Osborne outlines transport spending plans

Capital funding of transport projects will increase by 50% to a total of £61 billion, under plans revealed in Chancellor George Osborne’s Autumn Statement today (25 November 2015).

However, the Department for Transport’s (DfT) operational budget will fall by 37%.

Mr Osborne said: “This funds the largest road investment programme since the 1970s, for we are the builders.

“It means the construction of HS2 to link the Northern Powerhouse to the South can begin. The electrification of lines like the Trans-Pennine, Midland Main Line and Great Western can go ahead.”

The Chancellor confirmed that the government will fund the new Transport for the North (TfN) to get it up and running and that London will get an £11 billion investment in its transport infrastructure.

The government will also spend £250m to relieve the pressure on roads in Kent from Operation Stack and has committed to £300m-worth of cycling investment.

More than £5bn will be spent on roads maintenance during this Parliament. Over the next five years £250m will be spent on a ‘permanent’ pothole fund for local roads.

Elsewhere, the Chancellor has set aside £12bn for the Local Growth Fund and announced 26 new or extended Enterprise Zones, including 15 in towns and rural areas across the country.

You can read the full spending review and Autumn Statement here.

REACTION:

RAC chief engineer David Bizley said: “We are pleased the Chancellor has sought to protect the funds allocated to the Road Investment Strategy as this demonstrates a firm commitment to protect and improve the country’s crucial road transport infrastructure in the longer term.

“The government’s Road Investment Strategy shows that for every £1 spent on the projects identified, the return for the government is £4 in the long term, demonstrating the clear link between investing in the nation’s roads and economic growth.

“The extra £250m being allocated to the Pothole Fund over the next five years is good news but is, of course, no more than a drop in the ocean in terms of the scale of the problem across Britain’s 245,000 miles of road. The government’s own estimated backlog for repairing local roads is up to £8.6bn, which shows the scale of the funding shortage. We urge local authorities to use this money wisely by carrying out preventative maintenance rather than just short-term remedial repairs.

“Although the government has a sound plan in place to finance improvements to major roads, we badly need similar thinking for local roads. We would like to see local authorities given the freedom to allocate funds to bring their roads up to standard which, according to RAC research, is exactly what their council tax payers want.”

 

Matthew Pryor, managing director of Toppesfield, said: “It’s fantastic news that the government has decided to create a dedicated pot hole fund. For too long motorists have had to contend with crumbling roads over the winter months and cash-strapped councils tasked with repairing them have been operating with one hand behind their backs.

“It’s clear that the UK government has recognised that the UK’s road infrastructure is integral to the health of the economy.  The chancellor has put his money where his mouth is by funding the largest road investment programme since the 1970s in order to ensure we have a road network that meets our ambitious growth plans.”

 

John Hicks, director and UK head of government and public at AECOM, said: “Departmental cuts combined with the scaling back of civil servants necessitates new ways for government to engage both internally and with the private sector. A fundamental shift from hands-on delivery to hands-off governance is needed.

“The Chancellor’s rhetoric around ‘we are the builders’ didn’t appear to be accompanied by significant new money across the board. With transport at the sharp end of departmental revenue cuts, the challenge now is for government to play its part in delivery as the number of public servants further erodes. Are the right people with the right skills, governance and procurement tools in the right place within the public sector to allow the builders to move in? This could be an opportunity for new ways to engage and deliver.

“Given the urgent need to house the UK’s current and future workforce, we welcome the initiative to build 400,000 affordable homes and the Chancellor’s response to the difficulties faced by the shared ownership sector following the changes to Right to Buy. Government investment in Ebbsfleet Garden City and other schemes will further fuel housing growth. However, accelerated home ownership must not come at the expense of the affordable rental sector. History shows that supply has only increased through a balanced, multi-tenure approach. We would therefore like to see greater focus on extending the breadth of development players and encouragement for new entrants. Importantly, homes must be built where there is demand. Building housing in line with infrastructure investment and development is the key to creating communities where people want to live and work. Greater emphasis on sustainable, long-term planning of infrastructure to underpin economic growth is now needed.”

 

Lord Adonis, chairman of the National Infrastructure Commission, said: “We need to transform the way we plan and deliver major infrastructure projects in this country. The significant investment announced in today’s Spending Review represents a welcome step in the right direction – but it is only a start.
“We will only truly address the UK’s infrastructure needs if we consistently plan for the long-term – not just over a year or a parliament but through properly assessing and acting on Britain’s strategic needs over the coming 20 to 30 years.

“The new Transport Development Fund provides a valuable opportunity to make early progress in the major projects we require to better connect the great cities of the North and improve London’s transport network. The Chancellor should now look at extending this model to cover long-term strategic requirements across the board. In the coming months the independent National Infrastructure Commission will complete our first three studies, and begin the work leading to the UK’s first National Infrastructure Assessment. We will provide firm recommendations on major projects, strategic direction, and investment – and where government and others can and should do more we will make that clear. To secure the jobs and growth of the future, we have to get serious about planning and delivering the infrastructure this country needs to succeed.”

 

Simon Topp from Yotta said: “The government’s proposed revenue cuts appear at odds with its commitment to increase capital spending by £12 billion. Cutting revenue budgets will inevitably mean reduced spending on critical maintenance work – and that is difficult to rationalise in light of the growth in capital spending.

“The government needs to consider the cost of maintaining the new infrastructure they have committed to spend £100 billion on over the next five years. The initial cost of building infrastructure is significant, of course, but the expense of maintaining an asset for 50 to 100 years will amount to much more. So if the government is already cutting revenue budgets, how are they going to maintain this new infrastructure over the long term?

“This proposed cut in the Department for Transport’s revenue budget will inevitably filter down to a reduction in funding for local authorities and cuts to the money they can use day-to-day on repairing local roads. So, with limited cash, it is going to become increasingly critical that they do more with less.

“That’s where infrastructure asset management can help, enabling councils to collect relevant data about the condition of their highways and run accurate and intuitive analysis on it to reach more intelligent, informed maintenance decisions. This in turn will allow them to prioritise work; achieve better value for money and more precisely meet the requirements of the road user, especially at the local level where the need for proactive maintenance and repairs is an especially urgent concern.”

 

Geoff Allister, Highways Term Maintenance Association (HTMA) executive director, said: “Recent increases in capital maintenance budgets are welcome however HTMA is concerned that the impact of continued revenue reductions on local authority staffing levels is putting delivery of this critical programme at risk.

“Ongoing revenue pressures will also result in reductions in the amount of essential routine maintenance that is carried out and will increase the risk of failure to deal with the impact of severe weather events.

“A well maintained road network is critical to the economic and social development of our communities. A long-term asset management approach, allied to increased levels of funding, is required to bring our road network up to an acceptable standard and arrest the decline caused by years of under investment.

“It is important that tax payers get maximum value from the scarce funds that are invested in the road network. HTMA members have a track record of successful delivery and are prepared to work collaboratively with our clients to provide an efficient and effective road maintenance service and to minimise the impact of revenue reductions.”

 

Institution of Civil Engineers (ICE) director general, Nick Baveystock, said: “The Chancellor’s commitment to capital investment for new infrastructure projects – combined with the drive to increase devolution, innovation and apprenticeships – provides a strong platform for the next five years. The recently established Infrastructure Commission will also ensure that plans for new infrastructure are based on unbiased analysis of our needs.

“We hope to see the same level of commitment from government in maintaining our existing infrastructure – we await more detail on how the cuts to operational budgets will affect funding for the upkeep of flood defences and local roads. We must maintain a balance between capital and maintenance budgets if we are to deliver infrastructure that gives the right level of service and connectivity, operates effectively for as long as possible, and helps to support a prosperous economy.”

 

Howard Robinson, chief executive of the Road Surface Treatments Association (RSTA), said: “The Chancellor’s announcement that capital funding of transport projects will increase by 50% to £61 billion and just £250 million will go towards a pothole fund underlines that he still does not understand that investment in prestige transport projects will be undermined if to reach them drivers and passengers have to use a potholed, poorly maintained road network.

The additional £250 million will do little to address the £12 billion backlog of road repairs of a network that carries 98% of traffic. The Chancellor needs to understand the economic and social significance of having a well-maintained local road network. His continued focus on reducing local authority spending will add further pressure on stretched highway maintenance budgets.”

 

Institute of Highway Engineers (IHE) chief executive, Richard Hayes, said: “Local councils are already struggling to maintain local road networks with their current funding allocations.  Following the Chancellor’s announcement, councils are now left to juggle funds against competing priorities such as social care.

“This will unfortunately lead road maintenance to fall even lower down the funding priority scale for local authorities.  Without the central government grant, there is now even greater pressure on local authority resources that are already stretched to the limit.

“We’re calling on the government to re-consider the effect the grant cut will inevitably have on the day-to-day maintenance of the UK’s road network. The Chancellor’s pledge that ‘money will be found for roads’ suggests that there is government funding available for infrastructure projects.

“However, we must remind the Chancellor that local authorities also require funding to maintain our roads on a daily basis. While the IHE welcomes spending on infrastructure projects for the longer term, it is also vital that local councils receive adequate funding for regular and routine road maintenance that needs to happen on our roads every day.

“Local authorities urgently need additional funding for ongoing road maintenance to prevent further deterioration of UK’s road network and to ensure they have the resources to manage not only winter conditions but also severe and unpredictable weather events.”

 

Asphalt Industry Alliance (AIA) chairman Alan Mackenzie said: “The AIA welcomes the Chancellor’s commitment to capital funding for road infrastructure up to 2021.

“It is important that local authorities get their fair share of this investment, which could go some way to addressing years of underfunding in maintaining the local road network. Local authority roads carry two thirds of all traffic and account for 98%  of our entire road network yet only obtain a fraction of the funding received by the strategic road network.

“This year our Annual Local Authority Road Maintenance (ALARM) highlighted the annual shortfall between what highways engineers need to maintain their roads properly and what they actually receive annually remains at just over £3.2 million per authority, with over £12 billion still needed to bring the network up to scratch.

“Readdressing the funding imbalance will help local authorities in managing a backlog of repairs and in the implementation of proactive ‘invest-to-save’ maintenance strategies to improve our local roads.”

 

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