05Five recommendations for Whitehall and cities

Transport underpins many of the drivers of economic growth in UK cities. But the system is not working. Underinvestment in transport in UK cities is damaging local and national competitiveness.

To address this, Whitehall needs to reform how transport is funded and coordinated from DfT and the Treasury with other departments, especially DCLG, BIS and the Department for Work and Pensions (DWP).

To reflect that places are different, Whitehall needs to put more power in the hands of city regions for developing transport plans, managing investment and raising funds.

Cities need to be more proactive in calling for greater control over their transport systems and flexing their existing powers to improve transport.

Ultimately, cities need to learn from one another to work around the system while calling for greater powers from government. Many cities are working around the challenges of the centralised transport system, and cities should share lessons learned and ways of working to support transport investment today.

Transport needs a ‘tailored devolution’ model. This would give all cities greater power over local transport issues, with the precise powers varying according to the transport system in place. This is outlined in Figure 4.

Recommendations for all cities

All cities should be given more powers over how they invest in and manage their transport systems.

Most important are buses and roads, the major forms of transport in cities. Cities need to regulate local transport systems in order to enable them to provide better services and meet the needs of the public. And new investment in transport should be unlocked with long-term funding settlements from government and more local funding sources for local transport programmes. In turn, this certainty can attract new investment into UK cities.

1. Cities need London-style powers over buses, including Oyster Card-style ticketing

• Greater coordination of and control over the bus system is critical to allow Oyster Card-style ticketing systems for buses, making them easier to use, more efficient and providing a revenue stream for local government.
• Government should support cities to use existing powers — such as fees, parking regulations and procurement rules — to ensure that bus and road services meet local needs.

2. Minimum five-year funding settlements

• Government should offer minimum five-year settlements for transport capital funding to unlock investment in transport.
• Cities should use five-year funding settlements in order to lever in other funding and finance.

3. Local funding for local transport

• Local government should be enabled to create user-pays mechanisms to support transport investment, supported by the Treasury as appropriate.
• Local transport taxes and fees should only be used to support transport projects and programmes and should be subject to referenda.

Integrated Transport Authorities (ITAs) for city regions

Larger city regions should be covered by an ITA that coordinates transport across the wider city region. In turn, ITAs should be empowered to drive investment and coordination over those local authorities.

ITAs already subsidize bus services for socially necessary travel, set fares and timetables of some local train and metro services (for example Merseytravel in the Liverpool City Region), plan and fund new public transport (such as light rail), and work with their local areas to produce local transport plans. But they are constrained in their ability to coordinate key elements of the local transport system, notably the service levels, quality and pricing of local bus services, as well as the investment decisions taken in their areas by major transport agencies including Network Rail and the Highways Agency. This needs to change and, once established, ITAs should be given the ability to effectively integrate transport across the city region, in a way similar to TfL.

4. ITAs in the UK’s larger city regions not already covered by combined authorities

• Single consolidated management of transport systems (road, commuter rail, bus, tram, cycling) across a functional economic area, including statutory collaboration from Highways Agency and Network Rail.
• From 2015/16, LEPs will have a strategic role in transport investment, and they should give ITAs a lead role on strategic prioritisation and integration of projects.
• ITAs should be able to raise local funds through transport fees or other local fund-raising mechanisms, set up for specific projects or programmes and subject to appropriate local democratic and accountability.
• TfL-style powers for combined authorities.

Combined authorities now need TfL-style coordination powers to integrate transport into the wider economic strategy of the area. With control over the integrated transport system, combined authorities will be able to link transport to housing, employment and regeneration strategy, as well as areas such as the environment and health. This means cities with the platform to coordinate these areas can break through the silos of government to make sure that bus services are best organised to help more people get to work, shops and other destinations across city regions; and to ensure that infrastructure spending across road and rail systems best complements local regeneration, inward investment and housing priorities.

5. TfL for combined authorities

• A single funding settlement for each combined authority should provide a five-year (at minimum) ringfenced settlement for transport investment. This should operate on the same funding timeline as Network Rail and incorporate local funding to link in to major infrastructure projects such as HS2 or the Northern Hub.
• Combined authorities should ensure transport systems are integrated into the wider economy including access to jobs, shops and housing.
• Combined authorities should continue to integrate professional teams to link transport planners with skills agencies, business organisations, housing developers and infrastructure, including water, waste, phone, internet and power.
• Better coordination will aid the transport system to adapt to a growing city and make sure that systems are linked up to unlock growth.
• Because housing and transport, for example, will be better coordinated, transport investment will be more capable of levering in private investment and funding from other areas, such as developer contributions for new development.

London

Following on from the work of the London Finance Commission, London should be given more powers to fund its transport systems. This means government loosening the reins on the GLA and London boroughs to allow them to develop new financing models, removing or reducing constraints on borrowing, greater devolved tax powers to support London investment for London transport and greater control over road congestion charging and fees.

Next Steps: Making transport work for cities

Leading not waiting. While cities wait for government to enact these reforms, they should be taking action to make the most of the current transport system. This means city regions working together more and collaborating with LEPs on major investments from 2015/16.

The Independent Armitt Review of Infrastructure (led by former Olympic Delivery Authority chair Sir John Armitt) put forward national-level recommendations on how to improve the prioritisation and delivery of infrastructure that could be adapted for cities.

Using the Armitt Review city regions and LEPs should establish an advisory panel that will guide the long-term infrastructure investment strategy of the place. The role of the panel would be to:

• Ensure transport planning meets the needs of people and covers the appropriate economic area
• Determine how different infrastructure providers, transport organisations or bodies and areas of local government can best work together
• Examine ways of diversifying funding streams, introduce new local fees and taxes and greater fiscal autonomy
• Bring together planning authorities, developers and investors to coordinate and streamline transport for new developments
• Learn from other transport authorities, including TfL, to build up best practice and share innovative transport solutions
• Work closely with the Highways Agency and Network Rail as well as any relevant aviation body, port, bus company or tram operators.