Examination of Witnesses (Questions 200-219)
MS ALISON
QUANT, DR
IAN HARRISON,
MR TONY
MATTHEWS, MR
ROY NEWTON,
MR BOB
WILKINS AND
MR GRAEME
FITTON
24 MAY 2006
Q200 Chairman: Do you want to say
that again because I cannot believe what I have just heard.
Ms Quant: He is saying he can
save a million pounds off our revenue budget next year if we reduce
five million spend on our transport capital programme and that
is what he is recommending.
Chairman: That sounds very constructive,
I must say.
Q201 Mrs Ellman: Is the £5 million
threshold for local decisions on capital schemes the right level?
Ms Quant: It has got nothing to
do with that. He would like to save a million pounds.
Q202 Mrs Ellman: That is a separate
question. Is five million the right level?
Ms Quant: For?
Q203 Mrs Ellman: For local decisions
on capital schemes.
Dr Harrison: I think £5 million
is probably too low a threshold now for major schemes given the
amount of effort and, therefore, costs required to mount a major
scheme bid. This is an argument which would support the threshold
perhaps going to £10 million rather than £5 million
schemes but with the proviso that if the threshold were raised
there would need to be a greater proportion of the expenditure
put into the transport block to allow authorities to be able to
fund those schemes in the £4 million to £10 million
range, say.
Q204 Mrs Ellman: Would it be practical
to have a different threshold for different sorts of authorities?
Dr Harrison: I think that is a
difficulty. Smaller authorities, small unitaries in particular,
do already have difficulty in promoting major schemes. I think
it would cause problems of differential approaches if some authorities
were allowed to promote a scheme of a certain size through one
route and others were not, or if unitaries in proposing the schemes
had to use a major scheme format for schemes of a lower cost nature
to get around the issue. That would seem to be unduly burdensome.
Mr Matthews: Can I clarify that.
Under the existing processes we can make a case for a scheme under
£5 million to go forward as a major scheme, but it has to
be a special case. There is a way to do that already for a smaller
autohrity.
Q205 Chairman: So you are saying
it is not a burden even though we have taken evidence that it
might be?
Mr Matthews: In theory there is
a way you can do this. As a smaller authority you can put forward
a case.
Mr Fitton: Can I just expand on
that. The rules around the small and major schemes are very tight
and very difficult to achieve. I think it is only going to be
the very small unitary authorities that can match the rules on
that. If we are talking about raising the threshold for a major
scheme from, say, £5 million to £10 million what we
would need is a supplementary bid process to hit schemes between
that £4 million and £9 million mark in the same way
we had up until about two years ago where if an authority had
a £3 million scheme or a £4 million scheme that would
put a huge hole in the integrated transport budget we could put
a submission in for a supplementary bid on that and that would
deal with the intermediate schemes of between £4 million
and £9 million.
Ms Quant: I think you have got
to refer back to what is the total sum of money available for
spending. If you think that the South East region, which represents
eight million people, is only £30 million per annum at the
regional level and out of that comes the major scheme funding,
it simply is not possible to hand out large lumps of money, so
you run into the difficulty as the pot is quite small of distributing
that in a fair way because if you do that then you probably will
not be able to do any of the larger schemes at all. There are
trade-offs here when you have got such a limited pot of money.
Q206 Mrs Ellman: How do you relate
that to changing the system or would you leave it as it is?
Ms Quant: I think the route you
probably want to explore is how local authorities can raise money
for transport which might be a more fruitful route than arguing
about precisely how you distribute not enough money.
Q207 Chairman: Is that just Hampshire
or do other authorities think that?
Mr Wilkins: I think a number of
us would share in that. We would argue that we would like to see
Government making more money available for transport and for the
sorts of things we are doing. We would like to explore what freedoms
there are on obtaining other money from other sources. The problem
is that very often the routes that you take for those, developer
contributions for example, come up against bids for other factors.
For example, in one of my towns there is a major flooding problem
that people look to see developer contributions going to solve
before you get into health facilities and so on. It is quite a
difficult area. We have to find ways of raising more money somehow
to start doing some of these schemes.
Q208 Mrs Ellman: What efforts have
any of you made to raise money in different ways? Has anybody
got any examples that you can give of how you have tried to raise
money in other ways or ways you would like to see opened up?
Mr Fitton: I believe most authorities
are making full use of section 106 agreements and securing significant
funds from that for transport infrastructure to enable development
to go ahead and to help the infrastructure as it stands at the
moment.
Q209 Chairman: You do not think that
is a bit limited, Mr Fitton, because by definition that must be
limited to particular areas where you can demonstrate what you
are using the money for to the people from whom you are taking
it?
Mr Fitton: It is limited to a
reasonable distance within development but at the same time you
get the added benefit of addressing existing issues or issues
that will become a problem in the near future by the section 106
funding. It has added benefits other than just development.
Q210 Mrs Ellman: Are there any other
suggestions?
Dr Harrison: All authorities use
the range of funding sources that are available to them. For example,
we use match funding from European Objective 2 in parts of Devon
and also look at partnerships with district councils—district
councils contribute to some of our schemes—and, indeed,
the Regional Development Agency although RDAs, certainly in our
part of the country, have not been particularly keen to invest
directly in transport schemes themselves.
Q211 Mrs Ellman: What would prudential
borrowing?
Mr Wilkins: The problem with that
is you are still up against what you can afford through your revenue
support to pay for. The rules allow you to borrow but you are
still up against how much you can afford each year. There is a
limit on what local authorities can spend each year out of their
revenue budget, which is the point Alison made earlier on. It
is something that is there but it is a problem for us.
Dr Harrison: Devon is contributing
from its own capital resources to supplement LTP funding.
Q212 Mrs Ellman: Have you given any
thought to any new proposals like employment tax or land-value
tax, any other ideas?
Mr Newton: As part of our pump-priming
bid for Transport Innovation Fund we were investigating the use
of supplementary business rates but that is tied in with the Lyons
Review. We are hoping that the Lyons Review does give us much
greater flexibility for raising local revenue in that way because
even with section 106 agreements it is only limited to those areas
where the economy is working and you can actually get a reasonable
amount from the developer. In large parts of Greater Manchester
where the economy is still very, very tenuous you cannot hit developers
too hard otherwise they will not develop there, so we are looking
at other ways to raise it and supplementary business rates is
one we have started to discuss with the business community.
Q213 Mrs Ellman: What sort of response
have you had?
Mr Newton: Providing they can
see a direct investment they are broadly comfortable with that
but there has got to be that visible introduction of transport
improvements. What we are doing is we are looking along Metrolink
lines and saying could we raise rates along the Metrolink lines
to fund Metrolink expansion.
Q214 Mrs Ellman: What sort of response
have you had from Government on that?
Mr Newton: It is still early days
with Government. The DfT are still playing it close to their chest.
Dr Harrison: We submitted a Transport
Innovation Fund bid looking to use taxation of private non residential
car parking spaces as a means of raising funding. That was one
of the pump-priming bids in last year's Transport Innovation Fund
round but it was not supported for pump-priming funding at that
time because, of course, the Government's main interest is in
congestion charging rather than PNR taxation.
Q215 Mrs Ellman: Is that something
that you are pursuing?
Dr Harrison: We are pursuing it.
We are looking at the issue again and some new guidance for the
next round of pump-priming bids has just been issued. We believed
that for smaller settlements, and we are talking about the City
of Exeter in this case which has a population of 110,000, PNR
taxation was likely to be a more successful means of raising funding
than congestion charging. We had made some progress with both
the City Council and the business community who were supporting
the idea of PNR taxation and up until now have not been enthusiastic
about congestion charging. Clearly we are looking at that again
to see how one might move forward either with a congestion charging
scheme or possibly a hybrid scheme.
Mrs Ellman: Do you think that a city-region
model would improve transport in the different types of areas
you represent?
Q216 Chairman: Mr Newton, how about
the city-regions? City-states in the case of Greater Manchester.
Mr Newton: The AGMA view is very
much welcoming the city-region approach but from a co-operative
process rather than introducing another tier. What I would like
to see is a more federalist approach where the authorities work
together but with more devolved powers in order to enable them
to implement particularly transport improvements. That is the
sort of model that AGMA is pushing for.
Ms Quant: If I might say, my members
feel very strongly that only accountable authorities should have
spending abilities and powers and if there is to be a city-region
there needs to be a form of local government that matches it otherwise
it becomes relatively unworkable to deliver anything in areas
where there is complexity and difference.
Q217 Chairman: You have got some
city-states, Dr Harrison.
Dr Harrison: I would agree with
Alison in terms of the procedural mechanisms for delivering transport
but in terms of planning through the new process of Regional Spatial
Strategies we are working on a city-region basis already and doing
sub-regional planning. In the regional funding allocations the
South West effectively submitted proposals for major scheme bids
on the basis of city-regions.
Chairman: We are very impressed as my
memory is that you could not get the South Hams to even talk to
Bristol so, if you are doing that, well done.
Q218 Mrs Ellman: Do you anticipate
that these city-regions will encompass what are now county councils?
Mr Wilkins: I know that my chief
executive was involved with a Government minister last week in
discussions on the south coast about these issues and raised the
issue of not only city-regions but county-regions as well, so
the idea of a bigger area developed around a county or a city.
Certainly if you look in the South East there are not many big
cities along the south coast but there are quite a lot of towns
that are not big enough to stand on their own and if they could
work together with the counties around them you might have some
success. One of the things we have done very successfully in East
Sussex is a partnership between the County Council, Hastings Borough
Council, Rother District Council and the Regional Development
Agency on uplifting the economic performance of the whole of that
sub-region. That is with a lot of government support. If you take
away the idea of just calling it a city-region and talk in terms
of something that may be more acceptable to some people then you
might have more success with it.
Q219 Mrs Ellman: It has been suggested
to us that members are not especially interested in transport
and do not see it as a high priority. Is that reflected in your
authorities?
Mr Wilkins: No.
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