Spending and investment

26th June saw UK Chancellor of the Exchequer George Osborne announce the outcome of the inter-departmental negotiations on spending for 2015/16. The headline of the day was that current account spending would fall but that there would be more money for capital investment in those sectors like transport that are seen as driving economic recovery.

The Department for Transport will see its revenue budget fall by 9.3% to £3.2 billion while its capital budget will increase by 5% to £9.5 billion, a net gain in the overall spending for the Department it would seem.

Sustained investment

The next day saw Chief Secretary to the Secretary, Danny Alexander, set out a little more detail on where the additional money would go. While branded the “largest programme of rail investment since Victorian times” along with a long list of enhancements to the strategic road network, careful analysis of what was actually said reveals that while many existing commitments are reconfirmed, very few new transport schemes were announced.

Even so, those of us who have been arguing for the need for sustained investment in our national networks to help reinvigorate Britain’s economy can only welcome the Government’s commitment to keep investing.

Single Local Growth Fund

But what about the local level? The big announcement here was the creation of a Single Local Growth Fund, which rather than being new money would be pulled together from a number of existing sources. Decision-making will be devolved to the 39 English Local Enterprise Partnerships (LEPs). While we haven’t seen the details yet, the indications are that ring-fences between funding sources will come down and the LEPs will be able to direct money to any capital investment that they feel will support their local economies. This is the approach recommended last year by Lord Heseltine in his “No Stone Unturned” report to Government on how it can help promote the rejuvenation of our economy, although the annual £2 billion fund size falls somewhat short of the numbers that he recommended.

New challenges, same approach

For many years, local government has been arguing for just the greater freedoms and flexibilities to spend capital money that the Single Local Growth Fund seems to offer. But this creates a new set of challenges. What share of this new fund should transport get? How do we get best value from this spending? How are investment programmes tied into the availability of funding? Yet, while the challenges may be new, the approach should be the same as it always has been. Therefore, continue to be clear on the objectives, assess the merits of competing options and be decisive on the preferred way forward.