Cutting DfT costs – comment on NAO report13 Dec 2011

NAO critical of DfT rail spending

The National Audit Office has raised concerns on just how much knowledge the Department for Transport has on the benefits to be had from spending on the railways.

In its report Reducing Costs in the Department for Transport, the NAO says:

“The Department’s understanding of the relationship between cost and value was weakest in rail, where there was no analysis of the relative benefits and costs of reductions in the scope of rail franchises or increases in passenger rail fares. There was also limited evidence on the potential for efficiencies by Network Rail from 2014-15… A lack of transparency on Network Rail’s costs is consistent with our past reports on the Department and the Office of Rail Regulation.”

The report identified that:

  • The DfT’s budget in 2010-11 – the baseline year for the spending review – was £12.8 billion. Of this;
  • £3.4 billion was for rail
  • £3.2 billion was for the Highways Agency
  • £2.7 billion was for Transport for London
  • £2.6 billion was for local authority spending on transport

The report also noted that 68% of the 2010/11 budget is spend through third parties (not including executive agencies like the HA) and that by 2014-15 the annual DfT budget would be 15% less than the baseline year in real terms. The report was compiled before the 2011 Autumn Statement.

For comparison, the cut to the Highways Agency budget over the same period is 41% and 23% for local authority maintenance schemes.

Commenting on the report Professor Stephen Glaister, director of the RAC Foundation, said:

“It is worrying the DfT appears to have insufficient knowledge of the benefits spending on railways brings. Even though the vast majority of travel is on the road network, the roads budget has actually been cut more than the rail budget, yet one has to question on what basis this decision has been made? The NAO report suggests it isn’t based on reliable numbers.

“We welcomed the Chancellor’s decision last month to bring forward some important road schemes. This report suggests it would be wise to start work on even more of these high value projects. At least taxpayers would know what they are getting for their money.

“The nation’s 34 million drivers will also be worried to hear that a £1.2 billion cut in the road maintenance could lead to even more potholes, adding to the current large backlog of work and significantly increasing the long-term cost of putting things right.

“Worse still, the report says the Department has little control over whether the cash earmarked for councils to spend on road maintenance actually goes into filling potholes or disappears into a budgetary black-hole where it is used for things not even transport related.”