Transport secretary Justine Greening is consulting on a new plan to devolve funding decisions on local transport schemes to yet-to-be-created local transport bodies.
The government is proposing that from 2015 local transport bodies be set up to decide for themselves how to spend their money on priorities best suited to their local needs — without Whitehall approval. Currently central government must approve all schemes over £5M.
The transport bodies would likely be set up to match the geographic boundaries of the 39 Local Enterprise Partnerships (Leps) and would involve both Leps and local authorities.
The government is proposing that central funds — totalling £1.7bn in the current spending review period — be allocated to the bodies using a fornula, with the cash most likely to be divvied up on a per capita basis. Emphasis would be placed on the local bodies securing additional funding from private sources. They would be allowed to use mechanisms such as increases in business rates and Tax Incremental Financing to raise extra cash.
In return for devolution, the bodies would need to assure the government of governance and financial management arrangements, accountability for decisions and achieving value for money.
Return of the Regional Transport Boards — with a twist
The bodies are effectively a revival of the Regional Transport Board (RTB) idea created by the last Labour government and disbanded by the coalition government as part of its localism agenda. The RTBs were generally part of the Regional Assembly structure and advised government on regional priorities to allow it to allocate funds under its Regional Funding Allocation (RFA) system.
RTBs competed against each other for a larger share of the government’s cash pot, but had no power to actually decide on which schemes to invest in — final decision always rested with government.
The average cost to central government of a local major scheme under the RFA was around £30M. However, individual schemes ranged in value from less than £10M, such as the £5M A631 West Bawtry Road Improvement, to over £200M, such as the Manchester Metrolink extensions. The vast majority of schemes by number were in the region of £5M and £30M.
There would no longer be a £5M threshold defining a major scheme, meaning that a scheme of any size or on any network could potentially be prioritised and funded within a given allocation, where this is seen as a local priority.
Because RTBs competed for funds the system often fell down over schemes that spanned boundaries. The new system has been designed to encourage decision-making across Lep boundaries by allowing the creation of local transport consortiums. These would group together bodies in a number of Lep areas in order to manage big schemes.
The government says it will not force consortium formations, which have to be right for local areas.