Government competitions for urban transport funding are inefficient and costly

Excessive reliance by government on short-term competition funding for the long-term task of transforming urban transport networks is inefficient and costly, according to a new report by the Urban Transport Group, the UK’s network of city region transport authorities.

The report, The Local Transport Lottery, is based on surveys and one-to-one interviews with senior officers responsible for delivering transport policies, programmes and projects in some of England’s largest city regions.

The report finds that: 

• The costs of competition funding are high – for example, the cost of bidding for the Transforming Cities Fund is in the region of £1m for some authorities.
• The costs of preparing a bid for a small scheme is disproportionately high when compared with a large scheme - for example, the cost of bidding for a £5m project is typically two to five times less than bidding for a £100m project, despite the reward of the latter being 20 times greater.
• Bidding for short-term projects is a major drain on limited available staff, whose time could be better used for urban transport planning and delivery.

The report sought to quantify the costs of bidding for both small and large funding competitions using staff time and salaries as the basis. Even using conservative assumptions, it found that the typical cost of bidding for a £5m project ranges from £35,000 to £94,000 while the typical cost of bidding for a £100m project ranges from £170,000 to £339,000. 

Excessive use of competition funding is resulting in some authorities reducing the number of competitions they bid for due to a lack of resources, as well as higher consultancy costs as they seek to respond quickly to those ad hoc competitions they choose to enter.

The Local Transport Lottery report concludes that: “There continues to be a big gap between high level rhetoric about devolving decision-making on local transport and Whitehall’s inability to resist the temptation to puppeteer on local transport in practice. National highways and national rail both now have long-term funding deals from national government. This report demonstrates the logic of going further and extending this approach to local transport funding. This approach would also be in line with the National Infrastructure Commission’s recommendations in its National Infrastructure Assessment for cities to have devolved infrastructure budgets for locally determined urban transport priorities.”

Jonathan Bray, director of the Urban Transport Group, said: “The challenges for urban transport planners is greater than ever – given demanding targets for carbon reduction as well the need to respond to the demands and opportunities presented by new technologies and business models. The forthcoming budget offers the opportunity to re-set the approach to local transport funding so that we can make the best use of staff and resources to deliver the long-term solutions to the long-term transport challenges that city regions face.”

Bridget Rosewell, commissioner at the National Infrastructure Commission, said: “The shortcomings of our current system of funding are holding cities back from being able to address their long-term challenges head on. The National Infrastructure Commission has recommended that government provide cities with greater investment, but also long-term, stable funding through five-year settlements. It’s vital that the government’s forthcoming National Infrastructure Strategy addresses this to unlock the potential of cities across the country.”

Click here to download The Local Transport Lottery report.