Transport and the economy

Memorandum from South Yorkshire Passenger Transport Executive (TE 35)

Introduction

1. This response is submitted by the South Yorkshire Passenger Transport Executive. We plan, procure and promote public transport across South Yorkshire, encompassing Sheffield, Rotherham, Doncaster and Barnsley. We also lead on strategic transport issues across the city region in support of the South Yorkshire Integrated Transport Authority.

2. This response is focused on issues are of particular concern to South Yorkshire and Sheffield City Region. SYPTE have also input into the pteg response, which is focused on the generic views of metropolitan cities outside of London.

3. We welcome this examination of the relationship between transport and the economy. Our draft ‘Local Transport Plan 3’ for the city region is strongly focused on transport’s role in supporting economic growth. In this response we will outline the evidence that has guided the development of our strategy in addressing the questions posed.

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?

The relationships between transport and economic growth examined by Eddington hold. However, the macro-economic context means transport spending is at risk and should be focused on interventions supporting economic growth in areas hard hit by the recession.

4. Macro economic conditions and forecasts of growth have clearly changed in recent years. However, we see no evidence that any structural changes in the economy have occurred that have altered the relationship between transport and economic growth as set out in the Eddington Report.

5. However, as the response to the recession is on cutting the public sector deficit through, among other things, reduced public spending, it appears inevitable that funding for transport be further reduced.

6. We have identified a shift in priorities for businesses, from reducing congestion, to improving the reliability of our transport networks. Research undertaken for the Yorkshire and Humber Chamber of Commerce [1] identifies that, 83% of businesses that took part said the region’s inadequate transport capacity had a direct negative impact on them. The figure for Yorkshire & Humber (83%) is higher than any of its neighbouring regions and above the national average.

7. We are concerned that a reduction in funding to deliver transport schemes that support economic growth will slow recovery, particularly in South Yorkshire, where there are a number of transport schemes that are needed to unlock development and support regeneration. The more these interventions are delayed, the more expensive they become.

8. As local transport funding is not ‘protected’ either by longer term agreements (as with Network Rail), or political power (as in London), we are extremely concerned that we will be disproportionately affected by such cuts. Our funding streams have already suffered a 40% cut in our in-year funding (£10.7m down to £6.3m).

9. There is a real imperative for balancing the economy so that areas hard hit by the recession, such as South Yorkshire, experience investment and grow the private sector. Public investment on strong value for money schemes is essential to provide the conditions for private sector growth. This is particularly important given the persistent funding gap that exists between low levels in the North (including the Midlands) against much higher levels per head in the South East (including London) on transport spending [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?

We strongly support investment to maximise economic returns and promote private sector growth, in those places where transport would make a real difference. In South Yorkshire our evidence suggests investment in unlocking unique strategic sites is critical, as well as linking people to jobs.

10. Our LTP3 strategy has based its interventions on: (1) supporting regeneration, (2) linking people to jobs, and (3) improving connectivity. We very much see transport as an enabler of economic growth in South Yorkshire.

11. For re-generation there are two specific examples to evidence from a South Yorkshire perspective. The first is an example where existing planning conditions prevent development without better connectivity. This is the case in the Lower Don valley (next to the M1 in Sheffield/Rotherham) where without interventions to relieve congestion on M1 junction 34, development cannot take place. The solution involves some road infrastructure and a bus priority system to serve the sites and labour catchments. The importance is in the nurturing of a manufacturing and precision engineering hub that is of national significance. This in turn will grow and attract in new business, and support apprenticeships and up-skilling in these critical sectors for the national economy.

12. It is the uniqueness of the regeneration opportunity that must be recognised when considering how transport can support economic growth. A good example of this is the Doncaster – Robin Hood airport growth corridor. Private contributions will provide much of the funding for the road needed to unlock this corridor, as would be expected given the commercial opportunities it presents for an inland rail freight interchange, housing and employment. However, to fully cover the costs, some public investment is required. So public investment in transport is essential to lever in substantial private sector investment.

13. Bluntly without transport investment these unique strategic economic initiatives will fail. We feel these are the types of investments that should be prioritised to maximise economic growth opportunities in areas where public sector dependency is currently high.

14. However, we are also very mindful of the importance of linking people to employment and training, particularly where unemployment or low skills levels are focused. Our worklessness research [3] has investigated the extent to which a spatial mismatch between skill levels and jobs exists. Whilst job seeker claimants are largely based around the centre of districts, more often than not jobs are further outside and can be difficult to reach by public transport. The main occupations where a spatial mismatch was found include elementary occupations, process plant and machine operators and secretarial and administrative occupations. The challenge is to secure sufficient revenue support to facilitate connecting workers to these opportunities, and then identify how to deliver this connectivity in the most cost effective way.

15. Alongside this, improving the connectivity for the Sheffield City Region (SCR) to national and international gateways, especially by rail, has been shown to be a priority as it has significant benefits for productivity [4] . Our research into the benefits of High Speed Rail [5] identifies that a route to the East of the Pennines would deliver an estimated c.£60 billion in standard transport benefits and a further £2.3 billion of productivity benefits.

16. The priorities identified here have provided the focus for the development of our draft SCR Transport Strategy (available at www.southyorks.gov.uk). Alongside the three areas for action, our LTP3 strategy also identifies our obligation to ensure sustainable growth, and that we reduce carbon emissions through better planning and targeted interventions. It is vital that funding opportunities, such as the Regional Growth Fund, prioritise schemes that are linked to an agreed strategy and are targeted for areas where the need is greatest.

How should the balance between revenue and capital expenditure be altered?

Government should give more flexibility to local authorities to determine the balance between capital and revenue, and give more freedom so that authorities can maximise efficiency and effectiveness of revenue streams.

17. The creation of a Local Enterprise Partnership (LEP) provides the opportunity to allow local decisions on the balance between revenue and capital spending. The local stakeholders know best how and where investment can have the greatest impact.

18. Our Draft SCR Transport Strategy presents a focus on making best use of the assets we have, and acknowledged that substantial revenue is needed to maintain our assets. We also know we can get the most from our transport network by investing in traffic management, another initiative that is revenue hungry.

19. We want to focus funding for the provision of public transport service on improving access for people to employment and skills (as discussed above). And we want to continue with other initiatives to help people back to work and training (such as smarter choices travel planning and initiatives such as ‘Wheels to work’). All of these small scale interventions help with the economic recovery but require more revenue than capital.

20. Within existing revenue streams we would also wish for more flexibility to increase efficiency. For example we feel strongly that if BSOG (a payment made to bus operators largely on the basis of their fuel consumption), were given to PTEs, we could work in partnership with operators to get more from that revenue support – for example if it was spent on bus priority and punctuality measures, customers would benefit, and operators would benefit from increased patronage.

Are the current methods for assessing proposed transport schemes satisfactory?

No – the current methods are too complex, remain biased against public transport, and fail to take sufficient account of health, economic and other benefits. If the full benefits were incorporated, the case for increasing the proportion of government spending on transport would be stronger.

21. Current appraisal methods tend to bias against public transport, and modes such as walking and cycle. For example, because Government methods assume people who use public transport value their time less than people who drive.

22. Current methods underplay the practical economic benefits. We would like to see the ‘wider economic benefit’ analysis, developed as a result of the Eddington study, be formally included in appraisal to lock-in economic analysis. We would also like to see this improved and made less deterministic – methods need to be found to capture the transformational nature of some transport schemes.

23. The process is also very centralised. We wish to see scheme assessments decentralised to those authorities with the capabilities to do it, as now happens in London. Methodologies are currently overly complex and need to be rationalised. As Local Enterprise Partnerships will need to be able to prioritise effectively and appraise value for money, we would welcome more partnership between authorities and Government in determining appraisal methods. In South Yorkshire we are developing a ‘centre of excellence’ in appraisal to be able to undertake this role for transport schemes.

24. We would like to see central government methodological requirements proportionate to its contribution, and a more fixed timetable set out for appraisal and approval, so that schemes are not subject to the current uncertainties. As it stands Government cannot give any commitment to progress small schemes any faster than larger ones through its processes.

How will schemes be planned in the absence of regional bodies and following the revocation and abolition of regional spatial strategies?

In our experience schemes have always been planned and promoted locally, not regionally. ITAs are well placed to join up planning and decision making previously undertaken by the Regional Spatial Strategies.

25. The promotion of transport schemes has always been from the bottom up, with the drive coming from local authorities. The LEP model will provide the mechanism to build on this and will bring private sector expertise to the planning of schemes. This combination of public and private sector input will ensure realistic schemes are proposed that focus on economic benefit and have clear links to the Transport Strategy.

26. The importance of regional planning was in managing development patterns, and ensuring unsustainable development patterns were avoided. There is a gap now that the RSS has gone. However, ITAs are well placed to assist. For example in South Yorkshire we are leading the way through our Land Use Integration (LUTI) techniques to achieve the same result at a city region level.

27. LUTI is a tool that is used to highlight the ‘sustainability’ of development locations through public transport/active travel accessibility mapping. Importantly, all the planning authorities in South Yorkshire are signed up to the process and its guidance, and of the role of the PTE in undertaking the technical work and monitor progress.

28. The approach taken by SYPTE, and partners, in developing this tool needs to be embedded into all planning decisions. This has already started to happen in South Yorkshire, with partners in East Midlands looking to follow in due course. This will ensure sustainable land-use patterns are established at the outset of development planning, whether at a local, regional or national level.

September 2010