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House of Commons Debate Future funding of urban transport, 31 March 2022

We recommend that the Government is more ambitious on funding for the rest of the country not covered by Mayoral Combined authorities. Long-term pipelines of funding, and a focus on high level outcomes, for example ‘half of journeys by active and public transport by 2030’ would allow local areas to develop in house capacity to plan and deliver projects. Government is moving in the right direction but must ensure all parts of the country benefit.

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Key messages

  • The Government’s requirements for public transport demand and capacity are for half of all journeys in towns and cities to be carried out by walking, cycling and public transport by 2030. This means a ‘London-style’ transport system in cities across the country to make public transport accessible and the natural choice.
  • Buses are the major public transport mode in every city, and the only option available in many instances of the most common journey types. Buses rely on revenue spending, but provide significant public goods through cleaner air, less congested roads, and more extensive and affordable accessibility to jobs, schools and public services. Public transport in urban and rural settings needs central government revenue funding in the absence of local tax raising powers. A good starting point would be restoring the £700 million estimated gap in funding for the national concessionary fares scheme.
  • Increasing the frequency of services and reducing public transport fares will drive up ridership, but long-term responses to improvement are even greater than short term. Over time, passengers’ reliance on and usage of improved public transport increases. Short-term increases in revenue funding yield exponential value for money over time as ridership and fare income grows, reducing the subsidy required.
  • The Government should therefore consider the short-term revenue investment as important as capital investment to create long-term results in ridership levels.
  • In addition to increased government revenue funding, further long-term certainty over funding will improve the value for money central government and local authorities get. The longer-term funding settlements enjoyed by Mayoral Combined Authorities (MCAs) provides certainty and confidence required to invest in in-house transport planning capacity and develop pipelines of projects and procurement that delivers the best transport accessibility outcomes for the best value.
  • This model has worked for decades in London and has shown results in MCAs since 2017, with the model expanding further under the City Region Sustainable Transport Settlement. It should be extended to all urban local authority settings if we are to see greater public transport use and decarbonisation of urban settings.
  • Decisions should be made locally around bus service franchising, public transport fares, funding, and improvement to services. Currently only Mayoral Combined Authorities have this opportunity, and other transport authorities must apply to the Secretary of State.
  • As we have set out, we recommend that the Government is more ambitious on funding for the rest of the country not covered by MCAs. Long-term pipelines of funding, and a focus on high level outcomes, for example ‘half of journeys by active and public transport by 2030’ would allow local areas to develop in house capacity to plan and deliver projects. Government is moving in the right direction but must ensure all parts of the country benefit.
  • The effective funding of transport in urban areas is particularly significant because this is where there is the greatest opportunity to both successfully carry out a modal shift to sustainable transport methods and influence the greatest number of people. Drivers in cities make shorter journeys under 20 kilometres, along more congested roads, and pay more for parking. This means that in urban settings there is the best opportunity for improvements to bus services and pricing to encourage modal shift.
  • Government should go further and fund all local transport in a manner that is targeted at outcomes, namely around increasing the ‘modal share’ or share of people using public transport and active travel. This must include buses and trams, cycling and walking, and increased connectivity of trains as well as steps to, where locally relevant, increase Electric Vehicle (EV) usage.
  • Local authorities must also be enabled to deliver transport policy through planning policy, and vice versa. These represent to two sides of the spatial development ‘coin’, and decisions on one side effect outcomes on the other.
  • It is also important to ensure that car usage is generally replaced by public transport wherever possible. The Government has said it will replace motoring taxes, including fuel duty, in the transition to EVs. In this transition, the Government could consider introducing a national EV taxation model to replace fuel duty to manage driving demand and keep public transport fare revenues up. The greatest opportunity for tackling climate change, pollution and public health issues is through active travel and public transport, it is important that a balance is struck between these methods and EVs.


  • One of the greatest opportunities for increasing transport decarbonisation, connecting communities, and generally improving transport in urban areas is through increasing bus usage. This is because there is higher density in housing and concentrated employment centres, creating attractive markets for bus operators. Buses also present an opportunity to tackle the cost-of-living crisis and spiralling petrol prices.
  • We therefore welcomed ambitions set out in Bus Back Better 12 months ago. There was a clear analysis of the problems in the bus industry and its collaboration with local transport authorities (LTAs), as well as the transformative benefits that better buses could provide
  • Local Transport authorities have responded to ‘Bus Back Better’, the National Bus Strategy (NBS), to deliver increase bus usage aims echoed in the Levelling Up White Paper, Transport Decarbonisation Plan and the Walking and Cycling Investment Strategy.
  • In addition, the NBS is failing to deliver on its own terms 12 months on. It is disappointing to learn that the insufficient £3 billon of promised funding has reduced to a £1.2 billion budget.
  • Unfortunately, inadequate planned government funding for buses will render rapidly prepared Bus Service Improvement Plans meaningless. Local authorities responded to central government’s requirements of ambitious outcomes in patronage and accessibility, but government has put in a relative fraction of what is needed for transformation.
  • Government ambition is mismatched by the ambition of local authorities and operators as expressed through their Bus Service Improvement Plans (BSIPs). These BSIP bids totalled £7 billion over three years to transform local bus services. But government will now only provide £1.2 billion, rather than the £3 billion promised last year. This is on top of the £700 million annual funding gap for concessionary fares pre-Covid remains unfilled at a time when there are increasingly competing demands for councils’ expenditure in other areas.
  • The LGA wants to see renewed efforts to increase bus usage through the NBS. That requires not just returning the funding for reform and growth to the £3 billion as promised but considering the major new pressures on the cost of living.
  • One major benefit of bus franchising is the simplification of a complicated funding system for buses. We would welcome the Government reforming the current complex and inefficient method of revenue funding for buses, towards a simplified revenue stream so that areas without franchising can provide greater value for money.

Cycling and walking

  • The LGA welcomes the Cycling and Walking Investment Strategy published in 2020. It provides clear guidance and support for councils, recognising the role only they can play to build new cycle paths and reallocate road space. The strategy acknowledges the challenges faced by councils in delivering increased cycling and walking. The LGA welcomes targets to double walking and cycling by 2030 in towns and cities.
  • In addition, the LGA welcomed the July 2021 Government announced of £338 million investment in walking and cycling. The UK cannot meet its climate change targets and clean its toxic air without increasing cycling levels – this requires more safe, segregated cycling infrastructure and new rules for safer roads to encourage more people to take up cycling.
  • The LGA supports funding for improving walking and cycling networks. However, this will reduce road space, increasing congestion and therefore the case for increased bus investment and locally led decision making when it comes to EV usage.


Electric vehicles (EVs)

In the transition to electric vehicles, it is vital that the relative cost of private car use is not made cheaper than it already is as this will reduce the viability of public transport and demand for active travel, with subsequent negative impacts on public health and congestion.

Local conditions and patterns of travel should shape take-up. Encouraging the uptake of Electric Vehicles (EVs) to replace internal combustion engine vehicles will have the greatest carbon impacts for the highest mileage drivers emitting the most carbon.

The transition to EVs will make the smallest impact on carbon emissions and risks the highest impact on congestion by reducing the cost of motoring, in towns and cities where mileage is lower – 43 per cent of all journeys in towns and cities are under two miles - and congestion based on pricier motoring is higher. Net Zero transport in cities and towns will require significant modal shift – from cars, whether 100 per cent fossil-fuelled by petrol and diesel or 50 per cent fossil fuelled from the grid.

The greatest opportunity for modal shift is in towns and cities. Higher population and employment densities make journeys shorter and busier. Making walking, cycling and public transport a viable alternative to car journeys. Only councils have the local knowledge and range of powers as the planning, transport, parking and highways authorities to develop high quality sustainable local transport alternatives to car use.

Modal shift can reduce car ownership. If councils can provide local sustainable transport networks that are sufficient, this will reduce car ownership. This would result in both more sustainable car journeys and avoid carbon emissions required to construct EVs. In inner London, 60 per cent of households have no access to a car, compared to less than 32 per cent in outer London. Only 20 per cent of households in the rest of England lack access to a car.

Car clubs are playing an important role in towns and cities at increasing access to cars for journeys that cannot easily be replaced by public transport. Car clubs are electrifying the vehicle fleet rapidly, while reducing car ownership – displacing 23.5 private cars per car club vehicle in London - and helping poorer households switch to EVs while the upfront cost is high.


Jonah Munn, Public Affairs and Campaigns Adviser

[email protected]