Government Response
Bidding Competition
Recommendation 1. Competitive bidding for funds
could potentially lead to considerable wasted expenditure on bids.
It is a centralising process which may favour better resourced
authorities. We recognise that competition can be a creative process
which can be used on occasions where the benefits of the creativity
associated with competition are likely to outweigh the costs.
We recommend that the DfT ensures that the arrangements for bidding
mitigates these problems as far as this is practically possible.
We welcome the Committee's recognition that competition
can bring a level of creativity which can outweigh the costs incurred
as part of that process. The Government strongly believes that
competition for these funds, as recommended by Lord Heseltine
in his report[2], has generated
some genuinely innovative thinking and rewarded those with the
best arrangements for ensuring that taxpayers will get value for
money as well as transport schemes built on time and on budget.
The Government also believes that in a world of finite
resources and where a considerable amount of freedom and flexibility
in how to use those resources is potentially available, some level
of scrutiny, before allocation, is necessary. The allocation of
the Local Growth Fund via assessment of Strategic Economic Plans
has tried to meet the balance between the benefits of a competitive
process without the burden of having every project assessed. Nevertheless,
the Government pre committed over £1 billion of future funding
on a per capita basis in July 2013 so that each Local Enterprise
Partnership area had some certainty of future transport funding.
Additionally, projects which did not receive funding in the first
round of the Local Growth Fund may receive funding in future rounds
with further refinement or if given higher priority by the Local
Enterprise P.
It is the Government's intention to learn from the
assessment process used to determine the first tranche of Local
Growth Funding and ensure that future assessments continue to
strike the right balance between expenditure on bidding costs
and the benefits of a competitive process.
London and distribution across the rest of the
country
Recommendations 2 and 6. Far less money is spent
on transport projects outside London than in the capital. We recommend
that the Department aim for a more equitable distribution of transport
funding when making awards under the Local Growth Fund.
A crucial test for the new funding arrangements
is that they secure a fairer allocation of transport funding across
England. The under-funding of transport projects outside Greater
London in recent years cannot be allowed to continue. Ministers
must use the new funding arrangements, via the Local Growth Fund,
to ensure that there is a fairer allocation of funding to transport
projects beyond London, and not just in city regions, City Deal
areas and current enterprise zones. No area across our nation
should be second class in relation to the allocation of transport
infrastructure funds.
London has a unique dependence on public transport;
transport demand in London is on a different scale to elsewhere,
unmatched by any other major city - and so public spending on
transport is uniquely high. London is the biggest city in
the UK and a global capital, supporting 850,000 commuters to London
per working day, and about 4 billion passenger journeys in 2013/14,
which is counted as spending per head in London.
However, the London Enterprise Panel (London's Local
Enterprise Partnership) was not allowed to include bids for transport
projects within its Strategic Economic Plan. This recognises the
unique relationship the department has in funding transport in
London via the Greater London Authority transport grant as set
out in the Greater London Authority Act 1999.
The allocation of the Local Growth Fund beyond London
has gone to all areas of the country, not just city regions or
enterprise zones. The allocations are broadly equitable but reward
those who, via their Strategic Economic Plans, have been able
to demonstrate a coherent story for growth, a strong plan and
strong proposals which will provide good value for money, as well
as the ability of the Local Enterprise Partnerships and their
partners to deliver on their proposals.
On 7 July 2014 the Government made, by some way,
the largest local transport funding announcement for over a decade;
over £3 billion of government funding for new local transport
schemes in total. This includes £1.5 billion of funding for
180 road schemes, from congestion pinch points and maintenance
projects to a small number of new bypasses. Examples include the
Preston Western Distributor Road, improvements to the A338 Spur
Road in Bournemouth and major maintenance of the Tame Valley Viaduct
linking central Birmingham to the M6.
Additionally, there are around 50 schemes with close
to £600 million of funding for public transport, walking
and cycling schemes. Examples include the Plymouth Northern Corridor
Strategic Cycle Network, new bus stations for Gloucester and Chester,
a new parkway rail station at Thanet in Kent and refurbishment
of the Central Metro Station in Newcastle. Through these sorts
of investments the Government believes it is addressing the levels
of transport funding across the country.
Transport within the Local Growth Fund
Recommendation 3. Given the significant funding
that the Department for Transport is putting into the Local Growth
Fund—some £6 billion from 2015-16 to 2020-21—it
is unfortunate that there is no clarity about how much of that
funding will be used for transport projects[3].
DfT must make sure that LEPs implement transport projects for
which they receive money from the Local Growth Fund. We recommend
that the department publish an annual assessment of the progress
LEPs are making in this area.
The whole purpose of the 'single pot' concept is
to break down funding silos to optimise the growth generated by
investment in infrastructure. That said, transport facilitates
so many aspects of growth from homebuilding to travel to work
that is inevitable it will represent a significant portion of
Local Growth Fund awards.
The 7 July 2014 announcement set out the details
of Growth Deals with each of the 39 Local Enterprise Partnerships,
including confirmation of overall funding allocations for each
Local Enterprise Partnership and the projects to be funded. Over
£3 billion was allocated to transport projects. Around £1.5
billion of the Department for Transport contribution from 2018/19
to 2020/21 has not yet been allocated.
There is an expectation in Growth Deals that the
named projects will be delivered. But Local Enterprise Partnerships
will have a degree of flexibility to switch money between projects
in response to changing circumstances. Those with the stronger
local governance and assurance arrangements will enjoy the greatest
degrees of freedom.
The Government is committed to developing an overall
monitoring and evaluation framework that will that enable Local
Enterprise Partnerships progress in implementation to be measured.
The Department for Transport will be closely involved in this
work which is the responsibility of the Minister for Cities and
the Constitution.
Local vs National
Recommendation 4. We are also recommend that the
Department demonstrates how it will balance strategic oversight
over spending and locally determined priorities. It is essential
that strategic development is not overlooked simply on the basis
that it does not immediately benefit a LEP or local authority.
In particular, the DfT must clarify whether or not it will be
prepared to challenge LEPs if they have not prioritised port access
or other nationally significant, but locally delivered, transport
schemes.
The investment plans in the 39 Growth Deals announced
on 7 July 2014 have been driven primarily by the Local Enterprise
Partnerships' own priorities, shaped by discussions with Government
and our assessment of value for money, delivery and risk. Many
Local Enterprise Partnerships have prioritised investment in projects
that have an impact beyond the Local Enterprise Partnerships'
immediate area, including port and airport access schemes. The
Government is confident that the Growth Deals process does not
preclude such schemes being prioritised and will continue to work
closely with Local Enterprise Partnerships to ensure this remains
the case.
In addition schemes that improve access to ports
and international gateways will often be funded through national
road and rail investment programmes, for example the Highways
Agency's Route Strategies and Road Investment Strategy.
Monitoring and Improvement
Recommendation 5. Despite these challenges, it
is important for local authorities and businesses for the new
system to get underway and for there to be a period of stability
in how local major schemes are funded. Continual churn and uncertainty
helps no-one. However, the new arrangements must be reviewed
well before the end of the next Parliament to ensure that they
are efficient and effective in providing funding for the most
urgent transport priorities.
The Government agrees that stability is important
and recognises the forward certainty required for planning major
capital investment. The Growth Deal announcement has provided
Local Enterprise Partnerships with funding allocations of up to
6 years in order to provide such certainty and we are confident
that it is a system that can endure and develop. The Government
agrees that the arrangements should be reviewed to ensure they
are delivering effectively.
2 No Stone Unturned: in pursuit of growth Back
3
Department for Transport, Local Sustainable Transport Fund -Guidance on Applications for Revenue Funding in2015/16,
paragraph 2. Back
| 
