So, what did we learn in the budget on Wednesday 27 October 2021?
As far as the rail industry goes, not a lot really…
Yes, Chancellor Rishi Sunak announced that departmental spending will increase by a total of £150 billion by 2024-25 – the largest increase this century.
He also announced £7 billion for rail, tram and bus projects outside London as part of the “levelling up” agenda.
Which all sounds like good news.
But it isn’t. Not that it’s not good – it’s just not news.
The Treasury released details of the budget in advance – on Saturday 23rd, four days early.
And even the Treasury admitted that, of the £7 billion, only £1.5 billion was new money, and that was announced in advance.
So, his announcement wasn’t news, and most of it wasn’t new.
In parliament, Speaker of the House Sir Lindsay Hoyle was upset that budget details had been ‘leaked’ so comprehensively. He told MPs that the government should make important announcements in the House first, and that both he and the chair of the Ways and Means Committee, which oversees the budget, were very upset about the briefings that had taken place.
The Speaker even went so far as to suggest that Ministers who had leaked information in the past had “done the right thing” and “walked” – resigned. He told the government that it “should not try to ride roughshod over this house – it will not happen!”
Despite the preview, observers had been hoping for some news in the budget. Would the government agree to fund the eastern leg of HS2, to the East Midlands, Sheffield and Leeds?
Would the Chancellor talk about the Integrated Rail Plan, or the long-awaited Network Rail Enhancements Pipeline?
He did not, and the industry was quick to round on him for it.
David Hawkes, lead policy manager for the Institution of Civil Engineers, explained his frustration: “The Integrated Rail Plan (IRP), first announced in February 2020, is now almost a year late.
“This means we still lack the plans to deliver the promised connectivity improvements between cities and regions across the Midlands and North of England.
“On top of that, the delay is causing uncertainty for project promoters, investors and industry, while there are people and communities living in limbo across the potential route of the Eastern leg of HS2.”
Richard Robinson, chief executive officer of engineering consultant Atkins in the UK and Europe, tried to look on the bright side: “There were certainly a number of positives to take from the Chancellor’s speech, including the initial allocation of levelling up funds and a commitment to build affordable homes on brownfield land.
“That said, I had hoped to learn more about the Integrated Rail Plan which will not only give our industry clarity on how a number of major projects will be delivered, but also provide towns and communities with greater confidence knowing that infrastructure is going to be put into place which will help unlock regional growth.
“As such, we urge the government to publish a comprehensive Integrated Rail Plan as soon as possible, recognising its importance as a catalyst for transformative change.”
Darren Caplan, chief executive of the Railway Industry Association (RIA), went further: “Whilst it is positive to see confirmation of what looks like an additional £1.5 billion of funding for regional transport projects, including in rail, this Budget appears to be a missed opportunity to unleash the potential of the railways in helping the country to build back better.
“There was no indication in the statement of whether long-term day-to-day funding of the railway network will be maintained at least at current levels in the years ahead. We still don’t know what is in the Integrated Rail Plan for the Midlands & the North, we still have uncertainty over major projects, such as HS2 Eastern Leg, Northern Powerhouse Rail and Midlands Rail Hub, and we still await an update of the Rail Network Enhancements Pipeline, now more than two years since it was last published.
“With COP26 just around the corner, too, this would have been a good time to set out the Government’s plans to reach a net zero railway, including a rolling programme of electrification and fleet orders of hydrogen and battery trains. These plans would have not just shown UK leadership in decarbonisation on a global stage, but would also significantly boost green jobs and investment, as the UK moves to a cleaner, post-Covid economy.
“There could also have been some clarification on areas like digital signalling, with 60% of traditional signalling needing replacing in the next 15 years.
“Our rail exporters need to know whether Tradeshow Access Programme budgets will be reinstated or replaced, so that they can play their part in helping the country deliver on Global Britain ambitions.
“It is clear that UK rail can play a leading role in the UK’s economic recovery, but to do this the railway industry really does need greater sight of, and input into, the government’s investment plans. Visibility of these plans is vital to supporting effective, reliable and clean world-class railway infrastructure and rolling stock in the coming years, boosting the UK economy and its connectivity not just now, at this critical time, but also for the years ahead as we move on from the pandemic.”
Train operators unhappy
To support the aviation industry, the Chancellor reduced the level of tax on domestic flights. However, Andy Bagnall, director general at the Rail Delivery Group, representing train operators, wasn’t happy about that: “Investment to improve connectivity between the nations of the UK is welcome and flying has its place. But if the government is serious about the environment, it makes little sense to cut air passenger duty on routes where a journey in Britain can already be made by train in under five hours.
“Our analysis shows this will lead to an extra 1,000 flights a year as 222,000 passengers shift from rail to air. This is disappointing and comes at a time when the industry is working hard to encourage people back to rail travel and build a financially sustainable future.
“Taken together with a fuel duty freeze for the twelfth consecutive year, it is now more important than ever for the government to encourage more people to choose low carbon forms of transport like trains. We want to work with the government to accelerate our proposals to make fares simpler and better value.”
Professional services find fault
Ed Thomas, UK head of transport at independent professional services firm KPMG, gave his considered opinion: “While the theme of levelling up runs throughout the Budget, the Chancellor is yet to signal a transport offer that will deliver transformational change for connecting the UK’s regions. This is evident in the £6.9 billion of transport investment for Mayoral city regions outside London – it is largely funding that has been previously announced – for example the £4.2 billion ‘City Region Sustainable Transport Settlements’ and £1.2 billion of the £3 billion that the government had set already aside for spending on a ‘bus revolution’. This leaves potentially £1.5 billion of genuinely new money, although there is also speculation that some of this represents a re-packaging of existing funding for smaller capital schemes.
“These five-year settlements provide places with very welcome – and indeed long overdue – medium-term funding certainty to bridge the gap which will enable them to plan and invest in their rail, metro, bus and cycle networks in a far more strategic and integrated way. However, while an important first step, city regions will see the scale of funding available falling short of what’s really needed to level up their local economies and decarbonise their transport systems. The funding is also limited to capital schemes, leaving open the question of how bus services – which represent the backbone of local public transport in these city regions – will be sustained and enhanced in the coming years.
“As expected, the Budget stopped short of confirming the way forward on Northern Powerhouse Rail and HS2 Phase 2b – in particular the future of the eastern leg of HS2 to Leeds – with the Chancellor promising that the long-awaited Integrated Rail Plan will be ‘published soon’. Given its aim of setting out a strategy for rail investment in the North and Midlands for future decades, the Integrated Rail Plan represents a key test of the government’s ambition for levelling up and city region leaders will be giving it sharp attention in the coming weeks.
“The Chancellor’s announcement that the first tax sites at the Humber, Teesside and Thames Freeports will start to become operational from next month is a welcome step in encouraging new investment and economic growth. However, it’s important that the Government also supports the five other Freeports in England to become operational quickly if we are to maximise the investment and growth opportunities that will be key to achieving levelling up objectives. Furthermore, with some Freeports in England about to go live, it is notable that competitions to identify locations in other parts of the UK haven’t even started yet. The UK Government and the Devolved Administrations need to work together to rectify this as quickly as possible.
“And finally, the government’s investment of £360 million for modernisation of the UK’s outdated and overly complex rail ticketing and retailing system, including introducing Pay as You Go outside of London, shows that it is now serious about tackling this issue. The case for doing this is overwhelming to meet customer needs. This modernisation is part of a wider set of reforms trailed in the Williams Review to bring about a more efficient and customer-focussed railway and will deliver some of the first tangible benefits.”
Trade union dismay
Manuel Cortes, general secretary of rail union TSSA, was concerned about the environmental rather than fiscal impact, calling it “the wrong budget for a climate emergency”.
Referring to the Chancellor’s announced cuts to fuel duty, and a lower rate of air passenger duty for domestic flights, the TSSA leader said that it would “do nothing to decarbonise travel”.
“We should be encouraging people to take the train by cutting rail ticket prices and investing in station staff to make the railways more attractive,” he continued. “We have a budget speech that actively encourages people to increase their carbon footprint. The Chancellor, Rishi Sunak, has got this badly wrong.
“Glasgow hosts COP26 next week. Britain will have no moral authority to lecture the rest of the world on reducing their carbon footprint unless we start getting serious about making rail travel cheaper and more attractive. That means investing in infrastructure, investing in staffing, and cutting ticket prices. Not incentivising air and road travel!”
Kevin Bell, transport partner at law firm Womble Bond Dickinson, was also disappointed in Rishi Sunak’s offering, although he had a taste for the theatrical: “In scenes not too dissimilar to the James Bond spoilers that have recently been doing the rounds on the internet, the Chancellor, Rishi Sunak, took the opportunity at the weekend to announce his pre-Budget pledge for almost £7 billion of new transport projects to improve trains, trams, buses and cycleways across the North and the Midlands. A promise of new and improved train stations, extended tram systems, new bus routes and electric vehicle charging points to help build a clean, green transport network. Even the normally critical Labour Mayor for Greater Manchester, Andy Burnham, welcomed this investment as an important first step in the levelling up agenda.
“The naysayers will point to the fact that if you scratch beneath the surface of the Treasury’s weekend spoiler alerts then you will discover that only a small share (well, £1.5 billion, to be precise) is, in fact, new money. Yet our Mayoral Combined Authorities and local regions have asked for wider and deeper transport and infrastructure devolution and that is now being delivered in spades. Add to that the further commitments for transport infrastructure (including those comprised within the successful first-round funding bids under the Levelling Up Fund) and a new lower rate of domestic Air Passenger Duty announced in the Budget this afternoon and it is hard to argue that the Chancellor is not trying his best to tackle the fundamental barriers at the root of the North-South productivity gap. Only time will tell if the government’s rhetoric of ensuring that levelling up is a ‘birth right of every child’ is matched by reality.
“But then, of course, there is the ‘elephant in the room’ that is HS2 and Northern Powerhouse Rail. Surely, true levelling up (whatever that means to each of us) cannot be achieved without both of these projects being delivered in full? The continued delays to the publication of the Integrated Rail Plan and the fact that the Chancellor failed to publicly quash any of the continuing rumours about the Eastern leg of HS2 being scaled back and downgraded at the despatch box only adds to the increasing uncertainty surrounding these projects.”
So – marks out of 10 for the Chancellor on his budget? Three – must try harder?