Policy instruments (1) - Transport Policy and Planning in Great Britain - page 195

of current expenditure being taken up meeting previous commitments. (Over the
period of the Ten Year Plan the proportion of revenue spending consumed by these
commitments is expected to increase from 8% to 25%.) Given the need to contain
overall revenue spending to what can be financed by income on a year-to-year basis it
follows that PFI projects are likely to be best suited to situations where they are able
to generate their own income streams and/or where they enable major savings to be
made in operating or maintenance costs that would otherwise fall to public revenue
accounts.
As far as local authorities are concerned, debates about private financing are of
limited significance since the approval of major schemes by central government carries
with it agreement to additional revenue grant payments regardless of whether these
are used to service traditional loans or to pay for private finance contracts. (Concern
may of course arise over the complexities of negotiating the contract or if it is believed
that being required to follow the PFI route results in an overall increase in cost which
places the viability of the scheme in jeopardy.)
Local authorities are not always dependent on government funding for major
schemes. They may also use their own capital receipts (for example from the sale of
property or former municipally owned bus companies) and developer contributions
secured through the planning process. The availability of these sources is however
highly variable from one authority to another according to the level of development
activity within its area. Projects within certain defined areas may also be eligible for
an element of EU funding as part of its regional and economic policies referred to
earlier, and similarly contributions from Regional Development Agencies. There
are also special 'funding pots' established by central government from time to time
targeted at specific objectives which have their own eligibility criteria - for example
the Communities Infrastructure Fund (CIF) in the growth areas (23.8). From 2010
local authorities will also be able to levy a supplement on business rates in their area
to help pay for new transport and other projects which foster economic development
(LTT 479).
The ability to draw on all these funding sources - as well as possible contributions
from transport operators and other partners - is nevertheless very much a mixed
blessing since it makes the putting together of an overall funding package an extremely
complex and uncertain business. Agreement will be needed from a variety of sources,
but each party will have its own criteria and priorities, and the decisions it takes - if
unfavourable - can have a veto effect on the project as a whole. Financial contributions
have to tie in with their own, separate investment programming. Even if initial
agreement is obtained, all parties have to be 'kept on board' during the protracted
period when details are being worked up, consultation is undertaken, Government
approval is sought, planning permission obtained and so on. Actual delivery of a
project in these circumstances can rightly be regarded as little short of a miracle!
Most of the transport investment made by local authorities is on the structural
maintenance of highways and on relatively minor improvement schemes (those costing
less than £5m). Central government funding for these purposes is not dependent on
the approval of individual projects. Instead funds are allocated largely on a formula
basis (according to the characteristics of an authority's area) in the context of five-
yearly programmes prepared and monitored as part of a Local Transport Plan (20.4).