Hammond seeks productivity boost with £2.6bn for transport

Transport is one of the biggest beneficiaries of a new commitment to “high-value” investment in the British economy announced by the chancellor, Philip Hammond, in his autumn statement. Traffic-clogged roads and a new hi-tech railway system are among the projects to receive an additional £2.6bn in funds.

The chancellor’s focus in the autumn statement was for small-scale schemes that will directly contribute to raising Britain’s productivity. The extra transport investment will be drawn from the newly created £23bn National Productivity Investment Fund. Philip Hammond said £1.1bn will be spent on English local transport networks, “where small investments can offer big wins”. Another £220m has been allocated to address traffic pinch points on strategic roads.

A £27m Oxford-Cambridge expressway road has also been approved, along with £110m of funding for work on a rail link between the two cities. Major road schemes to be upgraded include the M60 around Manchester and turning the A66 into a dual carriageway across the northern Pennines.

Further road schemes to benefit from new funding will be announced in the coming weeks by the transport secretary, Chris Grayling.

But as well as the “shovel-ready” projects, where work can start immediately, Hammond pledged more long-term investment in infrastructure. He said that infrastructure spending would rise from 0.8% of GDP to between 1% and 1.2% of GDP, and that he had instructed the National Infrastructure Commission – an independent advisory body – to make recommendations for future work based on the assumption of that continuing investment.

Hammond backed the commission’s most recent recommendation by giving the go-ahead for twin road and rail schemes linking Oxford and Cambridge. Hammond said: “This project can be more than just a transport link. It can become a transformational tech-corridor, drawing on the world-class research strengths of our two best-known universities.”

Stressing that “reliable transport networks are essential to growth and productivity”, Hammond announced a further £450m for a trial of digital signalling on the railways. Bringing forward the so-called digital railway has been a major objective of Network Rail’s chief executive, Mark Carne, who argues transformed signalling could allow far more trains to run. Hammond said that the trial would help “to achieve a step-change in reliability and squeeze more capacity out of our existing rail infrastructure”.

Another £80m will be spent on speeding up the rollout of smart ticketing in rail, including season tickets for commuters in the UK’s major cities – a long-stated ambition of the Department for Transport, although impetus has dragged since early trials.

Meanwhile, a £5m feasibility study was announced as the first step in overhauling transport links in the Midlands.

Hammond also committed a further £390m “to build on our competitive advantage in low emission vehicles and the development of connected autonomous vehicles”. Of that money, £80m will be spend building charging points for electric cars.

Industry observers gave a lukewarm welcome to the commitments. Plans for the east-west rail linking Oxford and Cambridge were praised by Stephen Joseph, chief executive of the Campaign for Better Transport. But, he said: “While the government has rightly committed to focusing on smaller local projects which can deliver better value, it is still wasting too much on big road building schemes. Schemes such as the Oxford-Cambridge Expressway and dualling the A66 across the Pennines will only increase traffic – what’s needed instead is more support for alternatives to driving, including rail and bus infrastructure.”

Richard Threlfall, head of infrastructure at KPMG UK, said that although the chancellor had boasted of a future increase in infrastructure spending to 1.2%, that was still low by international standards. He added: “The continued focus on economic infrastructure in isolation, ignoring both social infrastructure and housing, is another missed opportunity to grasp the bigger picture. Overall, the UK spends about 2.7% of GDP on infrastructure today. Canada spends more than 4% and China at least double that.”

PwC’s UK infrastructure head, Neil Broadhead, said the chancellor had recognised the need for not only multibillion pound mega-projects for decades to come, “but also a plethora of smaller schemes dispersed around the country which can be completed and deliver benefits to the general public much more quickly”. But, he added: “This represents only one stage on the UK’s long journey to achieve an infrastructure base fit for the 21st century.”

Liz Jenkins, infrastructure partner at law firm Clyde & Co, warned: “A pipeline of projects is just a pipe dream until construction takes place. The government needs to speed up decision-making if it is serious about driving forward the UK’s infrastructure.”