Comprehensive Spending Review 20 Oct 2010

Chancellor promises capital for transport

Commenting on the Comprehensive Spending Review, Professor Stephen Glaister, director of the RAC Foundation, said:

“It is a relief to hear that the Chancellor recognises transport infrastructure investment is good for growth and good for society. What we now need is the detail to show that the £30 billion promised is being spent on the projects that deliver the best value for money – and more often than not that means roads.”

“The 150,000 drivers using the Dartford Crossing each day will be very nervous about the planned hike in the toll, though moves to improve traffic flow might soften the blow.”

ENDS

Contact:

Philip Gomm - Head of External Communications - 020 7747 3486 / 07711 776 448

Notes to editors:

COMPREHENSIVE SPENDING REVIEW 2010 - BRIEFING (full report available as PDF here)

•    The Chancellor recognises importance of transport to economic recovery and growth

•    Transport capital spending will be broadly flat in cash terms. This equates to an 11% reduction in capital spending in real terms over the next four years

•    This compares with a reduction of about 30% across most other departments

•    Only Defence and DECC have done ‘as well’ as Transport

•    As far as road schemes are concerned:

1.    A11 upgrade to Norwich will happen
2.    Looking again at A14 – unaffordable at the moment but not cancelling it
3.    Some of the managed motorways schemes are continuing but not all

•    Highways Agency:

1.    Will appoint a non-exec chair
2.    Look at benchmarking costs
3.    Going to consider reform of governance along the lines RAC Foundation has suggested

•    Funding for Network Rail is preserved (as part of regulatory settlement)

•    Crossrail is preserved but probably delayed by a year for design changes

•    London Underground upgrades protected

•    TfL will see a 28% reduction in its remaining grant (other than LU and Cross Rail). This is typical of all local authorities

•    Purchasing subsidies for Ultra Low Carbon Vehicles protected

•    High Speed Rail will continue

•    Cap on rail fairs will change to RPI + 3% from January 2012

•    Continue with concessionary bus fares

•    Bus Services Operators’ Grant (BSOC, essentially a rebate on the tax on fuel) will be cut by 20%. The current grant is about £400 million

•    Dartford Crossing tolls to be increased but will be accompanied by smoothed traffic flow rumoured to include the use of ANPR

EXTRACT FROM MAIN REPORT


2.17 The Department for Transport (DfT) settlement includes:

•• £14 billion of funding to Network Rail to support maintenance and investment,
including major improvements to the East Coast Mainline, station upgrades at Birmingham New Street and network improvements in Yorkshire, around Manchester and the Barry to Cardiff corridor;

•• over £10 billion for maintenance and investment in key road and local transport
schemes across the country, including work on the A11, M4/M5, M1, Midland Metro, Tyne and Wear Metro and construction of the Mersey Gateway;

•• funding to enable Crossrail to go ahead, and to support £6 billion of capital expenditure by Transport for London (TfL) to maintain and upgrade the London Underground network;

•• increases to the cap on regulated rail fares to three per cent above RPI for three
years from 2012 to support investment in new rolling stock, and, subject to consultation, increases to the charges on Dartford Crossing alongside accelerating plans to improve traffic flow;

•• protection of the statutory entitlement for concessionary bus travel; and

•• overall resource savings of 21 per cent by 2014-15 through a rigorous focus on
efficiency, cutting waste, stopping lower value spend and improving governance and accountability. Bus subsidy will be reduced by 20 per cent and local government resource grants by 28 per cent.

Supporting long term growth
2.18 Investments of high economic value are protected across all types of transport. The capital
allocation has been relatively protected; in 2014-15 DfT capital investment will be higher in
real terms than in 2005-06. This includes over £10 billion over the Spending Review period for
maintenance and investment in key road and local transport schemes,2 including widening the
remaining section of the A11 to provide a continuous dual carriageway link between Norwich
and the M11, improving the junction between the M4 and M5, easing congestion on the M1
between junctions 28 and 31, route extension and capacity increases on the Midland Metro,
upgrades to the Tyne and Wear Metro and constructing a new suspension bridge over the River
Mersey3 (the Mersey Gateway) while seeking significant cost reductions across the programme.

2.19 The settlement also includes £14 billion of funding over the Spending Review period to
Network Rail to support maintenance and investment, including major improvements to the
East Coast Mainline, station upgrades at Birmingham New Street and network improvements
in Yorkshire, around Manchester and the Barry to Cardiff corridor. Funding is also confirmed
for Network Rail to invest in delivering faster journey times in the North West. In addition, the
Government is supporting investment to improve journey reliability on Great Western Main
Line services to Wales. Final decisions will be made by DfT after the Spending Review on the
replacement of the UK’s inter-city high speed trains.

2.20 Funding will be made available to enable Crossrail to go ahead, providing an additional
10 per cent capacity to London’s rail network while continuing to seek efficiency savings
to maximise value for money. £6 billion over the Spending Review period will be spent on
maintaining and upgrading the London Underground network, supporting growth by improving
reliability and reducing travel times.

2.21 The Government is proceeding with its plans to deliver a new high speed rail network, and
will bring forward legislation during this Parliament to allow construction to proceed.

2.22 Key projects that support the Government’s climate change commitment are also
protected. This includes an incentive scheme offering up to £5,000 towards the cost of a new
ultra-low emission vehicle from January 2011 and supporting electric car charging infrastructure.

2.23 The Government’s intention is to proceed with PFI projects which will deliver sustained
improvements in highways maintenance in Sheffield, Hounslow and the Isle of Wight
and extend the Nottingham tram network with two new lines. As resources are tight,
the Government needs to ensure that every pound is spent to the maximum benefit. The
Government will therefore be urgently working with the four local authorities to establish how
these projects can be delivered affordably, in order to deliver the much needed benefits.

Fairness

2.24 The reforms outlined in this settlement will improve efficiency and cut wasteful spending,
minimising the impact of savings on transport users as far as possible.

2.25 To protect essential investment, some fare increases will be unavoidable. This will include
raising the cap on regulated rail fares to three per cent above RPI for three years from 2012,
which will support investment in rolling stock, and, subject to consultation, raising the charges
on the Dartford Crossing, alongside accelerating plans to improve traffic flow. The statutory
entitlement for concessionary bus travel has been protected, ensuring that older people can
maintain greater freedom and independence.

Reform

2.26 The Department for Transport and its Arms Length Bodies will reduce administrative costs
by one third over the Spending Review period, saving over £100 million a year by 2014-15.

2.27 Network Rail has already been tasked by the Office of Rail Regulation to deliver 21 per
cent efficiency savings over the current regulatory period to 2013-14. Sir Roy McNulty’s review
of the value for money of the railways will examine the overall cost structure of all elements of
the railway sector and identify options for improving value for money for passengers and the
taxpayer, while continuing to expand capacity as necessary and drive up passenger satisfaction.
The report will be presented to the Secretary of State for Transport in Spring 2011.

2.28 Greater accountability at both local and national levels will drive improvements in costs,
efficiency and value for money. For example:

•• better management of contracts across the Highways Agency (HA) will save over £240 million by 2014-15. In addition, an expert monitoring group, benchmarking HA performance, will support efficiency improvements with a full review to ensure that HA structure and governance give assurance of value for money;


•• reducing bus subsidies paid directly to operators by 20 percent will save over £300 million by 2014-15. The Government will also work with bus operators and local government to
examine smarter ways of administering this subsidy to get better results for passengers and
taxpayers;

•• strengthened scrutiny and transparency for Transport for London’s investment programme, including benchmarking of London Underground costs, will help to support the efficiency and economy of these programmes; and

•• local government resource grants will be reduced by 28 per cent, while the Government will simplify the number of grants to give local authorities more control and greater flexibility in how they spend this money.

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