Osborne to focus on key transport projects in spending review

Ministers are set to announce a multi-billion pound long-term commitment to fund high-profile transport projects in the impending spending review as they seek to convince the public of their commitment to growth.

George Osborne, the chancellor, is expected to earmark spending on two tolled road schemes – a long-delayed upgrade of the A14 and a new bridge called the Mersey Gateway in the northwest – as well as an initial five-year budget for the controversial high-speed rail line between London and the north of England, known as HS2. Transport chief warns cuts endanger Tube

Carl Emmerson of the Institute of Fiscal Studies said Mr Osborne was likely to use promises of infrastructure investment to “paint a rosier picture” against the grim fiscal outlook when he updates the coalition’s spending plans on June 26.

While the review will be dominated by another round of heavy cuts to Whitehall budgets, the Treasury is expected to allocate £15bn for major infrastructure projects between 2015 and 2020.

The go-ahead for the A14 upgrade will aim to end a long saga over plans to tackle bottlenecks on a road that links Midlands manufacturers with the country’s largest container port in Felixstowe.

The coalition scrapped a £1.3bn publicly-funded scheme for the A14 shortly after coming to power, claiming it was too expensive. It is now close to pulling together a funding package for a tolled section of the road that could cost up to £1.6bn – but with taxpayers picking up less than half of the cost.

It is the biggest unfunded project in the Highways Agency road programme and is seen as a critically important piece of national infrastructure by ministers who are determined to get the scheme off the drawing board.

The project still needs to pass through the planning process meaning that construction work is unlikely to start before 2017.
The £600m Mersey Gateway Bridge looks set to be the first big transport scheme to get off the ground during this parliament. A consortium, led by Spanish construction group FCC and Macquarie, the Australian financial services group, is expected to be confirmed as the winning bidders to build and operate the toll bridge over 30 years at a total cost of £2bn.

It will be one of the first schemes underwritten by the government guarantee scheme launched last year to unlock private infrastructure investment. Work could start as early as next year.

The coalition is also planning to bolster its high-speed rail ambitions by spelling out budget plans for the HS2 project between 2015 and 2021. A recent analysis by the National Audit Office puts the capital spending over that period at more than £11bn.

Ministers hope such a commitment will help quash doubts over the £34.5bn scheme after recent criticism by the NAO of the strategic case and a spate of legal challenges from opponents. Construction is due to start in 2017.

A senior executive involved in one big transport scheme welcomed the government’s plan to set-out long-term infrastructure funding plans in the spending review but warned that it would not amount to a firm commitment of financing.

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