Transport and the economy - Transport Committee Contents


1  Introduction

The challenge for transport

1. The UK's economic situation has changed dramatically over the past three years. Steady GDP growth in the period 2000-2007 has given way to low or negative growth, an increased fiscal deficit and higher levels of unemployment. Following the general election in May 2010, the Coalition Government stated that reducing the government deficit was its most urgent task and that it would "support sustainable growth and enterprise, balanced across all regions and all industries, and promote the green industries".[1]

2. Transport was expected to play a key part. The Secretary of State for Transport, Rt Hon Philip Hammond MP, told us that the Government's priorities for transport were to support sustainable economic growth and to contribute to the Government's 2020 carbon reduction targets, within the overarching constraint of reducing the deficit.[2] Supporting the economy has long been an objective of government transport policy. This Government, perhaps more than most,[3] appears to be focusing on it more sharply, no doubt due to the precarious state of the economy.

3. Investment in transport infrastructure was prioritised in the October 2010 Spending Review, reflecting the Government's view that long-term investment in transport infrastructure was essential to competiveness and economic growth. Whereas the resource budget for the Department for Transport (DfT) was cut by 21% (the average across government departments), the capital programme was reduced by only 11% compared with an average of 29%. According to HM Treasury, in 2014-15 DfT capital investment will be higher in real terms than in 2005-06.[4]

4. As well as supporting overall growth, the Government has made clear its intention to use investment in transport, particularly in high speed rail, as a means to rebalance the economy and to reduce regional inequalities:

    Our vision is a transport system that is an engine for growth [...] to radically reshape our economic geography [...] to help bridge the North-South divide that has limited for too long growth outside the South East.[5]

5. We welcome the Secretary of State's focus on using transport to support and stimulate the UK economy and to reduce the economic disparities between different parts of the country and we call on him to explain how his policy will achieve that end.

Our inquiry

6. We believe that supporting sustainable economic growth should be the overriding objective for the DfT. We have, therefore, decided to inquire into how best transport can support this objective. In particular:

  • Have the UK's economic conditions materially changed since the Eddington Transport Study in 2006[6] and, if so, does this affect the relationship between transport spending and UK economic growth?
  • What type of transport spending should be prioritised, in the context of an overall spending reduction, in order best to support regional and national economic growth?
  • What should be the balance between resource spending[7] and capital investment?
  • Are the current methods for assessing proposed transport schemes satisfactory?
  • How will schemes be planned in the absence of regional bodies and following the revocation and abolition of regional spatial strategies?

We have not attempted to assess the Government's other main objective for transport—reducing carbon emissions.

7. Our purpose was not to comment on individual transport schemes but on how priorities should be set, the process of scheme appraisal and decision-making, and the structures within which schemes are planned. Although many transport investment decisions were announced in the Spending Review, the Government will be taking further decisions on which schemes to support over the coming months and years, including £600m for local authority major schemes in the Department's new "development pool" and bids for the £560m Local Sustainable Transport Fund.[8] We noted also the Government's commitment to reforming the way in which decisions are made on which transport projects to prioritise.[9] We hope our Report and the supporting evidence proves of value in these processes.

8. Our inquiry generated considerable interest and we received written evidence from 117 organisations and individuals as well as related correspondence. We held six oral evidence sessions, including two in Hull and Birmingham where we were also able to visit the local transport infrastructure and to meet local business people and community representatives. We were advised throughout by Dr Dan Graham, Transport Economist from Imperial College London, and Mr Kelvin MacDonald of Spatial Effects Ltd, an independent planning consultant.[10] We are most grateful to all those who assisted us in our inquiry.


1   HM Government: The Coalition: our programme for government, 20 May 2010 Back

2   Transport Committee, Secretary of State's Priorities for Transport, oral evidence, 26 July 2010, Q 3 Back

3   Under the previous Government, the DfT had five strategic objectives, including supporting economic growth. (DfT, Annual Report and Resource Accounts 2008-09, HC454, 16 July 2009, p 14) Back

4   HM Treasury, Spending Review 2010, Cm 7942, October 2010, pp 10, 11 and 46  Back

5   DfT, Business Plan 2010-11, November 2010, p 1 Back

6   The last major study of transport and the economy. See Chapter 2 of our Report.  Back

7   We have used the term 'resource' in this Report as it is the term used in central government accounts; local government and others tend to refer to 'revenue' or 'current' spending. Back

8   HC Deb, 4 February 2011, col 60WS Back

9   This was contained in Coalition Agreement and details are contained in the DfT's Business Plan 2010-11, November 2010, Action 3.1 vii, p 9 Back

10   Dr Graham and Kelvin Macdonald made formal declarations of interests which can be found in the formal minutes of the Transport Committee, Session 2010-11, Appendix B  Back


 
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