Written evidence from the English Regional
Development Agencies (TE 54)
1. EXECUTIVE
SUMMARY
1.1 This evidence highlights that whilst the
recession has had a major impact on business activity and employment
the principles set out in the Eddington Transport Study remain
valid, namely that:
- Business competitiveness and subsequent employment
is directly linked to transport availability, with individual
industry sectors having different requirements from the network;
- Cities and urban areas are the main economic
drivers, the strategic links between them support business connectivity
and the international gateways are important for securing wider
global competitiveness;
- Transport investment should therefore continue
to be focused on growing and congested urban areas, inter-urban
corridors, international gateways and their surface access links.
It is also important that the short term investment
constraints and policy vacuums do not delay and limit opportunities
to support stability and facilitate growth in the short term and
set the foundations for the medium and longer term.
1.2 The future approach to prioritising transport
investment should:
- Support short term quick win solutions to current
transport constraints and challenges;
- Focus on well developed projects which open up
economic opportunities, promote low carbon initiatives and align
with other public and private sector investment to maximise opportunities;
- Ensure that swift progress is made in assessing
and announcing priorities following the Spending Review;
- Ensure that development funding is available
for preparatory work for longer term strategic infrastructure
such as high speed rail and the strategic freight rail network;
- Create the conditions for encouraging private
sector investment, ensuring that the Regional Infrastructure Fund
mechanism is taken forward and maximised by successor bodies;
and
- Support use of Regional Growth Funding for promoting
the early delivery of enabling transport infrastructure.
1.3 A flexible approach to the balance between
capital and revenue should be introduced to encourage Local Authorities
to take a creative approach and enable tailored solutions to specific
local and sub national challenges and needs.
1.4 It is important that early decisions are
made on new transport appraisal processes which reduce the timescales
and cost, and introduce consistency and alignment both across
road and rail projects and with other types of infrastructure.
1.5 A forward looking policy framework is required
which recognises the transport implications of both the economy
and the environment, and will provide the high level, long term
(30 year) strategy to enable the delivery of a strategic and integrated
transport network which sets the context for both modal and local
decision-making and delivery.
1.6 Mechanisms and structures need to be established
in a timely and expedient manner for prioritising, co-ordinating
and monitoring transport planning and delivery in alignment with
other employment, housing, education, health etc investment across
LEP/Local Authority boundaries.
2. INTRODUCTION
2.1 This evidence is being submitted by Advantage
West Midlands on behalf of the nine English Regional Development
Agencies (RDAs). Between 1999 and 2010 our role has been to create
the conditions to stimulate economic opportunity, and regeneration,
and support business competitiveness. This has been done in the
context of improving economic performance and narrowing the gap
in growth rates between areas across England.
2.2 The RDAs identified that transport is an
important enabler for successful and sustainable economic growth.
In order to better understand the implications of transport availability
on the economy and opening up economic opportunity, the RDAs have
reviewed the linkages between economic geography, business usage,
and dependency on transport provision to inform the development
of national, regional and local strategy and identify mechanisms
for prioritising transport investment. In addition, we have reviewed
funding approaches to explore options for developing new and innovative
funding mechanisms.
2.3 This submission responds to the questions
outlined in the call for evidence and is founded on the work undertaken
by the RDAs since 1999.
3. Question 1: Have the UK's economic conditions
materially changed since the Eddington Transport Study and, if
so, does this affect the relationship between transport spending
and UK economic growth?
3.1 The recession has impacted on the economies
of all of the English Regions with a resulting fall in business
activity and increase in unemployment. The UK's unemployment rate
has increased from 5.3% to 7.88% between Quarter 2 (Q2) 2008 and
Q2 2010. The implications of the economic downturn vary by region
influenced by the predominant industry sectors, for example the
unemployment rate in the West Midlands rose by 4.2 percentage
points at the peak of recession, compared to 1.8 points in the
South East. Notably the Midlands regions, the North East and
Yorkshire and the Humber saw much steeper contractions in business
activity during the recession than the southern regions.
3.2 However, recent economic figures indicate
that recovery is underway with the UK's GDP growing by 1.2% between
Q1 and Q2 2010; manufacturing output rising by 1.6%; and construction
output increasing by 8.5%. There were also improvements in the
labour market with the working age employment rate rising by 0.3
percentage points; unemployment falling by 0.2 points; and 10,000
more job vacancies.
3.3 Despite these recent improvements in the
economy there is still a considerable distance to go before reaching
pre-recession levels. Both the Bank of England and business surveys
have indicated concerns about the strength and pace of improvements
in the economy.
3.4 The linkages between transport, business
competitiveness and economic growth have been reconfirmed in recent
research with local businesses. They continue to identify accessibility,
reliability and cost of transport as a priority for supporting
their competitiveness and growth opportunities, confirming that
accessibility and connectivity to markets, suppliers, business
partners and labour supply continues to directly impact on business
efficiency and productivity.
3.5 An analysis of population, employment and
GVA by industry sectors and centres of economic activity highlights
that there is a tendency for clustering of industry sectors in
city regions or geographic areas. However, some regions including
the South West, South East and East of England have complex polycentric
geographies of smaller, but economically linked, centres in less
densely populated areas that drive local economies.
3.6 Our research has also highlighted that the
reliance of industry sectors on transport varies significantly
and that the relationship between improved connectivity and increased
productivity also varies widely by sector. The supply chain
linkages and business to business relationships of different industry
sectors vary; manufacturing industries are reliant on access to
skilled labour forces, suppliers and markets and logistics sectors
are reliant on good freight access to UK and global destinations.
Other sectors such as financial and business services, marketing,
media and retail are dependent on access to local labour markets,
require easy access to national and global partners hence they
have a higher dependence on air connectivity and generate greater
productivity growth as a result of the agglomeration impacts that
location in urban centres offer.
3.7 Manufacturing continues to make an important
contribution to regional GVA, particularly in West Midlands (16.1%),
East Midlands (18.4%), North West (16.8%), Yorkshire and the Humber
(16.8%) and North East (17.3%). Finance, insurance and business
services, marketing, media alongside high tech business make an
important contribution to GVA across the country and particularly
in London (48.2%), East of England (30.7%), South East (35%) and
South West (29.2%).
3.8 This research confirms that the Eddington
principles are still relevant as local urban centres and cities
are the main economic drivers, the strategic links between them
support business connectivity and the international gateways are
important for securing wider global competitiveness. The use of
these networks across the country will be influenced by local
industry sector demands. It is therefore important that the short
term investment constraints and policy vacuums prior to the development
of new strategies does not delay and limit opportunities to support
stability and facilitate growth relative to local and regional
sectoral requirements in the short term and set the foundations
for the medium and longer term.
3.9 Our evidence highlights that whilst the recession
has had a major impact on business activity and employment the
principles set out in the Eddington Transport Study remain valid,
namely that:
- Business competitiveness and subsequent employment
is directly linked to transport availability, with individual
industry sectors having different requirements from the network;
- Cities and urban areas are the main economic
drivers, the strategic links between them support business connectivity
and the international gateways are important for securing wider
global competitiveness;
- Transport investment should therefore continue
to be focused on growing and congested urban areas, inter-urban
corridors, international gateways and their surface access links.
It is therefore important that the short term investment
constraints and policy vacuums do not delay and limit opportunities
to support stability and facilitate growth in support of respective
industry sectoral requirements in the short term and set the foundations
for the medium and longer term.
4. Question 2: What type of transport spending
should be prioritised, in the context of an overall spending reduction,
in order best to support regional and national economic growth?
4.1 Transport infrastructure investment is key
to: opening up access to jobs; supporting regeneration; and economic
growth. There is a growing recognition that "added value"
can be gained by taking a more holistic, planned and phased approach
to investment ensuring it aligns and is co-ordinated with other
public and private sector investment in economic, business, regeneration,
housing and skills. Also, that transport investment is considered
alongside other infrastructure including energy, broadband, water
and waste in a way that supports national and local sustainable
economic prosperity.
4.2 The RDAs have played an important role in
co-ordinating the alignment of transport investment with other
public and private sector investment in economic and employment
initiatives to maximise impacts. The positive impacts of this
approach can be seen across the England. For example the West
Midlands, Impact Investment Locations (IILs) were identified to
support commonly agreed objectives. The process highlighted the
inter-dependence of funding streams in maximising the economic
and social outputs; which when supported by a robust monitoring
process which included a review of the performance of delivery
organisations, enabled the delivery of a range of projects to
be brought forward. The IIL at in Coventry City Centre supports
the regeneration of the city centre, including major new transport
infrastructure to provide links to new office and retail space,
the expanded university and higher education facility, new housing
which cumulatively will support the creation of approximately
26,250 new office jobs, 7,800 new retail jobs, 3,700 leisure jobs
and 6,000 new homes through a combination of public and private
funding.
4.3 This approach is, however, dependent on ensuring
the funding from the respective public and private sector funding
streams come forward at the appropriate time. Currently the Cranbrook
new settlement, East of Exeter which comprises a new community
of 3,500 low carbon houses, Science Park, skypark, intermodal
freight terminal and CHP plant collectively supporting 2,200 jobs
is compromised by the delay in providing the previously agreed
RFA transport contribution to the M5 J29/J30.
4.4 Therefore it is important to prioritise spending
which aligns with, and is inter-dependent on other public and
private sector funding programmes, opens up economic and employment
opportunities and supports low carbon initiatives, in addition
to addressing short term transport capacity challenges. This will
require the appropriate structures and processes to be put in
place. It is also important that swift progress in made in assessing
and announcing priorities following the Spending Review.
4.5 Alongside of this, as the majority of transport
projects take between three and 10 years, and major and nationally
significant projects up to 20 years or more to plan and deliver,
it is important to ensure funding is made available to cover the
preparatory work for medium and longer term investment projects
such as the high speed rail network.
4.6 The RDAs have proactively worked to identify
and develop funding approaches to facilitate the delivery of key
enabling infrastructure. This has been achieved through developing
the right conditions to support and attract private investment.
Regional Infrastructure Funds (RIF) were created to support the
private sector through the recession; they provided upfront funding
for enabling access infrastructure to development sites subject
to the repayment of funds once private sector returns commence,
thus creating a recyclable funding mechanism for the longer term
delivery of infrastructure. For example the £9.57 million
West Midlands RIF contribution to a transport interchange in Wolverhampton
enables private sector developers to create 1,678 sq m
of new retail development, 278 sq m of refurbished space,
supporting up to 99 new jobs. It also opens the opportunity to
release development plots for a further 13,605 sq m
of space and 574 jobs. It is important that this initiative is
retained and taken forward by successor bodies to ensure the public/private
sector relationship becomes embodied into future policy and returns
on funds can be used for enabling future projects.
4.7 Accelerated Development Zones and Community
Infrastructure Levy also offer mechanisms for funding enabling
infrastructure, the role of these needs to developed to ensure
they support and create the right conditions to attract private
sector investment locally and promote collaborative private/public
sector funding. In addition, every opportunity for maximising
the potential of EU funding options should be explored.
4.8 The Regional Growth Fund provides a short
term funding mechanism outside of current transport funding streams
that support and encourage private/public sector investment initiatives.
Every opportunity should be taken to ensure this new approach
enables the delivery of well developed projects which open up
new business and employment opportunities which would otherwise
be delayed through funding constraints.
4.9 The future approach to prioritising transport
investment should:
- Support short term transport capacity solutions
to current transport constraints and challenges;
- Focus on well developed projects which open up
economic opportunities, promote low carbon initiatives and align
with other public and private sector investment to maximise opportunities;
- Ensure that swift progress in made is assessing
and announcing priorities following the Spending Review;
- Ensure that development funding is available
for preparatory work for long term strategic infrastructure such
as high speed rail and the strategic freight rail network;
- Create the conditions for encouraging private
sector investment, ensuring that Regional Infrastructure Fund
mechanism is taken forward and maximised by successor bodies;
and
- Support use of Regional Growth Funding for promoting
the early delivery of enabling transport infrastructure.
5. Question 3: How should the balance between
revenue and capital expenditure be altered?
5.1 Current transport funding processes focus
on capital projects, whilst this is important it makes investing
in a range of revenue projects that can make a greater impact
on securing long term behavioural change and maximising the capacity
of the existing assets and networks very challenging for Local
Authorities. The review of Local Transport Funding should consider
opportunities to provide Local Authorities with more flexibility
to use their allocated resources for delivering revenue projects
and encourage a more creative approach to identifying tailored
solutions to specific local and sub national transport challenges.
5.2 A flexible approach to the balance between
capital and revenue should be introduced to encourage Local Authorities
to take a creative approach and enable tailored solutions to specific
local and sub national needs.
6. Question 4: Are the current methods for
assessing proposed transport schemes satisfactory?
6.1 A number of flaws have been identified in
the current transport appraisal processes:
- The timescales and process for assessing transport
schemes is lengthy, resource intensive and costly e.g. the Bristol
BRT scheme required £5 million in preparation costs
for a £47 million scheme;
- They are more favourable to road projects as
opposed to public transport projects;
- The appraisal processes for local transport and
rail projects differ; and
- The assessment process focuses on transport benefits
in terms of journey time savings and does not recognise the wider
economic, social and business benefits that can be derived from
the scheme;
6.2 As part of the evolving development of the
national infrastructure priorities being developed by Infrastructure
UK, consideration should be given to aligning the assessment processes
for other infrastructure.
6.3 It is important that these issues are addressed
in the revision of appraisal processes, and new processes are
introduced quickly to minimise uncertainty, cost and time delays.
6.4 It is important that early decisions are
made on new transport appraisal processes which reduce the timescales
and cost, and introduce consistency and alignment both across
road and rail projects and with other types of infrastructure.
7. Question 5: How will schemes be planned
in the absence of regional bodies and following revocation and
abolition of regional spatial strategies?
7.1 A coherent national approach is essential
for setting the framework for spatial, economic, transport and
infrastructure planning and investment. The RDAs have reiterated
that there is a need to develop a forward looking policy framework,
which will provide the high level, long term (30 year) strategy
to enable the delivery of strategic and integrated transport network
which sets the context for modal and local decision-making and
delivery. This framework should cover both short term planning,
investment and delivery in addition to enabling robust foundations
for longer term national strategic/significant infrastructure
to be planned and delivered. The framework should:
- Recognise the requirements of industry sectors
and take account of economic geography, including future population
and job growth with a focus on opportunities for future GVA growth;
- Support shorter term economic opportunity and
provide the foundations for longer term strategic infrastructure
including a high speed rail network and international gateway
(both air and port) capacity and supporting surface access measures;
- Support an integrated and holistic approach;
- Enable infrastructure to be identified and delivered
in alignment with national and local objectives and goals; and
- Promote low carbon options which fully embrace
new technologies such as electric vehicles and changes to working
practices to support behavioural change
7.2 The framework should be informed by the National
Infrastructure Plan and inform both National Policy Statements
for Ports, National Networks and Aviation, and local transport
planning and funding plans.
7.3 At local level it was originally proposed
that Local Enterprise Partnerships (LEPs) would take on responsibility
for local transport and infrastructure, planning and housing,
enterprise and the transition to a low carbon economy. However,
these responsibilities are not currently being sought by every
LEP and not all areas of the country are included in the bids
that were recently submitted to Ministers to form LEPs.
7.4 In addition many transport interventions
are larger scale projects whose geographic impact is wider than
the boundaries of the LEP. Businesses alongside other organisations
have also repeatedly highlighted the need for prioritisation and
monitoring of transport to be co-ordinated across boundaries and
considered from a wider strategic approach including the alignment
of transport projects with economic, regeneration and housing
private and public sector investment activity.
7.5 This highlights two specific challenges presented
by the proposed structures: firstly, not every area of the country
is included in a LEP and therefore they cannot be used to implement
national policy; and secondly, many transport projects are directly
linked to other employment, housing, education, health etc investment
programmes and therefore need to be prioritised, co-ordinated
and monitored through a cross LEP/cross Local Authority, wider
strategic approach.
7.6 Changes to planning processes introduce an
element of uncertainty which could lead to inactivity in the short
to medium term whilst the roles and responsibilities of the LEPs
are being developed. It is essential that proposals are developed
expediently, identify priorities which promote and focus on the
delivery of projects. It is important that the changes to regional
planning processes, alongside the constraints on funding does
not undermine the expedient delivery of key projects required
to support and maximise the opportunities of the current recovery.
Also, that much needed planning and preparatory work for major
and significant projects are not delayed as a result of the changes
to national and local planning systems.
7.7 A forward looking policy framework is required
which recognises the transport implications of both the economy
and the environment, and will provide the high level, long term
(30 year) strategy to enable the delivery of a strategic and integrated
transport network which sets the context for both modal and local
decision-making and delivery.
7.8 Mechanisms and structures need to be established
in a timely and expedient manner for prioritising, co-ordinating
and monitoring transport planning and delivery in alignment with
other employment, housing, education, health etc investment across
LEP/Local Authority boundaries.
September 2010
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