2021 Budget is mixed bag for rail

THE Government’s budget and spending review, presented to Parliament on October 27, sees a significant increase in the Department for Transport capital spending budget from £14.2 billion in 2019/20 to £19.9 billion in 2023/24. The revenue budget will also increase from £17.7 billion to £26.2 billion in the same five-year period, that coincides with Control Period 6 that regulates rail infrastructure spending by Network Rail.

Scotland and Wales will also receive noteworthy increases to their block grants provided for capital and day-to-day revenue expenditure. In total the figure for Scotland rises from £37.2 billion to £46.8 billion and for Wales from £16.3 billion to £20.6 billion, in both cases covering the same fiveyear period from 2019/20.

LOCAL INFRASTRUCTURE INVESTMENT

The Spending Review (SR21) includes local infrastructure investment to support economic growth and is aimed at improving the quality of local transport links. An investment package of £5.7 billion for eight English city regions is to be available to enable them to replicate London-style integrated transport.

Rail-based projects listed are located in Greater Manchester

(£1 billion), the West Midlands (£1 billion), Liverpool City Region (£710 million), South Yorkshire (£570 million) and the Tees Valley (£310 million)

SR21 confirms there will be over £35 billion of rail investment (including HS2) to boost connectivity across the country – focusing on the Midlands and the North. There has though been no announcement to confirm that the HS2 Eastern leg will go ahead and there is widespread speculation that there will be less new railway with sections of the existing network upgraded as a cheaper alternative.

EARLY-STAGE PROPOSALS

The £500 million budget to restore rail services lost in the closures of the Beeching era is maintained to improve local connectivity. £13 million has been provided to develop proposals to reinstate passenger services between Totton and Fawley in Hampshire, reopen railway stations at Wellington in Somerset and Cullompton in Devon, and assess 13 early-stage proposals to restore rail connections across England and Wales.

This funding allows an outline strategic business case to be developed for each one and listed routes include: Tavistock–Plymouth (connecting with the existing infrastructure at Bere Alston); BeverleyYork; Bishop Auckland-Weardale; StokeLeek; Oswestry-Gobowen; AshtonStockport; Buckley Wells-Rawtenstall and Gaerwen-Amlwch.

In terms of competition to rail services, to the surprise of many, a package of air passenger duty (APD) reforms was announced in the Budget, that will bolster UK air connectivity through a 50% cut in domestic APD, which from April 2023 will be set at £6.50 per passenger. The rate will apply to all flights between airports in England, Scotland, Wales and Northern Ireland (excluding private flights). As a result, around nine million passengers will pay less APD in 2023-24.

The Rail Delivery Group estimates that the reduction will divert at least 220,000 passengers annually from long distance rail services.