The Department for Transport (DfT) has told local authority bosses that it is postponing decisions on all local transport schemes and reviewing all schemes that are yet to begin construction.
In a written statement transport secretary Philip Hammond said that as of today the government can give “no assurance” on funding support for any scheme yet to commence. He has cancelled public inquiries into the A5/M1 link, the A14 Ellington to Fen Ditton scheme and the A21 Tonbridge to Pembury upgrade.
A Costain/Carillion joint venture was lined up for the £50M A5/M1 link. Costain was also lined up for the A14 project in joint venture with Skanska. Costs of the A21 job rocketed from £64M to £112M in 2008. Atkins was the preliminary designer but a contractor had not yet been appointed. Its inquiry was due to start last week.
The Civil Engineering Contractors Association said it was not surprised by the decision, but that it would be seeking an urgent meeting with the DfT.
Hammond said the Government has made clear its most urgent priority is to tackle the UK’s record budget deficit and that the DfT will play a “full part” in the spending review which will be reporting in the autumn. Only once the Government’s spending review has been concluded will the DfT be in a position to identify those major investments that can be supported.
Hammond also stressed that the coalition government has made a commitment to reform the way decisions are made on which transport projects are prioritised. As a result, Hammond said it would be “inappropriate” for the DfT to continue to invest time and resources on development of schemes at the same rate as before.
He said local authorities should also consider carefully whether investing further time and resources in developing such schemes ahead of the Spending Review is justified. He said they should not assume that schemes prioritised under the previous Government’s Regional Funding Allocations (RFA) process will be funded to the previous published levels.
“I am therefore today taking steps to help avoid unnecessary expenditure, whilst the government considers its transport priorities,” he said.
- The previous Major Schemes Guidance for Local Authorities and associated approval processes are being suspended until further notice.
- All schemes that were granted Conditional Approval or Programme Entry by the previous Government will be reviewed as part of the spending review. Until then, the Government can give no assurances on funding support for any of these schemes.
- Ministers will postpone decisions on scheme orders for schemes requiring DfT funding, but consideration will be given if there are alternative funding sources. Similarly, public inquiries on schemes requiring DfT funding will generally be postponed and no further inquiries will be scheduled, but inquiries will be allowed to proceed if there are alternative funding sources.
The previous major schemes guidance for local authorities has been replaced with immediate effect with new interim guidance.
Hammond said the government will aim to provide a firm indication on the way forward later this year once the spending review is complete.
CECA national director Rosemary Beales said the move was the shape of things to come.
“This puts a significant amount of potential work for contractors of all sizes in doubt. The industry will see this as an indication of the shape of things to come. Whilst we understand that the deficit needs to be addressed, we urge the Department for Transport and the Government not to lose sight of the critical role that transport infrastructure plays in delivering productivity, prosperity and quality of life. They must balance the cuts we know they have to make with the need to invest in infrastructure as a foundation for future growth.”
“Following initial contact with the new Government we are now seeking an urgent meeting with the Department for Transport to discuss this. They must maintain a close dialogue with the construction industry throughout this process. It is important that the Government keeps the sector fully appraised of its plans as they develop so we can be ready to deliver a programme of much-needed schemes when the funding is in place.”
The Campaign for Better Transport said councils needed to start looking at more affordable options for tackling congestion.
Richard George, roads and climate campaigner for the Campaign for Better Transport, said: “With tough times ahead, regions must be careful to fund to the right schemes. They can fund a handful of big projects, which means most areas won’t see any investment for several years, or invest in lower cost solutions which would spread the benefits more widely.”
“Councils should accept that their £100M road schemes just aren’t viable any more. Instead, they should start looking into more affordable ways to solve their transport problems while working towards UK climate change targets.”