Rethinking transport funding and finance

Wherewillthemoneycomefrom? PublishedaspartofLondonTransportMuseum’sInterchangeprogramme ForewordbySamMullinsOBE 1 Introduction 3 Canwetakegrowthforgranted? 5 Securingprivatefundingandfinance 9 Harnessinginnovation 11 Roadusercharging 13 Conclusions 17 Participantsandcontributors 19 Aboutthisreport ThisRethinkingTransportFinanceandFundingreporthasbeenproducedbyArupincollaborationwithLondonTransportMuseumaspartofitsthoughtleadershipprogramme,Interchange.InterchangeissponsoredbyinternationallawfirmGowlingWLGandglobaltransportationcompanyThales. ThereportdrawsonaseriesoffiveInterchangeeventsheldbetweenJuly2019andJanuary2020.Thesebroughttogetherleadingthinkersanddecisionmakerstodebatethechallengesandopportunitiesfacingcities,transportandinfrastructure,todayandtomorrow. LondonTransportMuseum LondonTransportMuseumistheworld’sleadingmuseumofurbantransport.Usingourcollection,exhibitionsandeventswetellthestoryofLondon’sjourneytoignitepeople’scuriositytoshapethefuture.TheMuseumoffersunforgettableexperiencesthathelpgetthemostofourcityandprovidesexcellentnetworking,thoughtleadershipandbusinessopportunitiesforourcorporatesupporters. Arup Arupisanindependentstaff-ownedfirmworkingacrosseveryaspectoftoday’sbuiltenvironment.WeareguidedbyourfounderSirOveArup’sspiritandprinciples.Togetherwehelpourclientssolvetheirmostcomplexchallenges–aswestrivetofindabetterwayandshapeabetterworld. GowlingWLG GowlingWLGisaninternationallawfirmwithmorethan1,500legalprofessionalsinglobaloffices.Weprovideourclientswithin-depthexpertiseinkeyglobalsectorsandasuiteoflegalservicesathomeandabroad.Weseetheworldthroughourclients’eyes,andcollaborateacrosscountries,offices,serviceareasandsectorstohelpthemsucceed,nomatterhowchallengingthecircumstances. Thales TransportnetworksaroundtheworldrelyonThalestechnologiesandexpertisetoensuresaferandmoreefficientpassengerjourneys.Thalesisagloballeaderinrail,roadandurbantransportsolutionsthatmeettheinfrastructureneedsoftomorrow.Whetherit’sincreasingthecapacityofanetwork,improvingthesafetyofpassengerjourneysorhelpingoperatorstosavecosts,weworkas atrustedpartnertosolveourcustomers’biggestchallenges. Foreword Foreword SamMullinsOBE Director,LondonTransportMuseum A dequatefundingandfinancinghavelongbeenachallengeforthedevelopment, operationandmaintenanceofpublictransportinfrastructure. InVictorianLondon,privatefinancierscarriedthecostsandrisksofinvestingininnovativenewtransport,theireyesfirmlyonthepromiseofprofits. ButastheCapital’stransportnetworkexpandedduringthetwentiethcentury,growthhasbeenunderpinnedbyacombinationofgovernmentfunding,passengerrevenueandprivateinvestment. Today,newtechnologies,changingworkingpracticesandconcernsfortheenvironmentaredisruptinghowandwhywemovearoundandthemodesoftransportwechoosetouse. Now,morethanever,opportunitiesexisttodevelopnewtransportinfrastructurethatembracesemergingtechnologies,maximisespublic benefitanddriveseconomicgrowthinourtownsandcities. Butonequestionremainsthesame:wherewillthemoneycomefrom? Astheglobaltrendtowardurbanisationcontinues,anddemandforefficient,flexibleandsustainablemodesoftransportgrows,sowillcompetition forfundingandfinance. And,itisnotjustcompetitionforcapitalwhichmustbeconsidered. Ourtraditionalmodelsoffinancingtransportinfrastructurearechangingtoo,withglobalcitiessuchasLondon,NewYork,ParisandTorontorecentlyexperiencingfluctuationsandevendeclineinridershipandfareboxrevenue. ThelatestinourseriesofInterchangethoughtleadershipevents,hostedinpartnershipwithArup,GowlingWLGandThales,broughttogethertransportindustryprofessionals,academicsandpolicymakerstograpplewiththesechallengesandopportunities. Whathasemergedisanoverwhelmingsensethatnowisthemomenttoradicallyrethinkfundingandfinancingmodelstocopewithadisruptivefuture. Thisreportbringstogetherinsightsfromthesedebatesandoffersanoverviewofthekeyissuesandsolutions. Wehopeyoufinditbothinformativeandthought-provoking. 12 Introduction planningcanhelptoensurethere Thisseriesofeventsinvolvedawiderangeofspeakersandguestswhowereabletodrawontheirexperiencesfromacrosstheworld.Welearnthowsecuringfinancingcan Introduction differencebetweenprojectsstayingintheblackorgoingbust.WhileprivatefinancehasprovedcontroversialintheUKandelsewherewithconcernsovervalueformoney,closingthedoor Arup,GowlingWLGandThalesaredelightedtohaveworkedwithLondonTransportMuseumonits latestInterchangereport.Thistimewelookedatthevexedissueoftransportinfrastructurefinanceandfunding1. issufficientdemandtojustify investment.Weknowtransportprojectsare‘greedy’forcapital.Asaresult,citygovernmentsandothersarelookingforadditionalwaystohelppayforschemes –forexample,bytappingintothe‘windfall’valuegenerated createmajorheadachesfor citiesandthecorporationstryingtogetschemesgoing,butwell-thought-outinvestmentstrategiescanunlockthewidervaluewhichprojectsbringtotheeconomiesandcommunitiestheyserve.Wesawthathow onprivatesectorinvolvement wouldalsoappearpremature. Thethemesoftechnology,innovationandpricing–thethirdandfourthareasthatourseriestouchedupon–revealedhowthe