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Comprehensive Spending Review: TransportOctober 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 Londons zonal fare system, the difference between national rail

and the Mayors 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

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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

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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

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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

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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), effectivelya 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

TfLs funding is to be reduced by 2.17 billion over the four years to 2014/15. This represents

an 8% reduction in TfLs budget.

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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