Uncertainty shrouds the close of the year

There was much to be welcomed for transport in the spending review two weeks ago. But as 2015 draws to a close a great deal of uncertainty surrounds many areas of the sector.

First, the good news. The spending review reaffirmed the Government's commitment to transport investment, including the road and rail investment strategies and HS2. Transport capital spending will double over the next five years. The acceleration of HS2 to Crewe was confirmed. There was more progress towards establishing Transport for the North. Sir Peter Hendy's review of Network Rail's programme of upgrade work managed the remarkable feat of not cancelling any infrastructure project.

Bus service operators grant, which many were concerned was in the firing line, was saved by a concerted campaign by the Campaign for Better Transport, Greener Journeys and others.

But under the surface there is less good news.

First, the DfT's day-to-day resource spending will be cut by 37% over the review period. This will come from "efficiencies" in the department and its agencies, a reduction in the level of rail subsidies, and a large chunk from phasing out Transport for London's resource grant.

TfL will be in the unique position for such an organisation of having to meet day-to-day running costs from its own income. This raises the question of whether TfL can bridge the gap by increasing income from sources such as property, or whether some of its customer and information services will suffer.

Second, some observers are questioning whether the cuts will affect the ability of the DfT's core staff to manage its programmes effectively.

The reprieve of BSOG is welcome, but bus services will face another hit from cuts to local authority funding, including the phasing out of revenue support grant, representing 25% of local authority income.

The CBT warned of dangers ahead in its report Buses in Crisis just before the review. But it warns that local spending on such things as cycle routes, safer routes to school and traffic management will also be hit as authorities retreat to providing only core services.

As mentioned, Sir Peter Hendy's review achieved the feat of preserving the rail investment programme more or less intact. Some renewals have been postponed, but nothing has been cancelled; this has been made possible by finding only an extra £2.5bn, £1.8bn from asset sales and an increase in borrowing of £700m.

But it was already known that the completion of the Midland main line and trans-Pennine electrification projects would be delayed. Many other projects are likely to be delayed, as will become clearer when Network Rail publishes a more detailed implementation plan. In particular, completion of Great Western electrification to Cardiff will be delayed at least till 2019. This will have implications for the introduction of the new Intercity Express fleet.

Further uncertainty emerges from the other reviews covering different aspects of Network Rail and its performance by Dame Colette Bowe and Nicola Shaw.

Colette Bowe agreed with Sir Peter Hendy that the cause of the slippage in the rail programme was that the planning framework, which had appeared to work well in the 2009-14 control period, proved inadequate for the more complex projects in the current five-year plan. And the mechanism for dealing with unexpected cost increases – Network Rail's ability to borrow cheaply – had disappeared when it was reclassified as a public company. Her review calls for another review, of the role of the Office of Rail and Road, which signed off Network Rail's plans.

Meanwhile the "scoping document" published by HS1 chief executive Nicola Shaw invites participation in what promises to be a comprehensive review of the structure of Network Rail and how it interacts with the Government and regulator.

Overall, 2015 was a successful year for transport. But though there is much to be optimistic about in the coming year, aviation, buses and rail face an uncertain start to 2016.

Reference: Transport Times, December 2015 Issue

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