Spending Review 2020 – the fine print on urban transport

The headlines…

  • The focus remains on capital investment
  • Overall (non-COVID19) spending projections for the next five years are below the Chancellor’s pre-pandemic plans
  • Non-COVID spending is well below pre-austerity levels for not protected Departments including transport and local government
  • Things will probably get worse for non-protected departments (including Transport and MHCLG)

Here’s some Resolution Foundation analysis…

‘While headlines have focused on cuts to the aid budget, in practice this will mean austerity feels alive and well for many departments at the time of the next election. Unprotected departments will remain almost a quarter smaller in 2024-25 compared 2009-10, with the Department for Transport still down by 45 per cent.’

Torsten Bell in the Times 26/11/20

Zero COVID19 revenue support funding for local transport for 21/22

Here’s the scary table from the Spending Review…

Gulp…there is a COVID19 revenue allocation for national rail for 21/22…but not for bus and tram outside London or for TfL. Given the virus itself is unlikely to be vanquished entirely by April 1st 2021 (never mind patronage fully restored) this would be a disaster for local public transport networks and those who rely on them. And that’s putting aside the way in which national rail is prioritised above any other form of public transport. It may be this is HMT’s starting point for a negotiation but its not helpful or realistic either way. One way HMT may be planning to square the circle can be found elsewhere in the spending review where it announces its intention to eat into the £3bn extra funding which had specifically been earmarked for improving bus services over the next three years.

‘£300 million in 2021-22 to drive transformation of bus services. This funding will be drawn down in the first instance for any further Covid-19 support that may be required, while progressing reform to deliver better outcome’

More widely national rail and road (as well as charging infrastructure) gets a multi-year settlement but local transport does not. As part of this the zombie national road programme also continues unimpeded as 1970s road schemes are reanimated. In the process generating one thing that the UK isn’t short of (car dependent sprawl) whilst funneling ever greater amounts of traffic into urban areas (where the Government has said it wants road space reallocated to active travel and buses).

Local Government funding – enough to muddle through for 21/22?

Although the longer term prospects don’t look good – with some hefty council tax rises, then maybe. Here’s what the LGA had to say: https://www.local.gov.uk/lga-responds-spending-review

New funds for urban transport?

There are a range of new funds for transport authorities to take a shot at. These include the £4bn levelling up fund which the Spending Review summarises thus: ‘this new cross-departmental Fund for England will invest in a broad range of high value local projects up to £20 million, or more by exception, including bypasses and other local road schemes, bus lanes, railway station upgrades, regenerating eyesores, upgrading town centres and community infrastructure, and local arts and culture. SR20 makes available up to £600m in 2021-22.’ 

There’s some good analysis on this in the Times.

MP support will be a factor in winning bids under this funding stream – which echoes the stress on MP involvement in the most recent tranche of active travel funding.

There’s also a new fund for the largest city regions where

‘Eight City regions will also benefit from £4.2 billion government investment in five year funding settlements for local transport starting in 2022-23, and £50 million in 21/22 to support preparations for settlements. Following the approach that has worked for London, these settlements will be agreed with elected Mayors and published, providing transparency and accountability while giving Mayors the flexibility and certainty to deliver their plans. The city regions that will receive settlements, subject to appropriate governance, include Greater Manchester, Liverpool City Region, West Midlands, West Yorkshire, Sheffield City Region, Tyne and Wear, West of England and Tees Valley. This will deliver the NIC’s recommendation to provide settlements that enable long-term and locally-led investment in large cities transport networks, devolving decisions on local transport to those that understand those systems best.’

There’s also news on the replacement for EU structural funds – the UK Shared Prosperity Fund. £220m will be provided for the pilot programmes and new approaches, and further details of this funding will be set out in the new year. Part of the funding project will be about investment in communities and place, “including cultural and sporting facilities, civic, green and rural infrastructure, community-owned assets, neighbourhood and housing improvements, town centre and transport improvements and digital connectivity”investment for local business, which includes support for “innovation, green and tech adoption, tailored to local needs”.

Further details of the UKSPF will be set out in a “UK-wide investment framework” which is due to be published in the spring.

Key initial takeaways

  • There are some hard yards ahead on securing sufficient revenue support to keep local public transport going during the pandemic and to get public transport back on its feet afterwards. Never mind it being in a fit state for the expansion needed for it to play its full part in meeting the wider decarbonisation challenge.
  • Despite its inherent inefficiencies competition funding remains the Government’s preferred format – although the longer term £4.2bn allocation for eight city regions looks like a better compromise.
  • The stress on pump priming the electrification of vehicle fleets is welcome but an inadequate counterweight to a climate deaf national roads programme which eats up vast amounts of DfT spend which could be so much more gainfully employed.
  • Local transport remains the poor relation to national transport not least in the hand to mouth funding arrangements compared with the multi-year settlements for national rail and road.

Are we moving to nano management?

In the summer there were high hopes that COVID-19 would be a short war in which the worst would soon be over and victory was in sight. Having won the war, we could then go onto win the peace by making some of the wartime measures (like a big shift to cycling) part of the new society we would build. Pre-war objectives were still firmly in place – plugging left behind towns back into the rail network, a green new start for the bus, levelling up and a green recovery. FDR’s New Deal was name-checked as the territory we were moving into. In some ways the mood was expansive and optimistic.

However, as the COVID war drags on it feels like horizons have shortened to getting through the slog of trench warfare with the virus until the point at which we can drop the vaccine A-bomb on it. There’s less energy around to think about the post-COVID world – including what the macro economic policy is going to be. Instead we seem to be entering a more claustrophobic world of micro-economics, narrowed horizons, central control and fragmented approaches.

Before I say why, I want to disagree with those that argue that HMT involvement in transport decision making is always a bad thing. In my discussions with HMT over the years they often take a far more clear headed and rational view than the Department for Transport. For example, HMT have seen the case for bus support but never understood the rationale for pumping that money into poorly regulated monopolies instead of a contracted system where they could see what they were getting for their money. By way of contrast, DfT tends to be siloed by mode and within each silo the default position (with honourable exceptions) is to act as the envoy within wider government for whatever the current status quo or controlling interests are within that sector.

However, the problem is that at present not only is the macro-economic approach to the crisis unclear, the scale of it has meant the Treasury has reverted primarily to bean counting mode as it attempts to keep the hurdles high for access from various parts of the economy or society for a COVID bail out, whilst simultaneously seeking to keep the hurdle low for ending that bail out as soon as possible.

This means we now have two Government departments (DfT and HMT) crawling over the detail of funding for each mode in isolation – and where there is a political backdrop (which there is with Transport for London) we also have Number 10 too.

Meanwhile, unlike the heady days of the summer when councils were told to move fast to turn capacity over to active travel, local government is now being told it must jump through numerous hoops on local traffic schemes as the government in effect wants to second guess decisions on paving stones and the position of white paint on high streets from Penzance to Peterlee. And whilst long term multi-year funding for big national infrastructure (like the climate-deaf and bloated national roads programme) appear to be intact, the one-year horizon of the Spending Review means that longer term funding for local public transport and active travel is curtailed. In short, on local urban transport we are in danger of moving from micro management to nano management.

Come fly with me?

The second lockdown is a further hammer blow to airports and the aviation industry. And that’s creating a lot of ripples for the economy and for land transport policy which we perhaps haven’t been thinking enough about. Prior to the crisis it was the norm that everywhere needed an airport – even if it was more status symbol than somewhere that tempted many planes to drop down out of the skies to touch down. And if a place already had an airport – it needed to be bigger, a lot bigger. If you have an airport what follows is a cluster of brown or greenfield development springing up around it. And if you have all that then you need new and bigger roads – and better public transport links. Before you know it you have an ‘aerotropolis’ (be it big or small) and local transport investment plans end up with big chunks netted off for improving links to the local airport.

But the boom times are over. Airport expansion plans are by and large dead or on hold. And there is a sense those airports which are pressing ahead with their growth proposals are only doing so to get permission in the bag rather out of any conviction that they will need it any time soon. The industry’s emergency landing is also taking place at a time when climate concerns are taking off – especially with Joe Biden now in the pilot’s seat in the US.

More widely, Britain may have given up on a state-driven attempt to dominate the jet age decades ago and the supersonic era started and finished with Concorde (the Apollo moonshot of aviation) but Aerospace is still one of the sectors that keeps us in the global economic premier league. It employs over 100,000 people directly, and over 220,000 indirectly. It’s also one of the UK’s largest exporters adding around £2.8bn annually to the UK balance of trade. All of this plays out not just in the economies of places near to the big airports (from Whythenshawe to Hillingdon) but in aerospace towns and cities like Derby and Preston.

So what might this mean for policy change? Any bailouts for the aviation industry should come with green strings attached, including on the fuels they use and also in relation to a shift in policy on rail.

I’ve said before that I have no idea, why, if the railways are now effectively state-owned and planned, all you would do with that opportunity is keep puppeteering the waxy corpse of rail privatisation with its cacophony of make believe brands in the pointless pretence that there is some kind of dynamic competitive market. And at the same time you are doing this why would you simultaneously let an infrastructure company with a reputation for insularity and unresponsiveness creep into the role of deciding what passengers and places want from their railways?

Why not instead use the opportunity to re-create a coherent national branded intercity network again, part of whose remit would be to eliminate domestic air travel wherever possible? This is what we are already seeing as part of airline bailout deals and wider transport policy in places like Austria where, as part of the national flag carriers bail out package, the airline is required to cut its domestic emissions by half by 2050 and to end flights where there is a direct train connection to the airport that takes considerably less than three hours. As a result, there are no flights anymore between Vienna and Salzburg but instead there is a first rate rail service.

Indeed, the Austrians are becoming the train daddy of Europe. When state operators like SNCF and DB trashed what was an extensive and inter-connected night train network in western Europe, Austria heroically kept the night train concept going by filling some of the gaps. They did this long enough for governments across Europe to realise the extent of the folly that had been committed and to pledge to start to reverse the process.

Meanwhile, as COVID and its consequences adds another layer of anxiety and procedure to air travel (and more businesses realise less flights are necessary for staff) then it will be some time, if ever, before passenger numbers return. Quality may also make a comeback over quantity as prices rise and packing people into cramped terminals and planes becomes less acceptable. Economic and transport plans predicated on an exponential rise in airline passengers may also need a rethink. It may be that securing, decarbonising and civilising the existing aerotropoli (and the jobs that depend on them) becomes more of a priority than further expansion.

Perhaps too we will see a more planned approach to airport capacity in order to safeguard the economies of those reliant on what we already have rather than the decades long cagey game of chess as the big airport operators manoeuvre and scheme for the approval of ministers and planning inspectors whilst the passing of the years grinds down the resistance of those under the flight paths. Will we also see a move away from turning airfields last used by RAF bombers into departure points for a limited repertoire of junk flights where most of the revenue comes not from the crazy cheap ‘what climate crisis?’ fares the airlines charge, but from the long stay car parks and the on-site retail.

We shall see. But one thing is for sure, less contrails in the skies will require more thinking about what happens to the runways, roads and rails below.

Jonathan Bray is Director at Urban Transport Group

The blog first appeared in Passenger Transport Magazine.