2004 SPENDING REVIEW

PN A3

12 July 2004

FURTHER INCREASES IN TRANSPORT INVESTMENT

The Government today underlined its commitment to ensuring a modern, efficient and sustainable transport system providing additional resources over and above the rising profile of the 10 Year Plan for the Department for Transport (DfT).

Spending by the DfT will grow by an annual average of 4.5% in real terms between 2005-06 and 2007-08.  This not only meets the rising profile of expenditure set out in the 10 Year Plan, but includes an additional £1.7 billion transport reform package to meet immediate pressures and a £0.5 billion annual uplift to the 10 Year Plan from 2006-07 onwards. These increases mean that DfT’s expenditure in 2007-8 will be over £2.4 billion higher than in 2004-5 and that total expenditure by the Department over the Spending Review period will exceed £37 billion.

As part of this settlement, the DfT will be undertaking a number of delivery reform measures including £785m annual efficiency savings by 2007-08; the key reforms arising from the Rail Review; improving the appraisal of transport investment choices; and a greater involvement of Local Authorities and regional bodies in the decision-making process over transport investment.

The Chief Secretary to the Treasury, Paul Boateng, said:

“This settlement underlines the Government’s determination to ensure that the UK develops a modern, efficient transport system.  This funding exceeds the profile set out in the 10 Year Plan for Transport, and ensures that the wider benefits of transport investment continue to be reflected in higher levels of productivity and economic growth, and a better quality of life for everyone.”

The Secretary of State for Transport, Alistair Darling, said:

“Transport is a high priority for the Government and my department is determined to deliver the outcomes that the travelling public and taxpayer desire. This settlement will allow us to continue the progress we have made in delivering the Government’s Ten Year Plan for Transport. We will be shortly publishing our long term strategy for Transport, which will update the Ten Year Plan and roll forward the funding plans to 2014-15.”

back to top

DETAILS

• 
  Spending by DfT will grow by 4.5% a year on average in real terms, with expenditure rising from £10.4 billion this year to over £12.8 billion by 2007-08.
• This settlement exceeds the funding profile set out in the 10 Year Plan for the three years covered by the Review. From 2006/7, there will be an annual increase to the original 10 Year Plan of £500m.
• DfT will also receive a one-off transport reform package, consisting of £1.7 billion above 10 Year Plan over 2005/6 and 2006/7, which will allow them to advance key reforms in priority areas.
• DfT will be taking forward the conclusions of the forthcoming Rail White Paper which will set out a comprehensive structural reform package to improve cost control and value for money in the rail industry, and ensure that it is capable of delivering significant performance improvements for rail passengers. The DfT settlement will enable these reforms to be taken forward without delay.
• The Government will be examining new ways to develop integrated regional strategies for transport, housing, planning, and economic development and increase local and regional involvement in transport investment choices.
• Changes will be made to the way buses are subsidised in some circumstances as part of a wider package of measures to improve the bus offering.
• DfT will deliver approximately £785 million of cash savings by 2007-08, which will then be recycled back into front-line delivery, and include staff reduction & relocation programmes, improved procurement regimes and rationalisation of back office and support functions.
• DfT will improve methodologies for appraising transport investment choices.  A shared value for money framework will support the standard New Approach to Appraisal system (NATA), which assesses schemes against economic and environmental criteria, and help inform Ministers and others decision making.
• 
  DfT’s target on local public transport has been modified to ensure that growth is achieved through increased local transport use across the whole country, and that no areas are left behind.  The rail target has been modified to focus on improvements in the performance of train services (defined as reliability and punctuality).
• 
  The DfT will take on joint responsibility for the Climate Change PSA target, together with the DEFRA and the DTI. The Government recognises that the transport sector has an important role to play in achieving our commitment to reduce greenhouse gas emissions.

back to top

£ million

2004-05

2005-063

2006-07

2007-08

Department for Transport

Resource Budget

7051

8555

10766

9867

Capital Budget

3717

3358

4083

4160

Total Departmental Expenditure Limit1

10,415

11,527

13,608

12,857

Dept. Expenditure excluding one-off reform package

10,415

11,027

12,408

12,857

UK transport spending (estimated) 2

16,548

17,312

20,086

19,287

1 Full resource budgeting basis, net of depreciation

2 UK transport measured consistent with international definitions from the UN classifications of functions of government (COFOG).  Actual outturns are subject to spending decisions by local authorities

3 Includes £500m in 2005/6 that has been allocated from the Reserve

£ million

2004-05

2005-06

2006-07

2007-08

Total Transport Investment

5884

6164

7697

7017

Of which:

Central government own investment

Investment Grants

3717

2167

3358

2806

4083

3614

4160

2857

back to top

NOTES FOR EDITORS

1. Media enquiries to HM Treasury Press Office on 020 7270 5238.

back to top
2004 Spending Review index