Transport and the Spending Review

Yes, two blogs from me in one week. Aren’t you lucky devils?

In case you have not noticed, this week our lords and masters at the Treasury, namely George Osborne and Danny Alexander, gave details on how much money Government will be spending on infrastructure as part of the Spending Review. There has been much comment on the content and the message of the Spending Review on transport, which featured heavily for once. But what do the numbers say, and what on earth does it all mean? This is when skills in reading Treasury documents come into play.


The one in the middle is the improvements to the A14

The one in the middle is the improvements to the A14

I should make it clear that in this context, I mean investment in roads primarily for the benefit of passenger cars and freight movements. It goes against my professional instinct to include all potential highway users, but it is necessary to portray the message that Government is making: Roads to Prosperity is back, and its meaner than ever.

The numbers seem pretty impressive: £30bn to £50bn over 15 years to revive many zombie road schemes and to complete the ones currently planned. The full list is pretty long – 110 schemes in all – and in it I count just 16 schemes dedicated to public transport. All schemes are at various stages from feasibility to completed. How many will see the light of day is another matter entirely.

These numbers also exclude the recent announcements on the Pinch point Funds. That’s another £507 million (£317 million Highways Agency Pinch Point Fund, £190 million Local Pinch Point Fund) and 195 schemes primarily aimed at reducing motor vehicle delay. So that brings the figure up to £50.5bn potentially. It doesn’t include infrastructure being delivered by the Growing Places Fund (up to £730 million), Regional Growth Fund (£380 million), and City Deals (£489 million). It does include Local Major Schemes being overseen by Local Transport Bodies, but nothing in London.

What will be interesting is the plans for the Highways Agency to become a publicly-owned corporation. From my understanding, this will be a similar arrangement to Network Rail with the railways (though they are a company limited by guaruntee), namely:

  • The Highways Agency will be responsible for delivering the powers of the Secretary of State relating to the strategic highway network;
  • The Highways Agency will still get most of its money from the taxpayer;
  • The Highways Agency is likely to be given powers to borrow from private markets, which may or may not be underwritten by the taxpayer;
  • Highway infrastructure debt will be transferred to this new body, artificially boosting the nation’s balance sheet.

So yes, road building has become the fashion again. Not a good message for the greenest government ever. And it isn’t necessarily good news for Integrated Transport, as we will now see.

Now, to be fair, not all the major road schemes will be bad for walking and cycling. For example – and speaking purely pariochially here – as part of the A5 to M1 Link named scheme, the local Council is looking to improve a local town centre for pedestrians and cyclists. But without further knowledge of the other schemes, I do think that this will largely be the exception as opposed to the rule.

Integrated Transport

By Integrated Transport, this simply means investment in transport infrastructure that isn’t road and rail. Like walking and cycling routes, bus stops, pedestrianisation. You know, the stuff that is excellent value for money (because we all must worship the mighty benefit cost ratio until its inconvenient). The stuff that helps local economies. The stuff you would think the Treasury would support.

What is of interest here is Table 9.A, and its explanatory text that sets out a new funding mechanism called the Single Local Growth Fund (SLGF).

Single Local Growth Fund

In brief, the SLGF is a fund that Local Economic Partnerships (LEPs) will need to negotiate directly with the Treasury to secure improvements for their areas. Whats important here are the figures for the Local Sustainable Transport Fund or LSTF (£100m) and Integrated Transport Block (£200m) for 2015-16.

Simply, these two are the main ways by which local walking, cycling, safety, and bus stop improvements are funded in England. By 2014-15, £450m will be provided to local authorities through the Integrated Transport Block to fund these schemes every year. LSTF is awarded by bid, but this is currently about £420 million over 4 years.

What the SLGF appears to do is swallow up LSTF post-2015, and effectively siphon off half of the annual grant to local authorities for walking and cycling improvements to another fund. Local authorities will then have to argue for its current funding to be included by a bid approved by a LEP, which in turn has to argue the case to the Treasury. What’s more, local walking and cycling schemes will be competing against Major Transport projects and projects to boost skills throughout this process.

I am hopeful that LEPs will be grown up about all this, and accept the need and case for investment in sustainable transport infrastructure. But you’ll forgive me for being slightly worried that (a) the routine investment – which in itself is a paltry amount – in walking and cycling in local authorities will be cut by half, (b) the big boost to this investment in the LSTF will be gone, and (c) the funding lost will have to be argued for, twice, and to the Treasury!


On rail, I won’t dwell too much, as like all other rail announcements much of it was already announced as part of the Higher Level Output Specification. The only additional bits of any note at all was further electrification – the Gospel Oak to Barking Line and the feasibility of doing the same on the Lakes Line – and plans to devolve some parts of the West Anglia Franchise to the Mayor of London. Oh, and studying the feasibility of Crossrail 2 and HS2 needing up to another £10 billion to build.

One very interesting thing on this that Government is actively looking at how it managed franchises in the future reflecting the lessons of the West Coast Franchise debacle. This will be either under a dedicated unit within DfT (a dedicated unit is very much different to a specific team, with a very specific remit and is often a cross-department initiative with experts being seconded in from the likes of the Treasury for example), an Executive Agency, or a new arms length body.


Not so good news for buses, I’m afraid. Whilst BSOG and the National Concessionary Bus Pass were protected, local authorities are facing yet another round of cuts – 10% in cash terms. That’s many supported bus routes gone, then. Unless the magic efficiency savings known by Michael Green can be found or that £50 bajillion that every authority has in reserves is used to save us from the cataclysm. At least that’s what Government would like you to believe.


In his speech, Danny Alexander made a big play on spending on the maintenance of highways, with £6 billion from 2015 to 2021 being allocated to local highway authorities, and £4 billion to the Highways Agency in the same period. And contrary to my initial thoughts, thats not too bad, with investment of an additional third on the planned 2014/15 local allocation. Improved maintenance of the network is clearly of significant benefit to all highway users, so I don’t think anybody can complain too much about that.


Danny from the Cyclists in the City Blog covers the impacts on London pretty well. The majority of the planned £220m cut in the grant to Transport for London is likely to be achieved through efficiency savings, with the Cycling Vision and Tube investment plans spared the axe. In fact, if you throw in the Crossrail 2 feasibility study and potentially devolving some West Anglian rail routes, London has done rather well out of this Spending Review. Typical.


Reflecting on my post earlier in the week on accessibility, it appears the Government is doing its absolute best to continue the trend since 2003 of making accessibility worse for people. Cuts to buses are clearly bad, as will some of the savings that public services need to make. Requiring job seekers to attend the Job Centre every week is especially evil, considering that the Government’s own analysis confirms that those in the lowest income quartiles will be the hardest hit by this Spending Review. Still, their equalities analysis says that everything is rosy, so why should we worry?

Spending Review Analysis


Wow that’s a lot, but if I was to summarise the Spending Review for transport in a few bullet points, it would be:

  • If you are a road builder, you should be singing “money, money, money” right now;
  • If you are a cyclist, pedestrian, or bus user and do not live in London, you should be worried;
  • If you are a Londoner who is complaining about how much you got shafted by the Treasury: Shut up, you got lucky

And with that, I need to give my fingers a rest. Phew


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