be provided where possible, noting that for some schemes / modelling platforms it will not be possible to obtain all inputs. Within the proforma users should complete all yellow cells (where possible) and should select from the dropdown in the green cells. User instructions / notes are shown in green text within the proforma.

Local Highways Maintenance Small Scheme Appraisal Toolkit

For local highways maintenance small schemes such as repairs to carriageways, bridges, tunnels or retaining walls, cycleways or footpaths, or draining assets, the Local Highways Maintenance Small Schemes Appraisal Toolkit has been developed to assist bidders to estimate value for money. This toolkit should ensure proportionate analysis for small local highways maintenance schemes, and should reduce the burden on bidders. As with the other Toolkits provided for the Levelling-Up Fund, use of this Toolkit is optional, and bidders may choose to use other methods for assessing value for money, and may prefer to use other methods if they are more suitable for a specific project.

For the Local Highways Maintenance Small Schemes Appraisal Toolkit, the bidder should input data into the proforma for the toolkit, providing data including Opening Year, Length of Scheme, Number of Vehicles and Average Vehicle Speed. They will also need to input extra data, depending on the type of scheme. These include SCANNER and RCI data for carriageways number of cyclists and information about diversion routes for cycleways, weight restrictions, length of delays and length of diversions for bridges and number of closures due to flooding for drainage schemes.

The Toolkit then calculates Net Present Value (NPV) using inputs for Present Value Cost (PVC) and calculations for Present Value Benefit (PVB). The PVB is calculated differently for each type of maintenance scheme. Carriageways consider vehicle operating costs, journey time savings and greenhouse gases; cycleways use journey ambience benefit assumptions; and bridges use data about the additional length and time of diversions.

The bid assessor will scrutinise the proforma that is submitted alongside bids to the Levelling-Up Fund, assigning an RAG rating to each section while considering any supporting information. RAG ratings may be downgraded if assumptions are used, average values are outside the expected range or if the data does not pass a simple sense check.

Active Mode Appraisal Toolkit

The AMAT was developed by the Department to allow scheme promoters to simply and robustly appraise the value for money of walking and cycling schemes. It quantifies some of the key benefits from active travel including improved health and lower workplace absenteeism, environmental and congestion benefits from reduced car miles and journey quality benefits from safer and more pleasant travel.

The AMAT has recently been simplified, reducing the information required from scheme promoters. In addition, the Department has published a new plain-English AMAT user guide, providing further explanation what inputs are required and where they can be sourced.

Users are required to input details about the scheme and its costs into the sheets ‘User Interface Intervention’ and ‘User Interface Costs’ respectively. Most of this information should be easily obtainable by scheme promoters including descriptions of existing/proposed cycling and walking infrastructure, scheme cost and opening year. In addition, the latest version of AMAT pre-populates many of the inputs with default assumptions, reducing the amount of information scheme promoters need to provide. Further details on use of AMAT is provided to this guidance note.

Active Travel: Determining a scheme’s value for money category

For permanent schemes costing £2 million or more the value for money category should be determined based on: 

The scheme’s benefit-cost ratio, which is reported in the ‘Analysis of Cost and Benefits’ sheet in AMAT 
Any significant non-monetised impacts of the scheme which haven’t been quantified in AMAT including traffic congestion dis-benefits from reallocating road space
Risks and uncertainties around the estimated costs and benefits

For schemes costing less than £2 million the value for money category should be determined based on the value for money of similar measures, its cost and any significant impacts non-monetised impacts. See estimates for the BCRs for past cycling and walking measures. A scheme’s value for money category may be higher or lower than comparable schemes depending on the relative cost per kilometre or cost per unit and non-monetised impacts. See cost benchmarks for cycling schemes. 

Where dis-benefits to other users are likely to be significant and they have not been quantified, scheme promoters will need to be satisfied that the benefits of the scheme are likely to be sufficiently high that it will still offer value for money. For example, schemes reallocating road-space on already busy roads may deliver significant non-monetised dis-benefits due to increased traffic congestion. Where a benefit-cost ratio has been calculated excluding potentially significant dis-benefits, we expect that schemes delivering value for money should have a BCR of at least 2:1.

As a rule-of-thumb, we assume that significant non-monetised dis-benefits could reduce a scheme’s BCR by up to 50%. This should be used to determine a range for the scheme’s value for money category. For example, if a scheme is estimated to deliver a benefit-cost ratio of 3.8 using AMAT but is likely to deliver significant non-monetised dis-benefits from worsening traffic congestion, the value for money category should be assumed to be in the range Medium (lower-bound BCR of 1.96) to High (upper-bound BCR of 3.8).

Further guidance on Active Mode Appraisal Toolkit

The following inputs to the Active Mode Appraisal Toolkit (AMAT) will require some analysis on the part of scheme promoters to estimate. This note provides bespoke guidance on how these can be estimated.

1. Appraisal period (User interface intervention sheet – cell F18)

This represents the number of years over which the benefits of the intervention are assumed to occur. The default appraisal period for permanent cycling and walking infrastructure schemes is 20 years, but may be up to 60 years for schemes built to comparable design standards to major roads.

2. Local area type (User interface intervention sheet – cell F19)

AMAT requires users to input the area type with the following options: London, Inner and Outer Conurbation; Other Urban; or Rural. This can be found by looking up the scheme area in the sheet ‘Area Lookup’.

3. Number of cycling/walking trips per weekday without the proposed intervention (User interface intervention sheet – cells F32 and F45)

Users are required to input data for the assumed number of weekday cycling and walking trips in the scheme corridor or area assuming the scheme doesn’t go ahead, known as ‘baseline’ trips. Given that permanent cycling and walking schemes are likely to be around for decades, baseline cycling and walking trips should be estimated based on pre-COVID-19 trip rates.

In some cases, it may be appropriate to set baseline trips to zero. AMAT will still calculate health, journey quality and mode-shift benefits for new cycling and walking trips (typically accounting for most scheme benefits) but won’t estimate journey quality benefits for existing cyclists and walkers. If the scheme delivers a benefit-cost ratio of 2:1 or above even without accounting for these benefits it isn’t necessary to do further work to estimate baseline cycling and walking trips.

Assuming the scheme BCR is lower than 2:1, there are a few options for estimating baseline trips for corridor and area-wide schemes.

4. Number of cycling/walking trips with the proposed intervention (User interface intervention sheet – cells F33 and F46)

5. How much of an average cycling/walking trip will use the intervention? (User interface intervention sheet cells F34 and F47)

This requires an estimate for the percentage of an average cycling or walking trips which is on the scheme itself. Given that most trips won’t use the new infrastructure for their entire duration, it should be assumed that no more than half of cycling and walking trips are on the scheme itself unless agreed with the Department. For a new cycling or walking scheme along a corridor this may be estimated as the length of the scheme in kilometres divided by the average length of cycling or walking trips – approximately 5km and 1km respectively . For area-wide schemes this may be estimated as half the length/width of the scheme area (assuming most trips are to the area mid-point) divided by the average length of cycling/walking trips.

For example, consider two cycleway schemes with length 2km and 4km respectively. The average proportion of cycling trips on the scheme is estimated to be 40% (=2km/5km) and 50% (given 4km/5km is greater than 50%) for these two schemes.

6. Total intervention costs (User Interface Costs sheet – column D)

The AMAT requires an estimate for the upfront costs of delivering the scheme and any on-going maintenance and renewal costs for the scheme’s assumed life (typically 20 years). These should be reported in nominal (today’s) prices and in units of £1000 (i.e. input £1 for £1000).

As stated above the default appraisal period for walking and cycling schemes is 20 years, over which period it is expected there will be costs associated with maintenance. For schemes with assumed appraisal periods over 20 years it is expected there will also be costs associated with renewals.

Cookies on GOV.UK

This guidance was withdrawn on 14 June 2022