Posted 9th November 2015 | 2 Comments

Railway braced for spending cuts

THE Department for Transport is facing a budget cut of almost a third over the next four years, it is reported.

The Chancellor George Osborne is expected to announce spending reductions at four government departments today, which will amount to an average of 30 per cent.

The agreements are ahead of the formal spending review on 25 November, and are being described as 'provisional'.

No details are available, but the economies are believed to cover what is being described as 'day to day spending', and will be achieved through efficiency savings and closing some 'low value' programmes.

The proposed cutbacks come as Network Rail's own budgets are being reviewed. The transport secretary 'paused' some electrification schemes in June, and although he has since announced that they are to go ahead, project timetables have been extended. As a result, for example, the Midland Main Line will not now be electrified between Kettering, Nottingham and Sheffield until the early 2020s.

Railway finances are also affected by a government undertaking to restrain increases in regulated fares to the equivalent rise in the Retail Price Index each year, effectively 'freezing' them in real terms for the life of this Parliament.

The other departments included in the new round of economies cover local government, the environment and the Treasury itself.

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • Chris Jones-Bridger, Buckley Flintshire

    As the Chancellor says that 'Capital' spending is protected it will be interesting to see the affect on railway budgets. As NR's much vaunted 38 billion CP5 budget has always been promoted by ministers as 'investment' lets see what survives. As the NR investment budget and forecasts are already I tatters thanks to GWML overspending interesting times loom ahead.

    Fortunately for TOC's as premium/subsidy payments almost balance* and as ridership figures continue to improve perhaps restraint I DfT spending may not be harshly felt. What is to be hoped that any surplus in this balance continues to benefit the industry and not seen to offset cuts in other non rail DfT programmes.

    [*The balance is an illusion, I fear. If track access charges were not significantly reduced by the current level of DfT Direct Grant to Network Rail, very few TOCs would still be paying premiums. In other words, a large proportion of subsidy to the passenger railway is channelled to Network Rail rather than the TOCs.--Editor.]

  • Martin Marrison, Haywards Heath

    What a suprise the latest goverment making cut on transport!. I am sure everyone was aware that a conservative goverment would make cuts so I will expect no complaints from all those people that voted conservative.
    You voted then in so you voted for this.And the same goes for other areas of cuts.