Home Infrastructure Autumn Budget 2017: what does it mean for the rail industry?

Autumn Budget 2017: what does it mean for the rail industry?

Chancellor of the exchequer Philip Hammond has presented the Autumn Budget 2017, setting out his strategy for the UK’s future economy.

Infrastructure – and railways – feature prominently in the chancellor’s plans as the UK seeks to boost productivity and build a prosperous economy ready for Brexit.

But while the government looks to upgraded railways as part of the solution, the current spending in rail has caused the Treasury a slight headache. Network Rail overspent by £0.7 billion, compared to what had been forecast in the Spring Budget 2017, which has contributed to the government borrowing an extra £12.2 billion by 2021.

Some of the biggest new and not-so-new Budget announcements that will impact the rail industry are covered below.

An artist’s impression of the metro extension through Dudley. Photo: West Midlands Combined Authority.
An artist’s impression of the metro extension through Dudley. Photo: West Midlands Combined Authority.

Transforming Cities Fund

This £1.7 billion fund aims to boost productivity and create higher-paying jobs by improving connectivity and supporting employment across England’s great city regions. Half of this money will be allocated via competition for city transport projects and the other half on a per-capita basis to the six combined authorities with elected metro mayors. This results in:

  • £74 million for Cambridgeshire and Peterborough;
  • £243 million for Greater Manchester;
  • £134 million for Liverpool City Region;
  • £80 million for West of England;
  • £250 million for West Midlands, which has signalled the green light for the Midland Metro extension to Brierley Hill;
  • and £59 million for Tees Valley.

The money for this scheme, which was first launched by Theresa May in Birmingham on November 20, comes from the National Productivity Investment Fund (NPIF).

Network Rail's Old Union Yard Arches. Photo: Network Rail.
Network Rail’s Old Union Yard Arches. Photo: Network Rail.

Network Rail will sell its commercial property business by autumn 2018

Philip Hammond said that the government will look at selling corporate and financial assets when value for money can be secured for taxpayers and where there is no longer a policy reason to retain them. It was previously announced that Network Rail will sell its commercial property business in England and Wales but no estimated sale date was given, until now.

Photo: Tyne and Wear Metro.
Photo: Tyne and Wear Metro.

Tyne and Wear Metro’s ageing fleet is to be replaced

Campaigners pleaded with the government to invest in new rolling stock for the metro system earlier this year and their calls did not fall on deaf ears. The light rail system runs the same trains as it did when it was launched in the 1980s. In total, £337 million from NPIF will be invested in new energy-efficient vehicles that will help cut running costs and boost reliability for the metro’s 38 million annual passengers. Nexus has said that these trains will enter passenger service from 2021.

A picture taken from construction of Crossrail. Photo: Crossrail.
The construction of Crossrail. Photo: Crossrail.

Crossrail 2 update

The government will continue to work with Transport for London to develop fair and affordable plans for Crossrail 2. Part of this will be achieved through an independent review of funding and financing.

Photo: Wellphoto / Shutterstock.com.
Photo: Wellphoto / Shutterstock.com.

Digital upgrades

Three digital upgrade schemes were mentioned by the chancellor: £84 million to fit state-of-the-art in-cab signalling across a range of trains; £5 million from NPIF for digital railway upgrades on the South East and East London lines; and a fund for digital signalling scheme at Moorgate, which will enable more frequent and reliable services.

Photo: HM Treasury.
Photo: HM Treasury.

A new 26-30 railcard

Another of the not-so-new announcements that were mentioned in the Budget. The government will work with the rail industry to extend the benefits of discounted rail travel to those aged 26-30. Plans will be implemented from spring 2018.

Photo: Dubova / Shutterstock.com.
Photo: Dubova / Shutterstock.com.

Better mobile connectivity

Up to £35 million will be pumped into trials to improve mobile phone communications for rail passengers. Directly, this will go towards: upgrading Network Rail’s Melton Mowbray test track; installing trackside infrastructure along the Trans-Pennine route between Manchester, Leeds and York; and supporting the rollout of full-fibre and 5G networks.

Photo: Markus Mainka / Shutterstock.
Photo: Markus Mainka / Shutterstock.

Money for Northern Powerhouse Rail

Initially announced in October, the Budget reaffirms the £300 million funding to ensure HS2 infrastructure can accommodate future Northern Powerhouse and Midlands rail services.

Photo: Sovastock / Shutterstock.com.
Photo: Sovastock / Shutterstock.com.

A North of Tyne devolution deal 

Following the likes of the West Midlands and Greater Manchester, a devolution deal has been agreed with the North of Tyne authorities, which could give the region greater powers and responsibilities when it comes to transport. This deal is subject to the consent of local partners, however.

Photo: EQRoy / Shutterstock.com.
Photo: EQRoy / Shutterstock.com.

Developing the Coventry-Leamington rail corridor

The transport arm of the Midlands Engine, Midlands Connect, will be allocated a £2 million pot of money to assess the best options for overcoming the capacity constraint from Coventry to Leamington. This will improve connectivity between the Thames Valley area and the East Midlands and is one of the key elements to the transport body’s wider strategy. Midlands Connect said that it will now advance proposals to reinstate and add new infrastructure that would enable an additional Cross Country service through Birmingham International station.

Photo: EQRoy / Shutterstock.com.
Photo: EQRoy / Shutterstock.com.

Helping the Cambridge – Milton Keynes – Oxford corridor reach its potential 

Philip Hammond said that the western section of East West Rail will be complete by 2024, allowing services between Oxford and Bedford, and Aylesbury and Milton Keynes. He added that a new East West Rail Company is being established to accelerate delivery of the central section between Bedford and Cambridge. Leveraging private sector investment it is aimed for completion by the mid-2020s. Working in partnership with local stakeholders, the government is committing £5 million to develop proposals for Cambridge South station, and is starting a study on the enhancements needed to accommodate future rail growth across Cambridgeshire. As a first step towards opening a station at Cowley, the government will also make available £300,000 to co-fund a study for new stations, services and routes across the Oxfordshire rail corridor.

Photo: Ceri Breeze / Shutterstock.com.
Photo: Ceri Breeze / Shutterstock.com.

Infrastructure upgrades in Wales

The government will also invest in infrastructure upgrades that will provide direct services from Pembroke Dock to London via Carmarthen on new Intercity Express trains. Additionally, the Department for Transport continues to develop proposals for a number of other schemes, including:

  • Station improvements at Cardiff Central station and Swansea;
  • Improving Cardiff to Severn Tunnel Junction relief lines;
  • Improving journey times between: Swansea and Cardiff; South Wales, Bristol and London; and on the North Wales main line;
  • Considering proposals to improve journey times on the Wrexham – Bidston line and provide necessary funding to develop the business case.

Photo: A G Baxter / Shutterstock.com.
Photo: A G Baxter / Shutterstock.com.

Housing around transport hubs

Housing featured prominently in the Budget. One scheme Philip Hammond has put forward is to introduce minimum densities for housing development around transport hubs, to ensure scarce urban land is used as efficiently as possible. The government will now consult on introducing this measure.

Photo: Jason Batterham / Shutterstock.com.
Photo: Jason Batterham / Shutterstock.com.

Extra money for CP5

The Treasury has allowed Network Rail to allocate an additional £200 million on renewals for CP5. This money is in addition to the current funds and does not come from CP6. RIA chief executive Darren Caplan welcomed the decision and said he looked forward to working with government, Network Rail and other parties to improve funding mechanisms and avoid the “boom and bust” at the beginning and end of control periods.

Read more: Network Rail’s sale of 5,500 properties to fund mega projects



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