The Government has conceded that transport investment will fall far short of the ambitious targets set out in the 10-year plan unveiled by John Prescott in 2000.
An additional £1.7bn will be pumped into the system to meet "immediate pressures" in the two years to the end of 2007. Expenditure in 2007-08 will be more than £2.4bn higher than in 2004-05, the Government says. Spending will grow by an annual average of 4.5 per cent in "real terms" between 2005-06 and 2007-08.
It is proposed that some £785m will be saved by 2007-08 through "delivery reform" measures. Spending by the Department for Transport over the decade to 2010 will exceed £37bn.
Gordon Brown said that by 2008, transport spending - even after inflation - will be 60 per cent higher than in 1997 when Labour came to power.
Much of the extra investment will go into the rail network, but observers point out the Government will get nowhere near the target of increasing the number of rail passengers by 50 per cent and rail freight by 80 per cent in the decade to 2010.
Ministers are hoping there will be long-term savings through measures to restructure the rail industry, due to be published in a White Paper on Thursday. The Government is hoping to save money by "streamlining" the management of the network. It is expected that the Strategic Rail Authority (SRA) will effectively be abolished as part of the new structure.
Alistair Darling, the Secretary of State for Transport, also envisages greater involvement of local authorities and regional bodies in the decision-making process over transport investment. Mr Darling said transport was a "high priority" for the Government. "My department is determined to deliver the outcomes that the travelling public and taxpayer desire. This settlement will allow us to continue the progress we have made in delivering the Government's 10-year plan."
He said the Government would soon be publishing its long-term strategy which would update the 10-year plan and "roll forward" the funding plans until 2014-15.
Tony Grayling, associate director of the Blairite Institute for Public Policy Research, said the increased funding was welcome and necessary but was likely to be largely absorbed by increased operating costs on the railways. "There will be a need to find additional sources of funding if we are to meet Britain's transport investment needs and that could include looking at road tolls and private sector contributions for major projects." Mr Grayling said.
The RAC Foundation welcomed the "modest" increase to the transport budget but warned much more was needed.
Tim Yeo, the Conservative transport spokesman, said the Government had consistently failed to hit its targets for transport. "Nothing Gordon Brown has said in his spending review suggests that the Government has an effective plan to make our railways more reliable or our roads less congested," he said.
John Thurso, the Liberal Democrat transport spokesman, said there had been an "incredible waste of money" in transport, particularly on the railways.
Department for Transport
Spending in 1996-97: £5.3bn
Spending in 2002-03: £6.2bn
(increase of 17 per cent)
Civil servants: 15,090
Future spending: The budget will rise from £10.4bn this year to £12.8bn by 2007-08.
Where the money will go: The bulk of the money will go on improving the rail network.Reuse content