FASTEN YOUR SEAT BELTS FOR A TURBULENT YEAR AHEAD
24 February 2015 | Author: Lizzie Wills, Account Director, Westminster Advisers

The outcome of the 2015 election remains far too close to call, and it is highly unclear who will form the next government. An unprecedented range of potential results is possible in what is now a five or six party system; these include a small Conservative or Labour majority, minority, or Lib Dem coalitions; an alliance of left-leaning parties (drawing together Labour, the Lib Dems, Greens, and Plaid Cymru); a Labour government supported by the SNP through confidence and supply; a Conservative government supported by the DUP and or UKIP, and so on.


All these outcomes will have different implications for the UK’s transport priorities, which businesses throughout the sector will need to understand in order to position themselves effectively with the new government of whatever colour.


There is significant noise around transport policy in the run-up to this year’s general election. This is understandable, given people’s day-to-day contact with the transport network. Transport it is also a vital plank of the UK’s recovery and key to international competitiveness; this has been used as the rationale for some of the largest investment decisions in recent years, including for HS2.


The narrative on transport policy over the last few months has been dominated by Labour as central to its “cost of living” theme, with the party arguing that rising train, bus and fuel prices, as well as cuts to concessionary fare schemes and local bus services, are putting family budgets under unprecedented pressure. Much of Labour’s positioning, therefore, has focused on ensuring future affordability.


As always, rail is the most politicised element of transport policy. Labour continues to seek to capitalise on rising ticket prices and has laid out an ambitious pro programme of reform to include fare caps, franchise overhauls and a green light for public sector companies that want to bid against private sector providers to run rail lines. This not only poses significant risks to the existing train operators, but the high costs of each franchise bid may mean the DfT budget has to be redirected from policy areas seen as less of a priority. Businesses reliant on specific funding streams will need to ensure that they are well positioned after the election to make a compelling case for their sector.


Rolling stock leasing companies, which have long escaped the political scrutiny afforded to train operators, may come under fire in 2015, particularly in the event of a Labour-led government.


The Labour transport team has already indicated that it would tackle the monopoly market for rolling stock. Active engagement with decision-makers by the sector both before and after the election will be crucial to ward off direct threats to the sector.


Aviation is a similarly risky area of transport policy. The final recommendations of the Airports Commission, due this summer, and responses to the commission are likely to feature heavily in the first few months of the new parliamentary term.


The aviation industry believes that the UK will need to increase airport capacity significantly between now and 2030 to maintain its connectivity and hub status, which in practice means an additional runway at either Heathrow or Gatwick (the options now shortlisted).


Despite what looked like a softening of the Lib Dem leadership’s position to allow expansion at Gatwick, party members voted to maintain their policy of “no net increase in runways in the UK as a whole” at the last party conference.


For Labour and the Conservatives, increasing the number of runways in the South East remains a contentious issue. Both parties feel hamstrung by their responsibilities to their west London constituents, many of whom remain opposed to any expansion at Heathrow. The outcome of the election, and the distribution of power in the next parliament, may have a significant bearing on the airport capacity debate – though it looks likely that there will be expansion of some kind whatever the colour of the next government, given the commercial realities.


Encouraging greener journeys, including persuading commuters to move away from car use towards buses, coaches and bicycles, has largely fallen off the priority list of central government since the departure of Norman Baker from the DfT, with local authorities assuming ever-greater responsibility for sustainable travel. In an era of increasingly tight local budgets, 2015 is likely to see increasingly fierce competition for   limited local budgets (from the Local Sustainable Transport Fund, for example), and a struggle for businesses in the sector to ensure that the benefits sustainable transport brings to individuals, the economy, and the environment are recognised and its funding protected.


With other potential flashpoints this year on quality contracts for regional bus services, HS2 phase two, and priorities for improving the UK’s road network, transport and politics look set to collide this year as never before.


Reference: Transport Times - Jan/Feb 2015 Issue


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