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Congestion charging 10-year hypothecation limit extended

LOCAL AUTHORITIES look set to be given an extra two years to spend ring-fenced congestion charge revenues on transport projects, it emerged this week.

And the 10-year hypothecation limit set out in the Transport Bill last week could even be raised to as much as 25 to 30 years for certain long term projects, NCE has learned.

Councils had feared that the 10-year limit set by Government on congestion charge revenue ring-fencing would not be long enough to secure massive private sector investment in public transport (NCE last week).

But a DETR source this week confirmed that a more 'flexible' approach would now be taken.

The source said: 'What we will do is work closely with local authorities and take a decision in the light of what they really want. We have guaranteed hypothecation for 10 years. If it made sense it could be hypothecated for a longer period but we want to talk about the real examples.'

Extensions to ring-fencing would most likely be limited to two years but partial ring-fencing over a 25 to 30 year period, to safeguard payments to private concessionaires, would be considered. Such an extension would be particularly useful if congestion charging revenue was linked to the funding of one flagship public transport scheme, such as a tramway, said the DETR source.

However, following this week's Government-led road summit which approved consideration of new road construction, it is equally likely that such an extension could be applied to safeguard payments for private road schemes.

A DETR source said: 'One question we would raise is whether congestion charges really need to be 100% hypothecated. A 30-year income stream for a private concessionaire may be less than the total yield from the congestion charging scheme. We haven't really thought through how we would handle that sort of situation, but 10 years would not necessarily be the end of the story.'

Extensions will be considered soon by DETR in talks with all local authorities keen to introduce congestion charging. The talks will focus on how to create the best conditions for private sector investment in public transport improvements.

Local authorities keen to introduce the charges have already held talks over the last month with the Local Government Association appointed Public Private Partnership Programme (4Ps) to explore the private financing of public transport improvements.

4Ps transport executive David Locke said: 'The 10-year rule has been highlighted by a number of local authorities as an issue of concern. Long term contracts for delivery of transport services over a 25 to 30 year period doesn't necessarily tie in with 10 years' hypothecation. It's something that does require further consideration from DETR.'

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