Will Osborne's Budget keep Britain moving?
14 March 2016 | Author: Mike Indian, Senior Political Analyst, DeHavilland

When George Osborne leaves 11 Downing Street on Budget day, he will be carried by a special convoy of ministerial cars to the Palace of Westminster. During his short journey, the chancellor will be surrounded by reminders of one of his key goals: keeping the UK moving.

Usually, the most memorable transport announcement from Budget statements is a cut in fuel duty, designed to gently guide motorway man from the slip road into the polling booth. This year, however, Mr Osborne has two integral decisions to weigh up that will affect the long-term prospects of the UK economy.

The Government is already facing questions over its fiscal policy. A combination of the falling cost of borrowing and low inflation is expected to expect to grant a £20bn windfall to the Treasury. This comes on top of a £27bn gain from debt interest and inflation forecasting changes in last year's autumn statement.

The Department for Transport received mixed news in its spending settlement, with an emphasis on capital spending rather than resource spending. This underpins the first area that Mr Osborne will address in his Budget.

The chancellor will receive reports from the newly-established National Infrastructure Commission on improving connectivity between cities in the north of England, and large-scale transport improvements in London.

Since the spending review, the Government has put Transport for the North on a statutory footing, and local leaders have powered ahead with plans for transport investment in their regions designed to boost economic growth and create new jobs. TfN chief executive David Brown has given strong hints on important questions like smart ticketing and improving east-west connections.

However, as IPPR North director Ed Cox has pointed out, the key task for Mr Osborne in 2016 is to assure stakeholders that the agenda is not losing steam. Meanwhile, Labour has chastised ministers over the "shockingly poor progress" of the introduction of smartcard readers in the North East and Cumbria.

Key questions remain over how those improvements will be funded. TfN has an operational budget of £10m a year. There is another £300m that it could bid for and another £150m committed by Mr Osborne for developing smart ticketing.

The recommendations from the National Infrastructure Commission could provide a new sense of strategic direction for the Northern Powerhouse. It will report back on the prioritisation of transport challenges facing the region, including improving east-west connectivity. The commission reported last week giving its assessments on large-scale investments in London's transport infrastructure.

It gave its recommendation that Crossrail 2 gets the go-ahead. London mayor Boris Johnson has already warned the Government of the potential cost of delaying this project and has appointed Daniel Moylan interim chair of the company designated to drive forward takes the project. He wants to see a commitment to "serious funding" in the Budget, alongside legislation to grant planning powers as soon as possible.

The opposition of residents concerned about how Crossrail 2 might affect their neighbourhoods is unlikely to be blunted by Mr Osborne handing the decision to the commission, but he will be hoping that it will make it less politically toxic.

Another element will be the chancellor's response to the Shaw report on the future shape and financing of Network Rail. The review conducted by HS1 chief executive Nicola Shaw has been used by bodies such the Institute of Economic Affairs as an opportunity to push for the privatisation of the rail infrastructure body.

Minutes of the Rail Delivery Group meeting in November showed that executives discussed selling off the assets along the lines of utility firms. Another clear indication came from Network Rail chair Sir Peter Hendy, who told a joint meeting of parliamentary rail groups last month that the body needed to continue to look for more private finance for control period 6 (the period covering the current five year investment plan to 2019).

Answers to the infrastructure needs of the North and London, as well as the future of rail infrastructure, are likely to be known when Mr Osborne holds up his red box on 16 March. Politics is all about the big questions, and in transport terms, they do come bigger than those.

For more information about DeHavilland's Budget coverage, click here.

Reference: Transport Times, March 2016 Issue

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