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Putting LEPs in charge of £6bn transport plan could be ‘waste of money’, warn MPs

Putting LEPs in charge of £6bn transport plan could be ‘waste of money’, warn MPs

🕔04.Jun 2014

MPs have questioned the ability of Local Enterprise Partnerships to deliver the major transport schemes outlined under the Government’s £6 billion Single Local Growth Fund proposals.

The House of Commons Transport Committee said the competitive process underpinning the growth fund arrangements could discriminate against poorer areas and result in money being wasted on poorly presented bids.

In its ‘Who Decides?’ report on local transport expenditure, the committee warned: “There are significant concerns about the capability of LEPs to bid for and administer this funding.

“There is a risk that some areas will be left behind, or that funding provided by the Department for Transport will be spent on other priorities. Increased reliance on competition as the basis for allocating funds could lead to significant wastage of resources because of failed bids.”

The Government initially proposed that the Single Local Growth Fund would be administered by Local Transport Bodies (LTBs), a mixture of transport authorities, voluntary partnerships and LEPs.

But following consultation it was decided to hand the role directly to LEPs who will work with local councils and be responsible for developing transport projects typically worth more than £5 million.

Not all LEPs will have the capability to take on responsibility for administering public funds and some might have to improve capacity by working together. There was little sign that the growth fund process would devolve powers from Whitehall to the regions since Ministers would ultimately decide on winners and losers, the MPs warned.

The committee was also concerned that the bidding process would do little to reverse the historic government bias of approving transport projects in London and the South-east at the expense of the rest of the country.

The report noted: “A crucial test for the new 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.”

The six West Midlands LEPs have joined forces in their bids for cash from the Local Growth Fund by agreeing areas of improvement in transport to drive economic growth.

Although each of the six, led by the Greater Birmingham and Solihull LEP, have prepared individual Strategic Economic Plans (SEPs) for consideration by the DfT, they will work together to develop regional transport priorities.

They have identified investment in the road and rail network, improving links to HS2 and developing freight activity at Birmingham Airport as well as seeking improved connections to international gateways.

GBSLEP’s SEP identifies 52 priority projects worth a total of £508 million over five years.

These projects are forecast to create 41,000 new jobs by 2022, provide 14,315 new homes and almost two million sq ft of commercial floorspace across the LEP area, which covers Birmingham, Solihull, Wyre Forest, Redditch, Tamworth, Bromsgrove, East Staffordshire, Lichfield and Cannock Chase.

Funding for major local transport projects will be devolved to LEPs from 2015, as part of the Single Local Growth Fund, as recommended by Lord Heseltine in his report No stone unturned: In pursuit of growth.

The major changes are that:

  • Instead of being allocated solely by formula, a large proportion of Local Growth Fund allocations would be competitive, on the basis of Strategic Economic Plans submitted to Government;
  • There would be a more distinct policy focus on economic growth for the Local Growth Fund; and,
  • The decision makers for the devolved funds would be LEPs, as opposed to LTBs, although LTBs might continue to have a role depending on local arrangements.

MPs noted that the system for allocating funding for local major transport schemes is “in a state of flux” with “novel and untested” arrangements planned to begin in 2015, based on competition for Local Growth Fund allocations.

The DfT will continue to have a significant say in which projects are funded, but there is also concern that strategically significant schemes could be overlooked.

The committee report continued: “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.

“It is questionable whether bidding for pots of central government money that will be allocated via rules set by central government amounts to genuine devolution.

“Competitive bidding for funds could potentially lead to considerable wasted expenditure on bids. It is a centralising process which may favour better resourced authorities.

“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.

“Given the Government’s focus on LEPs bringing in outside investment to supplement taxpayer funding we are also concerned that regional economies, which may not have a sufficiently well-developed private sector to provide alternative investment, may end up losing out.”

MPs said it was “unfortunate” given the significant funding that the Department for Transport is putting into the Local Growth Fund “that there is no clarity about how much of that funding will be used for transport projects”.

“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.

We are also recommending 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.”

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