Guidance

Towns Fund Selection Process: Summary of Accounting Officer (AO) advice

Published 14 January 2021

Applies to England

Recommendation

1. The advice to the Accounting Officer (AO) recommended that the approach to selecting towns met the tests set out in Managing Public Money, as set out below.

Selecting 100 towns

2. Advice outlined the selection methodology designed by officials, as set out by the Permanent Secretary in the Public Accounts Committee evidence session on 21 September 2020:

a) The foundation of the methodology is a list of all 1,082 towns in England, created by the ONS. Using the ONS measure of deprivation at town level, the less needy half of all towns were excluded from being eligible.

b) Officials then gathered information on the 541 eligible towns, including factors such as strategic alignment with government priorities, the presence of investment opportunities and different indicators of need. Judgements were made by Cities and Local Growth Unit experts to build these factors, apply weightings and produce a ranking.

c) Officials then grouped towns in each region into three categories – high priority, medium priority and low priority based on all the factors assessed.

3. The advice outlined that the High Priority list contained 40 towns which were recommended for selection, spread across regions. These towns scored highly across all available criteria. This approach ensured the fund reaches the most deserving places. Ministers agreed to this recommendation.

4. Officials recommended that ministers should select the remaining 60 towns based on the information provided and their own judgement. Officials recommended this flexibility because, for the majority of towns, there were a variety of arguments both for and against their inclusion, meaning an element of qualitative judgement was necessary and because political accountability for decision-making was important.

Accounting Officer tests

Propriety

5. The advice set out that there was insufficient funding to provide funding to all towns on the long list. Therefore, it was necessary to limit the number of places eligible for funding.

6. The measure developed by officials was designed as a guide and not the only way to assess eligibility. The advice to the AO stated that a number of towns were in similar situations, and a degree of qualitative judgement between picking towns with similar characteristics was inevitable. It was considered appropriate for ministers to exercise qualitative judgement, subject to there being a rationale for selection.

7. The advice noted that, in line with officials’ recommendation, ministers had set out the rationale used at a regional level for the remaining 60 towns and at an individual level for the 12 of these 60 towns which were selected from the low priority group.

8. The advice noted that ministers deviated from the recommended number of Town Deals per region, but that this had little impact on average score and led to a regional distribution of funding more focused on the regions with higher need. This was noted in the NAO report in paragraph 3.7.

Legal advice

9. Legal advice was obtained which confirmed that the propriety test was met. Further details of that advice are not provided here as the advice is subject to legal professional privilege.

Value for Money

10. The advice to the AO was that value for money of the capacity funding will come from ensuring it leads to high quality investment planning and a successful deals process.

11. It was advised that value for money of the broader investment pot would come through the selection and approval of funding for specific interventions proposed by individual towns as deals are developed. It was judged that the chosen selection of towns will not negatively affect value for money.

12. To protect value for money, the Departmental “Investment Sub-Committee” (details in MHCLG Annual Report & Accounts) approved the plans noting that allocations of capacity funding to towns would need to be aligned to publication of the prospectus. This minimised the risk that the capacity funding was spent developing plans in the absence of guidance from government on the criteria for the fund. The Towns Fund Prospectus was published on 1 November 2019.

Affordability and feasibility

13. In the advice, it was estimated that around 20 additional full time equivalent (FTE) staff would be needed to deliver this programme across 100 towns. The view was that this was affordable and appropriate in the circumstances.

Regularity

14. The advice stated that there were no regularity concerns as the Department holds the powers to provide funding to deliver this objective to local authorities through Section 31 grants.