Devolving local major transport schemes: Moving forward

By April 2013, an initial list of prioritised schemes for funding (from 2015) is expected, so its full steam ahead for local decision making on major transport schemes. The consultation document contained some interesting responses, including population concerns and the exact role of the DfT in the process.

Ministers finally confirmed their intention to press ahead with devolving transport funding. The new local transport bodies (LTBs) have until 28 September to draw up their boundaries. Afterwards the DfT will announce indicative budgets, allocated according to population, and is set to publish guidance to enable LTBs to draft robust local assurance frameworks by December.   

The current spending review period the major schemes programme is the result of a competitive process. Plans for LTBs comprising of councils and local enterprise partnerships to take responsibility for decisions on new transport infrastructure were put out for consultation in January. The DfT have now confirmed the move will go ahead, more or less as set out in the consultation document, responses from which were published in July. Decisions on the use of the devolved funding will be expected to demonstrate to local stakeholders and central Government that the schemes they will carry forward provide good value for money. Transport minister Norman Baker stressed making decisions on new transport infrastructure at a local level would be more efficient:“While it is right for the Government to look at the big picture and co-ordinate schemes with a national impact, there is no substitute for local knowledge. That is why we want to make sure that important decisions affecting the future of towns and cities across England are made by those who best understand the specific issues facing their communities.”

The transport minister’s written statement to Parliament on September 18 also contained: “I am pleased to say that our consultation proposals were met with approval from the majority of respondents, particularly Local Authorities and Local Enterprise Partnerships.

“Transport is vitally important to local economies, and new infrastructure can provide the missing links that are often so crucial in getting economies moving and creating opportunities for new investment and employment. We want to ensure that decisions on new transport infrastructure are made more efficiently, and at a more local level than previously. Local Enterprise Partnerships are well placed to understand how transport investment can be used to boost economic recovery and growth and that is why we want them, working with Local Authorities, to have a key role.

“I fully support the key objective of removing Whitehall from the process of making decisions on which local schemes should or should not go ahead. However we have a responsibility to ensure that the new local decision makers have arrangements in place to achieve the value for money that we know the right schemes can deliver and to take account of other important factors such as environmental impact. Most respondents accepted the need for robust local assurance frameworks and we will shortly publish detailed guidance on this, to enable local areas to submit their draft frameworks by December.

“Transparency is also essential, to ensure that priorities are widely publicised and understood and can be effectively shaped by local people that have a key interest in them. Evaluation will also assume an even greater importance, to enable all parties to look critically at whether key outcomes were achieved and to learn lessons for future investment decisions.”

Consultation - Population concerns
A simple population basis of allocation was supported by almost half of respondents (49 per cent) with no consensus in favour of any specific alternative method. The Department proposed three possible options for allocating funding between local areas: Option 1: population (i.e. per capita) allocation (which was the preferred option of the DfT); Option 2: economic contribution, and; Option 3: A measure of transport need. Of those expressing any preference 49 per cent of respondents supported Option 1 for similar reasons to those suggested by the DfT, because the alternative mechanisms were either too complex or not sufficiently compelling. Some of the respondents that favoured population stressed the need for it to take account of expected growth in population. But the consultation document did throw up some interesting responses that it felt couldn’t really be categorised, such as: “there is a value in … a per capita basis, but it is suggested that wider issues including ‘economic GVA contribution and a measure of transport need’ is also taken into account”, and“funding distribution should be based on a combination of greatest population (both current and expected growth), economic contribution, strategic importance and transport needs.”   

As you would expect, there was a tendency for local areas to favour an allocation method that they would most benefit from, as demonstrated by these contrasting responses from three LEPs in different parts of the country. These included: “We are part of the country’s economic engine room, with far more potential than other areas to help recover from recession. We would therefore urge you to increase the allocations to this area by taking account of factors such as the area’s contribution to Gross Value Added or the very high level of congestion that our businesses are forced to endure.”

“There is a strong concern that the options do not acknowledge the difficult transport issues faced in larger rural counties, …[we] would urge that the formula includes a factor which takes account of the overall geographic size of the LTB.”

“If the Government is serious about delivering its stated intent to address the north/south divide then it should take this opportunity to direct funds where they are needed most. A formula based upon population but weighted in inverse proportion to GVA is suggested.” As the DfT suggested, these are difficult concepts to implement.

Residual role for the DfT
One question in the consultation document asked: Do you have any general comments on proposals to devolve decisions and funding, and on any residual role for the Department?

Many respondents stressed the importance of LTBs having influence over funding decisions on the Strategic Road and Rail networks. Nearly a quarter of respondents expressed concern that the Department was minded not to provide funding support for LTB administration, particularly for the initial prioritisation of schemes and noted the difficulties of resourcing this locally. Some explicitly asked the Department to reconsider this position. On the residual role for the Department the responses tended to focus on four main areas: 

Assurance/audit - Although not accountable for individual scheme decisions, the Department will need to remain responsible for ensuring that the devolved architecture is robust and fit for purpose; Advisory – It is clear that many authorities feel that they would benefit from the Department’s expertise and advice, particularly in the early stages of LTB set up and scheme prioritisation. This may well include the identification and dissemination of good practice; Technical – the DfT was felt to have a clearly defined role in developing and maintaining fit-for-purpose assessment and appraisal frameworks and providing guidance on their use, and; Champion – ultimately this role is the securing of funds for major schemes in the future by building up the evidence base.

Larger scheme funding
The consultation included a section on how to promote strategic investment through larger schemes. Three options were put forward:

Option 1: Local transport bodies decide themselves to allocate funding for big schemes either by central encouragement or requirement; Option 2: a central competition run by the Department for big schemes, and for which the Department retains a top-slice of the total budget and Option 3 (the DfT’s preferred option): no separate distinction for big schemes, and no central encouragement or requirement to help promote their delivery. Individual Local Enterprise Partnership areas would get a budget to prioritise whatever schemes were agreed locally.

There was an large majority against any top slice for large schemes. 85 per cent of respondents answering this question said there should be no top-slicing for larger schemes at local or national level. Only four respondents argued for a national top-slice and competition as per Option 2. In line with the principle that it is for the LTB to decide on their priorities, the DfT proposed that 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, where this was seen as a local priority. 90 per cent of those expressing a view agreed that there should be no mandatory minimum £5m threshold. Some of those argued a threshold may in principle be a good idea, in order to maintain the distinction between major schemes and Integrated Transport block, but said either that it should be a guideline, that it should be lower, or that it should be locally determined and not necessarily set at the same level in every LTB.

Accountability
The consultation set out the need for LTBs to have in place appropriate accountability measures as part of a wider assurance framework; measures to enable independent and public scrutiny of decisions and spend, as well as ensuring that local communities’ and citizens’ views are adequately represented and considered in the decision making process. It set out a suggested list of criteria to ensure this. The consultation document asked:

Do you have any comments in relation to how local transport bodies should demonstrate that they are accountable to central Government for tax-payers’ money and to local communities and citizens?

A significant number of respondents pointed out that local authorities’ existing arrangements for local accountability and scrutiny should be adequate for this purpose. Many of those respondents stressed that this meant that elected members would need to have a defining role in the decision making process, and some linked this back to their more general views on ensuring that LTBs are democratically accountable.

There were far fewer respondents with anything specific to say about how accountability to Central Government could be achieved, although a small handful said explicitly that there would be no need for any reporting. Some NGOs also stressed that, as well as transparency there needed to be a mechanism for a wider group of stakeholders to be actively involved in the decision making process. They also felt that LTBs should be subject to the Freedom of Information Act.

Timescale
The consultation set out a timetable for implementation, including a deadline of December 2012 for Local Transport Bodies to set out their proposals for governance, financial management and assurance frameworks, and April 2013 for them to publish an initial list of prioritised schemes for funding from 2015.

There were a mixed range of views expressed on whether the timetable was realistic and achievable. DfT accepted that the timetable is challenging, but believes is also necessary in order to ensure a sufficient number of schemes are able to start construction when new money becomes available from 2015/16.

If there are any LTBs that fail to meet the timetable or choose to adopt a slower one, then it follows that they are unlikely to have schemes ready for construction in the early years of the next spending period. That being the case, the DfT cannot guarantee to provide those LTBs with the funding allocation for the whole of a future spending period.

To assist authorities in meeting the timetable the DfT will be providing detailed guidance about the minimum standards for assurance frameworks, and local planning assumption figures by October. The department will also work with LTBs as they develop their assurance frameworks with a view to minimising the time required for formal approval, and allow LTBs to submit and gain approval for their assurance frameworks earlier if they are ready.

IOD: The right decision
Responding to the decision to devolve funding and decision-making on local major transport schemes to new Local Transport Bodies from 2015, Corin Taylor, senior economic adviser at the Institute of Directors, said:

“This is the right decision, which should give businesses more of a say on key projects in their region and speed up approval of vital work to ease road and rail bottlenecks. Britain’s Government is over-centralised, with far too many decisions still made in Whitehall, but today’s move should restore some much-needed control to local areas. It will now be vital for the new Local Transport Bodies to put together a list of priorities, so that work can start as soon as responsibility is transferred.”

Further information
Consulation document - tinyurl.com/8amcmut
Transport Ministers statement - tinyurl.com/9s6kd5k