Local transport funding took a major step forward at the end of last month with Bus Service Improvement Plan (BSIP) funding being allocated by formula rather than competition. The Urban Transport Group has long made the case for the movement away from short-term competitive pots to longer-term allocations, enabling a more strategic approach to local transport developments rather than smash and grab. 

In 2020, we released a report called ’The Local Transport Lottery’, which explored the costs and inefficiencies of funding local transport through ad hoc competitions. 

Between 2016 and 2019, 82% of short-term funding made available by government required councils to bid competitively, placing a huge strain on already stretched resources. 

To put this into context for an individual authority, Wakefield Metropolitan District Council submitted 12 bids in the year June 2018 to June 2019, seven of which were successful in securing almost £19 million. That is an average of less than £3 million per bid and a success rate of just over 50%. 

With each bid of this size costing up to an eye-watering £90,000, they may have spent over a million pounds in bidding for funds in a single year! That is money that could have been better spent in delivering outcomes on the ground. 

However, the new Government has signalled that this is going to change. Local government is to move towards long term settlements, allocated by formula rather than expensive competition funds. 

The BSIP funding announcement in the Autumn Budget will be the first major step towards this. Previously a competition fund, this round of funding has been allocated, allowing it to target areas with specific characteristics, rather than those who can write the best bids. This looks to be the start of a journey as the first two combined authorities receive integrated settlements from April 2025, with four more authorities being in this position from April 2026. 

Other areas of transport already benefit from this certainty, with strategic roads having had the Roads Investment Strategy (RIS) setting out five-year funding allocations. Active travel has also benefited from three-year capital funding deals in recent years. 

Whilst local transport funding has been moving in the right direction, with the City Region Sustainable Transport Settlements being awarded for five years, the increased certainty of the new approach will provide further benefits. Bringing revenue funding into longer deals will allow authorities to plan the services that people use with more certainty, both delivering for the passenger and maximising the impact of the capital spend. 

As we continue the devolution journey, we must now work with government to ensure that the right funds are moved into broader settlements, and that the allocation formula allows local government to continue to deliver on its transport requirements.  

Tom Ellerton is Technical Manager at the Urban Transport Group