Some local areas could lose out under plans to make transport funding awards more competitive, MPs say

The select committee also called for the new transport funding arrangements to be reviewed by the end of the next parliament in 2020, pointing out that transport spending per head of the population in London was more than twice that elsewhere in England.

"This inequality has gone on for too long and has to change," said Louise Ellman, chair of the committee.

"The government has again changed the system for distributing money to local areas for major transport projects, with much more emphasis now on competition for funding. This will not necessarily help regions get a fairer share of transport funding and could make the situation worse. Those Local Enterprise Partnerships (LEPs) which are well organised and resourced will have an advantage in bidding for funds. Other areas may lose out as a result," she said.

As recommended by Lord Heseltine in his 2012 report on regional economic growth, a new 'Single Local Growth Fund' is due to be established next year. This initiative will combine a number of existing central government funding streams into a single 'pot', from which LEPs will be able to bid for funding for their own projects. It is anticipated that funding for major transport schemes valued at over £5 million will be incorporated into this fund.

According to the Transport Committee, the main implications of this change on regional transport funding would be a "more distinct policy focus on economic growth", as well as competitive allocation for a large proportion of the funding on the basis of Strategic Economic Plans submitted to the government by LEPs. These are a local government initiative consisting of partnerships between local authorities, businesses and other organisations, established by the government in 2010 to help deliver economic growth and decentralisation.

In its report, the committee said that the competitive nature of the funding and inclusion of other funding streams in one single 'pot' would provide successful bidders with the opportunity to fund much larger schemes than would otherwise have been possible. Neighbouring LEPs could also team up on jointly beneficial transport projects, it said. However, the process could ultimately "favour better resourced authorities" as well as potentially leading to considerable wasted expenditure on bids, it said.

Transport projects in London would continue to be funded centrally under the new regime, although those parts of the south east not covered by Transport for London would be eligible to bid. The committee said that this raised questions about regional variation in transport expenditure more generally, given that "far less money" was spent on transport projects outside London than in the capital and these projects were less attractive to private sector investors.

"The government's focus on using competition to bring in private sector funding for projects could disadvantage the regions, where there tends to be less private sector money available compared with London," Ellman said.

"[The Department for Transport] must also make sure that strategically significant schemes such as access to ports don't get overlooked and that areas covered by a number of LEPs do not miss out because of fragmentation," she said.