The Institute for Public Policy Research says that Treasury control over transport spending is holding back regional growth,

Despite strong public support and clear economic benefits, cities are still required to seek central approval to start and fund transport projects that would unlock jobs, investment and growth. This means that many schemes struggle to get off the ground, even where there is a strong local case to build.  

The authors identify lack of access to upfront funding as a key problem. Local leaders often lack the reliable income needed to finance major projects in the first place, leaving them dependent on short-term funding rounds and repeated Treasury sign-off.  

Transport investment can drive long-term growth and generate significant tax revenues. But under the current system, most of these returns go to central government rather than to mayors. For example, new homes built around a station generate stamp duty, more businesses produce VAT through higher sales, and rising employment boosts income tax receipts.  

This reveals a structural inequality: local areas take on the political risk and challenge of delivering transport projects but don’t share in the benefits of growth those projects help create, reducing incentives to invest and reinvest.

To fix this, the think tank is calling for a shift towards local control, allowing mayors to retain a share of business rate growth generated by transport investment and to borrow against predictable, rising revenues. Packaged with greater autonomy, this would give city regions the certainty and flexibility needed to plan, finance and deliver major projects without having to repeatedly seek central approval.

The report contrasts the success of projects like the Elizabeth Line – delivered through sustained funding and alignment between national and local government – with the continued absence of mass transit systems in cities such as Leeds, Bristol, Leicester and Teesside. It argues that fragmented decision-making and short-term funding pots have repeatedly undermined delivery in major English cities.

While recent commitments in the Spending Review and to Northern Powerhouse Rail signal renewed recognition of transport’s role in driving growth, IPPR says the next phase of reform must go further. Rather than central government signing off individual projects one by one, the report calls for a place-based model that empowers mayors to lead delivery, backed by stable local finance.

IPPR has recommended a package of reforms to give cities the tools to deliver, including:

• Give mayors real control over transport funding and approval, allowing them to plan, finance and sign off local projects without repeated Treasury sign-off or stop-start grants.
• Create stable local revenues that grow with success, so cities can borrow to build transport and see their funding rise automatically as investment attracts jobs, businesses and development.
• Adjust the way growth benefits are measured, by taking into account 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. This report makes an important contribution to the debate about how best to do that.

“In the West of England, our new ‘Transport Vision’ sets out a plan for better buses, more trains, and mass transit – and more levers for us will help ensure that local people can see and feel the difference of these investments sooner.”

(Picture: Yay Images)