A £690m competitive fund for tackling congestion was a surprise but welcome announcement in chancellor Philip Hammond's first Budget today.
The fund was one of a number of allocations from the £23bn National Productivity Investment Fund set up in last year's autumn statement. English local authorities will be invited to bid for funding for schemes to tackle urban congestion, with details expected to be announced by transport secretary Chris Grayling on Friday.
Chancellor said that the productivity gap between the UK and G7 competitors was not closing. "Investment in training, and investment in infrastructure, will start to close this gap and this government places addressing the UK's productivity challenge at the very heart of its economic plan," Mr Hammond said. With an emphasis on infrastructure investment in the autumn statement, he said the next step was to consider skills.
But there were a number of infrastructure announcements, of which the congestion fund was potentially the most interesting. A competitive approach may help to encourage fresh thinking on tackling congestion, and it is to be hoped that the fund will encourage bids based on sustainable transport solutions and investment in public transport, rather than, for example, road building. Pinch-points on the national road network were in any case addressed, with £90m allocated for the north of England and £23m for the Midlands from a £220m fund for this purpose, with details of individual schemes to follow "shortly".
Meanwhile a strategic study on relieving congestion in the south-west sections of the M25 has been completed and options will be developed for the next Road Investment Strategy.
The chancellor reaffirmed the government's support for the six conurbations which will elect mayors next month, allowing them to "take control of their own economic destiny". Following the publication of the Northern Powerhouse strategy last autumn, the Midlands Engine productivity strategy will be published tomorrow, addressing productivity barriers in the region.
Agreement has been reached on further devolution to the mayor of London, which will include setting up a taskforce to explore running a pilot of a development rights auction model for contributing to the financing of a major infrastructure project in London. The Greater London Authority will take on responsibility for funding TfL's investment grant and in return London will be allowed to retaining "a higher share of locally raised business rates".
The government has committed itself "to working further with London government to ensure it has the powers it needs to tackle congestion", including consulting this year on extending the scope of the land rental charge.
In addition the chancellor announced £300m from the productivity fund for "the brightest and best research talent". This will support 1,000 new PhDs and fellowships in science and technology subjects. There will also be a £270m industrial strategy challenge fund, supporting collaboration between industry and the UK science base and aiming to keep the UK at the forefront of disruptive technologies such as driverless vehicles and biotech and robotic systems, as well as in development of batteries for the next generation of electric vehicles.
There will also be £740m for digital infrastructure to 2021, including £200m for local projects to accelerate market delivery of full-fibre broadband networks.
On skills the chancellor said that "while we have an academic route in this country that is undeniably one of the best in the world, the truth is that we languish near the bottom of the international league tables for technical education". New measures would end for good "a lingering doubt about the parity of esteem attaching to technical education pursued through the further education route".
At the centre of the proposals is the introduction of T-Levels as a counterpart to A-Levels. The Government will implement in full the reforms proposed in the review conducted by Lord Sainsbury, Baroness Wolf and other experts, in particular accepting the need for a much clearer system of qualifications. The 13,000 current qualifications will be replaced with 15 "clear, career-focused routes". The number of hours training for 16-19 year old students will be increased by 50%, there will be a three month work placements for every student, and there will be maintenance loans for students at the new Institutes of Technology and National Colleges.
David Fowler, Editor, Transport Times
Some key industry figures respond below:
David Leam, Infrastructure Director, London First
I'd have liked to see a far stronger emphasis on investing in future growth, so as to get the UK into the best possible shape for Brexit. Instead of squirreling cash away, the Government should be investing more in our transport infrastructure now to unlock housing, jobs and economic growth.
I wasn't expecting anything on Crossrail 2 as the Government has only just received TfL's revised business case. But we need a positive response in the next couple of months so that London can plan for the next generation of transport upgrades – alongside similar planned improvements for other major urban areas.
In this context, I was encouraged by the ongoing work taking place on new funding options for major infrastructure projects. The MoU on devolution to London is pretty thin gruel, but does announce a new taskforce on capturing land value uplifts to pay for new transport schemes. This is something all cities should be interested in.
I was also struck by the explicit reference to London's congestion challenges. There's no doubt that this is rising up the political agenda as angry road users fill up more postbags and Twitter feeds. That said, the only concrete measure mentioned was around better streetworks management which, while worth having, is extremely marginal. The Government and mayor will need to be far braver than that to really make a difference on roads congestion
Ed Cox, Director, IPPR North
The best way to ensure that there is enough gas in the tank as Britain leaves the EU is to invest in a more productive economy outside London. Reannouncing relatively small amounts of infrastructure and research funding not only betrays the political rhetoric on rebalancing but leaves Northern economies more vulnerable to the economic storms on the horizon.
It is understandable that Mr Hammond sought to focus on technical issues rather than bigger government projects like industrial strategy and the Northern Powerhouse, but in the coming weeks we need to see concrete funding, especially on infrastructure.
London will see £1,500 more in transport spending per person than the North, and the South will see 75% of R&D spending. Today's Budget announcements won't shift this pattern. We need a bottom-up industrial strategy if we are to create an economy that works for everyone.
If the chancellor is really concerned to build a more resilient economy, then he needs to focus on social infrastructure too. A renewed focus on education and skills is right in principle but in practice these matters need to be devolved to allow city and county regions to work with employers to address local economic demands.
Steve Gooding, Director, RAC Foundation
On the surface at least this was a budget where "no news was good news". There wasn't a mention of fuel duty in the chancellor's speech, not even passing acknowledgement that rates will remain frozen as promised in last year's autumn statement.
Nor was there any mention of vehicle excise duty, though the small print in the Budget document confirmed that rates for vehicles already registered would go up by the rate of inflation on 1 April.
The chancellor didn't mention air quality. However, that did not mean he wasn't thinking about it. We agreed with his decision not to implement a diesel scrappage scheme – it would not be cost-effective and have only minimal impact on air quality – but in the budget papers he has set out his direction of travel, stating that "the Government will continue to explore the appropriate tax treatment for diesel vehicles, and will engage with stakeholders ahead of making any tax changes at Autumn Budget 2017".
This means yet more uncertainty for diesel owners – and prospective buyers of diesels – as the war of words against their vehicles continues from a variety of sources.
The Treasury paperwork revealed a second prong of the attack on air pollution: £690m of the £1.1bn allocated to local roads in the Autumn Statement will be used to tackle congestion. A welcome side-effect should be a reduction in the pollution that comes from stationary traffic and is a major cause of poor air quality.
Stephen Joseph, Executive Director, Campaign for Better Transport
The Budget does little to tackle transport problems and some of what's planned will make things worse, but there are some interesting signs of action to come. Mr Hammond has done nothing concrete to tackle air pollution, despite the huge medical evidence and pressure for action to phase out diesel vehicles. Freezing lorry taxes again will not help here, though at least there's a promise to review the levy on lorries and incentivise efficient and clean operations. Could this be lorry charging by the back door?
But the real failure of the Government is over local congestion. Yet again the chancellor announced funding for some local transport schemes, as if £690m would solve congestion. The Government appears blind to the problem away from trunk roads, and the further cuts in local government funding in the Budget will make things worse. Individual link roads and roundabouts will merely shift jams around, while disappearing bus services and lack of funding for basic local transport will just add to the problem.
Sooner or later the Government will have to tackle local transport properly rather than rely on a mix of different funding pots and individual schemes.
John Hicks, Director and Head of Government & Public, AECOM
Brexit clearly influenced many of the measures outlined by the chancellor today, which were peppered with announcements designed to offset any potential consequences of a hard exit from the EU.
One such measure is the focus on technical education and the introduction of T-Levels to address the productivity gap between the UK and our international competitors. This may help to insure against potential difficulties in accessing skilled labour from within Europe in the future. The private sector will have a vital role to play in the successful development of these qualifications and ensuring they reflect industry need. Funding for 1,000 extra PhDs in STEM subjects are welcomed by AECOM and should help tackle the deficit of STEM skills in the market.
New money to tackle traffic pinch-points in the North and Midlands is a step in the right direction, with the £690m competition to address urban congestion especially welcome as it puts power in the hands of local authorities who are better placed to invest capital of this kind. However, funds will only be available over time and its impact may be lost if the idea is not expedited once local institutions make the call.