Reducing costs in the Department for Transport

Book excerpt: The 2010 spending review set a transport budget that is 15 per cent lower in 2014-15 compared with 2010-11. All areas of spending are affected by reductions, but the Highways Agency sees the biggest reduction, with a budget falling from £3.2 billion in 2010-11 to £2.1 billion in 2014-15. The Department felt constrained in altering some areas of spending, most significantly excluding from consideration the current grant to Network Rail. In a sample of 73 per cent of the Department's budget, over half of the reductions, compared to planned spending, are the result of cuts, delays to new investment or higher fares rather than new approaches to delivering the same services for less. The Department had a good understanding of the relationship between costs and benefits regarding specific transport projects such as Crossrail and national road schemes. Information was less good in other areas, the weakest being in rail. The Department commissioned work to improve its information on the costs and benefits from grants to Transport for London and local authorities. There is a risk now that a proportion of the budget reductions in road maintenance and rail budgets may not be financially sustainable. Budget reductions of £1.23 billion will be made to national and local road maintenance; however, this includes £223 million of unspecified efficiencies, risking deterioration in road quality and higher long term costs to the Department or local authorities. One year after the spending review, it is too early to assess with confidence progress on the major cost reduction measures, as most of the critical milestones against which progress can be judged lie ahead