CIHT breaks down this years autumn budget (27 October 2021) and how it impacts the highways and transportation sector.
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Commenting on this years Autumn budget, Andrew Hugill, Director of Policy and Technical Affairs at CIHT said:
The Budget and Comprehensive Spending review shows some welcome signs that government continues to recognise the value of transport and is prepared to change previous approaches to support it in new ways and with significant funding. Nevertheless, there are still areas where progress needs to be made, particularly in moving to an overall strategy for transport rather than a mode specific approach. Without that change there is the risk that the benefit of funding is not fully achieved.
This analysis highlights the key areas and compares progress against the 7 areas CIHT called for the Comprehensive Spending review to address.
The pandemic has had a major impact on the UK’s economy, with today’s budget (27 October 2021) indicating that the transport and highways sector will be play a key role in the ‘leveling up’ of the UK’s economy.
Chancellor Rishi Sunak’s budget announcement today outlined that investment in infrastructure innovation and health will stabilise and ‘level up’ the economy. Additionally, the OBR has forecast that the UK’s economy will return to pre-pandemic levels at the turn of the year enabling the chancellor to spend more than anticipated, with significant funding going to highways and transportation.
CIHT welcomes the Government’s announcement of substantial devolved investment in integrated transport settlements to English city regions outside of London. Seven city regions, mostly located in the Midlands and the North will receive funding totalling £6.9 billion. These announcements are welcome and fall in line with calls by the CIHT for investment in a sustainable and healthy transport network – as outlined in response to this year’s comprehensive spending review[1]. In devolved nations, the additional £8.7 billion per year average increase is welcome and be vital to progressing several key highways and transport projects.
It is clear that highways and transport is seen as instrumental to the Governments levelling up agenda and whilst CIHT welcomes the overall announcement of £21 billion worth of investment into the local highway network is concerned that funding for road maintenance falls short of what is required. The investment to improve lorry park facilities is welcomed, enabling better and more efficient use of the highways network.
A £46 billion investment for rail has also been announced, but nothing was detailed on what projects this might include. In its CSR (Comprehensive Spending Review) response CIHT called for certainty for the sector on key projects and programmes, including HS2 and the Northern Powerhouse rail project. Therefore, it is disappointing to not see the Government have confirmation for the latter project, nor details of the overall form of HS2.
A detailed breakdown can be found here.
CIHT welcomes the government’s announcement to invest £3bn to build on the governments job creation plans and transform post-16 education. The government investment will include:
Skills development is a key area of concern for the growth and progression of the highways and transportation industry. It is common knowledge that, as an industry, transport infrastructure is suffering a severe skills shortage at a time when investment in major projects is increasing and the demand for skilled technicians, planners, designers, engineers, and managers is growing.
Skills development with the highways and transportation industry has not been specifically recognised in the autumn budget review. It is important the government invest in highways and transportation as it is critical to economic performance and productivity.
The government need to work with the highways and transportation sector to develop the workforce to deliver the government’s transport strategy - to bridge the skills and knowledge gap to meet the short-term skills needs for the transition to net zero. The government need to provide long term investment to deliver STEM education strategy, but there was a lack of detail on this.
A detailed breakdown can be found here.
CIHT has recognised the scale of the challenge set out in July’s Transport Decarbonisation Plan and reconfirmed in last week’s Build Back Greener strategy. Investment includes £3 billion for buses (including support for 4000 Zero emission buses) and £2 billion for walking and cycling. Similarly, £1.3 billion has been announced to support the roll out of charging infrastructure for Electric Vehicles. In all these areas, detail on the overall approach, timelines, and hard targets are still to be given.
The biggest financial issue facing the highways network – and on which the budget is silent – remains the impact of the roll out of Electric Vehicles on the tax income needed to maintain the highways network and upgrade it to support decarbonisation. CIHT would like to see the debate begin on alternatives. Road user charging is not a magic bullet but given its potential to help manage demand – a key element of the government’s own Net Zero pathway - it should be part of the debate.Elsewhere the budget was silent on a funded strategy to meet the target to remove all diesel trains from the rail network by 2040 and a supporting programme of track electrification.
Reducing Air Passenger Duty - It is disappointing that government seems to be encouraging cheaper domestic air travel at a time when we are trying to shift people to (much) lower carbon modes. The rational for giving domestic flights an even greater advantage over the train is not clear. Higher rates for super-long-haul travel looks positive but should not be an either/or and is in direct contradiction to the Climate Change Committee’s advice that the Government needs to do more to reduce demand for flying.
The same applies to the freezing of fuel duty again. This does not rebalance marginal cost of a journey by car vis a vis public transport, whilst at the same time government is investing heavily in public transport. The announcements on Air Passenger Duty and Fuel Duty are disappointing and run contrary to the need to incentivise choices for low carbon modes as set out in other parts of the budget. Ahead of the COP 26 summit, it doesn’t suggest that the government is fully committed to prioritising decarbonisation.
A detailed breakdown can be found here.
The CIHT set out seven areas of focus for investment in its response to the Comprehensive Spending Review[2], and it is important to highlight where the Government met these proposals in the budget.
1) Developing a national transport strategy (NTS)
CIHT called for the government to set out a clear vision and strategy that sets out how transport will contribute to key policy areas across the United Kingdom, but the budget made no mention of a NTS and, with the exception of funding to City regions continues to make allocations for transport across different modes with no indication of how modes will work together to provide a transport system that meets the need of a range of key policy areas. Without this overall plan there is a risk that funding does not achieve its full benefit.
2) Providing certainty for the sector on key projects and programmes
CIHT called for the government to ensure longer-term funding certainty for the highways sector for local roads and devolved administrations. This is something that was included in the budget, with levelling-up funds for all nations in the UK and a large portion going to highways and transportation. However, the chancellor did not confirm the delivery plan of the Eastern leg of HS2 nor the Northern Powerhouse rail project.
3) Improving the local highway network
CIHT called for the government to commit to deliver a four-point strategy for the local highway network that will create a vision, funding and focus to the local highway network over the next ten years. While investment for local highways was announced, it did not give the level of ambition set out by CIHT. Funding allocations are spread across modes without the clarity of a vision for what the local network needs to achieve and an investment plan to match. Funding for highways maintenance appears to be below that envisaged by CIHT in its report Improving Local Highways[3]. Whilst capital applications are welcome the implications of the revenue settlement for local government is less clear for the highways and transportation sector. With local government facing a range of funding challenges in the next three years it is not clear how local government will deliver the wide range of investment.
4) Supporting a sustainable and healthy transport network
CIHT called for the government to invest in the development of sustainable and active travel by:
Through City Regional funding and funding for cycling, active travel and public transport will get a much-needed capital investment, however, the announcement of a cut to air passenger duty as well as a continued freeze on fuel duty is counterproductive to investment in sustainable travel.
The links between sustainable transport and planning to create sustainable developments are not fully identified in the budget.
5) Road Safety
CIHT called for the Government to develop a long-term strategy to significantly reduce the number of people killed and injured on our roads. This will require a clear vision for how that will be achieved and funding to deliver the strategy. No mention of road safety was made in the announcement.
6) Skills and capability
CIHT called for the government to work with the highways and transportation sector to produce a clear strategy for developing the workforce to deliver the government’s transport strategy. Enabling the UK to export those skills and capability and gain a competitive advantage over other nations. Significant investment in skills development was announced, but there was no specific of how the vital skills needed in the highways and transportation sector would be delivered.
7) Resilient networks
CIHT called for transport resilience assessments to be made a statutory requirement for all transport asset owners to identify vulnerable areas. CIHT also called for a central fund to be established to support the mitigation of vulnerable areas. There was no direct mention of this in the budget.
To discuss any of the commentary raised in this analysis please contact e: technical@ciht.org.uk
[1] https://www.ciht.org.uk/media/15095/september-2021-ciht-comprehensive-spending-response-submission.pdf
[2] https://www.ciht.org.uk/media/15095/september-2021-ciht-comprehensive-spending-response-submission.pdf
[3] https://www.ciht.org.uk/knowledge-resource-centre/resources/improving-local-highways/
A downloadable copy of this content is available here - CIHT Budget Commentary 2021
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