Rail the winner and HA the loser in coalition’s budget decisions

Rail has been the big winner and the Highways Agency the loser from transport spending decisions made by the coalition Government, according to a new analysis.

PTE umbrella body pteg has analysed spending for transport  in England since the May 2010 election, examining the effects of the three major change events: the in-year cuts made by the coalition government soon after the election; the autumn 2010 comprehensive spending review (CSR); and the Chancellor’s autumn statement last November.

“Rail is clearly the overall winner… with an 8% real terms increase in the Network Rail grant between 2010/11 and 2014/15, and that is even before the investment in Crossrail is taken into account,” says pteg.

The Highways Agency’s budget was hit by the in-year cuts and the comprehensive spending review but received a boost from the Chancellor’s autumn statement, which allocated the Agency an extra £1.2bn in the current CSR period, albeit heavily backloaded to the final year, 2014/15.

“The HA budget at the end of the CSR will still be well below the pre-election allocation,” says pteg. The HA’s pre-election budget for 2010/11 was £3.6bn, compared with £2bn in 2012/13 and £2.7bn in 2014/15.

A mixed picture emerges on local authority spending. The integrated transport block (ITB), which funds local authority capital schemes costing less than £5m, was heavily cut in the CSR.

Despite last autumn’s £50m injection, ITB funding in 2011/12 will still be 44% below 2010/11 levels in real terms. Funding is set to remain fairly stable in 2012/13 and 2013/14 before rising in 2014/15 to become 32% below pre-election levels in real terms.

The local authority major scheme budget suffered in-year cuts of 50% but was boosted in the autumn statement when the Chancellor and transport secretary Justine Greening announced funding approval for 41 of the 45 schemes in the development pool (LTT 16 Dec 11).

Pteg calculates that by 2014/15 the major schemes budget will be 4% above pre-election levels in real terms.

But it says the increase in the later years of the CSR is outweighed by cuts in 2010/11.

“If we take a longer time period and compare the budget allocated to major schemes over the comprehensive spending review period (£1.7bn current prices) against the previous four years (£1.9bn current prices) then we conclude that the current Government is planning to spend 18% less in real terms [on local transport majors] through this funding stream than occurred in the four years before the election.”

Pteg notes that the reduction in ITB and major scheme funding will, however, be compensated by the £560m Local Sustainable Transport Fund; the Regional Growth Fund – to which the DfT has contributed £465m; and the Growing Places Fund – to which the DfT has contributed £125m.

The expenditure picture in London is complicated by the numerous sources of funding. Transport for London’s general grant will fall 28% by 2014/15 but the cut is heavily backloaded.

“The Greater London Authority and TfL also receive substantial additional financial support from central government, which in some cases, will grow in the coming years,” says pteg.

“In effect, total transport expenditure in the capital over the first two years of the comprehensive spending review will probably be growing in real terms,” it adds.