Transport Insights

I’ve had a go at comparing the “Local Transport Grant” set out in last week’s Spending Review with what English councils outside city region settlements – particularly North and Midlands councils – would have got under the Tories’ Local Transport Fund (LTF), which promised local transport authorities in those two regions £4.7bn over seven years from 2025.

In January, I revealed that the new government had effectively ditched the LTF, which was part of the Tories’ widely ridiculed Network North plan for the cash saved by curtailing HS2.

Under the (now withdrawn) LTF, individual authorities were promised specific sums of money over the seven years, but without an annual breakdown. The money was said to be additional to Integrated Transport Block (ITB), which is currently worth £170m a year for councils outside city regions.

The Labour government sort of honoured LTF by awarding Local Transport Grant totalling £226m to North and Midlands councils outside city regions in 2025-26. This was described as is a one-year capital grant that tops up ITB funding for local transport and maintenance.

Highway authorities across England are also getting resource funding totalling £28m during the current financial year. That gives around £424m in total for the year.

The new version of Local Transport Grant, from 2026-27 to 2029-30, is spread across England but also honours the idea of giving more money to the North and Midlands “to make up for years of underinvestment in these regions”.

It combines the current Local Transport Grant and ITB and comprises £2.2bn of capital funding, over four years, and “over £100m” resource funding over three years. The first £1.3bn capital funding will be spread across England with the North and Midlands sharing an extra £900m.

The Department for Transport has published the funding profile for this, showing the cash ramps up significantly over the four years. In fact, councils that currently receive Local Transport Grant and ITB will get more or less the same next year as this.

Looking at the Tory and Labour allocations over the five years from 2025-26 to 2029-30 is tricky because of inflation and because the Tories never gave annual spend on the LTF, but here goes…

Under the Tories you would add ITB of £850m (£170m) a year, to five sevenths of the £4.7bn LTF, which is 3,357m, and £150m of resource funding. This totals 4,357m.

Under Labour, you would add the £424m for 2025-26 to the £2.3bn over four years and assume a further £30m resource funding for 2029-30, giving a total of around £2,750m.

So while Labour is claiming to have increased funding, it is nothing like as generous was what the Tories said they would do, but then Network North was always fantasy money.

And the concept of making up for “years of underinvestment” in the North and Midlands is still alive.