Written statement to Parliament

Consultation on devolving local major transport schemes for the next spending review period

Consultation for deciding new devolved prioritising and funding of local major transport schemes launched.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon Mike Penning MP

Today (31 January 2012) I am launching a consultation paper to take forward discussions for deciding a new devolved system for prioritising and funding local major transport schemes for the next spending review period - schemes which have cost over £5 million.

The previous government’s regional funding allocation process failed to give local people and communities proper transparency for decisions, and control over spending - investment decisions were taken centrally and it was a bureaucratic and inefficient system which hampered local enterprise and delivery. The government has already made efficiencies on the programme of schemes inherited from this process. In total, schemes commencing construction in this spending review period are forecast to deliver benefits of around £8 for every £1 of public money spent, with a 34% reduction in the central government contribution compared to previous plans.

We now have the opportunity of developing a new system for beyond 2015. A system which ensures that the best outcomes are achieved for the economy whilst balancing the need for developing sustainably and reducing carbon emissions; a system which hands real power to local communities; and, a system which is fit for purpose in practical delivery terms.

As local major transport schemes can take on average 4 years to move from business case to the start of construction, it is vital that we begin to develop a new system now. And to fully empower local areas means giving them freedoms and flexibilities they have not had before.

Proposals set out in the consultation paper include: using a population based formula to allocate funding rather than putting in place a costly bidding process; a locally led assessment process for prioritising schemes, reducing the role of central government which many local areas perceive as costly, time-consuming and autocratic; and, putting local enterprise partnership areas in the driving seat over which transport schemes are delivered.

The government is proposing to devolve decisions to democratically accountable local transport bodies involving local enterprise partnerships and local authorities, which are given responsibility for establishing a prioritised programme of schemes for investment. These local transport bodies would oversee the delivery of individual schemes, but would not be the vehicle for delivery, which would remain with individual local authorities or other relevant delivery agencies.

Local enterprise partnerships would be central to decisions, to ensure that transport investment is fully aligned with plans for economic development. Local enterprise partnerships can play a strong role in helping to make the tough trade-offs between competing priorities and will have a say in investment financing. Transport authorities, however, would also be crucial given their expertise, responsibilities and leadership role on transport matters.

The new system would encourage decision-making across local enterprise partnership boundaries to local transport consortia - groupings of local enterprise partnership areas - in order to manage a handful of big schemes, which were experienced under previous systems. However, the government will not force consortia formations, which would risk creating ineffective and artificial partnerships that lack legitimacy.

Instead it will be for local areas to decide what collaborations are right for them and to prioritise eligible transport interventions, which they collectively agree to deliver local growth.

In return for greater devolution, central government will need assurances on effective governance, financial management, accountability and the achievement of value for money - matters which businesses and local authorities do every day.

In particular, the government proposes that while local areas will have the freedom to decide their own priorities and appraise individual schemes, all schemes would need to follow the transport business case framework and be appraised in line with webTAG, the department’s best practice and well-evidenced guidance on transport appraisal and evaluation.

Individual schemes would also be expected to be dealt with transparently, in particular through the publication of business cases at each stage of scheme development, individual schemes meeting minimum value for money thresholds, ongoing review and monitoring, and pre and post delivery evaluation of scheme benefits.

The offer of devolution will be available to all, but different local areas will have different challenges and ambitions. The government will take an individual approach with each local transport body to put in place a tailored system that is fit for purpose and secures value for money for the tax-payer.

I welcome responses to the consultation paper. The consultation runs from 31 January 2012 until 2 April 2012. This is shorter than the usual 12 weeks but will help ensure there is a system in place which enables local areas to begin to construct schemes by 2015.

Following the end of the consultation, my department will consider all responses and produce a summary report alongside setting out the next steps. I will make a further statement to the House at that point.

Published 31 January 2012