Comment

Budget: Rail went missing and Powerhouse talk was low key

Pinsent Masons infrastructure partner Jon Hart found Osborne’s summer budget a bit of a let down and is concerned that rail budgets are in for a tough time in the autumn spending review.

Like buses, you can wait for budgets and then two come along all together.  The second budget in just over six months has been relatively disappointing for UK construction and engineering. 

"The Chancellor has talked about power for the Northern Powerhouse, but there appeared to be very little by way of headlines to brighten the UK infrastructure sector."

This perhaps has not been much of a surprise.  The fall of the Treasury’s axe on major electrification works on the trans Pennine routes last month after talk during the election campaign of Powerhouses and out-doing our Victorian engineering forebears, was always going to make it hard not to be cynical at today's Budget statement.

The Chancellor has talked about power for the Northern Powerhouse, but there appeared to be very little by way of headlines to brighten the UK infrastructure sector. The government's mantra of pain in the (relatively) short-term to secure long-term gain seems to be on a loop and unwavering.   

“Given the Chancellor’s stated objectives of reducing the current £65.9bn budget expenditure levels to a budget surplus by 2019-20, it is perhaps no surprise that there were no surprises in relation to UK projects. 

Infrastructure spend

 As in previous years, we are going to have to wait until the Autumn Statement to see how precisely the further cuts are going to be applied to the big spending departments like the Department for Transport, but today’s budget has continued the uncertainty around opportunities for the nation's roads, airports or railways for investors and the wider business community. 

"It is disappointing that the only reference to Heathrow, for example, was an (admittedly witty) jibe by the Chancellor at the expense of the Hon. Member for Uxbridge"

It is disappointing that the only reference to Heathrow, for example, was an (admittedly witty) jibe by the Chancellor at the expense of the Hon. Member for Uxbridge ie Boris Johnson.

(In case you missed it funds were allocated to repair World War II RAF Group Fighter Command in Uxbridge; “a monument to the heroes of the Battle of Britain and the days when aeroplanes flew freely over the skies of west London" said Osborne).

Rail

No express reference was made to rail investment, despite the recent project cancellations – although reference to providing a statutory footing and £30M for the Transport for the North is to be welcomed – but only as a means to an end in improving transport connectivity.  No talk of Network Rail, mired in review by the regulator and silence on HS2 and Crossrail 2 either indicate that perhaps rail investment is going to be subject to further examination before the Autumn spending announcements. 

Network Rail

In the underlying Treasury documentation it is quite clear that major changes may be afoot – both in terms of scaling back Network Rail’s responsibilities, changing its management and funding infrastructure changes through train operators instead. (HS1 boss Nicola Shaw has been brought in by Government to advise on the operator's future).

"This is going to mean, in practice, a more complicated patchwork of infrastructure delivery and quality across the country"

This may mean further changes to the current franchise system. 

As anticipated, there has also been further discussion of increased devolution to individual cities and to all points of the compass, from Cornwall to the devolved administrations in Wales and Scotland. 

This is going to mean, in practice, a more complicated patchwork of infrastructure delivery and quality across the country, dependent upon securing local agreement between Whitehall and local city elders.

Roads

In the roads sector, the Chancellor has repeated the locked in commitment from the previous parliament for funding to Highways England – so no news there, either. 

What is potentially more eye-catching is the establishment of a new Roads Fund to be derived from a reformed Vehicle Excise Duty from 2017. What remains to be seen is to how this hypothecation is going to be applied in practice. 

It would seem that the fund is going to be used to supplement Highways England’s funding for the strategic road network, rather than the potholed local roads for which our councils are responsible.

 

Comments

Interesting the relation of Vehicle Excise Duty to funds for Highways England's projects. As VED is collected centrally one assumes the funds raised in devolved nations will be given to devolved nations in addition to the normal payments!
Interesting. I imagine there is no new money here! Certainly not to tackle the local road backlog!