Department of Transport

Sir George Young announces transport spending plans
_______________________________________________________________

date 26 November 1996
source Department of Transport
type Press release

note 360C

Transport Secretary, Sir George Young, today announced the public
expenditure settlement for his Department.

Speaking after the Chancellor's Budget statement, Sir George Young
said:

"This settlement is consistent with the transport strategy I set out
in this year's Green Paper Transport: The Way Forward. It will allow
me to continue to promote a shift towards public transport, while
recognising the need to maintain a sensible and balanced roads
programme. The settlement maintains expenditure next year on all my
main programmes at least at the level assumed in last year's plans
and, with the addition of substantial private sector finance, will
allow continued investment to improve and expand our transport
infrastructure."

Key points in the settlement include:

* a commitment to take forward a programme of new construction on
national roads worth #6 billion, at the same time withdrawing from
the programme longer term schemes which had little prospect of being
built, in order to remove planning blight and uncertainty. Progress
with the Department's Design, Build, Finance and Operate (DBFO)
programme under the Private Finance Initiative will be maintained;

* funding for railways next year reflects the consequences of
substantially completing the sales programme. The benefits of
franchising are now coming through: these will be seen in substantial
savings during the PES period and beyond, coupled with service levels
guaranteed, fares capped in real terms and major investment
programmes for infrastructure and rolling stock;

* grant for LT protected next year, with investment in the existing
network of around #1.5 billion expected over the 3 year period, on
top of completing the Jubilee Line Extension;

* local transport funding maintained at the planned level next year,
taking into account the Department's contribution towards Capital
Challenge;

* public funding for transport supplemented by over #3.5 billion of
private finance over the 3 year period.

The broad allocation of transport expenditure is as follows:

Railways

The privatisation process is now well advanced and bearing fruit.
Provision next year is a consequence of the successful sale of
profitable businesses. Savings start coming through over the
three-year settlement period - the start of a longer term trend which
will see subsidies fall dramatically to well below pre-privatisation
levels. Over time, subsidy for the first 13 passenger franchises will
be at less than one third of the grant British Rail needed last year
to run the same services. In addition, with Railtrack in the lead,
the privatised companies will be investing significant sums in the
future of the new railway in the years to come.

London

Grant for London Transport next year will be maintained broadly at
the planned level. Grant tapers off in the later years, reflecting
the planned completion of the Jubilee Line Extension towards the end
of the period. LT is expected to make further progress in improving
efficiencies and revenues. In addition to the JLE, the settlement
should allow total investment in the existing tube network of around
#1.5 billion over the next three years, including projects taken
forward under the Private Finance Initiative. New privately financed
trains will start to enter service on the Northern Line next year,
and further PFI projects are well under way.

Over the next 3 years, investment will average 50% above the level of
the 1980s. In addition, Government support will continue to be
available towards other transport investment benefiting London, such
as the Channel Tunnel Rail Link, Thameslink 2000 and the Docklands
Light Railway extension.

Funding for red routes will be maintained over the period to enable
the Traffic Director to meet his objective of having the red route
network operational London-wide by the year 2000.

National roads programme

The settlement provides for an average spend of #1.5 billion a year
on the national roads network. This will enable a substantial
programme of new construction worth #6 billion to be sustained. The
Government's policy is to make steady progress in implementing a
roads programme the size of the current main programme. This is
likely to mean an average of 3 to 4 significant new starts a year.
The Department is on course to sign up a further three DBFO contracts
(including up to 20 schemes worth approximately #350m) in 1997/98 and
more thereafter. The final two Hackney-M11 contracts were signed on
14 November, in time to provide access to the Millennium Exhibition
site, and the contract for the last section of the M66 Manchester
Outer Ring Road will be let in 1998. Provision for maintenance will
be sufficient to safeguard roads infrastructure for the future.

Blight and uncertainty will be removed by withdrawing most of the
schemes in the longer term programme. (Details given in separate
Press Notice).

Local transport

Allocations for local transport will be announced before Christmas.
Local authority transport projects are now open to private finance
treatment following changes to capital finance regulations earlier
this year. Over #1.8 billion will be provided to support local
transport over the PES period, on top of the resources available to
local authorities under Capital Challenge and the Private Finance
Initiative.

Aviation

Reduced funding for the Civil Aviation Authority reflects the
anticipated proceeds from the disposal of some Air Traffic Control
equipment and property at BAA's airports. The Government is committed
to privatising the National Air Traffic Services and intends to bring
forward legislation to do so early in the new Parliament.

Private Finance The Department forecasts investment of over #3.5
billion by the private sector over the 3 year period to 1999/2000 on
transport projects under the Private Finance Initiative, including
the Channel Tunnel Rail Link, Heathrow Express, Northern Line trains,
Birmingham Northern Relief Road and Design, Build, Finance and
Operate (DBFO) schemes for roads.

Administrative costs

The Department's running costs will decrease from #376 million in the
current year to #346 million in 1999/2000 as a result of reduced
staffing, improved efficiency and in some cases reduced workloads.
Additional money has been allocated under the Governments "spend to
save" initiative to introduce a national wheelclamping scheme to
combat evasion of Vehicle Excise Duty.

NOTES TO EDITORS

1. The Department's expenditure covers:

* external finance for the transport nationalised industries

* support for local authority capital programmes through grants and
credit approvals

* instruction and maintenance of motorways and other trunk roads in
England

* a variety of regulatory and other functions such as licensing of
motor vehicles, the Coastguard and Marine Safety Agencies, safety
publicity and international transport contributions.

2. The attached Table gives a broad breakdown of the Department's
planned expenditure. Full details will be published in the Transport
Report next March. Expenditure figures in the text of the Press
Notice are in cash terms.

3. There are separate Press Notices on the detailed implications for
the national roads programme, and on the "spend to save" initiative
to tackle VED evasion.

# = pounds sterling

Railhub Archive ::: 1996-11-26 DoT-001