3 ways to fund public transport: Key takeaways from our ‘Ideas for Investment’ event

Public affairs manager Laura Hyde-White reports on our recent ‘Ideas for Investment’ event where we discussed how to fairly and feasibly raise funds for investment in sustainable transport.

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Setting the scene

Newly appointed Transform Chair, George Lowder, opened the event by setting out the context for Transform’s work on ‘Ideas for Investment: How to generate funds for sustainable transport?’.

Ahead of the Scottish Budget (due 4 December) and following severe cuts to sustainable transport this year—particularly from bus and active travel— he noted that now is the time to explore innovative funding mechanisms and ask the questions: 

• How do we implement the polluter pays principle in transport?

• How do we fill the funding gap from lost fuel duty as we shift to electric vehicles?

• How can we ensure costs are equitably shared across society?

Following George’s introduction, I presented an overview of Transform’s latest report on funding sustainable transport, emphasising the urgency of action in the face of both strained public finances and climate commitments. Transport is Scotland’s largest source of emissions yet progress on traffic reduction targets is lagging and public transport is increasingly underfunded.

The report’s guiding principles were feasibility and fairness, ensuring that proposed measures were practical within Scotland’s devolved powers and equitable in distributing costs and benefits. I proceeded to provide a snapshot of key proposals, including parking charges, frequent flyer levies, local climate bonds, and road user charging. Each was framed as a way to raise revenue while tackling environmental harm, showcasing real-world examples like Iceland’s road pricing model and Warrington’s use of climate bonds to fund electric buses.

Before passing on to the guest speakers, I discussed road user charging as a transformative opportunity to fill the widening gap in budgets as fuel duty revenue declines. I reiterated that these proposals represent more than funding mechanisms—they are a call to action for Scotland to lead the way in creating a sustainable, equitable transport future.

Speakers and their insights

We were pleased to be joined by three expert speakers:

The presentations underscored the transformative potential of innovative funding mechanisms, emphasising their role in addressing the twin challenges of sustainable transport and climate action. However, the discussion also revealed persistent barriers—legal, institutional, and practical—that must be tackled to unlock these opportunities.

1. Parking charges: Reforming legislative barriers

Sue Flack highlighted the power of parking charges to fund sustainable transport, citing examples from Nottingham, Snowdonia, and Lambeth. A common thread was the creative navigation of the Road Traffic Regulation Act 1984 (RTRA), which currently prohibits deliberate revenue generation from parking charges for funding public transport. Sue called for legislative reform, particularly in Scotland, to allow local authorities to design parking strategies aligned with sustainability goals.

Participants noted that robust enforcement, as seen in Snowdonia, is critical for successful implementation. Sue recommended that local authorities frame parking charges within the principles of sustainable transport strategies—drawing inspiration from Wales’ Well-being of Future Generations Act.

2. Land Value Capture: Building momentum

George Hazel introduced Land Value Capture (LVC) as a promising yet underutilised mechanism for funding fixed transport infrastructure like railways and trams. The economic logic of capturing value uplift from developments adjacent to new transport links—turning farmland worth £10,000 per acre into residential land worth £1 million—was compelling. George emphasised the equity of this approach, ensuring those who benefit most contribute proportionally.

In Edinburgh, the feasibility of extending tram routes using LVC sparked enthusiasm, particularly for southward expansions like Cameron Toll. However, past missed opportunities in Granton illustrated the importance of timely intervention. Participants called for stronger collaboration between Transport Scotland, Network Rail, and local authorities, acknowledging governance challenges arising from siloed structures that hinder coordinated action. The necessity of a targeted approach to LVC (distinguishing it from broader property taxation) was a key takeaway.

3. Local Climate Bonds: Bridging funding gaps

Dr. Karen Barrass championed Local Climate Bonds (LCBs) as a tool for local authorities to directly engage communities in funding decarbonisation initiatives. The examples from West Berkshire and Warrington highlighted their flexibility and capacity for impact. Yet, the limited uptake of LCBs reflects capacity constraints within councils, where staff focus on traditional funding mechanisms.

Participants identified a need for practical support, such as partnerships with organisations like Abundance, to help local authorities navigate the administrative challenges of issuing bonds. There was consensus on the value of “proof of concept” projects to build confidence in LCBs, with Scottish councils encouraged to explore these opportunities despite initial hesitations.