Central control by the UK Treasury over transport funding is slowing economic growth in the regions, according to a new report from the Institute for
Public Policy Research.
The study warns that city regions are still heavily reliant on central government sign-off and short-term competitive funding rounds to deliver major transport projects — even when those schemes have strong local political support and a clear economic rationale. This, the report argues, creates delays, uncertainty and missed opportunities for growth outside London.
A central problem identified by IPPR is the absence of upfront, predictable funding. Without long-term financial certainty, metro mayors and local authorities struggle to plan, borrow for, or deliver large-scale transport infrastructure. Instead, they are forced to operate project by project, often reshaping plans to fit Treasury timetables rather than local need.
The report also highlights a deeper structural issue: while transport investment can unlock significant economic benefits — including new housing, higher employment and business expansion — much of the resulting tax revenue flows back to the HM Treasury rather than staying in the areas that generate it. IPPR says this weakens incentives for local leaders to pursue ambitious schemes, as they bear the political and delivery risks without retaining the financial rewards.
To underline the imbalance, the think tank contrasts the decades-long political and financial commitment behind the Elizabeth Line with the continued absence of modern mass-transit systems in major cities such as Leeds, Bristol and Leicester.
IPPR is urging the government to go further on devolution by handing city regions greater control over transport funding and approval powers. It also calls for stable local revenue streams that would allow mayors to plan confidently, borrow against future returns and deliver infrastructure at the scale needed to drive long-term regional growth.
Aditi Sriram, economist at IPPR and author of the report, said: “Transport investment is one of the most effective ways to boost productivity and long-term growth, but the current system makes it far harder than it needs to be.
‘When cities create growth through better transport, they should be able to reinvest it locally, not lose it to the Treasury. Reforming how we fund and assess transport is essential if the government is serious about growth”.
Helen Godwin, mayor of the West of England, a principal member of the Urban Transport Group, said: “This timely report from IPPR recognises the importance of regions deciding the direction of travel for our places. That principle has been endorsed again by the government when it comes to the overnight visitor levy, which should prove a crucial first step in fiscal devolution.
‘Further empowering mayors will accelerate our ability to deliver the major projects that we know our areas need, boost productivity, and drive greater economic growth. This report makes an important contribution to the debate about how best to do that”. Photo by Peter Barr
