Comprehensive Spending Review: Transport

October 21, 2010 by colinbuchanan

A quick overview of the transport implications of the Comprehensive Spending

Review

Rail

Its rail fare increases that make the headlines but projections of rises of 30%+ are
misleading. The government proposes maximum increases of RPI +1% for 2011 followed by
RPI +3% for next three years. This implies a 10% increase in real regulated fares over four
years. This is in line with long term rail fare increases during the last 20 years of British Rail
which were generally in line with rises in real earnings and averaged 2.7%. Since rail
privatisation in 1996 average annual real fare increases have been 1.2%.

The situation is more complex in London as the Mayor has indicated fares will increase by 2%
in real terms. Given Greater London’s zonal fare system, the difference between national rail
and the Mayor’s real fare increase proposals will lead to some variations in future increases.

Longer term rail franchises are hoped to bring savings of £100m from the TOCs over 4 years
while Network Rail is expected to deliver extra savings of £185m over the same time period.
These are effectively extremely modest in a £12bn a year industry.

However, an industry that only covers 50% of its costs is always going to struggle and the
government has made it clear that it believes the railways are too expensive for both
taxpayers and fare payers, and is determined to make the railway more affordable in the long
term.

As expected Crossrail is to go ahead to its original scope but will slip a further year with
opening now earmarked for 2018 and costs reduced to £14.5bn. It is assumed that the saving
will accrue to the taxpayer rather than fare payers and business who were originally down for
two thirds of the costs.

Perhaps surprisingly the government is proposing to spend a further £750m in progressing

High Speed 2 over the next four years.

Previously announced investments of £2.1bn in station improvements at Birmingham New

Street, London Kings Cross, Reading and Gatwick Airport stations will continue to go ahead.
While line improvements will take place on the Midland and East Coast Main Lines as will
gauge enhancements between Southampton and the West Coast Mail Lines and between
Felixstowe and Nuneaton. However, there remains uncertainty over electrification, Thameslink
and rolling stock programmes where further announcements will be made at a later date.

Highways Agency roads

A number of major schemes will go ahead, subject to statutory processes where necessary,
including:

• A11 in Norfolk – dualling the ‘missing link’ between Fiveways junction and Thetford.

• M4 and M5 north of Bristol

• M1 in Derbyshire (junctions 28-31) using managed motorways.

• A23 in Sussex

• M62 near Leeds (junctions 25-30) using managed motorways.

However, the following schemes are cancelled:

• A1 Leeming to Barton

• A14 Ellington to Fen Ditton

• A19 Moor Farm

• A19 Seaton Burn Interchange

• A21 Baldslow Interchange

• A21 Flimwell to Robertsbridge

• A21 Kippings Cross to Lamberhurst

• A47 Blofield to North Burlingham

To raise money to provide additional capacity at Dartford Crossing the government is

proposing to increase tariffs from £1.50 to £2.00 in 2011 for cars, rising to £2.50 in 2012 but
perhaps surprisingly it has decided not to sell the Crossing at the present time

Cuts will be made to road maintenance and operations budgets with the presumption that this
will come mainly from efficiency savings rather than reduced activity.

Local transport
The government is seeking 28% savings from local transport revenue funding and will reduce
the present 26 grant schemes down to four

• a local sustainable transport fund (capital and revenue);

• major schemes (capital)

• block funding for highways maintenance (capital); and

• block funding for small transport improvement schemes (capital).

In part the aim is to give local authorities greater flexibility in how they spend their funding,.

Local capital

The government is establishing a £560 million local sustainable transport fund which local
authorities outside London can bid for to fund transport interventions that support economic
growth, reduce carbon emissions, deliver cleaner environments and improved air quality,
enhanced safety and reduce congestion.

In addition £1.5 billion for local authority major schemes is to be provided with funding
approved for

• Mersey Gateway Bridge: suspension bridge over the River Mersey between Widnes and
Runcorn

• Midland Metro: extension of tram line through Birmingham City Centre to a new
terminus outside New Street station and replacement of the fleet of trams;

• Leeds Station Southern Access: a new pedestrianised access from the rear of Leeds
station.

• Tees Valley Bus Network will continue to go ahead as will Tyne and Wear Metro
upgrades.

Regional Growth Fund

The Department for Transport is contributing around a third of the funding for the
£1.4bn Regional Growth Fund. Bids for local transport schemes that unlock sustainable
economic growth will be eligible for submission to this fund.

Highways Maintenance
The government is providing over £3 billion over the next 4 years for local highways
maintenance. Whilst a £3 million fund in each of 2011/12 and 2012/13 will be provided to
achieve best practice.

Integrated Transport Block

Government will provide over £1.3bn over four years for small transport improvements, on top
of the capital funding provided through the Local Sustainable Transport Fund and in addition to
the Regional Growth Fund. Funding will be allocated according to a needs-based formula
agreed with local authorities.

Local authority PFI

The following street lighting schemes will proceed

• Knowsley

• Oldham & Rochdale

• Croydon & Lewisham

• Eastern Shires (Cambridgeshire & Northamptonshire)

As will PFI projects to extend the Nottingham tram network with two new lines and deliver
sustained improvements in highways maintenance in Sheffield, Hounslow and the Isle of Wight
but efficiencies will be sort.

The following PFI street lighting schemes will be scrapped:

• Hertfordshire

• Essex

• Kirklees

• Warrington

• Gloucestershire

• Durham with Stockton

Local resource
The government is seeking a 28% savings from local transport revenue funding. There will be
no change in concessionary travel benefits but savings will come through efficiency savings
which suggests cuts in payments to bus operators.

From 2012/13, DfT plans a 20% reduction in Bus Service Operators Grant (BSOG), effectively
a £80m reduction in bus subsidy. The incentives for smartcards, low carbon buses and
automatic vehicle location will be maintained. The scheme that enables long distance coach
operators to claim BSOG in return for offering a half price concession to older and disabled
people will be ended by October 2011. Future changes in how bus subsidy is to be distributed
will be considered and decisions announced later.

Environment

The government will stop spending on its “Act on CO2” advertising campaigns and will seek
efficiency savings from both the Energy Saving Trust and Low Carbon Vehicle Partnership.

However, £400m will be provided for measures to promote the uptake of ultra-low carbon
vehicle technologies including:

• supporting consumer incentives for electric and other low emission cars

• continued investment in electric vehicle recharging infrastructure (Plugged In Places);

• research and development.

• Supporting the key elements of the carbon-saving transport programmes that are
delivered by the Energy Saving Trust and Low Carbon Vehicle Partnership,

Drivers

Road Safety

Government will no longer provide a specific ring-fenced grant to support road safety delivery
and enforcement – including camera enforcement – at local level. Less money will be spent of
road safety advertising campaigns

TfL

TfL’s funding is to be reduced by £2.17 billion over the four years to 2014/15. This represents
an 8% reduction in TfL’s budget.
£300m cuts will come from reductions in

• funding provided to boroughs for small scale projects

• walking and road safety campaigns and smarter travel initiatives

• road maintenance spend and investment on the TfL road network,

• funding of measures to promote use of electric vehicles,

• introduction of parking charges on Transport for London Road Network