The headlines in the Autumn Statement are intended to reassure:
“The Autumn Statement recommits to the government’s transformative growth plans for our railways.”
“Departmental budgets maintained at least in line with last year’s Spending Review settlement.”
Move along. Nothing to see here.
I don’t think so.
Underneath the headlines, there are some things conspicuously absent. There’s no mention of Rail Reform and no mention of the Integrated Rail Plan. Yesterday’s political answers aren’t going to help with today’s problems. And today’s problems are all about short-term industry finances.
Three fiscal challenges are now in sharp focus:
- Delivering last year’s Spending Review – last year’s settlement was incredibly challenging for the Department for Transport. Resource savings of 30% are called for over the next two financial years, and over half of the £2.6bn will be expected to come from rail.
- Delivering workforce reform – when last year’s Spending Review was put together, the savings relied on improved productivity through workforce reform. Even if an agreement was reached quickly with the unions, including productivity gains, the price would be an inflation-linked pay award.
- Inflation – there’s no budget increase to cover inflation, so both resource and capital budgets don’t go as far.
The Chancellor highlighted infrastructure as one of his three priorities to boost economic growth. Capital funding hasn’t been cut, but it will feel like it has. Look out for short-term pain but long-term commitment.
There are some inevitable difficult questions:
Will there be cuts to projects? Are everyday train services safe? Most projects will be impacted, but delay is easier than cancellation. There may be some train service economies. But for both projects and services, the inevitable stakeholder reaction will put a brake on many.
Will this bring an end to the rail strikes? No, but there are more positive indicators than over the summer.
Is GBR dead? No, and industry reform will continue to make progress with a lower profile.
The next three months will see the detail worked out. The DfT will be making a range of tough decisions on service levels, project scope and programmes, which will inevitably become increasingly political.
Strap in for a bumpy ride.
