ARTICLE IN PRESS

Transport Policy 15 (2008) 379–386

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Transport Policy

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Funding for local authority transport and land-use schemes in the UK$

Charlotte Brannigan 1, Neil Paulley �

TRL, Crowthorne House, Nine Mile Ride, Wokingham, Berkshire, UK

a r t i c l e i n f o

Available online 8 February 2009

Keywords:

Sustainable transport

Funding

Local transport planning

Partnerships

Local transport schemes

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ransport Research Laboratory 2008. The info

erty of TRL Limited. Whilst every effort has b

presented in this paper is relevant, accurate a

ion, TRL Limited cannot accept any liability f

esponding author. Tel.: +44134 477 3131; fax

ail address: npaulley@trl.co.uk (N. Paulley).

rrent address: AEA, The Gemini Buildin

ional Business Park, Didcot, Oxfordshire OX1

ISTILLATE Consortium Members include ITS (L

ity (Edinburgh), UCL (London) and TRL.

a b s t r a c t

This paper focuses on the research activities, findings and planned products of one of the UK EPSRC-

funded DISTILLATE (Design and Implementation Support Tools for Integrated Local Land use, Transport

and the Environment) projects on the funding of transport and land-use schemes. Research activities

have included a literature review, dialogue with local authority case studies and a funding workshop.

The research identified and explored a range of barriers to funding, including lack of revenue funding,

difficulties in obtaining funding for ‘soft’ schemes, the formation of partnerships and timing-related

issues. The research also revealed that the funding system is failing to meet the needs of the current

transport policy focus on managing travel demand, rather than being a supply-led process. The key

project outputs are described, which include a ‘funding toolkit’ for local authorities, and guidance for

funding bodies regarding the barriers faced.

& 2009 N. Paulley. Published by Elsevier Ltd. All rights reserved.

1. Introduction

Identifying and obtaining appropriate funding for both capitalinvestment and for operation is a recognised barrier for theeffective planning and implementation of transport and land-useschemes by local authorities. This issue has been addressed withinthe UK DISTILLATE2 project (Design and Implementation SupportTools for Integrated Local Land use, Transport and the Environ-ment), a UK EPSRC (Engineering and Physical Sciences ResearchCouncil) funded project, which seeks to enable significantimprovements in the ways in which sustainable transport andland-use strategies are developed and delivered in the UK. Moreeffective and efficient selection, planning and delivery of schemesand projects will enhance the sustainability of urban areas and thequality of life of people who live in them.

DISTILLATE consists of seven projects looking at OrganisationalBehaviour and Barriers, Option Generation, Indicators, Organisa-tional Delivery, Funding, Analytical Support Tools and Appraisal.Fig. 1 provides an overview of the project’s structure.

This paper focuses on one project within this programme, ProjectE: Improved Mechanisms for Funding and Phasing of Implementation.

blished by Elsevier Ltd. All rights

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or any error or omission.

: +44134 477 0356.

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eeds), SEI (York), Heriot-Watt

The project seeks to understand the funding procedures which affecttransport and land-use projects and how these procedures affectimplementation. The paper describes the findings of the researchactivities undertaken to date, and discusses the planned outputs.

2. Background

The DISTILATE ‘Organisational Behaviour’ project (the ‘core’part of Fig. 1) acts as an overarching project, dealing with theidentification of barriers to the implementation of sustainableurban transport systems at the local authority level. Part of themethodology involved a number of questionnaires and in-depthinterviews with local authority practitioners. The results from thisresearch have been used within DISTILLATE projects for identify-ing issues and for monitoring changes in local authorityperspectives as a result of the study.

A questionnaire was developed and administered amongst UKlocal authority partners on the barriers to the delivery of transportsolutions (Hull and Tricker, 2004). Interviews and a second surveywere undertaken in 2006, addressed to local transport plannersand their counterparts in public health, environmental strategy,land-use planning and local authority corporate policy units, andfocused on the barriers to cross-cutting sustainable transportsolutions and methods of cross-sector working.

The research revealed a number of issues that were identified tobe impeding local authorities’ progress towards the implementationof more sustainable urban transport systems (Hull et al., 2006).Specific barriers were also identified which affect other sectors’abilities to engage in policy formulation and with the implementa-tion of transport schemes at the local level. Uncertainty and barriers

reserved.

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Fig. 1. DISTILLATE project structure.

C. Brannigan, N. Paulley / Transport Policy 15 (2008) 379–386380

associated with funding have been identified in both surveys. Thesebarriers have been summarised in Table 1 where barriers have beengrouped in terms of institutional, technical, political and funding-specific barriers. The majority of barriers to identifying andobtaining funding for transport schemes appear to be related topolitical and institutional aspects, rather than the funding sourcesthemselves.

Therefore these and other funding barriers have been moreclosely examined within the Funding Project, as part of the overallaim of DISTILLATE to develop tools and products which will aidlocal authorities in overcoming barriers.

3. Methodology

A number of research activities have been undertaken withinthe DISTILLATE Funding Project. An extensive literature review wascompleted (Burke et al, 2005), which identified a variety of fundingsources used within the UK to finance local transport projects.

The review included wide-ranging literature from the UK andfurther afield, identifying the various funding mechanismsavailable for transport projects. In the UK, public, private andpublic–private funding is obtained by local authorities and theGovernment to implement and maintain transport projects. Themain public source of funding is the Local Transport Plan (LTP)settlement awarded to local authorities to implement schemes inthe local area, although additional sources of funding are oftenrequired to fulfil all needs.

A number of studies stood out as important in understandingthe funding of transport in the UK and the implications of using

various sources. The Commission for Integrated Transport (CfIT,2005) undertook research into public funding of LTP projects,which identified that revenue funding is a key issue for localauthorities. ‘Revenue funding’, as referred to in this paper, isfunding used for the ongoing operational or maintenance elementof schemes. Transport consultancy Atkins recently reviewed theLTP process, and included a section on funding. This study for theDepartment for Transport (DfT, 2005a) revealed that localauthorities are using a wide variety of funding sources tosupplement the LTP capital allocation. However, the use ofalternating funding streams has its drawbacks, such as theirtime-consuming nature (particularly during the bidding pro-cesses), and local authorities should ensure that this does notdetract from effective delivery.

Like the CfIT, the Atkins study (DfT, 2005a) identifies revenuefunding, or lack of it, as a key barrier to delivery, especially forthe funding of infrastructure maintenance. Increasing costsfor existing transport services, internal inefficiency exercises, aswell as funding pressures in other services and local politicalissues may further exacerbate the problem of low revenuefunding.

In addition to these traditional sources of funding, a number ofinnovative funding mechanisms were identified in the literaturereview, including applying a Land Value Tax, Work Place ParkingLevies, Road User Charging (RUC), Developer Levies and TransportDevelopment Areas (TDAs). Some of these methods are beginningto be used in the UK, such as Road User Charging, whereasothers are still in the early stages of development. However, thereare some positive opportunities for alternative funding mechan-isms to assist in the funding of transport schemes in the UK.

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Table 1Barriers to funding (adapted from Hull et al., 2006).

Type of barrier Progress towards more sustainable urban

transport systems

Other sector’s ability to engage in

policy formulation and with the

implementation of transport schemes

at the local level.

Funding-related barriers

Technical Analytical capabilities and technical decision-

making skills

Institutional Complexities of organisational collaboration in

the process of transport planning

Territorial and/or temporal mismatches

between service delivery activities

across different sectors

Adverse effect on the availability of

staff time (e.g. because of cost

efficiency agendas)

Lack of local control over the implementation

and operation of schemes

Organisational constraints (time,

resources, leadership, interests,

structures and systems)

Difficulties occur in delineating

contributions between partners in joint

funding packages across sectors

Professional mindsets Clarity and consistency of

communication between sectors

(horizontal interaction)

Political Societal constraints on the development of

‘sustainable’ strategies

Political influences adversely affecting

cross-sector policy integration

National government unwillingness to use its

own executive actions to support transport

policies

Impact of direction and decisions of

central government (vertical/diagonal

integration)

Politics

Funding-specific Strength of focus on narrow transport priorities High levels of funding uncertainty Adverse impacts upon scheme

prioritisation and delivery processes

due to specific funding pots/streams

Funding for sustainable urban transport solutions

Other Physical characteristics of local areas

C. Brannigan, N. Paulley / Transport Policy 15 (2008) 379–386 381

Subsequent updated literature reviews were undertaken in 2006and 2007, to identify any new material.

The DISTILLATE project involves 16 local authority partnersfrom across the UK. Each project within DISTILLATE has beenworking with selected local authorities in developing and utilisingcase studies related to transport and land-use schemes. TheFunding Project is associated with five case studies:

�

a cycle/shared use route (part of the National Cycle Network—

NCN);

� a showcase bus route; � city centre redevelopment and transport improvements; � an airport rail link and � provision of a bus service and transport infrastructure in a new

housing development.

Meetings and informal interviews have been held between theDISTILLATE project team and the appropriate case study localauthority officer to discuss scheme details and the associatedfunding issues and barriers that have been experienced. Furtherdiscussions will be held with the case study authorities before theend of the project to discuss scheme progress and any otherfunding issues that may have arisen.

The most recent activity within the Funding Project was theorganisation of a workshop which was attended by various localauthorities and transport consultants. In addition to a number oflocal authority presentations on specific scheme-related fundingissues, breakout sessions were held to discuss a variety of fundingtopics, including:

�

local authority barriers, � funding barriers, � partnerships, � revenue funding,

�

capital funding and � innovative funding mechanisms.

The findings from these ongoing activities will contribute tothe two key outputs of the Funding Project; a local transportfunding toolkit for local authorities; and a guidance note forfunders on funding barriers and issues faced by local authorities.

4. Funding of local transport schemes in the UK

This section looks in more detail at the mechanisms currentlyin place in the UK for the funding of local transport schemes. Themain source of funding for local transport projects in England isthe Department for Transport’s LTP scheme. The concept ofproducing an LTP was first introduced in the 1998 TransportWhite Paper A New Deal for Transport: Better for Everyone (DETR,1998), and the requirement set out in the subsequent TransportAct 2000. The LTP process replaced the previous Transport Policiesand Programmes (TPP) capital settlement process. The mainproblems associated with the TPPs had been identified as thefollowing (DfT, 2005b):

�

Government took decisions on very small schemes, often costingas little as a few thousand pounds, wasting time and resources. � Decisions were taken in isolation, often on purely financial

grounds, rather than their contribution to a wider strategy.

� Emphasis on annual settlements was seen as militating against

strategic long-term planning by local authorities and, exceptfor the package approach, does not encourage an integratedapproach to dealing with transport problems.

The first round of LTPs was for the period 2001/02–2005/06,and the second round of LTPs is set to run from 2006/07 to 2011/

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12. LTPs are prepared by all County Councils, Unitary Authoritiesand Partnerships in Metropolitan Areas, but also PassengerTransport Executives3 (PTEs) and Metropolitan Areas in partner-ship with associated District Councils. The LTPs should set out anauthority’s local transport strategies and policies, and animplementation programme (DfT, 2005c).

The LTP is used by the DfT to inform decisions on capitalfunding, the development of DfT policies on local transport,monitor the delivery of key objectives and targets that aredelivered through the actions of Local Government and feed intothe authority’s Comprehensive Performance Assessment Score.4 Inthe second round of LTPs, it is planned that more than £8 billion ofcapital funding will be distributed. There are three main fundingstreams:

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Major schemes: Those individual schemes that are in excess of£5 million.

� Integrated transport block: Non-maintenance schemes that are

less than £5 million in value.

� Maintenance: Funding or structural local road maintenance

(DfT, 2005c).

Revenue funding is provided through a wider Local Governmentsettlement. The main transport element is for routine highwaymaintenance, and is decided through the use of a formulaconsisting of road length, condition and other factors so there isno real link into other projects’ revenue needs.

5. Funding and funding-related barriers and issues in the UK

The literature review, discussions with case study authoritiesand the funding workshop highlighted a number of specificfunding issues faced by local authorities. Key issues relate to theavailability and use of revenue funding, the formation of partner-ships to obtain funding and subsequently deliver transportschemes, issues related to the funding of ‘soft’ or non-motorisedschemes, the requirement to be innovative when bidding forfunds, the need for political support, and timing restrictions.These issues are discussed in more detail below.

5.1. Revenue funding

In the UK, revenue funding provided to local authorities is notring-fenced; therefore transport must compete for resources withother services, such as education and health. The majority of localauthorities consider themselves to be Capital Rich, Revenue Poor.The lack of revenue is a persistent problem with no clearsolutions. Revenue is required for a variety of uses, includingrunning services, maintenance of vehicles and infrastructure,provision of information (such as Real Time Passenger Informa-

3 Passenger Transport Authorities (PTAs) are responsible for assessing the

lic transport needs of a metropolitan area, making policy decisions about

lic transport provision and producing the LTP. Passenger Transport Executives

Es) are local government bodies which are responsible for delivering public

sport within large urban areas. There are seven PTEs within the UK, including

us (Tyne and Wear), GMPTE (Greater Manchester), Merseytravel (Liverpool and

rseyside), Centro (West Midlands), SYPTE (South Yorkshire), Metro (West

kshire) and SPT (Strathclyde).4 Comprehensive Performance Assessment (CPAs) is an element of the

ernment’s performance framework for local government which aims to

port improvement planning in local authorities and lead to co-ordinated and

portionate audit and inspection and increased freedoms and flexibilities for

l government. Judgement is formed on the performance and proven corporate

acity of every single tier and County Council in England. A balanced scorecard is

produced for each authority, and they are given a rating—excellent, fair, weak

oor—to describe how it is performing overall.

tion, RTPI), repainting of road markings and removal of graffiti andother vandalism. The DfT is aware that many local transportauthorities would prefer LTP allocations to include an element ofrevenue funding; however, this is not intended in the second LTPround. Local authorities are therefore required to consider fundingrevenue-requiring activities in support of an LTP from other DfTfunding for specific initiatives, from non-ring-fenced revenuesupport, or from funds raised locally. The LTP is required toindicate how the revenue funded programmes it contains will befunded.

The DfT commissioned a research study into the first round ofthe Local Transport Plans; Long Term Process and Impact Evaluation

of the LTP Policy (DfT, 2005a). That study was based on the findingsof workshops with a range of stakeholders and local transportpractitioners as well as interviews, data analysis and regional casestudies. It addressed the issue of whether the LTP system iseffective and outlines the impacts and consequences at groundlevel that the policy has had.

The study revealed that local authorities identified revenue asa key barrier to LTP delivery, although findings in the reportindicate that increases in funding have allowed authorities to bemore ambitious in the programmes that they pursue. A lack ofrevenue funding was outlined by all stakeholders as a ‘pressing’issue. The report suggests that as a result, it is becomingincreasingly difficult to fund maintenance for infrastructure, sobenefits may diminish, schemes requiring high revenue may bedelayed or cancelled and easily funded capital works may replacerevenue-based schemes, such as increases in bus services(DfT, 2005a).

Transport policy therefore seems to be shifting from capital torevenue actions, from ‘hard’ to ‘soft’ measures. This heightens theproblem of there being dedicated capital funding but no dedicatedrevenue funding.

It is also suggested that revenue shortages could even result ininadequate staffing, particularly in rural areas where measurestend to be more revenue intensive. Options for external supportare also identified as being ‘limited’ in rural areas (DfT, 2005a).The issue of revenue available for staffing needs was alsoidentified at the DISTILLATE funding workshop and there aresignificant implications. Participants estimated that approxi-mately 30% of project costs was staff time where staff timecannot be charged to projects, then there are huge implicationsand schemes may, in some cases, be unable to get off the ground.Factors such as increasing costs for existing transport services andlocal political issues may further exacerbate the problems of lowrevenue funding.

Findings of the report (DfT, 2005a) suggest that someauthorities are viewing the revenue problem constructivelythrough the development of local solutions, such as creatingpartnerships with revenue-rich, capital-poor partners (e.g. busoperators), and strengthening the case internally for transport, i.e.by stressing its contribution to wider corporate and communityobjectives.

The Second Local Transport Plan guidance (DfT, 2004) does notoffer any direct solutions to the revenue problem but suggeststhat authorities consider how revenue-based transport spending,which supports capital investment could be funded, with districtauditor support, from the capital programme. DfT (2005a)suggests, however, that in the long term Local Government couldmake it easier for capital and revenue expenditure to beintegrated. Innovative approaches are also mentioned as a wayto secure funding in the future, through Land Value Tax andincreased trade schemes, for example.

Discussions held during the workshop organised by DISTIL-LATE echoed many of these findings regarding revenue funding.Local authorities often identified the potential availability of

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revenue funding, but as it often comes from a variety of sources,obtaining it is often viewed as a time-consuming process.However, examples of revenue sources were provided, such asdeveloper contributions, but there were generally of a short-termnature. In another example ‘shuttle buses’ may be provided bysuperstores, but problems are felt by the users of these serviceswhen the funding ceases. Parking charges and advertising revenuewere also identified as sources.

The project provided a number of examples of revenue issuesexperienced by the case study local authorities.

One example came from the case study of a Local Authorityimplementing Showcase bus routes, which stated that a high levelof revenue is required for the maintenance and continued runningof the service if they are to continue to attract passengers.However, the local authority is often uncertain as to the varyingrevenue allocations year on year (with the amounts receiveddepending on council tax) making it difficult to forward plan.In some cases the allocation amounts are unknown until July(4 months into the financial year). The Local Authority has tried toovercome some of these maintenance revenue problems throughensuring the use of high-quality materials for the City’s secondshowcase bus route. Although this solution reduces revenuefunding requirements in the longer term, there are initial capitalimplications, and this is not necessarily the most efficientapproach, but works best given the problem of revenue funding.

An alternative solution is the raising of revenue throughadvertising contracts. The Local Authority has recently renego-tiated their agreements with advertising firm ADSHELL. Rentrevenue can be created through providing advertising space at busshelters, which in turn can provide revenue to maintain shelters,including weatherproofing and the removal of graffiti. However, insome circumstances, the combination of advertising in the sheltermay detract from the purpose it has been designed for, and maydeter waiting passengers from seeing approaching buses, reducingvisual splays, etc. Smaller or ‘soft’ schemes often require a highlevel of revenue funding, and are therefore notoriously difficult tofinance (both capital and revenue funding). The lack of availabilityof funding for cycling schemes in general is leading to difficultiesin delivering comprehensive cycling facilities. The Local Authorityinvolved in delivering the cycle/shared use route (which is part ofthe National Cycle Network) have experienced a number ofdifficulties. Funds have been stretched as far as they can tocomplete as much of the cycle/shared use route as possible. Thishas ultimately resulted in a lower quality of scheme in some areas,which ultimately poses higher maintenance (revenue) implica-tions for the future. This in itself is another major problem, asrevenue to maintain off-highway cycleways is difficult to achieve.Sustrans5 has been successful in securing a Department for theEnvironment, Fisheries and Rural Affairs (DEFRA) grant for bankand hedgerow trimming, which will last for 10 years. However,other sources will need to be identified to maintain seatingbenches, information boards and eventually the surfacing of theroute (although this should last approximately 15 years). Thereare also concerns such as vandalism, which will have furtherimplications for revenue funding.

The provision of public transport services to new residentialdevelopments is extremely important if new occupants are to beable to use sustainable transport alternatives to the car. Ideally,these transport services will be implemented and operational touse as soon as residents have moved in to ensure sustainabletravel patterns and habits from the start. In one English county, alarge housing development of approximately 2000 homes is

5 Sustrans is a UK-based Sustainable Transport Charity which is heavily

involved in aiding the completion of the UK’s National Cycle Network (NCN).

planned to the north of an existing town. The existing publictransport bus service has been extended to include the plannedhousing development. It was intended that the revenue supportfor the service would be obtained from the developers for the first10 years (through a Section 106 agreement). However, althoughbuilding was due to commence a couple of years ago, this is yet tohappen. Therefore, no funding has been received from thedevelopers to support the running of the bus service. The servicehas been operational since autumn 2005, and the Local Authoritytook the decision to launch and support the service themselves, inorder to ensure that it is up and running as soon as residents moveto the area. As a result of the revenue shortfall, the Local Authorityis hoping to be reimbursed by the developers at a later stage.

5.2. Formation of partnerships

Partnerships are often formed to aid the delivery of transportschemes and projects. They can be internal partnerships withindifferent sectors of Local Authority responsibilities (transport,planning, education, health, etc.), between neighbouring autho-rities, or including partners from the private sector (businesses,bus operators, voluntary sector, etc.). The study has found that theformation of partnerships as important in relation to identifyingand securing of funding for transport schemes and projects.

Many of the case study local authorities spoken to hadexperience of forming partnerships in order to obtain funding orto deliver a scheme. In some cases the partnership was found tobe instrumental to the success of the scheme, particularly inobtaining funding from a variety of sources, whereas othershighlighted the potential difficulties of managing a large numberof partners, which can hinder the process. Local authorities,especially smaller ones, may often lack the skills and resourcesrequired to form and maintain a successful partnership.

DfT’s (2005a) report on the Long Term Process and Impact

Evaluation of the LTP Policy (reviewed in the literature review,Burke et al., 2005) reveals the elements that an effectivepartnership is dependent on, which include the following:

�

a clear shared view of a common problem and an appreciationthat a joined-up approach is needed to find a solution. � one or more committed and proactive champions, more

beneficially at sufficiently senior level within their organisa-tions to take key decisions and commit resources (time orfunding) as necessary.

� a suitable mix within the partnering bodies, often beyond

those specifically focused on transport.

� availability of funding, either from the key partners (e.g.

matching the capital and revenue) or using the strength of thepartnership to secure external support (e.g. Urban BusChallenge, Sustainable Towns).

� appropriate systems and support, including capital success

factors.

� encouragement and guidance to incentivise the partner bodies

(DfT, 2005a).

Where these factors are not present, the effectiveness ofpartnerships is likely to be undermined. Groups that are formedare in danger of becoming little more than ‘talking shops’ (DfT,2005a). However, the report identifies that local authorities arebeginning to pay attention to these factors which make partner-ships work.

Working with other service areas is becoming more commonthrough the availability of Travel Plan bursaries from the UKDepartment of Education and Skills, encouraging greater integra-tion between the transport and education sectors. Similarly,

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accessibility planning is driving increased integration with health(DfT, 2005a). However, it is primarily the transport departmentsthat are instigating these partnerships, rather than other serviceareas.

The DISTILLATE ‘Organisational Delivery’ project (part ‘D’ inFig. 1) undertook case study research which identified a numberof factors considered to influence the success or failure of apartnership (Snell et al., 2006). It was found that those factorsinstrumental in creating a partnership include:

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similar goals,

� two-way needs (mutual benefits and exploitation of synergy), � financial gain or added value, � mandatory requirements and � clear links between policies regardless of departmental

divisions.

The factors highlighted as an important part of maintainingpartnerships include:

�

close physical location, � clearly defined mandatory requirements, � champions at all levels, � political/high-level support and � consistency in availability of staff/personnel.

Similar issues have been identified by others—see, for example,Ieromonachou (2006).

One of the case study authorities within the DISTILLATE Projectwas involved in setting up an Urban Regeneration Company (URC),with the local Regional Development Agency and NationalRegeneration Agency. The partnership was formed to focus onthe regeneration of a city centre. The Local Authority considers theformation of the partnership to be partly responsible in thesuccess of obtaining funding for the majority of improvements,including extensive transport improvements. The partnership hasbeen successful in identifying and obtaining funding from a widevariety of sources, including European Objective One,6 SingleRegeneration Budget7 (SRB) and various private sector sources, inaddition to Local Transport Plan settlements.

DISTILLATE funding workshop delegates considered partner-ships to be about collaboration and communication, a way ofstimulating dialogue between different organisations and ex-changing ideas. Accessibility planning was given as a goodexample of a shared approach, which has resulted in sharedagendas, e.g. between transport and education.

Where joint LTPs8 have been prepared, local partnershipworking has been perceived as being easier. Although manychallenges were discussed, it was felt that this was primarily dueto the fact that large blocks of funding needed to get schemes offthe ground would not have been given without the officers from

6 European Objective One is an EU initiative to provide resources for project-

ed activities that bring about social, economic and environmental develop-

nt. In England, three areas have been designated for Objective One

port—the South West (Cornwall), North West (Merseyside) and South

kshire.7 The Single Regeneration Budget (SRB) is run through Regional Development

ncies (RDAs) and provides resources to support regeneration initiatives

igned to enhance the quality of life in disadvantaged areas in England and

uce inequalities.8 Joint Local Transport Plans are produced by areas incorporating Passenger

nsport Authorities (PTAs) and Passenger Transport Executives (PTEs). PTAs are

onsible for producing the LTP in conjunction with the District Boroughs which

ke up the area. The LTP is subsequently delivered jointly by the PTEs and

trict Boroughs, with PTEs responsible for public transport, and the boroughs

onsible for roads and maintenance.

different authorities working together. It was perceived that a lotof grant funders (Central and Local Government, private sectorand the voluntary sector) like to see partnerships applying fortransport funding, and this may therefore increase their chancesof obtaining funding from these sources.

5.3. Funding of ‘soft’/non-motorised schemes

In comparison to other transport schemes, ‘soft’ schemes suchas those for walking or cycling, travel plans, or those based oninformation and advice services, are often on a much smallerfunding scale. However, despite the lower costs involved,authorities have experienced difficulties in obtaining funding.Part of the problem lies in appraising such schemes. Cycling andwalking schemes in particular are likely to have a range ofbenefits, including security, health and physical fitness, improvedaccess, as well as a reduction of negative impacts of motorisedtransport (noise/air pollution, safety, etc.), which are oftendifficult to quantify or to fit within conventional appraisalmethods. Therefore, when competing against other schemeswhich display obvious monetary benefits (time savings, etc.),these softer schemes tend to lose out. DfT does recognise theseproblems and has commissioned research into the issue. It is alsobeing examined within the DISTILLATE project.

The cycle/shared use route case study, which is partly beingcompleted by one Local Authority demonstrates how a relativelylow-cost scheme has had to attract funding from a vast number ofsources in order to complete the route. The route, costing just over£2 million, required in excess of 25 different funding sources,ranging from £250 to £250,000. Sources included neighbouringlocal authorities, DfT grants, New Opportunities Fund,9 AggregatesLevy Sustainability Fund10 (ALSF) grants, parish councils and artscouncils among many others.

5.4. Political support

Political support is seen as a key factor not only in schemedevelopment, but also in the subsequent acquisition of funding.Local authorities agree that political support for a scheme isessential in the funding and implementation process. It isconsidered that political interest and support should be consistentover time and that a political champion is needed.

Such commitment has been witnessed in the case study LocalAuthority promoting the development of a rail link. The schemehas been in preparation for in excess of 20 years. As schemedevelopment has been over such a long time period, it has beenessential that continued support, both technical and political, hasbeen provided. However, for schemes such as walking or cyclingimprovements, where there are already shortages in funding,funding can fluctuate with political commitment, and there is adifficulty in obtaining what small funds do exist.

5.5. LTP allocations and other timing restrictions

The way in which LTP funding is allocated is perceived to becreating a barrier for local authorities. In December of each year,

9 The New Opportunities Fund (NOF) is the former name for the Big Lottery

Fund, the body which distributes the largest amounts of national lottery funding.

The aim of the grants awarded is to improve communities and the lives of people

most in need.10 The Aggregates Levy Sustainability Fund (ALSF) is a former Countryside

Agency initiative. A levy was introduced on aggregate abstraction in April 2002. A

proportion of the money raised is in the fund, which is used to address

environmental and social costs of aggregate extraction through delivering

environmental improvements and minimising the demand for primary aggregated

and reducing the local effects of aggregate extraction.

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local authorities are informed of their allocation as an IntegratedTransport Block from Central Government. A political process isthen undertaken within the local authority to allocate the fundingacross activities. It is only then, in the April, that the transportdelivery team will know the exact amount of the allocation.Therefore, 5 months have passed in the annual cycle, presenting aproblem in ensuring the money is spent effectively for theremaining period. This is considered to be a major barrier forimplementation.

Case Study local authorities identified and discussed othersources of funding that also involve time restrictions. Fundingsources, including LTP allocations, tend to work on an annualrotation, whereby they require allocated funds to be used withina year.

For example, one local authority reported receiving a fundingallocation from the Aggregates Sustainability Levy Fund (ASLF) in2003. However, they were driven to spend this funding byApril 2004. In hindsight, it was realised that the money may nothave been spent as efficiently as it could have been if timerestrictions were not in place. It would have been more effectiveto break the implementation works into more manageablesections, rather than rushing to get as much of the routecompleted as possible, with implications for the resulting qualityof the scheme.

There are additional considerations and pressures linked tofunding and phasing of transport projects, particularly whentiming restrictions outside of the funding arena have to beconsidered. One example was provided relating to the construc-tion of a rural cycle route. Due to the nature of the scheme,the Countryside and Wildlife Acts created additional phasingissues. Bird nesting is an important issue and clearance work canonly be undertaken between September and February, so as to notdisturb the birds. Additionally, if there are badgers within thevicinity, works cannot involve the closing of sets or disturbing theland close to sets between July and November. These restrictionscan often mean that advance work and careful planning arenecessary, particularly if trying to fit work according to fundingschedules.

Involving the community and stakeholders from the start ofthe process may also be beneficial to the smooth running andimplementation transport schemes. Where unexpected objectionsto planned work are received, additional delays are placed onimplementation.

11 Land Value Tax (LVT) is the policy of raising state revenues by charging each

landholder a portion of the assessed site-only value of improved land.12 Work Place Parking Levies (WPPL) are levies allowing local authorities to

charge companies and organisations for each commuter car parking space

provided in a specified work place.13 Transport Development Areas (TDAs) are ‘well-designed, higher density,

mixed use areas situated around good public transport points in urban areas’ (RICS,

2003).14 All three DISTILLATE Funding Outputs can be downloaded from the

Distillate Website: http://www.distillate.ac.uk/outputs/products.php.

6. Conclusions and next steps

Funding is always going to be a ‘hot-topic’ amongst localauthorities when discussing or considering the implementation oftransport schemes. As the findings of the DISTILLATE FundingProject have shown, funding issues are wide-ranging and can varygreatly between authorities and between scheme types. Althoughlocal Transport Plan funding is available to authorities, they alsoneed to be aware of alternative funding sources to substituteLTP allocations.

The literature review concluded that research has identifiedthat revenue funding is a key issue for Local Authorities. One ofthe studies revealed that Local Authorities are using a widevariety of funding sources to supplement the LTP capitalallocation. However, the use of alternating funding streamshave had their draw backs, such as their time-consuming nature(particularly during the bidding processes), and Local Authoritiesshould ensure that this does not detract from effective delivery.In addition to the more traditional sources of funding,innovative funding mechanisms were identified, including apply-

ing Land Value Tax,11 Work Place Parking Levies,12 Road UserCharging, Developer Levies and Transport Development Areas13

(TDAs). Some of these methods are beginning to be used in the UK,such as Road User Charging, whereas others are still in the earlystages of development. However, there are some positiveopportunities for alternative funding mechanisms to assist thefunding of transport schemes in the UK.

The research has also importantly revealed that the fundingsystem is not meeting the needs of the current transport policyfocus on managing travel demand, rather than being a supply-ledprocess. The existing system is structured around this supply-led,capital-intensive approach to planning, and as such is leading toinefficient policy implementation. In the worst case situations,good revenue-dependent policies can be left on the shelf whilstpoor capital-intensive policies are implemented as a result ofthe funding system. A re-examination of the funding system andappraisal mechanisms could reflect this shift in transportpolicy focus and ensure that effective transport policies areimplemented.

The DISTILLATE Funding Project has produced three keyoutputs related to funding and the overcoming of barriers.14

The first is a ‘Funding Toolkit’. The Toolkit is aimed at localauthorities and provides decision makers with an overview ofpotentially available funding sources to use for a variety ofschemes and projects. It has been demonstrated through theresearch activities of the DISTILLATE Funding Project, localauthorities regularly face barriers when identifying or applyingfor funding, and this toolkit will help them in both identifyingalternative sources of funding, and highlighting the potentialbarriers at an early stage. The toolkit provides advice on usingvarious sources of funding, including private sector, other central,regional or Local Government initiatives, initiatives of govern-mental organisations or bodies, and the voluntary/charitablesector.

The toolkit provides descriptions of existing sources, the typesof schemes they can be used for, case study examples of thefunding sources used in practice, and the potential benefits anddisadvantages of using the source. Advice on partnership workingis also provided, to strengthen partnership working in theidentification and attaining of funds.

The research undertaken in DISTILLATE Funding Project hasbeen useful in identifying a number of barriers faced by localauthorities concerning the funding of transport schemes. Thesecond key output is a guidance document aimed at fundingagencies, the potential funders of transport and land-use schemes.This guidance document identifies and examines the fundingbarriers faced by local authorities and the potential implicationsthese may have, on both the organisations and the resultantschemes. Where appropriate, recommendations on improvementsto existing funding mechanisms and regimes have been made.Finally, a research note examining the implications of the variousfunding restraints/barriers has been produced. In some cases, thefunding source itself can distort the planned scheme—this may bein terms of the objectives the scheme is trying to meet beingaltered to obtain funding from a particular source. Thesedistortions within funding streams and their implications for

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schemes/projects are identified within the note, and recommen-dations made as to how these distortions may be dealt with/addressed.

It is hoped that these outputs produced by the DISTILLATEFunding Project will assist local authorities and the fundingbodies overcome the barriers that they currently face in thefinancing of transport and land-use schemes in the UK.

References

Burke, C., Townley, K., Binsted, A., 2005. DISTILLATE Deliverable D1: Funding andPhasing of Transport Projects—Literature Review, UK. Available at URL: /http://www.distillate.ac.uk/reports/Deliverable%20E1_Lit%20Review%202005.pdfS.

CfIT, 2005. Local Authority Expenditure: A Review of Capital and Revenue Fundingfor Transport. CFIT, UK.

DETR, 1998. A New Deal for Transport: Better for Everyone. HMSO, UK.DfT, 2005a. Long Term Process and Impact Evaluation of the Local Transport Plan

Policy: Interim Report. DfT, UK Available at URL: /http://www.dft.gov.uk/stellent/groups/dft_control/documents/contentservertemplate/dft_index.hcst?n ¼14325&l ¼ 3S.

DfT, 2005b. Local Transport Plans Policy Evaluation. HMSO, UK Available at URL:/http://www.dft.gov.uk/pgr/regional/ltp/guidance/policy/S.

DfT, 2005c. Local Transport Plans (LTPs). DfT, UK Available at URL: /http://www.dft.gov.uk/stellent/groups/dft_localtrans/documents/page/dft_localtrans_610728.hcspS.

DfT, 2004. Full Guidance on Local Transport Plans, second ed. HMSO, UK Availableat URL: /http://www.dft.gov.uk/stellent/groups/dft_localtrans/documents/pdf/dft_localtrans_pdf_504005.pdfS.

Hull, A., Tricker, R., 2004. Project A Interim Report: Findings of the ‘Phase 1’ Surveyon the Barriers to the Delivery of Sustainable Transport Solutions. DISTILLATEFormal Deliverable A1, UK Available at URL: /http://www.distillate.ac.uk/reports/reports.phpS.

Hull, A., Tricker, R., Hills, S., 2006. Interactions between policy sectors andconstraints on cross-sector working in the delivery of Sustainable UrbanTransport Solutions. DISTILLATE Formal Deliverable A2, UK Available at URL/http://www.distillate.ac.uk/reports/reports.phpS.

Ieromonachou, P., 2006. Urban road pricing—what lessons can we learn from theItalians. Traffic Engineering and Control 47 (4), 128–132.

RICS, 2003. TDAs—The London Dimension. RICS, UK Available at URL:/www.rics.org/Property/Propertydevelopment/Transportdevelopmentareas/TDAs+-+the+London+dimension.htmS.

Snell, C., Forrester, J., Tricker, R., 2006. DISTILLATE Project D Structures Report. UK.Available at URL: /http://www.distillate.ac.uk/reports/reports.phpS.