The government’s Autumn Budget has combined reforms to public investment appraisal with new fiscal powers for English mayors, creating a framework that could change how transport schemes are assessed and financed across England.
image: .gov.uk (report extract)
The Budget, delivered on 28 October, confirmed a roadmap for fiscal devolution and new Good Growth Funds, alongside the publication of Treasury guidance on place-based business cases. The measures build on Green Book reforms introduced earlier this year and are intended to give local leaders greater flexibility to develop investment programmes around the economic needs of their areas.
The changes could help authorities make the case for transport investment as part of wider programmes involving housing, employment, skills and regeneration, although they do not guarantee funding or approval for individual projects.
The Green Book is the Treasury’s guidance for evaluating public spending proposals. The revised approach allows authorities to develop place-based business cases in which related investments can be assessed in the context of their combined contribution to local economic and social outcomes.
For transport, this could for instance help authorities demonstrate how a tram extension, bus rapid transit corridor, railway station upgrade or transport interchange supports housing delivery, access to employment and commercial development, alongside more direct benefits such as reduced journey times and improved reliability.
The approach is intended to give decision-makers a broader view of the benefits of public investment, rather than relying on benefit-cost ratios as a simple means of comparing schemes across different places. Projects will still need to demonstrate value for money, affordability and deliverability, and funding decisions will remain separate from the appraisal process.
The reforms also include a reduction in the Green Book’s standard real discount rate from 3.5% to 3% for the first 30 years of an appraisal. This increases the present value assigned to future benefits and can improve the appraisal results for long-lived infrastructure, including rail and public transport schemes.
Alongside the appraisal changes, the Budget sets out a new funding model for regional and local government. From April 2027, mayors will receive a 20% share of locally retained business rates, while the government intends to increase the proportion of business rates retained locally to 100% by the end of the decade.
From 2028, mayoral strategic authorities will also receive an assigned share of income tax receipts. This arrangement is intended to replace existing central government grants, rather than provide an entirely additional source of funding, and will not give mayors the power to set income tax rates or thresholds.
The Budget also provides £285m in transitional funding for Good Growth Funds in 2027-28, comprising £165m for areas with a mayor in place and £120m in incubator capital for places moving towards devolution. A further £1.5bn devolved borrowing facility for mayoral authorities is planned from April 2028 to help catalyse investment in regional growth priorities.
These measures could allow combined authorities to assemble longer-term funding packages for transport and regeneration, drawing on a combination of devolved resources, borrowing and other public and private investment. The government is also developing business rates retention zones in selected areas, where authorities will be able to retain additional growth in business rates to support local investment.
The government says more than 90% of England’s population will have a devolution agreement in place as further deals are agreed, with the aim of achieving full devolution coverage by the end of 2028.