A303 Stonehenge Tunnel most high profile project hit by Treasury audit revelations
Chancellor Rachel Reeves has confirmed that UK transport infrastructure projects including the £1.7bn A303 Stonehenge Tunnel “will not move forward” as the government looks to fill a £22bn hole discovered by the new Labour government in its audit of public finances.
Other money saving measures announced by Reeves in her first address to Parliament include the cancellation of the £85m Restoring Your Railway programme to bring disused railways back into service and the A27 Arundel Bypass. Deferral of the £320m A27 scheme had already been announced in the party manifesto in the lead up to the election.
The findings follow a Treasury audit commissioned by the Chancellor which have unearthed billions of pounds of unfunded commitments from the previous Government, including the Rwanda scheme, the Advanced British Standard and the New Hospital Programme. Part of the shortfall includes £1.6bn of undisclosed support to private rail companies to make up for losses during the pandemic.
The previous Government also failed to increase departmental budgets to cover public sector pay settlements, which were £11-12 billion higher than accounted for at the last Spending review.
In taking immediate action, the Chancellor announced £5.5 billion of savings this year and £8.1 billion next year to tackle the overspend. She also committed to set out full fiscal plans, alongside a Spending Review, at the Budget on 30 October.
Chancellor of the Exchequer, Rachel Reeves said, “This is not the statement I wanted to give today, and these are not the decisions I wanted to make. But they are the right decisions in difficult circumstances.”
The Civil Engineering Contractors Association (CECA) said the industry was “disappointed” by the cuts. Director of operations Marie-Claude Hemming said, “The Chancellor’s announcements are disappointing but will not come as a shock to industry.
“The Labour Party rightly identified economic growth as its core mission, but as ever cancelling or pausing projects that will likely need to be delivered at a later date – and at higher cost – is putting off the potential for schemes to drive growth, create jobs and meet the needs of businesses and communities.
“Our industry thrives on certainty of investment, which is what enables CECA members to plan and deliver world-class infrastructure, upskill the workforce to meet projected need, and to ensure sustainable and stable business models.
“That’s why we’re looking forward to working with our members and the government to review schemes that have been put on hiatus and see how they might be brought back online in due course, and to identify other projects that can be unlocked in all parts of the UK.
“The Chancellor’s announcement that she will set a multi-year spending review to provide certainty over three year periods will be welcomed by industry as a statement of intent to deliver economic stability in the longer term.
“Yet we urge the Government not to repeat the mistakes of previous administrations in taking an axe to capital projects without regard to future growth, and to work with industry to identify opportunities for investment that will not only deliver value for money, but form the backbone of a net zero UK economy for years to come.”
This sentiment was echoed by Stephen Bush in the FT who commented “the risk for Reeves, with her cuts to infrastructure projects and other public spending, is that she now falls into the same economic doom spiral that plagued the previous Tory government: sacrificing long-term economic growth to pay for stretched public services.”
Haigh commissions internal review of DfT’s capital spend portfolio
Transport Secretary Louise Haigh issued the following statement following the Chancellor’s address to Parliament.
“In recent weeks, the gap between promised schemes and the money available to deliver them has been made clear to me. There has been a lack of openness with the public about the status of schemes – some of which were cancelled or paused by the previous government, without proper communication to the public.
“As the Chancellor informed Parliament, I am commissioning an internal review of DfT’s capital spend portfolio. We will bring in external expertise and move quickly to make recommendations about current and future schemes. This review will support the development of our new long-term strategy for transport, developing a modern and integrated network with people at its heart and ensuring that transport infrastructure can be delivered efficiently and on time.
“I am determined that we build the transport infrastructure to drive economic growth and opportunity in every part of the country and to deliver value for money for taxpayers. That ambition requires a fundamental reset to how we approach capital projects – with public trust, industry confidence and government integrity at its heart.”