New blood through the arteries

Author: Lena Tochtermann
Date: 15/11/2010
Publication: The House

Transport is at the heart of economic growth, underpinning local economies by linking people to jobs, and companies with their customers and suppliers. Getting connections between people and businesses right is one of the most important elements of a successful city economy.

Under the last government, regional development agencies were the main vehicles for driving economic development in cities and, as part of this, held strategic transport functions. Since the election, they’ve been abolished and Local Enterprise Partnerships (LEPs) are being set up to take on this role. LEPs are groups of local authorities and businesses with the aim of stimulating economic growth across ‘real economic areas’, rather than the wider, and sometimes economically arbitrary, regions.

Transport secretary Philip Hammond is already thinking about how his department can delegate more transport powers to LEPs, either individually or in strategic consortia. He is simplifying local transport funding to give local authorities more flexibility over investment decisions. And he has created a Local Sustainable Transport Fund worth £560m. Its aim is to provide local authorities outside London with badly needed cash to support economic growth – at a time when local transport resource grants are to be cut by 28 per cent by 2013-14.

But if the government’s drive to localise is to achieve its aim of stimulating local economies, a few challenges still need to be met.

First, Local Enterprise Partnerships need to be ready to take control over local transport delivery, with a governance structure that covers real economic areas. This is crucial to provide an integrated transport offer across the area in which people travel to work, shop or visit friends. LEPs were intended to cover these areas – some do, such as Greater Manchester; others don’t accurately reflect their local economies. This is a real concern to business leaders, as Mark Prisk highlighted in a recent leaked letter to his boss, Vince Cable.

Second, government needs to be ready to give LEPs real powers over transport. In some cases this will mean devolving to the LEP, rather than to an individual local authority. But how far is the government prepared to go to support local growth? Would it beprepared to go to the effort of making LEPs a legal entity recognised in statute so that a LEP can introduce a congestion charge, if this had the backing of local business? Could LEPs make spending decisions, if the government returns control of the business rate to councils in the New Year?

Third, different strategies need to be taken in different cities. The success of LEPs in stimulating their economies will depend on their economic circumstances and local capacity – growing your economy is much easier if you are Manchester or Leeds than if you are Hull, Stoke or Burnley. 

Many of the government’s new funding mechanisms are linked to economic growth. But borrowing against future revenue streams will not result in enough cash to fund major transport schemes in areas where private sector growth is less certain. This is a concern, as linking residents to jobs in neighbouring areas will be important for these cities’ economic futures.

A local approach to transport has the potential to stimulate economic growth in all cities. But getting the details right, to ensure transport strategies really do reflect local economic needs, will remain a challenge in the months ahead.

This article first appeared in the House magazine.