Transport at the heart of infrastructure
The Chancellor’s focus on infrastructure has positioned transport policy front and centre, with a decision to invest now to reduce the productivity gap and encourage growth outside London and the South East.
The Northern Powerhouse productivity strategy is to receive infrastructure investment worth £55bn to the north of England. Alongside that, £2.6bn is to be expected to be used to tackle congestion and deliver networks fit for the future.
Fuel duty is to remain frozen for a seventh consecutive year. This means that the average motorist will no longer be hit by over £100 worth of tax rises. The Government are terming this a cut, but to the average person on the street this is simply money they won’t otherwise have to spend.
The Government will not move on Air Passenger Duty. Despite furious lobbying from airports, especially those in the north of England likely to feel the effects of the devolution – and likely reduction – in APD in Scotland. The Government will look again at this after an exit from the EU, but it’s clear they don’t want to give up a rich strand of revenue ahead of Brexit lest they need it.
The Government intends to create a new National Productivity Investment Fund worth £23bn of extra funding between now and 2021/22 which will focus on transport, digital communications, housing and R&D. These are the areas where the Government sees potential for growth, and where its greatest challenges to creating a fairer society lie. Within this, the Government has also directed the National Infrastructure Commission to consider how to spend this extra money, so its influence is likely to increase in the coming years.
The NPIF will also spend £390m on ultra-low emissions vehicles, including infrastructure, as well as on autonomous vehicle R&D. This is likely a fillip to the automotive industry, nervous after the EU vote, and will almost certainly have answered some of the concerns and demands put in place by companies like Nissan whose own investment has been the subject of much discussion around Brexit. Of this, £150m will be directed towards development of low emissions buses and taxis.
On the railways, the Government will direct £450m of the NPIF towards digital signalling to cut down on delays and improve the efficiency of the network. A further £80m will be put towards smart ticketing efforts and the Green Book has confirmed the start of construction for phase one of High Speed 2. The government is also investing £5 million in development funding for the Midlands Rail Hub, a programme of rail upgrades in and around central Birmingham that could provide up to 10 additional trains per hour.