"Greater financial freedoms for our cities are absolutely central to their ability to better plan and finance the infrastructure they need to flourish"

Transport and city leaders from Birmingham, Leeds, London, Greater Manchester and Sheffield have come together today to set out how transport funding reforms could transform the prospects of the UK economy.  

London's Transport Commissioner Sir Peter Hendy, Sir Howard Bernstein, Chief Executive of Manchester City Council, Geoff Inskip, Chief Executive of West Midlands transport co-ordinator Centro, and key figures from Leeds and Sheffield, have thrown their support behind a new independent report which calls for reforms that would ensure a shift in power from Whitehall, enabling the creation of jobs across the UK and economic growth for the whole country.  

The report, which was commissioned by Transport for London and Transport for Greater Manchester, has been developed and delivered by leading economic consultants Volterra. It states that the current approach to the evaluation and funding of transport projects is likely to lead to 'damaging underinvestment' unless it is tackled and that pay back in terms of economic growth and jobs would be optimised if the approach were changed.  

The Mayor of London, Boris Johnson, said: `Greater financial freedoms for our cities are absolutely central to their ability to better plan and finance the infrastructure they need to flourish. Transport is no exception to this argument. It is a vital key to unlock the door to wider growth in our economy, helping to spur jobs, new homes and regeneration. Working in partnership with other major cities I have been making the case for Whitehall to give us a greater say over our own futures and in turn boost the prosperity of UK plc.` 

Sir Howard Bernstein said: `As this report makes clear, greater devolution of transport powers is vital so that cities can better develop, fund and deliver transport improvements and fulfil their full economic potential.  

`At present, the Government has a centralised system of funding with little integration at the city level. Just 5% of taxes raised in Britain are controlled by UK cities, compared to 30% in Germany and 37.5% in the USA. The report states this should change. 

`Changing the rules and providing cities with more economic freedom would allow new projects to get off the ground and deliver benefits far more quickly than is currently the case.  

`The pipeline of infrastructure projects that could be created would then fill the order books of companies up and down the country providing more certainty over transport investment and more firms investing more in jobs, skills, apprentices and innovation for the long-run, something which existing short-term planning horizons work against.`  

The report shows that the current system of funding needs reform if the UK is to avoid being left behind in the global race for creating jobs and growth. It argues that transport investment in cities is pivotal to the country's success and that we need a fresh approach to the framework for deciding what transport infrastructure gets funded, where and when

It also calls for:

  • fiscal devolution so that cities can keep and re-invest a greater proportion of the tax revenue generated by investment
  • a longer-term approach to funding that works across political cycles
  • a system which places greater weight on the economic pay back of transport investment
  • additional powers over transport services so that they can be planned and delivered for maximum economic return.

The report goes on to state that the current system of evaluating potential transport projects wrongly assumes economic development is not connected to the development of the transport system. But, this approach was established in a period when cities were declining, whereas now it is cities that will drive future growth - with transport playing a crucial role.  

It also recommends a new focus on both a project's ability to create jobs and growth and the way it will pay back investment. A project capable of creating economic activity will lead to more people paying fares, more people and businesses paying taxes and larger contributions from private sector developers, all of which can be used to pay back the original investment. A project that can pay for itself through the creation of new growth is clearly different from one that cannot.  

Sir Peter Hendy said: `The current system of transport evaluation was developed in an era of under-investment, where governments managed the decline of cities. We are now in a very different world, where cities are the drivers of the country's future growth.  

`We need a new system that enables cities to work together to realise their full economic potential. For that we need more control over the tax revenue we raise and changes in the way in which the real financial return of transport investment is evaluated.  

`If we are given the freedom to do so we will create new jobs and growth that will benefit the whole country.`

Geoff Inskip added: `The report sets out the need for a new direction for transport, so that it integrates with city agendas for global competitiveness and provides the right levers to deliver a truly integrated transport network.  

`We wholeheartedly agree with the report's conclusions that devolved powers and funding from Whitehall will allow cities to strengthen their transport infrastructure and fulfil their true economic potential.` 

West Yorkshire Combined Authority Chair Cllr Peter Box said, `Providing us with the powers to develop transport infrastructure for our towns and cities will, as this report shows, enable us to use local knowledge and expertise to put in place the improved links that local people want and deserve and which support growth and the creation of jobs.'

Ben Still, Interim Director General of South Yorkshire Passenger Transport Executive, said: `This is an important contribution to update our appraisal of infrastructure, and to compass the full economic benefits to City Regions.`  

Chief Executive of the Civil Engineering Contractors Association (CECA) Alasdair Reisner said: `Transport is an integral part of our daily lives. It enables work and business development, provides access to education and other public services and encourages social interaction.  

`Yet while demand has increased, investment has not always kept pace. Congestion across all modes of transport causes costly delays and discourages use of our transport network.  

`CECA believes there is scope for bodies such as TfL and TfGM to have a greater responsibility for the planning and building of new infrastructure, and be given financial independence to achieve this.`

Note to Editors

Link to Executive Summary

Link to Full Report