Cutting transport spend could prove a false economy, warns FTA

Tuesday 25 May 2010

Investment in essential transport infrastructure projects must be protected to help secure the UK’s economic future. That’s according to leading trade body the Freight Transport Association following the announcement that £683 million is to be slashed from the transport budget as part of the government’s plans to reduce waste.

Simon Chapman, FTA’s Chief Economist, said:

“While we accept that tough public spending decisions have to be made, it is short-sighted to under-invest in the UK’s transport network. Infrastructure is key to the UK’s economic recovery and without improvements in the way we move goods by road, rail, air and water we are selling our businesses short and consigning operators to years of congestion and delays.

“In prioritising which transport projects remain on course for delivery, the Chancellor should concentrate on schemes which are of strategic importance to the country. These include capacity improvements to the existing motorway and trunk road network, creation of a Strategic Freight Network on the railways and ensuring that inland transport links enable ports to act as trade gateways. Work on key planned road schemes and rail upgrades is now critical, with many having suffered slippage as investment was prioritised and reprioritised by the last government.”

The Eddington Transport Study in 2006 concluded that the economic case for targeted new infrastructure is strong and offers very high returns. Surface transport schemes that improve access to international gateways provide an average return of £6 per £1 of government expenditure. For inter-urban routes, the return is just under £5 per £1 of expenditure.

Chapman concluded:

“Road users were at the front of the queue when it came to raising more tax revenue - the Budget fuel duty increase in April alone will raise an extra £700 million this year in taxes. Less than two months later, essential transport infrastructure investment must not be in the front line for cuts.”

Notes for editors

In his March 2010 Budget the then Chancellor, Alistair Darling, increased road fuel duty by 1 pence per litre and scrapped the 25 pence per litre duty differential designed to encourage the uptake of biofuel - together representing a cost to road users of £700 million in 2010/11. Further duty increases of 1 pence per litre are planned from 1 October and 0.76 pence per litre from 1 January 2011.
 

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