Rachel Reeves is expected to halt spending on major new rail projects until after the next general election, leaving Britain’s train network under pressure from pressure on public finances.
Industry bigwigs say three projects already under construction are set to consume almost all of the available funding from the Department for Transport (DfT) between now and the end of the decade: the first phase of High Speed 2 (HS2) from London to Birmingham; multi-billion pound upgrades to TransPennine infrastructure; and the East and West Railway, a new route linking Oxford, Milton Keynes, Bedford and Cambridge.
Beyond these schemes, sources suggest that railway spending will be largely limited to safety-critical maintenance unless the Department for Transport can convince the Treasury to bring in private investment. The future of other major rail upgrades hangs in the balance.
The revelations emerged as Transport Minister Heidi Alexander prepares to say on Monday that public rail ownership is “not a silver bullet” to improve performance. It will pledge a “relentless focus on passengers” by unveiling a new app with a “Best Price Guarantee” ensuring passengers always get the lowest prices, along with further trials of “pay-as-you-go” in-and-out services. Station performance schedules will also be published in a bid to “rebuild passengers’ confidence in a comfortable and accurate journey every time”.
Alexander is expected to point to the poor performance of some public lines, such as the Northern Lines, as evidence that state ownership alone will not solve long-standing railway problems. However, it will confirm the government’s commitment to a new public body, Great Britain Rail, describing it as “second in size and importance to the NHS”. Greater integration of the rail network will be “non-negotiable”, ensuring passengers are able to move between services with minimal hassle.
Despite the focus on operators, concern among industry insiders centers on how the new railway lines and major upgrades will fare. Under Rishi Sunak’s ‘Network North’ programme, road and rail projects aimed at reallocating a £36bn budget originally earmarked for the canceled HS2 extension to Manchester are said to face major delays or cancellation.
Network North promised new schemes such as a railway hub in the Midlands and the electrification of lines in North Wales. Any delay here could cause friction in the Cabinet, after Welsh Minister Jo Stevens declared rail as her “number one priority” in Reeves’ spending review.
However, Reeves may have less room to maneuver than expected. Slowing economic growth in the UK could leave the Chancellor facing a £30bn deficit if the government bases spending on updated rather than official forecasts, it has been reported.
Insiders stress that not all transportation upgrades will be dropped. Sir John Armit, who chairs the National Infrastructure Commission, is drawing up a ten-year infrastructure plan that will be unveiled alongside Reeves’ spring forecasts. This strategy will determine daily government spending over at least three years and set capital budgets for five years.
Armit recently hinted that the government’s approach to infrastructure investment could focus more on roads, noting that decarbonising vehicles means that “the traditional argument that rail is less polluting than roads will not apply in the future.” “. He told MPs he did not expect “significant growth in railways” and that roads would remain critical.
In response to industry concerns, a Government spokesman pointed to the Autumn Budget, in which ministers pledged to “kick-start economic growth” by pressing projects including HS2, TransPennine and East West Rail upgrades. Officials denied claims that future railway projects could be halted, stressing that they remain “committed to providing the infrastructure this country needs.” A Treasury source added that final decisions will only be made after the spending review, where “every pound of taxpayers’ money” will be examined.
Within Whitehall, there is still the potential to attract private money for new railway projects. One option being considered is to sell the stations built to East West Rail, allowing private investors to charge train operators or the state for their use. Similar structures already exist: Heathrow charges rail companies to use its station, while the high-speed line between London St Pancras and Folkestone is owned by private investors who receive “access fees” from Eurostar and Southeastern.
Industry figures admit that such sales could raise “hundreds of millions of pounds” but will not alone bring the British network up to the standards seen elsewhere in Europe. Only 39 per cent of the UK’s lines are electrified compared to 65 per cent in Italy, 63 per cent in Spain and 60 per cent in Germany. The Treasury has halted Network Rail’s 2020 plans to electrify Britain’s railways at a cost of £30bn, underscoring the financial challenges ahead.
The post Spending freeze to push major railway projects into the sidings past general election first appeared on Investorempires.com.