Further details of how funding unlocked from the cancellation of Phase 2 of the HS2 project is to be funnelled into bus and other local transport enhancements has been announced.

The announcement sheds light on how funding originally earmarked for the now-cancelled HS2 Phase 2 project is to be allocated in the North and Midlands. The decision to cancel the second leg of the rail project was announced in October last year. It has already enabled the government to invest over £200 million to extend the £2 bus fare cap in England outside London until the end of 2024 and £1 billion to improve bus services in the North and the Midlands, with £150 million expected to be delivered from April this year.

Who gets what?

The government is reallocating £4.7bn of funding into the North and Midlands’ local transport network. The Local Transport Fund is to be used to invest in transport upgrades, including enhancements to bus stations.

The North is to receive £2.5 billion and the Midlands will receive £2.2 billion from April 2025 to improve local transport connections. The seven-year funding uplift is targeted at smaller cities, towns and rural areas.

The announcement comes as the Prime Minister is set to chair a Cabinet meeting in Yorkshire today (26 February 2024) where he is expected to call on Ministers and MPs to hold local authorities to account to ensure the funding is used appropriately and that the voices of local people are heard when decisions are made on where this funding goes and how it is spent.

This investment is intended to give local authorities long term certainty to invest in transport improvements from 2025 through to 2032, including:

• Improving journey times for car and bus users by tackling congestion
• Refurbishing bus and rail stations
• Building new roads and improving junctions
• Installing or expanding mass transit systems
• Improving roads by filling in potholes and better street lighting for personal safety
• Increasing the number of EV chargepoints

The DfT is to publish advice for local councils and transport authorities to help them develop ambitious plans to improve local transport infrastructure in their areas. Local councils will be expected to publish their delivery plans for which projects they wish to invest in.

The funding is directed to the North and Midlands because the majority of HS2 savings are specifically from those regions. The Local Transport Fund is also specifically for communities in the North and Midlands which are outside City Regions which receive City Region Sustainable Transport Settlements (CRSTS).

The North East is separately receiving £3.7 billion from CRSTS from now until 2032, which includes an uplift of more than £1 billion from Network North, boosting local transport across the Tees Valley and the North East.

£100 million will also be shared across the North and Midlands to support the development and rollout of contactless and smart ticketing.

‘New era’ criticised

Commenting on the funding, Prime Minister, Rishi Sunak, said the Local Transport Fund will deliver a ‘new era of transport connectivity’. Transport Secretary, Mark Harper, said the investment is ‘truly game-changing for the smaller cities, towns, and rural communities across the North and the Midlands’.

However, the announcement has come under fire from Labour Shadow Transport Minister, Louise Haigh, who has been reported to have said only the Conservatives could have the ‘brass neck’ to promise such transformation after what she described as 14 years of ‘countless broken promises’. She then claimed Labour could reform public transport, giving communities the power to demand London-style networks.

In response to press coverage of the funding announcement, Mayor of Greater Manchester, Andy Burnham, said on X (formerly-Twitter): “Didn’t they promise this exactly ten years ago? They must think we are thick.”

Ben Curtis from charity Campaign for Better Transport said: “Reallocating HS2 money to other public transport projects is welcome, but we are disappointed to see funding transferred from a sustainable rail scheme to high carbon, low-return road schemes. Time and time again, research has proven that investing in public transport over road schemes delivers the greatest return for the taxpayer, whatever metric is used.”