Reaction to the Chancellor's Budget - Steer Davies Gleave 17 March 2016 | Author: Jim Steer, Director, Steer Davies Gleave
Transport investment continued to be blessed in the Spring 2016 budget, with development funds for Crossrail 2 and rail & highway schemes in the north. Both had just received the thumbs up from Lord Adonis' National Infrastructure Commission.
With £300m going to Transport for The North (half of which is to accelerate the upgrade to the M62 around Manchester) this leaves a significant fund available for the design and feasibility studies that are essential for HS3, the proposed Manchester – Sheffield road tunnel and the rest. While Lord Adonis talks of 'kick-starting' these projects, the reality is they are only loosely defined as yet. TfN needs time to do the necessary work. For London, the commitment to Crossrail 2 development will be welcomed, although it leaves TfL needing to find large-scale matching funds at a time when it faces the loss of its 'revenue' support from central Government. Crossrail 2 is seen as hugely valuable in unlocking housing growth areas in the upper Lea Valley (and potentially more widely in East London). But as the NIC's review pointed out, Crossrail 2's Benefit Cost ratio is surprisingly poor, given the pressure on London's transport system.
Yet the budget could have been about more than capital projects. Here was an opportunity to help demand management and end the fuel duty freeze – the application of which, over the last 5 years, means Government is by now about £20bn worse off per annum. Pre-speech chat about a modest increase was (who'd have guessed it?) just that. With fuel on average now close to £1/litre rather than the £1.40 level of four years ago, any motoring lobby protest would surely have been muted.So more cheap fuel, and Severn Bridge tolls to be halved too. Time for that family holiday to the Gower Peninsula.