APPENDIX 22
Memorandum submitted by the Civil Engineering
Contractors Association
INTRODUCTION
Terms of reference of the Transport Committee's
new inquiry into Local Transport Planning and Funding in England
were set out in the Committee's Press Notice 33/2005-06 issued
on 30 March 2006. These left some doubt as to whether or not the
Inquiry will cover all local transport in England, including London.
Apart from a single paragraph beginning "A separate planning
and funding system operates in London" all of the background
information and the lists of questions that the Committee wishes
to examine seem to relate only to the transport plans and funding
of local authorities outside London.
CECA suggests the background information contained
in the Press Notice might usefully have posed a number of questions
that are not listed. For example, it begins by saying that "local
transport will receive £1.6 billion for capital-funded projects
over 2006-07" without attempting to put that figure in any
broader context. Also, there is no reference to most capital funding
for roads and transport being now included in the Single Capital
Pot. Moreover, there is no reference to Regional Funding Allocations
for transport or "regional advice" on prioritisation
of major schemes proposed by local authorities and the Highways
Agency.
The following points comprising CECA's written
submission do not attempt to address directly the issues/questions
listed in the Committee's Press Notice, most of which, especially
about planning, are not within CECA's competence to answer. They
do, however, include elements that CECA feels the Committee needs
to consider but which, on the basis of the Press Notice, might
possibly be overlooked.
BACKGROUND
Construction, improvement and maintenance of
local roads are major elements in total civil engineering workload.
In Great Britain as a whole total annual expenditure
by local authorities on roads and other transport infrastructure
is currently around £5.5 billion, including around £4.75
billion in England [source: Transport Statistics Great Britain,
DfT].
This is equivalent to close to 30% of CECA's
most up-to-date estimate of total civil engineering output.
CECA's quarterly survey of civil engineering
workload trends finds that two out of every three member contractors
are engaged in work of local roads, including firms of all sizes.
Arrangements for planning and funding investment
in and maintenance of local roads and transport in England have
changed considerably since the Government's first Transport White
Paper was published in July 1998.
The basic premise on which the changes have
been founded is that a longer time horizon for transport planning,
coupled with longer-term financial provisions, will help local
authorities improve the quality of transport services in their
areas, and obtain better value for money. CECA strongly supports
these objectives.
The over-riding concern for CECA members, as
suppliers to highway authorities throughout England, is the need
for greater Clarity, Consistency and Continuity in the published-programme,
funding available and initiatives to promote better value for
money.
LOCAL TRANSPORT
FUNDING AND
PLANNING
CECA welcomed the decision to replace the former
annual transport planning regime for English local authorities
with the present regime of five-year Local Transport Plans, which
it judged would be of benefit to suppliers including civil engineering
contractors as well as to authorities.
CECA also welcomed the Government's July 2000
10 Year Plan for transport which set a broader framework of service
delivery targets for local transport (maintenance condition of
highways, cycling, bus partnerships, etc), and gave indicative
values for total public investment in local transport through
to 2010-11.
One feature of the 10 Year Plan particularly
welcomed by CECA was the decision to increase central government
funding of maintenance of local roads in England mainly by way
of greater capital allocations rather than additions to Revenue
Support Grant.
CECA has long argued that central funding of
local highway maintenance should be ring-fenced, and was re-assured
that increased capital allocations for highway maintenance, along
with those for road improvement and integrated transport schemes,
would be ring-fenced.
Over the succeeding five years, however, it
is clear the regime has become less, rather than more, certain.
CECA is seriously concerned that local authorities appear to be
currently less sure of their position in respect of both the planning
and the funding of local transport than at any time since 2000,
particularly where major (>£5 million) road and integrated
transport schemes are concerned.
The Committee has noted that local transport
in England (but outside London) will receive £1.6 billion
for capital-funded projects in 2006-07. However, CECA feels that
could be misleading.
The headline figure of £1.6 billion for
the 2006-07 local transport capital settlement includes £0.2
billion of possible funding of major schemes that are not yet
approved. Fully committed capital allocations total only £1.4
billion.
Even if allocations did total £1.6 billion,
that would be £0.5 billion less than the sum suggested in
the July 2000 10 Year Plan.
Total allocations, including provisional allocations
for major schemes that had not yet secured all necessary approvals,
broadly matched the 10 Year Plan figures for the first three years
of the authorities' first five-year Local Transport Plans.
However, they then fell short by £0.3 billion
for 2005-06, for which year there was also a marked reduction
in new approvals of major schemes, ahead of the £0.5 billion
shortfall for 2006-07.
Without the level of funding originally envisaged,
the service delivery targets set out in the 10 Year Plan are unattainable.
Another example of "back-sliding"
is provided by the Government's decision that, with effect from
2002-03, almost all capital allocations for highway maintenance
and for smaller road improvement and integrated transport schemes
(the "integrated transport block") should be included
in each authority's Single Capital Pot the allocation of which
between services would—like that of Revenue Support Grant—be
decided at local level.
It appears to CECA that the Single Capital Pot
decision indicates a degree of conflict between the Government's
policies for local government in England and for transport.
More recently another conflict has developed,
between policies for regional planning and for local transport,
which has created major uncertainty for local authorities—and
their suppliers—where plans for major road and integrated
transport schemes are concerned.
The Government has established a new system
of Regional Funding Allocations for the Government Office Regions
in England, including allocations for transport. It has instructed
the Government Offices to facilitate consultation at regional
level on the prioritisation of major schemes proposed not only
by local authorities in the region but also by the Highways Agency
for improvement of the strategic roads network.
The timing of this new regional system, linked
to Spending Reviews by The Treasury, has cut right across that
of the Local Transport Plan process.
Local authorities were due to finalise their
second five-year Local Transport Plans by end-March 2006. However,
decisions on the major schemes components of the authorities'
draft Plans submitted in July 2005 were deferred pending consideration
of "regional advice" that was not submitted until January
2006, and will not be announced until later in Spring 2006.
CECA members have reported that authorities
in different parts of the country have reacted in different ways
to this added dimension to the planning process. For example,
where authorities had begun the procurement process for schemes
that "regional advice" has suggested should be given
only a low priority or should not proceed at all some have suspended
procurement but others are pressing ahead, which is potentially
wasteful of authorities' own and suppliers' resources.
The insertion of the additional "regional"
dimension appears, to CECA, to raise fresh and disturbing questions
about the allocation of responsibility for decisions regarding
local transport plans, particularly in respect of major schemes.
Long-term planning decisions about "national strategic"
routes should be afforded considerations from a wider perspective
than may be the case at regional level.
Of particular concern to those CECA members
that are involved in major highways, is the effect on the programme
of maintenance and enhancement to the national strategic network
as administered by the Highways Agency (HA).
There are relatively few companies that are
now suppliers in the major highways market; these having invested
considerably in resources and modern business improvement processes
to meet the needs of the HA. Such processes are helping the Agency
to improve value for money and deliver more reliable budget and
programming predictions.
Essential to this effort is the need for the
HA to retain control of its programme of projects, something that
appears to be undermined by regional influence.
On paper all the indications are that decisions
will be taken by the Department for Transport, after considering
"regional advice" that should take account of the views
of the whole spectrum of stakeholders.
There are indications, however, that a greater
influence is being exerted by the Government Offices for the Regions,
which is also extending to other aspects of the Local Transport
Plan process, including assessment of delivery of authorities'
first Local Transport Plans and of their draft and final second
Plans.
For example, it appears to CECA that decisions
on "performance funding" are being taken at the level
of the Government Offices rather than that of the Department for
Transport, and there would seem to be a risk that judgements may
not be entirely consistent across the country.
"Performance funding" is another source
of uncertainty in the local transport planning and funding system.
Introduced in the 2004-05 local transport capital settlement it
was shelved for 2005-06 but revived for 2006-07.
Arrangements for the new funding year seem to
CECA to be most unfair. Some additional funding is being provided
for reward payments for authorities whose draft second Local Transport
Plans have been judged "very promising", but those for
authorities whose delivery of their first Local Transport Plans
is considered "excellent" or "good" by reference
to their Annual Progress reports for 2004-05 are being funded
from an unchanged total of integrated transport block guidelines,
by imposing 5% deductions from the guidelines of authorities whose
performance is rated no better than "fair".
It is impossible to see how the Government can
justify these deductions, which for some larger authorities equate
with more than £1 million, when "fair" performance
is said to mean "generally satisfactory delivery".
CONCLUSION
CECA considers that the Local Transport Plan
process for planning and funding, investment in and maintenance
of local roads and integrated transport in England outside London,
is based on sound principles, but its effective operation has
been and is being compromised by changes from year to year in
guidelines, reporting, performance funding, etc, and by more radical
changes in the balance of national, regional and local transport
policies.
The Government's 10 Year Plan was a significant
step in the right direction to establish a long-term agenda for
transportation.
CECA believes that commitment to funding investment
in transportation infrastructure is in danger of being undermined
by a culture of inconsistency typified by the Future of Transport
White Paper (2004) that failed to follow through with a commitment
to a long-term agenda for transportation as set out in the 10
Year Plan.
For this reason, coupled with a need to facilitate
robust business-cases for national transportation bodies such
as the Highways Agency, CECA considers national strategic routes
and projects that have been identified as having wider importance
are insulated against undue influence by regional consultation
and the disruption that can occur from that.
Notwithstanding these concerns, CECA believes
there is merit in regional input for schemes that are not of national
strategic importance.
There is an ongoing requirement for transportation
strategy at all levels to not only reflect the need for long-term
investment in transportation infrastructure but also provide stability
for those seeking to develop best value procurement and delivery
processes.
2 May 2006
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