New research from the Institute for Public Policy Research (IPPR) suggests that Treasury control over transport spending is hindering regional growth.

With cities still required to seek approval from the central government before starting and funding transport projects, many schemes that could provide additional jobs, further investment and increased growth are struggling to ‘get off the ground', the think tank said.

The report authors highlighted access to upfront funding as a key issue, with local leaders lacking reliable income to finance major projects and remaining reliant on short-term funding rounds and ‘repeated Treasury sign-off'.

As a solution, the think tank is calling for mayors to be given powers to retain a share of business rate growth generated from transport investment while also being able to borrow against ‘predictable, rising revenues'.

IPPR recommends a package of reforms, including:

  • Giving mayors real control over transport funding and approval without the need for Treasury approval
  • Creating stable local revenues that grow with success, allowing cities to borrow, build transport and see funding rise automatically with investment
  • Adjusting the way growth benefits are measured by accounting for more of the wider gains for jobs, productivity, and local communities.

Helen Godwin, mayor of the West of England, said: ‘This timely report from IPPR recognises the importance of regions deciding the direction of travel for our places. That principle has been endorsed again by the government when it comes to the overnight visitor levy, which should prove a crucial first step in fiscal devolution.

‘Further empowering mayors will accelerate our ability to deliver the major projects that we know our areas need, boost productivity, and drive greater economic growth.'

Aditi Sriram, economist at IPPR and author of the report, commented: ‘Transport investment is one of the most effective ways to boost productivity and long-term growth, but the current system makes it far harder than it needs to be. When cities create growth through better transport, they should be able to reinvest it locally, not lose it to the Treasury. Reforming how we fund and assess transport is essential if the government is serious about growth.'

The full report can be found here.