Decentralisation: the road to prosperity

March 21, 2011

Since its inception, the Coalition has been pursing a twin-track drive of private-sector-led economic growth and decentralisation. However, with the economy recovering only slowly, pressures are building to prioritise enterprise ahead of a wider shift in political power. It is fast becoming crucial, therefore, that the Government can define areas where these two tracks converge. If designed correctly, transport policy could be a meeting point.

Currently, the Government has three principal and over-riding objectives in transport policy – the first to facilitate economic growth (hence High Speed Rail Two and Crossrail); the second to ensure environmental sustainability. These are synthesised in a desire ‘to promote green growth’.

A third destination – and perhaps the vehicle by which to get there – is greater community involvement and the ‘Big Society’. It has been argued for instance that local authorities who come forward with support and buy-in from local voluntary and business sector are more likely to have their bids to the Local Sustainable Transport Fund looked on favourably.

Because transport infrastructure and people’s travel patterns transcend local authority boundaries, the scope for ultra-localism may be slim. However, devolution of transport policy should not be ruled out completely. NLGN has previously suggested that discrete revenues (such as environmental fines or parking charges) could be devolved down to neighbourhoods. This would allow them to decide on local transport measures such as cycle facilities, pedestrian crossings, speed reduction measures or road improvements. Community transport is likely to remain a lifeline for those in rural areas or for those whose mobility is impaired.

But to localise, as the Prime Minister has argued recently, is to devolve control to the ‘lowest possible level’. Given the nature of connectivity and transport services, this level is often likely to be local government or city regions. And when this is taken as the predominant sphere of influence in transport then solutions really do start to flow.

Some of the announced reforms acknowledge this and could lead to real improvements. The Government has already committed itself to Tax Increment Financing – whereby councils can hypothecate the proceeds of business rate growth to infrastructure projects. A radical reform of local financing – with business rates localised – would also restore the incentive for areas to promote their economy through new transport services and by tackling the cost of congestion.

But there could be some more quick and radical wins if Government is to follow through this logic.
First, NLGN’s research has called for control over spending decisions to be handed down to local authorities or to Local Enterprise Partnerships (clusters of councils and business partners). Under past funding systems, Whitehall departments have parcelled up discrete packages for specific programmes. This has left decisions at least half pre-judged before they got there. Therefore, Housing Market Renewal money, for example, was ringfenced for housing when it could at times have made more economic sense for local authorities to regenerate an area with new and quicker train links.

So, a single pot of capital handed down into one set of hands would allow communities to decide how to drive economic growth most effectively. The Department for Transport itself has simplified its funding streams – this is welcome. But Whitehall as a whole must also play ball. In addition, the Government should hand down the Bus Service Operators Grant (worth approximately £1/3bn) to councils to distribute to operators. Based on their community and market intelligence, local authorities would then be well-positioned to incentivise companies to serve routes that their communities most value.

Second, to introduce a truly localised and sustainable transport system, the linkages between transport, spatial planning, labour markets and housing need to be recognised. These links could be strengthened if the Localism Bill adopts an amendment to allow LEPs to play a more significant role in strategic planning.

And this enhanced status for LEPs would allow the Coalition to be truly ambitious. The Localism Bill contains a provision for a ‘Community Right to Bid’ to run local council services. How about local councils or enterprise partnerships, on behalf of their communities, bidding to run services previously run by the central state? Why should Network Rail, DfT or the Highways Agency have a monopoly in these areas? Could authorities come together in Super-LEPs and ask for responsibilities, resources and accountability for rail lines and franchises currently governed by Network Rail and DfT? Where car or rail journeys are predominantly contained within a city-region why should locally-elected representatives not be able to take a stronger hold in governing them in the interests of the local population?

Transport policy has often been left in the siding as public service reform has rushed past on the mainline – but through a genuinely localist lens, it could become a key meeting point for the Government’s ambitions for decentralisation and economic growth.

Nigel Keohane, Senior Researcher, NLGN
Total Politics, April 2011


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