Chancellor George Osborne has said that over the next four years £30bn will be spent on transport projects, but has signalled a grim four years for local government.
The impact on government department’s continues to filter through following Osborne’s long awaited Comprehensive Spending Review on Wednesday. Major infrastructure projects have largely survived intact but funding for roads and local authorities has been hit hard.
Osborne said that of the £30bn for transport, £14bn will be spent on maintenance and investment in the the railways.
Crossrail will go ahead, but with work rephased. The central section only will now be delivered by 2018, with the remainder delivered at a later date. This rephasing will cut project costs by £1.4bn to £14.5bn.
Osborne has set aside £750M to develop High Speed 2.
“Key” Tube line upgrades are also safe.
The rail cash means Network Rail can complete its capital projects planned in the current control period that runs from 2009 to 2014. There was no mention of the £5.5bn Thameslink programme, where phase one is currently under construction. But an annoucement is expected next week that will confirm a £1bn investment in new rolling stock for the route.
Osborne said electrification of rail lines in the north west from Manchester to Liverpool, Preston and Blackpool would go ahead. Old Thameslink rolling stock will be used on the newly electrified lines.
As previously trailled, the Mersey Gateway bridge will also go ahead. However, the Highways Agency’s capital budget has been slashed in half.
Its budget for major projects, capital maintenance and enhancements has been cut to £4bn over the four years of the review period. Its current business plan for 2010/11 will see it spend £2.7bn on major improvements and maintaining the network.
The Department for Transport has identified eight schemes to be cancelled, collectively worth over £1.3bn and including three on the A21 and the A14 Ellington to Fen Ditton scheme. The future of the Managed Motorways programme is uncertain; contractors will be briefed in mid-November.
More details will be revealed by transport secretary Philip Hammond next week, alongside publication of a national infrastructure plan.
Local government budgets have been slashed. Local authorities will see cuts of around 30% in overall capital expenditure, including cust of around 45% in capital funding from government departments, and the Office of Budget Responsibility’s forecast of a 17% reduction in self-financed capital expenditure.
Resource cash to councils will reduce by 28% over the spending review period. Local councils also receive funding from other government departments and council tax. When grants from other departments are included, the overall reduction in revenue grants will be 26%. Ring-fencing of revenue budgets, which are used to find highways maintenance schemes, is axed.
The Department for the Environment Food and Rural Affairs has announced that as part of its Comprehensive Spending Review settlement it is withdrawing funding for seven waste PFI projects – saving the Government £26M by 2017-18. It said they “will no longer be needed to meet landfill diversion targets set by the European Union.”
Chancellor George Osborne has said up to £1bn will be set aside for the “world’s first carbon capture and storage demonstration project”.
He said a further £200M will be set aside for offshore wind, specifically for the development of port sites to allow the construction of turbines.
Osborne has put £1bn into a Green Investment Bank, “the first time anybody has ever been in favour of such a bank”, he said.
More funds would come from the private sector and the sale of government assets, he said. The aim was to make the UK a leader in the green economy.
Osborne said £170M will be cut from the flood defence budget.
The Department for Environment Food and Rural Affairs (Defra) will seek to make budget cuts of 29% on resource spending and 34% on capital spending under plans outlined in the Comprehensive Spending Review (CSR).
Defra and its agencies will also shed between 5,000 and 8,000 jobs from their 30,000-strong workforce.
Chancellor George Osborne has said that capital spending will be cut by £2bn per year less than predicted in his emergency budget in June, which set out a reduction of up to £100bn by 2015.
He said capital spending would be £51bn in 2012, £49bn in 2013, £46bn in 2014 and £47bn in 2015.
“This is £2bn higher than in the emergency budget,” he said. “Anything else would impact on vital infrasrtructure.”
But Osborne said he would “ruthlessly prioritise” capital spending on transport, green energy and the science base. He said the government would “leave no stone unturned in the search for waste”.
Osborne said dealing with Britain’s budget deficit was “unavoidable” and revealed the country was paying £43bn a year in debt interest.
On planning, he said he would put “local people” in charge of decisions on what gets built.
Civils contractors welcomed the recognition that improving the UK’s infrastructure would help drive growth in the economy.
“We await the detailed announcement next week by the secretary of state of exactly what cuts have been made to transport projects. However, the chancellor has made it completely clear that he links investment in infrastructure with economic growth,” said Civil Engineering Contractors Association national director Rosemary Beales.
“We also welcome the reduction in the cut to capital spending that was envisaged in the June Budget Statement and the announcement that the Green Investment Bank will be established is good news for the delivery of the low carbon economic recovery,” she said.
But Beales said the communities and local government budget has been hit “quite severely” and that it is hard to see how this will help the wider construction industry.
“I am still concerned that we are at risk of substantial job losses in the infrastructure sector over the next few years and the issue that we face as a country is sustaining an economic recovery which depends on businesses and communities having access to effective and efficient infrastructure. Today’s announcement is positive, but we need more than this to be confident Government is addressing both of these significant questions.”