The Spending Review allows for £30bn to be spent on transport investment over the next four years. This includes £14bn of funding for Network Rail, £10bn of investment in key roads and local transport schemes across the country and £6bn of capital expenditure by Transport for London.
Funding for Crossrail is also secure, although the wider Transport for London budget is to be reduced by 28%. The Department for Transport will also have its budget cut by 21% over the period to 2014-15.
Rail passengers will see rising ticket prices as the price cap on regulated fares increases for three years from 2012 and charges on the Dartford Crossing also go up. Bus subsidies paid directly to operators will be reduced by 20% but free passes under the Concessionary Fares Scheme are protected.
The level of capital spend reflects a strong desire to protect the infrastructure which will support the growth of the economy in both the short and medium term. The Spending Review prioritises capital spending on transport projects which can offer high economic returns when compared to investment projects in other sectors.
It is positive that Crossrail will go ahead in full without cuts to either lines or stations, although with a reduction in budget and a clear message that overruns will not be tolerated. Those responsible for delivery of Crossrail face some very real challenges in delivering the scheme to a very tight budget and an efficient delivery mechanism combined with strong management and financial controls will be required.
The wider TfL budget is to be reduced by 28%. Coming on top of cuts already included in the TfL Business Plan brought about in large part by the impact of the recession on fares income, this reduction marks a very real challenge to TfL. Similarly, the Department for Transport will change given its budget reduction and we will see much tighter control of how money is spent in terms of both assessing how monies are dealt out as well as the level of control in how it is spent.
With the cut-backs, new sources of funding will have to be found to plug the gap for transport projects. It is our belief that more complex and innovative funding packages will be required, needing a strong degree of local public-private support and partnership. Public sector transport organisations will be under more pressure to realise cash from the sale of surplus assets, which should include under-utilised land and property.