Transport and the Economy - Transport Committee Contents


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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