26 May 2010

DfT takes the strain

Perhaps the only positive to draw from Monday's announcement by the Chancellor of the Exchequer, which stated that the Department for Transport (DfT) would see its budget slashed by £683 million in the coming year, is that the national media are fairly sure that the division within the DfT that will be hardest hit by this reduction in expenditure is the coffers used to build new/improve existing roads.

While £683 million is indubitably a sizeable chunk of money alone, it does only represent 4% of the DfT's annual budget of £15.9 billion. Those within the transport industries should also be thankful that George Osborne has chosen not to make an example of the DfT, since similar percentage reductions through all other departments catering for non-essential services are to be made. Of the £683mil, the direct expenditute to local authorities is being reduced by £309mil, the schemes not yet agreed for the procurement of new rolling stock will be shelved and outside of the financial reduction, the DfT has announced it can make efficiency savings that amount to £112mil.

The railways are additionally protected thanks to Network Rail's (NR) Control Period 4 (CP4), for which funding is guaranteed, which safeguards all planned engineerung work until March 2014.

NR does need to be more efficient, though - something many within the rail industry have long been calling for - and has seen its budget outwith CP4 reduced by £100m. In turn, this will see its recently-formed Better Stations programme cancelled and cut-backs concerning "discretionary investment on programmes that do not add capacity or operational efficiency to the railway."

As local authorities see their spending squeezed, bus and coach operators who rely on home-to-school contracts and/or subsidies for operating non-commercially viable bus services will potentially see their incomes reduced, as decisions are made in town halls about how best to make savings to the money afforded to local governments. While larger bus operators who see subsidy wane for evening journeys will arguably be no worse off by withdrawing the service(s) altogether, the smaller, family-owned coach operators, whose bread-and-butter comes in the form of school and college contracts, could be hit hardest by seeing reduced subsidies for the same work undertaken.

Even Crossrail could face significant problems in the short-term at least. The clever money is now on the largest peace time railway infrastructure project not being shelved (new Transport Secretary Phillip Hammond recently confirmed its 'green light') or its route cut, but a delay in its construction being most likely. London Mayor Boris Johnson recently claimed to have 'real fears' over the £16 billion scheme being completed at any time near 2017. The DfT is in consultation with Boris over the level of subsidy reduction TfL is likely to see next year - £108mil is the likely figure.

BSOG reform, the impending legislation outlawing non-low floor vehicles by 2017/8, the lack of manufacturers who are producing buses, the financial squeeze on both operators and local authorities as a result of the free bus pass schemes (which the Tories have claimed they will retain in England), the volatile price of a barrel of oil and increased congestion on the roads, the 'big squeeze' couldn't have come at a more critical time.

For the hard-line transport pessimists out there, it could (and surely will) be argued that the reason why the national media have highlighted road construction as being the biggest loser in the DfT's budget reduction is due to car ownership being so high and passions running so strong whenever car owners feel they are being 'taken for a ride'. Exaggerate this and you a) sell more papers and, b) under-estimate the true impact on public transport.

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