139: how cuts will affect major infrastructure projects

This is entry number 139, first published on 11 June 2010, of a blog on the implementation of the Planning Act 2008. Click here for a link to the whole blog. If you would like to be notified when the blog is updated, with links sent by email, click here.

Today's entry sets out how yesterday's cuts announcements will affect major infrastructure projects.

The coalition government is intending to save £6bn in expenditure in the current financial year, fulfilling the pledge that the Conservatives made in their manifesto.  In separate announcements, both the Department for Transport (DfT) and the Department for Communities and Local Government (DCLG) gave details of where their contributions will come from.

Transport

The DfT cuts will affect infrastructure projects most directly.  Progress on all local authority projects that are part-funded by the DfT and have not been fully approved is to be suspended until a spending review has been concluded, expected later this year.

The Secretary of State for Transport, Philip Hammond MP, issued a written statement 'Transport (Local Authority Major Schemes)' yesterday (here).

The DfT's Major Schemes Guidance for Local Authorities has been suspended and replaced with an Interim Guidance on Local Authority Major Schemes that basically says to local authorities: current work suspended, schemes unlikely to go ahead before 2012/13, spend money on a project at your own risk.

There are six transport projects on the Infrastructure Planning Commission (IPC) list of expected projects:

• DIRFT 3 rail freight interchange
• A21 improvements
• Shaftholme railway chord
• M1 improvements
• A556 improvements
• Ipswich railway chord

None is a local authority, and none is likely to be funded directly by the DfT, although five will be funded indirectly - the road projects via the Highways Agency and the rail projects via Network Rail. 

Although not local authority schemes, the outlook for the road projects to start before April 2012 does not look good, since three letters were issued yesterday postponing public inquiries into highway schemes already applied for under the previous regime: the A14 Ellington to Fen Ditton improvements, the A5/M1 link and the A21 Tonbridge to Pembury improvements (notably the same road as one of the IPC schemes).  See this link to for the postponement letters.

Communities and Local Government

Meanwhile, the Secretary of State for Communities and Local Government, Eric Pickles MP, also issued a wrtten statement 'Local Government Savings Package' (here).

The cuts to local government are to total £1,166m (including money from various departments, not just CLG), but the main grant of £29bn to local authorities is unaffected, and no local authority will see its grant reduced by more than 2%.  The effect of these cuts (rather than the transport cuts) on projects that are funded by local government should therefore be less significant.

Running costs for CLG and its quangos - which include the IPC - are to be cut by 10% or £50m by means of efficiency savings.  It is not clear if savings will need to be made at the IPC, given that it is to be replaced altogether in 2011/12.

A table of the cuts to local government can be found in this press release.

Energy 

The vast majority of the projects on the IPC's list are energy-related, and the provenance of the Department for Energy and Climate Change (DECC).  There was no cuts statement from DECC yesterday and anyway, most energy projects are not funded by the government but are market-led - even nuclear power stations.  Thus the 29 energy projects on the IPC list are likely to be unaffected by the £6bn savings drive.

Water and waste

The final project on the list is the Thames Tunnel, a waste water project to be promoted by Thames Water.  It is on the list because the previous government was minded to treat this as an IPC project even though it is not in an official category of nationally significant infrastructure project (which it was entitled to do under the Planning Act). It remains to be seen whether the coalition government will follow through on this, particularly in the light of opposition from some (but not all) Conservative-led councils in London, but it should be unaffected by the cuts announced yesterday.

Previous entry 138: 237 local authorities for 36 nationally significant infrastructure projects
Next entry 140: National Policy Statements set to continue under coalition government