5. Funding and financing
Introduction
It is important to note that Local Transport Plan 4 (LTP4) and its investment and intervention priorities, as set out in section 4, are not funded. This section sets out the potential funding and financing opportunities for the proposed interventions identified in the LTP4 Investment Plan.
The availability of funding, with consideration to the costs of development, construction, maintenance and renewals, alongside operational costs, will be a key challenge in delivering LTP4. Additionally, routes for financing, as well as how and from whom the funding is secured to meet the costs of construction as they arise may change over the life of the Plan and Investment Plan.
As the LTP4 is made up of several diverse schemes, there is not going to be a ‘one size fits all’ funding and financing solution that applies across the programme. So, over the life of the plan up to 2050, this LTP more than previous plans will provide East Sussex County Council, their partners and communities opportunities to explore and innovate how funding can be secured and combined to study, develop and deliver transport infrastructure interventions and initiatives.
Types of funding
To study, develop and deliver transport infrastructure, services and initiatives requires a combination of capital and revenue funding.
- Capital funding – is typically used in the delivery of permanent or fixed transport infrastructure improvements. Each year the government allocates local authorities a capital sum for highway maintenance and a further allocation is made for integrated transport schemes and road safety improvements.
Capital funding also becomes available from Government and other partners from time to time for specific types of schemes (e.g. active travel, bus priority). Local authorities either must competitively bid for this funding and if successful, the funding is allocated to delivery bodies and transport authorities or is directly allocated to the local authority. If secured, this funding will be ring-fenced to spend on specific schemes/projects (e.g. if secured for a cycle scheme it cannot be used to spend on highway maintenance). - Revenue funding - The County Council provides revenue from its annual budget towards a variety of services including support for bus services, concessionary fares, home to school transport, road safety education, school crossing patrols and further highway maintenance.
Similarly, revenue funding becomes available to local authorities from time to time from Government and other partners to deliver revenue specific measures, for example additional highway maintenance funding or travel behaviour programmes. Likewise, if this funding is secured, either competitively or through direct allocation, it will be ringfenced towards specific projects/schemes and cannot be directed to other uses.
Sources of funding
The sources of funding that are most appropriate and available will vary according to scheme scale. For example, community match funding is only available for schemes up to a total value of £120,000, whereas larger strategic transport schemes will usually need to secure central government funding, e.g. Department for Transport’s (DfT) Bus Service Improvement Funding or the Road Investment Strategy (RIS). This will influence which schemes can be prioritised.
The sources of funding that are most appropriate and available will also vary across the LTP’s modal strategies, i.e. the East Sussex Local Cycling and Walking Infrastructure Plan, Bus Service Improvement Plan, Rail Strategy, Freight Strategy and, Electric Vehicle Strategy.
This section explores potential and known/historic sources of funding schemes and initiatives, considering each mode.
Highways maintenance and integrated transport annual government grant allocation
As highlighted above, each year the government allocates local authorities a capital sum for highway maintenance and a further allocation is made for integrated transport schemes and road safety improvements. The level of funding received is determined via a formula-based system. With the increases in construction costs and the allocation remaining static, the overall value of this has decreased over the past decade.
Both the highways maintenance and integrated transport grant funding received by the County Council is included in the annual County Council’s capital programme for these specific uses.
Active travel
Local authorities are encouraged to develop Local Cycling and Walking Infrastructure Plans, or similar, to set out their active travel networks to support with the securing of active travel investment.
East Sussex County Council has previously secured over £20m of funding for active travel schemes through the South East Local Enterprise Local Growth Fund and has more recently secured funding from the Levelling up Fund and the Towns Fund to develop and deliver schemes that support active travel. A number of these schemes will be delivered in the early years of LTP4.
National Highways have also delivered a segregated active travel path alongside the A27 from Polegate to Glynde as part of the £75m funded A27 East of Lewes works
In August 2022, Active Travel England (ATE) was established. ATE are a government agency set up to manage the allocation of active travel funding alongside managing active travel scheme delivery performance and applying a strategic approach to the delivery of walking, wheeling and cycling infrastructure at a local level.
There are currently specific funding programmes managed by ATE including the Active Travel Fund, which is capital funding available for the development and delivery of infrastructure improvements, including walking and cycling schemes as well as school streets. East Sussex County Council has been successful in securing Active Travel funding to progress the design of various walking and cycling schemes alongside trialling and then deliver three school streets schemes in the county.
ATE also administer the Capability Fund and the Bikeability Trust’s Bikeability programme, which is revenue funding available for scheme design and the delivery of initiatives and training.
Crucially, to maximise opportunities to secure funding for the integration of active travel as part of schemes or of programmes with broader transport, regeneration, health and/or environmental objectives that come from other, complementary funding sources, the County Council and their partners will continue to work collaboratively to secure funding.
Looking at schemes under development, active travel measures also form part of the two Major Road Network business cases currently being developed to secure funding for improvements to the A22 between Hailsham and Stone Cross, and the A259 corridor from Brighton to Eastbourne. Other funding is also available via Sustrans for improvements to the National Cycle Network (NCN) with two routes – NCN route 2 and NCN route 21 – traversing parts of the county.
The Council and their partners are supportive of longer, multi-year-term funding programmes to help realise the benefits of active travel schemes and ensuring a co-ordinated network of improvements can be developed and delivered as set out in the East Sussex Local Cycling and Walking Infrastructure Plan (LCWIP).
Bus
Funding for bus-based solutions and services is generally very context specific and accordingly does not fit within established modal regulatory funding settlements and is secured in combination by the local highway authorities and bus operators.
Funding for passenger transport improvements is through County Council capital and revenue expenditure, Government and regional funding for specific projects, and development contributions. Capital development contributions are being used to improve bus stop facilities, by ensuring they are designed to comply with accessibility requirements, and to help fund the roll out of real time passenger information across the county. In conjunction with Bus Service Improvement Plan (BSIP) funding, revenue contributions are also used to subsidise bus services in areas where development requires sustainable transport solutions but before services have become viable.
East Sussex County Council was successful in securing £41.1m of DfT Bus Service Improvement Funding to improve services and infrastructure across the county, with the Flexibus element commencing in May 2023 and service enhancements in July 2023. The development of bus priority schemes is continuing.
In conjunction with Bus Service Improvement Plan funding, revenue contributions are also used to subsidise bus services in areas where development requires sustainable transport solutions but before services have become viable. Development funding can also be obtained to provide improved bus stop infrastructure for passengers.
Rail
The Rail Network Enhancements Pipeline (RNEP) is a periodically updated list of enhancements that Network Rail is expected to deliver within each five-year Control Period and is tied to government spending review allocations. Previous RNEP schemes in East Sussex have included the £18m re-signalisation of the line between Lewes and Newhaven, which was completed in 2019. With the establishment of Great British Railway’s the County Council and their partners will expect a review of rail funding for infrastructure and initiatives.
Funding is also available to improved accessibility of stations (Access for All programme). In 2024 Battle secured feasibility funding, as did Wivelsfield station (which is used by residents of East Sussex
Road / highway improvements
Funding for highway schemes comes through a variety of sources, often depending on the type of road (i.e. part of the strategic, main or local road networks)
Strategic Road Network
Funding for highway interventions on the strategic road network managed by National Highways is generally provided by DfT and allocated as part of the Road Investment Strategy (RIS) process.
For example, in RIS1, covering the period 2015 to 2020, the Government allocated £75m towards small scale improvements to the A27 east of Lewes including localised capacity improvements, safety enhancements and a shared use path for pedestrians and cyclists along the length of the route. These were completed in March 2023 and were led by National Highways.
Major Road Network
This is alongside the DfT’s Major Road Network and Large Local Majors programme providing investment for local authorities for road enhancement schemes on the most important local authority roads, including priorities to support multi modal journeys. At present East Sussex County Council is leading and working with partners on business cases to secure major road network funding for the A22 in between Hailsham and Stone Cross as well as the A259 corridor from the east of Brighton through to the east of Eastbourne.
Electric Vehicle Infrastructure
To support the increase take up of electric vehicles across the country, the Government has rolled out its Local Electric Vehicle Infrastructure (LEVI) fund to local authorities to work with the chargepoint industry and improve the roll out and commercialisation of local electric vehicle charging infrastructure.
These public chargepoints will help residents who don’t have off-street parking and need to charge their electric vehicles.
The LEVI fund includes:
- Capital funding to contribute to the costs of delivering chargepoints.
- Capability funding for local authorities to employ and train new staff specifically to plan and deliver chargepoint infrastructure.
Development funding
Development contributions are payments made by developers to help fund the provision of infrastructure which supports developments. There are two main mechanisms which are used to collect contributions, section 106 and Community Infrastructure Levy (CIL).
Section 106 contributions
Section 106 (s106) involves the use of legal agreements which secure contributions as part of a planning permission. They are used to make a development proposal acceptable in planning terms and are focused on mitigating the impact of that specific development. Most s106 contributions are secured through planning applications which are determined by other authorities.
In some areas (Rother, Eastbourne, Hastings) s106 contributions are paid directly to the County Council by the developer. In Wealden and Lewes contributions are mostly paid to the districts and the national park authority who then hold the contribution on the County Council’s behalf until they request the transfer of the contribution to a specific project.
Community Infrastructure Levy
For new developments being granted planning permission, CIL has mostly replaced s106 contributions sought. However, there are still contributions from historical s106 agreements which are to be collected once the payment point has been reached and spent.
CIL is a standard charge on development which can be levied by charging authorities on new development in their area. It is used to help deliver infrastructure which support development across their area. CIL only applies where a charging authority has an approved charging schedule which sets out its CIL rates. In most cases it replaces contributions which were previously collected through s106.
The County Council is not a CIL charging authority. In East Sussex the charging authorities are the districts, boroughs and the South Downs National Park Authority. Currently all authorities other than Hastings Borough Council have an adopted CIL charging schedule in place. Therefore, the County Council has to bid to the charging authorities to secure CIL funding towards transport infrastructure.
Highway maintenance funding
Through the Highways Act 1980, Councils are required to keep the roads in a safe and usable condition. This undertaken and funded through two types of maintenance programmes:
- Reactive maintenance, where reported safety defects such as potholes are repaired in line with the Council’s maintenance policies to keep roads safe to use as contained in the East Sussex Highways Inspection Manual. This is funded from the Council’s revenue budget.
- Planned maintenance, is funded from the council’s capital programme, where a programme of planned works such as surface dressing and resurfacing, structural maintenance, street lighting and road reconstruction is undertaken to maintain road condition against the Council’s performance targets. This funding comes primarily from the Department for Transport (DfT) road maintenance grant funding received annually
Other funding sources
Other sources of funding particularly pertinent to local transport schemes include town and parish councils and community match funding, an initiative created for local communities to apply for match funding from East Sussex County Council for schemes up to a total value of £120,000.
Income generation
Where the County Council generates any surplus from civil parking enforcement it can be used to fund transport improvements, especially supported bus services. The County Council is also able to charge for some of the services they provide, including driver training and Bikeability for adults, which support these services towards financial
Future sources of funding
Given the investment horizon of the LTP4 and as the devolution agenda continues to evolve, it is conceivable that innovative new funding mechanisms will form part of future funding deals for transport schemes. Mechanisms that may play such a role in the future delivery of the LTP may include:
- The diversion of incremental revenues from existing taxes or charges in specified locations, e.g., the Community Infrastructure Levy (CIL), business rates, Council Tax or Stamp Duty.
- Increased rates, or other enhancements, to existing taxes and charges such as a Council Tax precept, business rates supplement or a supplementary CIL.
- New local charging mechanisms, such as a betterment levy or ‘transport premium charge’ (TPC), or land pooling or sharing the proceeds of development rights through mechanisms such as land value capture (LVC).
There is also an opportunity to look at funding reform beyond the prism of specific interventions or modes. For example, there is a growing trend for broader ‘growth deals’ with government whereby a package of investments is agreed that might stretch beyond transport to, for example, housing delivery, and in return unlock either matched funding and / or access to wider revenue-raising powers at a local level.