Contact: Alison Quant (01962) 84 5099; [email protected]

Jon Pittam, (01962) 84 7400; [email protected]

1 Introduction

1.1 The Government is consulting on proposals to change the way that financial allocations for integrated transport are calculated for local transport plans (LTPs). LTP allocations are made for three different purposes:

· major schemes costing more than £5 million are assessed and funded on a case-by-case basis. Government has identified indicative regional allocations and priorities are to be set through the Regional Transport Board

· maintenance expenditure: allocations are calculated by a formula which takes into account the length and condition of roads in each authority's area; (the Government is consulting on minor changes to this formula) and

· integrated transport allocations are made for all other transport capital schemes costing less than £5 million. This includes new roads, junctions, footpaths, cycleways, bus stops, bus lanes, bus stations, etc. Up to now, allocations for this type of expenditure have been based on an assessment of local authorities' LTPs.

1.2 The Government now proposes that integrated transport allocations should be calculated by a formula rather than by the assessment of the LTP submissions. LTPs must be written to show how the allocations produced by the formula would be used. The consultation covers the formula and whether it should be phased in over three years or five years. The impact of the formula varies considerably from authority to authority. Some of this is because of previous anomalies arising from the willingness of authorities to align priorities with the Government's priorities and the quality of LTPs submitted.

1.3 Using projections based on the previous share of national funding, the proposed formula would lead to a reduced allocation for Hampshire County Council of up to £8.2 million over the five years, depending on how quickly the transitional arrangements end.

1.4 Allocations may be increased or decreased by as much as 25% depending on the strength of the LTP. Authorities rated as excellent under the comprehensive performance assessment (CPA) process are guaranteed not to have their allocations reduced below the amount produced by the formula. However, it is not clear whether there will be scope for many authorities to receive 25% increases in their allocations. Any reward funding will have to be taken as reductions from poor performing authorities, excluding CPA excellent authorities. As poor performing authorities tend to be the smaller authorities, this suggests that there will be less to allocate to larger authorities than the 25% proposed.

1.5 Therefore at present Hampshire County Council is guaranteed to receive the formula allocation by virtue of its CPA excellent status. There is a possibility of reward funding for a good LTP, although it is unlikely to be as high as the 25% that is theoretically possible. Reward funding will be recalculated each year according to how well authorities deliver their LTP programmes and meet their targets.

1.6 The formula largely allocates funding according to levels of

· bus and light rail patronage

· casualties

· congestion and pollution potential

· deprivation and rurality

1.7 It does not take account of the level and type of infrastructure present in an authority's area or the needs which exist. For example an urban area with relatively good transport infrastructure would receive the same allocation as an urban area of the same size with poor transport infrastructure. There is an argument for changes in the formula. However it is possible that an alternative formula based system will be less beneficial for Hampshire. Hampshire has received higher funding than other highway authorities in the past because of the quality of its LTP and ability to spend whatever is allocated. There may be merit in therefore arguing for some competitive element based on quality of submission, current performance and evidence of need.

1.8 The consultation period ends on 12 October and the Government intends to announce the results in December. This leaves very little time for local authorities to incorporate the allocations into their full LTPs, which are due to be submitted to Government by the end of March 2006.

1 Proposed responses

1.1 It is proposed that in responding to the Government's consultation exercise the Council should:

· criticise the timetables and narrowness of the consultation, and recommend that the decision be deferred for a year

· advise that the proposed formula is a very crude approximation of need to spend on integrated transport

· recommend that alternative formula options be considered, together with options that include consideration of bids by authorities; and

· indicate a preference for phasing in any changes over a longer period (ie the five year taper) if the formula is to be implemented.

1.2 The proposed response to the consultation questions is attached.

Section 100 D - Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1. Published works.

2. Documents which disclose exempt or confidential information as defined in the Act.

Appendix

Draft response to the Questions raised by the Government in its Consultation on Local Transport Plan funding allocations

Q1: Do you agree with the basis of the formula being a representation of the pressures related to the transport shared priorities and if not what alternative would you propose?

The formula as it stands is a crude attempt to measure transport pressures and contains some perverse indicators, such as the allocation of resources to authorities with high levels of public transport patronage. Generally the indicators take little account of the effectiveness of existing transport infrastructure and services. The County Council supports in principle the use of a formula in order to provide some transparency and predictability to the grant allocation process. However it is important that the variables used are good indicators of cost pressures.

Consideration should also be given to allocating a small proportion of the resources on a reward basis as the current proposals limit the scope for rewarding good performance to the extent that deductions are made from other authorities' allocations as a result of poor performance.

Q2: Do you generally agree with the variables used and the balance between them and if not what should be different?

No. The variables are not closely related to the need to invest in integrated transport. Variables need to be identified that reflect better the problems faced by individual authorities, including better measures of problems connected with congestion and accessibility, traffic growth and traffic management needs. However there is little or no time to develop alternative proposals in the Government's timetable. The Government has not suggested alternatives and why this formula is the preferred approach. Because of this, the County Council recommends that the decision be deferred for a year.

Q3: Do you have any concerns related to specific variables and if so how might they be addressed?

As above. The County Council is also concerned that the proposals for allocating reward funding will not be fully effective, as indicated in the response to Qu 1.

Q4: Do you agree in principle that the formula should be phased in?

The implementation should be deferred for at least a year to allow for proper consideration of the formula and variables. If a formula is used, it should be phased in to allow authorities time to adjust their spending programmes to meet the revised allocations.

Q5: Which of the two options for phasing in do you prefer?

The County Council prefers a longer phasing in, on the basis that this provides a less radical change for most authorities, and minimises the impact of sudden changes in the level of resourcing available and required to fully deliver revised allocations.

Q6: Do you have any comments about individual data items for a particular authority plan area?

The Director of Environment and County Treasurer will formulate a response to this question on technical issues relating to data sources.