City, metro and national governments in the UK must act now to rethink funding and finance models to pay for future transport infrastructure developments, says a new report.
The report, produced by Arup and London Transport Museum in partnership with Gowling WLG and Thales, says that additional funding options must be investigated to unlock new sources of income alongside sustained public investment.
Analysis by Arup shows that despite population, employment and economic growth, changes in the way people are living, working and travelling has already resulted in a stalling, or in some cases decline, in the rate of daily trips people make.
These changes – which include technological change, pressure on real incomes and changes in how and where people work – have disrupted financial growth from the farebox and can lead to shortfalls in traditional revenue sources.
Looking to the future, the Rethinking Transport Finance and Funding report says now is the time to investigate and embrace new ways of paying for major transport infrastructure projects across the UK.
The report draws on roundtable discussions with transport, legal and finance industry leaders, policy makers and academics as part of Interchange, London Transport Museum’s thought leadership programme. It highlights that:
A central vision for sustained government funding remains essential to maintaining and developing new transport infrastructure. But to cope with increased competition as new projects get off the ground, the harnessing of additional funding and finance opportunities at a metro and city level must be explored.
As farebox funding continues to come under new pressures, models for public/private partnerships which have a greater focus on land and property value capture present a promising opportunity. For example, the re-development of station car parks for higher density accommodation close to or above stations offers the opportunity to tap into the wider financial value generated – such as premium rents and property prices – to support future developments.
But key to the long-term financial sustainability of these partnership deals will be giving back city authorities the fiscal powers to borrow and retain at least some of the taxes generated from their transport investment. Tapping into the wider value generated as a direct result of transport infrastructure developments will create a virtuous circle of economic growth: authorities gain the ability to garner funds for future projects locally; and attractive financing opportunities are open for the private sector.
Gaining the ability to generate income for future projects at a local level must be coupled with embracing innovation. If innovation is stifled within the development of infrastructure projects supported by private capital, then the allocation of risk down the supply chain may jeopardise successful collaboration between suppliers.
A shift towards ‘mobility as a service’ is an additional opportunity for transformational change at a metro and city level. For example, it could enable charging for road space to become an accepted everyday part of the cost of moving around. This would allow local government to harness additional resources to tackle transport problems and secure continued economic growth.