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Fri June 25 2021

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Budget backing for major projects

16 Mar 16 Chancellor George Osborne has commissioned planning work to continue on major transport projects in the north and south of England.

Chancellor George Osborne delivering the 2016 budget statement
Chancellor George Osborne delivering the 2016 budget statement

The £32bn Crossrail 2 railway project in London, the HS3 rail link between Manchester and Leeds and widening major trans-Pennine road arteries in the north have all been given backing in the chancellor’s eighth budget.

The M62 will be widened to dual four lanes, while further north the A66 and A69 will be upgraded. No timetable has been given for this work yet.

The HS3 project has been allocated £60m to develop plans for cutting 30 minutes of the rail journey between Leeds and Manchester, as well as improving transport connections between other cities in the north.

Crossrail 2 gets £80m to continue development work.

Mr Osborne has also agreed to stump up for further studies into the construction of what could be the world’s longest road tunnel, running 20-30km under the Pennines between Manchester and Sheffield. (The Laerdal Tunnel in Norway is 24.5km.) Highways England’s interim report into the scheme has published in December 2015. (See our previous report here.)

All the projects have recently, and presumably not uncoincidentally, received ardent backing from the National Infrastructure Commission (NIC). The NIC was set up by George Osborne ostensibly as an independent body to provide expert advice on national priorities. Within its first six months it has already given its backing to all the projects that Mr Osborne set it up to back, although much of the legwork was outsourced to consultants.

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In fact NIC is part of the Treasury, chaired by a former transport minister and run by a Department of Transport civil servant, Philip Graham, who was involved in planning many of the projects that the NIC is now being directed to bless. The NIC is independent of party politics but is in no sense independent of government.

The chancellor has now asked the NIC to recommend an upgrade of infrastructure to better connect Cambridge, Oxford, and Milton Keynes, work that has also been carried out by the Department of Transport, in accordance with its traditional role as the arm of government responsible for planning national transport priorities.

George Osborne’s budget statement also revealed that the Office for Budget Responsibility has downgraded its forecast of UK economic growth in 2015 from 2.4% to 2.2% and from 2.4% to 2% in 2016.

The 2017 growth forecast has been downgraded from 2.5% to 2.2%, and 2018 is downgraded from 2.4% to 2.1%. 

The budget also gave a £700m boost to flood defences. The chancellor proposes to increase the standard rate of insurance premium tax by half a percentage point (the standard rate will rise from 9.5% to 10%) and all the extra money raised will go to flood defence spending.

Other measures include: a cut in the higher rate of capital gains tax from April 2016, from 28% to 20%, while the basic rate is cut from 18% to 10%; corporation tax will be cut from 20% to 17% in 2020; and Class 2 national insurance contributions (NICs) for self-employed people will be scrapped from April 2018.

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