A new Local Transport Fund has been launched by the Department for Transport (DfT), totalling £4.7 billion of reallocated HS2 funding.
The fund is specifically for communities in the North and Midlands that are outside city regions which receive City Region Sustainable Transport Settlements (CRSTS). It is part of Network North, which Prime Minister Rishi Sunak committed to at the Conservative Party Conference in October 2023, after axing the Northern leg of HS2.
Sunak argued that, with costs doubling, the economic case had been "massively weakened with the changes to business travel" after the COVID-19 pandemic.
Although the line to Manchester will not go ahead, the route to Birmingham will begin at Euston, travelling by Old Oak Common in West London to the West Midlands.
The government explained that the Local Transport Fund demonstrates its commitment to reinvest the £19.8 billion saved from the cancellation of the Northern leg of HS2, and all of the £9.6 billion from the Midlands leg. The £6.5 billion saved through the new approach at Euston will be spread across every other region in the country.
Sunak said: "Last year I made a decision on HS2 and what that's done is free up considerable funding, every penny of which is being reinvested in the North and Midlands".
He said now local areas can decide how they want to spend the money.
Sunak and Mark Harper, the Transport Secretary, said the North will receive £2.5 billion and the Midlands will receive £2.2 billion from April 2025. The funding is intended to improve local transport connections. According to the government, local authorities should make development funding plans and prepare to hit the ground running so plans are delivered as soon as possible.
The government said the investment will "deliver an unprecedented long-term funding uplift across the North and Midlands over seven years" and that it is the first transport budget of its kind that is specifically targeted at smaller cities, towns and rural areas.
Over the seven-year duration of the funding, the amount allocated will on average be at least nine times more than what these authorities receive through the local integrated transport block, the current mechanism for funding transport improvements in their areas.
The money could be used to:
Sunak said: "We have a clear plan to level up our country with greater transport links that people need and deliver the right long-term change for a brighter future".
"Through reallocating HS2 funding, we’re not only investing billions of pounds directly back into our smaller cities, towns and rural areas across the North and Midlands, but we are also empowering their local leaders to invest in the transport projects that matter most to their communities – this is levelling up in action".
"The Local Transport Fund will deliver a new era of transport connectivity. This unprecedented investment will benefit more people, in more places, more quickly than HS2 ever would have done, and comes alongside the billions of pounds worth of funding we’ve already invested into our roads, buses and local transport services across the country".
Lord Patrick McLoughlin, Chair of Transport for the North (TfN), commented: "We welcome this funding for our local transport areas as a sign of progress towards transforming the North to a more inclusive, sustainable and better-connected region. By having greater clarity on the funding that’s available, and consolidating funding streams, it helps remove inertia and accelerates delivery on the ground".
"TfN looks forward to working with government and local leaders because we know that the travelling public will get better results the more locally the decisions are made on how those services should be provided".
Maria Machancoses, Chief Executive at Midlands Connect, added: "This funding represents a significant investment in our region’s infrastructure. The Midlands contributes more than £90 billion to the UK economy, and to boost that even more, we need reliable transport networks and investment in new technology".
"We welcome this announcement and the improvements it will bring for our communities and businesses across the Midlands, and we will continue to work with the government and support our local authorities to ensure these vital Network North transport upgrades are delivered".
