Major transport projects could still be killed off

2 Jul 10
The government's commitment to major transport projects could come under threat in October's Spending Review, a leading academic has warned
By Jaimie Kaffash

01 July 2010

The government’s commitment to major transport projects could come under threat in October’s Spending Review, a leading academic has warned.

Chancellor George Osborne has pledged to continue several schemes, such as the High Speed Rail 2 link and upgrades to the Tyne & Wear metro system and the Manchester Metrolink. He also committed to protecting capital spending in his June 22 Budget statement.

But the Department for Transport has been told to make £683m worth of cuts this financial year. Because of its high proportion of capital spending, its revenue spending is likely to be hit harder.

In May, the department said it would be cutting: £309m from local authority grants; £108m in its grant to Transport for London; deferral of £54m for lower priority schemes such as some highway improvements; and £112m in its direct expenditure.

There would also be a £100m funding reduction to Network Rail. The company said it would be scrapping a £50m project to upgrade ten rail stations and ditching smaller schemes such as installing cycle racks.  

Chris Nash, a professor at the University of Leeds’ Institute for Transport Studies, said there was little flexibility for the DfT to make cuts. He told Public Finance that the department has already made its five-year agreement with Network Rail for the bulk of its funding and had deals with private contractors.

‘It is hard to see how the DfT can cut by 25% over the next four years and protect capital projects, including many big ones. A bigger round of cuts will only follow the Spending Review. It is likely they many of these will have to be postponed,’ he said.

Jaimie Kaffash is the subeditor for
Public Finance

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