Spending Review: Department Responses

Published on Wednesday, 20 October 2010 14:18
Posted by Scott Buckler

Over the course of the Spending Review period, The Department for Transport will reduce resource spending by 21% in real terms, and capital spending by 11% in real terms.


The Department’s Administration budget will be reduced by 33%.

By making tough decisions now the Department can invest in vital transport infrastructure and greener technology to boost economic recovery.

The Department will manage these reductions and support deficit reduction while maintaining high levels of investment by taking the following difficult but necessary decisions:
• Increasing regulated rail fares from the current RPI + 1% annual increase to RPI +3% for three years from January 2012. This fare increase will mean the government can deliver priority capacity improvements on the rail network to relieve overcrowding on routes into major cities. However, because Government recognises the impact this will have on passengers, particularly at a time of high inflation, this fare rise will be delayed until January 2012.

• Continuing with the previous government’s policy to link eligibility for concessionary bus fares to pension age changes and reform reimbursement, whilst maintaining the statutory entitlement for concessionary bus travel, ensuring that older people can maintain greater freedom and independence.

• Increasing charges for the Dartford Crossing. Subject to consultation, prices will increase from £1.50 to £2.00 in 2011, then to £2.50 in 2012. The Department and the Highways Agency are developing options to improve the crossing for motorists including: exploring a new additional crossing; using free flow charging to improve efficiency; and removing charges to aid flow when congestion is most severe. The increased charges will be used to fund this work.

• Reducing bus subsidies paid directly to operators by 20 percent will save over £300million by 2014/15 and Government will 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 (TfL)’s investment programme, including benchmarking of London Underground costs, will help to support the efficiency and economy of these programmes. Whilst investment in the
London Underground will be maintained, TfL will need to accommodate a 28% reduction to the remainder of their GLA transport grant by 2014/15.

By taking these tough decisions now, the Government will be able to pursue vital transport schemes across all regions to support economic growth and increase the sustainability of the country's transport system. These include:

• Over £10 billion funding for the national and local road networks, and public transport schemes in Britain’s major cities. This will include 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; investing in the Mersey Gateway Bridge; improving the A23 Handcross to Warninglid; upgrading the Tyne and Wear Metro; improving the Tees Valley bus network for passengers; introducing a managed motorway scheme between junctions 25 to 30 of the M62; and improving accessibility to Leeds rail station. Significant cost reductions will be made across the programmes.

• £14 billion 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, and major signalling replacement programme around Newport and Cardiff and increased line speeds and network capacity on the Barry to Cardiff corridor, funding for Network Rail to proceed with investment to deliver faster journeys in the North West, and Government support for investment to improve journey reliability on Great Western Main Line services to Wales.

• Crossrail will proceed in its entirety, providing an additional 10 percent capacity to London’s rail network, while Government will continue to seek efficiency savings to maximise value for money.

• Spending on upgrading the London Underground network will be protected.

• A national charging infrastructure for electric vehicles and an incentive of up to £5000 for the purchase of ultra-low carbon cars, supporting both UK manufacturing and sustainable travel options.

• Subject to consultation 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.

• 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. The Government will work urgently with the four local authorities to establish how the projects can be delivered affordably in order to deliver the much needed benefits.

To ensure continued efficiencies across transport spending, the DfT will drive more fundamental reforms to how money is spent, including

• Rail. Network Rail has already been tasked by the Office of Rail Regulation to deliver 21 percent of efficiency savings over the current regulatory period to 2013-14. The Government will be: promoting reform based on the evidence of the McNulty Review;
making Network Rail more accountable to its customers; and enhancing competition through encouraging Network Rail to widen the pool of suppliers involved in infrastructure work.

• Public Bodies Reform: improving accountability, promoting efficiency and generating valuable savings to the taxpayer over the parliament by abolishing six of the department's public bodies.

• Highways Agency: introducing immediate reforms to the performance management regime in the HA, including the appointment of a non executive chair, a clearer output specification and expert advice on benchmarking costs. Better management of contracts across the Highways Agency (HA) will save £240million by 2014-15. A review will follow to ensure that HA structure and governance give assurance of value for money.

In addition, fundamental reforms will be implemented to give local people more power to tackle their own transport priorities including:

• Simplifying Local Authority Grants to give power and greater financial autonomy to local authorities through a simplification of local transport funding, moving from just under 30 grant streams to just four. Local Authority resource grants will be reduced by 28 percent.

In addition to the above, the Department will be exploring a number of ideas suggested through the HMT Spending Challenge process, including:

• Allowing the Highways Agency to charge back the cost of event traffic management; and

• Reducing the fuel costs of Traffic Officers by running vehicles on LPG or sharing fuel depots with other contractors.

Transport Secretary Philip Hammond said:

This Government inherited a financial crisis because we were spending more money than the country could afford. That has meant that we have had to look again at every pound that we spend to ensure we get value for money.
“Whilst we have had to make some difficult choices, I am confident that our focus on the long term will ensure that we can continue to build a transport system that supports economic growth and reduces carbon. We have secured investment to allow us to go ahead with important projects such as high speed rail, support for ultra-low carbon cars and major road building and public transport programmes.
“We have taken big steps forward in improving efficiency – making genuine savings of over 21% from our resource budget. We have also radically reformed the way decisions are made, ensuring that local people have more control over their priorities.”

Source: ©DFT

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