2004 Comprehensive Spending Review

The Chancellor today (Monday 12 July 2004) announced his spending plans for the three-year period (2005/06 ­ 2007/08).

Headlines

• Transport spending growth to rise by 4.5 per cent in real terms to 2007/08
• Spending totals for 2004/05 rebased to inflate spending growth
• FTA brands transport settlement as disgraceful

Summary of announcement

Spending totals for transport

The spending plans show that spending by the Department for Transport (DfT) will grow by 4.5 per cent on average in real terms, with expenditure rising from £10.4 billion this year to £12.8 billion by 2007/08. The growth in spending masks a recalibration of the 2004/05 baseline spending total. In the 2002 Comprehensive Spending Review (CSR), the Chancellor planned to spend £11.2 billion in 2004/05. The 2004 CSR suggests that just £10.4 billion will be spent, a shortfall of £800 million, a loss of momentum from which the plan fails to recover.

Department for Transport spending limits

Transport spending committed in Comprehensive Spending Reviews

Average annual growth rate in Department Expenditure Limit by Department 2004/05 - 2007/08

The review includes a one-off transport reform package of £1.7 billion, presumably to fund the shortfall in rail spending identified by the Rail Regulator in December 2003. This requires an extra £1.5 billion per annum spending on rail to 2008. The additional money is mainly targeted at the spending year 2006/07 (£1.2 billion). Only an extra £500 million is allocated in 2005/06, with the shortfall likely to be made up from borrowing agreements already in place. There is no additional money allocated to rail in the final year of the three year spending plan. The Government claims that the DfT settlement will enable the comprehensive structural reform package for the rail industry to be taken forward without delay. A Rail Review will be published later in July 2004 setting out how this will be achieved.

Review of Ten Year Transport Plan

The Review of the 2010 Ten Year Transport Plan will be published later in July 2004. This will roll forward the existing plan and the funding plans to 2014-15.

Road charging

As has been already widely reported in the press over this weekend, the DfT is close to publishing how it intends to take forward recommendations from a feasibility study into the practical options for tackling congestion through road user charging for all. This will be published ‘shortly’ although no date has been given.

FTA comment

FTA has said that the 2004 Comprehensive Spending Review is disgraceful as it has reduced previous spending commitments whilst attempting to portray them as an increase. FTA cannot reconcile the contrast between statements made by the Secretary of State and the Chancellor acknowledging the need for transport investment after decades of neglect, and the effective reduction of £1.2 billion in the transport budgets for 2005/6 through to 2007/8.

Promises to create a transport infrastructure to rival any in Europe appear to have gone out the window. The Ten Year Transport Plan set up in 2000 was recognised in 2002 as needing a substantial increase in investment. The Chancellor has now not only failed to increase that commitment but has gone back on what he promised, by undercutting the spending plan he took credit for three years ago.

The continuing policy of successive governments to leave transport investment for the next government to deal with is impacting on every company and consumer in the country. The Chancellor’s statement today continues that neglect and the future for congestion is bleak.

Last updated: Wed Jul 21 14:21:27 2004