Supplementary memorandum submitted by
East Sussex County Council
1. Direct grants are allocated specifically
for transport in London. Would you like to see revenue for transport
services ring-fenced in the same way for county councils? If grants
were to be ring-fenced for metropolitan transport authorities
how would this affect county councils?
Unlike Transport for London, County Councils
are not single purpose authorities. Funding for the County Council
has to be in the context of all its key services; the impact on
the council tax payer and the local political choices that are
involved in forming priorities. In terms of core government base
revenue funding there would be little support for further ring
fencing of grants. Rather the wish must be for general formula
grant to be adequate to help support the cost of all key service
expectations being set for local government.
There is, however, an accepted use of specific
grants to pump-prime new services (eg transport routes). More
significantly, properly funded capital allocations for specific
purposes (such as LTP) are accepted practice and amount to the
equivalent of direct grants—providing they are properly
funded and the balance of the burden falling on the local tax
payer and the national exchequer is transparent and reasonable.
In the round, funding issues for transport cannot be divorced
from the totality of the funding regime for County Councils as
a whole; including the financial impact on government and the
local council tax payer. There would be major concerns if ring
fenced grants for metropolitan transport authorities were to result
in swallowing up potential regional and LTP major scheme allocations
to shire counties in particular.
2. Does the authority feel that the LTP was
permitted to concentrate on areas felt to be important locally?
If not, why was there a feeling that the "National Shared
Priorities" were to dominate over other local objectives?
The Department states that the guidance encouraged local authorities
(and partners) to identify local priorities within their LTP—what
more steer did local authorities (and partners) need to develop
local priorities?
Generally, the East Sussex LTP2 objectives fit
comfortably within the context of the wider National Shared Priorities
transport. The LTP2's objectives are based on the East Sussex
Community Strategy Objectives ("Pride of Place") and
are closely aligned to the national shared priorities for transport.
The exception is the LTP2 "maintenance" objective as
none of the shared priorities explicitly includes this.
However, the rural nature and poor economic
performance of the County, together with the overall level of
resources available, constrains the extent to which the County
Council's transport capital programme can significantly contribute
to the achievement of all LTP objectives. The funding process
is heavily weighted to meeting national transport objectives and
this limits the LTAs' ability to pursue local aspirations. For
example, there is no tangible funding opportunity to implement
significant non-major schemes in excess of £1 million and
less than £5 million. In East Sussex, implementation of Phase
1 of the Newhaven Port Access road has been a local priority for
several years but continues to be frustrated by an apparent lack
of commitment from Government to invest in schemes in excess of
£2 million but under £5 million, despite the potential
for such schemes to contribute to high priority local economic
regeneration and transport objectives.
The LTP guidance is sufficient in terms of providing
a steer on how local authorities should identify their local priorities.
3. We would be grateful for an assessment
of the cost of the interaction between the local authorities and
the central Department for Transport, if this is possible.
The cost for interaction will vary year-on-year
ie depending on whether we are preparing both a Local Transport
Plan and a Delivery Report (formerly an Annual Progress Report)
and the number of consultations eg re national/regional transport
policy and funding. Over a five-year period average costs vary
in the range of £80,000 to £100,000 per year.
4. Q268 The transport Minister Dr Ladyman
stated: "We can keep it under review, but actually the £5
million threshold is widely misunderstood. The £5 million
is not the maximum that a local authority can spend: it is the
threshold under which we are unlikely to consider giving additional
grant. If we increased it to £6 million local authorities
would actually be worse off because it would mean that they would
have to have a £6 million scheme before we would consider
giving them additional grant. Local authorities would be better
pressuring us to bring the level down rather than bring it up".
What is your response to this statement? Have local authorities
misunderstood the issue?
Local Authorities have understood that they
are not able to progress schemes of more than £5 million
without specific DfT major scheme approval, irrespective of the
funding stream. The Transport Minister's words imply that LTA's
can progress schemes in excess of £5 million without having
to obtain DfT approval if funded through a combination of the
LTP and non-government sources (ie "The £5 million is
not the maximum that a local authority can spend"). Clarification
would be helpful to confirm whether such schemes must receive
DfT approval to be implemented. The Minister's statement still
leaves us believing they do require DfT approval.
We strongly agree that there would be potential
benefits in lowering the threshold below £5 million for schemes
to qualify for Government funding support. However, the concern
is that the current bidding system for "Majors" is so
onerous that the costs involved in progressing significant non-major
schemes, would form a large proportion of overall scheme costs
impacting on its Value for Money credentials. The current requirement
has presented a major obstacle to progressing important regional
and local priorities. I have already mentioned the first phase
of the Newhaven Port Access Road. The first phase of this scheme,
would cost in the order of £4 million and would contribute
to the economic regeneration of Newhaven, consistent with the
emerging South East Plan and LTP2 objectives.
5. It has been suggested that whole life
costing, good asset management and strategic transport planning
is not helped by having separate (revenue and capital) funding
streams. CIPFA, the public sector accountancy body, has suggested
that integration could be achieved by supporting capital schemes
through the revenue account, by paying the full cost of depreciation
plus an interest or opportunity cost of using capital. What would
be your view on this?
Having separate funding streams for capital
and revenue is not an issue. Currently most capital schemes are
funded by borrowing finance from the revenue account. It is right
and proper to account for the differences between revenue and
capital spend items. CIPFA have not suggested the integration
implied in the question. Rather, they would promote a depreciation
charge to revenue to reflect the full cost of the use of the asset.
This would allow renewal funds to be built up but this does raise
a major question of the impact on the council tax payer of depreciation
accounting.
July 2006
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