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Spending Review
SR2002/DFT
15 July 2002
Spending by the Department for Transport will grow by 12 per cent a year in average annual real growth terms, with expenditure rising from £7.7 billion this year to £11.6 billion by 2005-6.
This exceeds the Ten Year Plan funding profile over this Spending Review period, and will allow the Department for Transport to make progress on the agreed objectives in the Ten Year Plan.
The settlement includes around £1 billion each year to fund the first three years of the Tube Public Private Partnership (PPP) modernisation plans, supporting a step-change in the levels of investment in the Underground.
The Spending Review also delivers substantially increased purchasing power for the railways. Railtrack's successor's lower cost of capital and ability to finance renewals over asset life means that it will be able to finance a significant increase in maintenance and renewals compared with what was assumed in the Ten Year Plan.
In welcoming the settlement, Alistair Darling, Secretary of State for Transport said:
"This settlement will allow us to take forward the delivery of the Government's Ten Year Plan for Transport and the safe, efficient and reliable transport system the public demands.
"The Ten Year Plan represents our key reform in the delivery of the Government's transport objectives, and came into effect just over a year ago in April 2001. By providing an unprecedented commitment to sustained levels of new investment over a decade, it provides the stable long-term framework needed to bring about real improvements to our transport system. Delivering the Plan is now the main task."
Some £370 million from unallocated capital within the Ten Year Plan has been brought forward into the Spending Review period to help to accelerate delivery.
The agreed funding is linked to a number of delivery reform measures, including:
continuing work to shorten lead times for major infrastructure projects, and a review of the planning process for transport projects;
and strengthening the connection between national objectives for transport and local delivery (through multi-modal studies and local transport planning, for example).
The Secretary of State for Transport will publish a first report in the autumn on progress so far in delivering the objectives of the Ten Year Plan. The Government's priority is to ensure the increased investment we have put in place delivers the real improvements the Plan identified. To that end a full review of the impact of the Plan and its policies, which will also roll the plan forward into the next decade, will be published at the time of the next spending review.
The newly established Department for Transport will play a central role in delivery of the Government's objectives for the economy, society and the environment.
1. The following table outlines the settlement.
| £ million | 2002-03 | 2003-04 | 2004-05 | 2005-06 |
| Department for Transport | ||||
| Resource Budget | 4,960 | 7,632 | 7,749 | 8,650 |
| Capital Budget | 2,948 | 3,369 | 3,811 | 3,391 |
| Total Departmental Expenditure Limit1 | 7661 | 10,692 | 11,197 | 11,640 |
| Near-cash spending in DfT DEL2 | 7843 | 10,829 | 11,333 |
11,774 |
| UK transport spending (estimated)3 | 11,962 | 15,347 | 15,827 |
16,406 |
2. In April 2001 the Government agreed to bring forward approximately £1.9 billion in income for Railtrack over the years 2001-02 to 2005-06. This increase in funding still stands, and £435m in 2003-04, £385m in 2004-5 and £305m in 2005-6 has been added to the original funding profile of the Ten Year Plan.
3. The proposed financing arrangements for Network Rail (giving it a lower cost of borrowing than Railtrack, and allowing it to finance network renewals over the life of the assets, rather than upfront), and the fact that the new company will be focused and incentivised to be more efficient than Railtrack, will substantially increase the buying power of the settlement. It will enable it to support the increased cost of operating, maintaining and renewing the rail network and to continue to make progress towards the 10 Year Plan targets.
4. Multi-modal studies take a comprehensive look at transport problems on a regional basis. They reject the old approach of focusing on one-dimensional solutions and instead look at the contribution that all modes of transport and traffic management might make - including road, rail, bus and light rail, as well as walking and cycling. They propose solutions to regional transport problems in which all types of transport can play a part. Several studies have reported already with their recommendations, and it is envisaged that most of the remainder will have reported by the end of this year.
5. The Government conducted a comprehensive review of public services - the Comprehensive Spending Review - in 1998. The 2000 Spending Review built on this by setting targets and allocating resources for the three years to 2003-04. The 2002 Spending Review revises these plans for 2003-04 and outlines new plans for 2004-05 and 2005-06.
6. For further details please contact the DfT Press Office on 020 7944 3108 or visit the DfT website. A full set of Spending Review 2002 Press Notices is available from this web site.
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