Centralised Treasury control over transport spending is constraining regional growth, according to new research from the Institute for Public Policy Research (IPPR).

The report argues that city regions remain dependent on central Government approval and short-term funding rounds to deliver major transport schemes, even where there is strong local backing and a clear economic case.

A lack of upfront, reliable funding is identified by IPPR as a key barrier, limiting mayors’ ability to plan and finance long-term infrastructure.

While transport investment can generate substantial tax revenues through new homes, higher employment and business growth, most of these returns flow back to the Treasury rather than remaining locally. IPPR describes this as a structural imbalance that reduces incentives for local leaders to take forward ambitious projects.

The think tank’s report contrasts the sustained backing behind the Elizabeth Line with the continued absence of mass transit systems in cities such as Leeds, Bristol and Leicester.

IPPR is calling for greater devolution of transport funding and approval powers, alongside stable local revenue streams, to enable mayors to plan, borrow and deliver infrastructure with greater certainty.

Aditi Sriram, economist at IPPR and author of the report, said: ‘Transport investment is one of the most effective ways to boost productivity and long-term growth, but the current system makes it far harder than it needs to be.

‘When cities create growth through better transport, they should be able to reinvest it locally, not lose it to the Treasury. Reforming how we fund and assess transport is essential if the government is serious about growth.’

Helen Godwin, mayor of the West of England, a principal member of the Urban Transport Group, said: ‘This timely report from IPPR recognises the importance of regions deciding the direction of travel for our places. That principle has been endorsed again by the government when it comes to the overnight visitor levy, which should prove a crucial first step in fiscal devolution.

‘Further empowering mayors will accelerate our ability to deliver the major projects that we know our areas need, boost productivity, and drive greater economic growth. This report makes an important contribution to the debate about how best to do that.’