Transport Grant (Hansard, 27 June 1997)

§ Mr. Hain

I have considered the advice contained in the joint Welsh Office/Welsh Local Government Association working party report into the Transport Grant arrangements and I have introduced two changes for the 1998–99 settlement, for which bids have been invited todaysupport will be reduced, from a rate of 100 per cent., to 80 per cent. for cost increases incurred once a scheme has been accepted for a start of works; integrated transport package schemes costing over £1 million, will be eligible for support.

I believe it is essential to obtain the best value from the Transport Grant resources made available. While I accept it is difficult to predict the costs of major construction projects with complete accuracy, I am concerned by the rate at which local authority Transport Grant schemes have increased in cost in recent years compared with our own Trunk Road projects. The generous grant arrangements do not help in this respect. My proposals will provide a strong incentive for authorities to control costs, ensuring both the best possible use of available resources and cost-effective solutions to transport problems. This in turn will help release resources to help tackle the growing number of local authority projects awaiting support.

Transport Grant will continue to be available at a rate of 100 per cent. (50 per cent. grant and 50 per cent. supplementary credit approvals) up to the estimated project cost accepted at start of works. Therefore, schemes whose costs do not increase during construction will continue to receive full support, as will projects which have previously been accepted for a start of works, which are not subject to the new arrangements. I recognise that it is sometimes necessary or sensible to modify a scheme once construction has started. I do not intend to penalise authorities in these instances and, provided such changes are agreed with the Welsh Office in advance, any cost implications will also be exempt from the reduced rate of support.

In reaching this decision, 1 have been mindful of the strong local authority opposition to earlier proposals to reduce the overall rate of Transport Grant support to 90 per cent. I accept their views that this would impose too great a burden on them and lead to the demise of many worthwhile schemes. I am sure that my proposals offer a reasonable compromise that will achieve my overall aim.

My decision to introduce package funding in Wales reflects the Government's policy to achieve a balanced and integrated transport system in Wales. We have too long relied on the private car and while this still has a 653W very important role to play, we need to invest in less environmentally damaging solutions. Extending Transport Grant support in this way provides a mechanism for local authorities to look at combinations of public transport and other alternative measures to alleviate transport problems in specific areas. As well as public transport, I will expect authorities to explore the possibilities of traffic management proposals and provision for cyclists and pedestrians. These arrangements will subsume the existing Bus Priority scheme.

The existing £5 million qualifying threshold for major road schemes will remain. I will also consider bids for major (over £5 million) public transport projects under Section 56 of the Transport Act 1968.

The working party also reported on a possible reduction in the duration of Transport Grant support. I accept their views that any move in this direction would discourage early scheme development work and encourage early settlement of contractors' and land compensation claims without necessarily obtaining the best value for money. I have not therefore made any changes to these arrangements.