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Letter from Department for Transport in Response to Committee's Letter Re the Spending Review, Dated 4 December 2020

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From the Secretary of State The Rt. Hon. Grant Shapps Great Minster House 33 Horseferry Road London SW1P 4DR Tel: 0300 330 3000 E-Mail: [email protected] Huw Merriman MP Web site: www.gov.uk/dft Chair of the Committee Transport Select Committee House of Commons London SW1A 0AA 4 December 2020 Dear Huw, I am writing in response to your letter of 3 November 2020. This sought further information on my Department’s Spending Review plans, following a decision by HM Treasury to postpone the multi-year approach in order to enable focus on responding to the immediate public health and economic emergency we face in light of the continued spread of COVID-19. The material set out in Annex A provides a comprehensive response, in turn, to the original and further questions which you posed. I hope you will find your questions more fully answered because of the Spending Review having taken place last week and the Department now having confirmed budgets to work on various aspects of delivery for next year. Yours ever, Rt Hon Grant Shapps MP SECRETARY OF STATE FOR TRANSPORT Annex A – Responses to questions in turn 1. What your policy priorities are for the Spending Review period, including how these differ from those published in last year’s Single Departmental Plan, including those commitments made by the Government during the election DfT has taken steps to evolve our objectives from last year’s Single Departmental Plan, in order to reflect the government’s priorities (including those outlined in the 2019 Manifesto) and take account of the impacts of Covid-19 and EU Transition. We will continue to develop these as part of post-Spending Review business planning and into 2021. We are focusing our work around the following areas: • Improving Transport for the User: Build confidence in the transport network as the country recovers from Covid-19 and improve transport users’ experience, ensuring that the network is safe, reliable, and inclusive. • Decarbonising transport: Tackle climate change and improve air quality by decarbonising transport. • Levelling-up the economy: Improve connectivity across the United Kingdom and grow the economy by enhancing the transport network. • Increasing our global impact: Boost our influence and maximise trade by having an outward-facing approach and being a world leader in the future of transport. • An excellent department: Be a well-run department that focuses on delivery, drives value for money and embodies our values in all that we do. The first three bullets above have been set as key priority outcomes as part of Spending Review 2020 (SR20) (as set out in the Spending Review document1). 2. Details of spending commitments already made for the Spending Review period, by year, and by amount SR20 allocates multi-year funding envelopes to several of the Department for Transport’s (DfT) major capital programmes. Profiles for each of these are detailed in the Spending Review document (Table 6.18) (and as below): Department for Transport multi-year capital programmes: £ billion 2021- 2022- 2023- 2024- Total 22 23 24 25 High Speed 2 capital DEL 5.2 5.7 5.8 5.9 22.6 Road Investment Strategy 2 capital 3.8 4.4 4.8 5 18 DEL Network Rail's Control Period 6 5.8 5.8 5.8 - 17.5 capital DEL Intra-city settlements capital DEL - 0.8 0.8 0.8 2.5 Electric vehicle charging and 0.4 0.6 0.5 0.4 1.9 grants capital DEL 1https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/938052/S R20_Web_Accessible.pdf#page=81 2 The Spending Review also allocates one-year (2021-22) Resource (RDEL) and Capital (CDEL) settlements for DfT programmes that are not in scope of multi-year funding envelopes. These will be reflected in DfT’s Main Estimate. Policy commitments and the associated funding implications are described later in this response (see question 6). The settlement also provides Covid-19 funding for Rail for the first quarter of 2021-22 intended to specifically address the fare income shortfalls DfT is experiencing as a direct result of the pandemic. The settlement further includes wider provision for budget pressures that DfT may experience as a result of Covid-19, particularly through a reduction in income. 3. How your Department has analysed its priorities and work for this Spending Round, including how it identified areas of cost saving, programmes and projects that can be brought to an end and the total resources dedicated to the Spending Round Following the announcement of SR20 in July, a central Spending Review team was created with representatives from the finance and strategy teams to coordinate the department’s overall response (a core team of 10-15 people working flexibly on the Spending Review and related departmental planning work over a period of approximately six months). Central governance structures were created, including a Fiscal Events Programme Board to bring together Finance, Strategy and representatives from policy teams across the department. A Spending Review Analytical Board was created to assess funding bids. The central strategy and finance team commissioned the whole department to forecast financial requirements for the SR. As part of this, information was requested to support the prioritisation of these requirements and to identify opportunities for cost savings. This information included the level of commitment (e.g. legal or contractual) associated with each forecast, alignment with strategic objectives, value for money, deliverability and robustness to the impacts of Covid-19. Initial findings from this exercise were then stress-tested with teams and later via challenge panels with members of the department’s Executive Committee. Summaries of these financial requirements and associated information were presented to ministers to inform decision making on which programmes should be prioritised or de-prioritised from the department’s Spending Review bid. 4. How you intend to engage those outside the Department, such as civil society, in formulating ideas for savings and priorities The department’s central SR and policy teams have engaged closely with key stakeholders throughout the SR process both to support the development of departmental priority outcomes and effective packages of proposals to support these outcomes as well as the government’s wider priorities. These stakeholders include industry representatives within specific modes and the transport sector more widely, both at the local and national level. They also include the department’s Arms Length Bodies (ALBs), Devolved Administrations, Mayoral Combined Authorities, and Local Authorities. Engagement with key stakeholders has continued in the immediate aftermath of the SR announcement, to brief them on the settlement, answer questions, and gather feedback. 5. What policy areas you have identified that require assistance from other departments, and how you have liaised with them; 3 DfT works with other government departments across policy areas on an ongoing basis (for example, on issues such as EU Transition and security). Key areas of collaboration to deliver on our strategic priorities have included: • BEIS and Defra on Decarbonising Transport • MHCLG, BEIS and DfE for Levelling-up. Broader cross-cutting areas for the SR have included: • Defra – Working towards the 25 Year Environment Plan – including policy on managing green estate alongside railways and strategic roads; and reducing air pollution from transport • BEIS – Net Zero by 2050: DfT will work alongside other departments including MHCLG, Defra and HMT to deliver policy, legislation and infrastructure. • DCMS - Increasing economic growth and productivity through improved digital connectivity and data infrastructure: Working with DCMS and MHCLG to support DCSM to make it easier and cheaper to deploy digital infrastructure. • MHCLG - Raising productivity and empowering places so that everyone across the country can benefit from levelling up: In coordination with BEIS, DWP, DfE and MHCLG 6. Policy commitments (including those in legislation) made which may have a significant spending impact, such as reducing carbon emissions to net zero by 2050, over the Spending Review period, with likely costs Significant areas of spend to deliver on policy commitments include: • Covid-19 response - supporting public transport services to ensure that people can make the journeys they need to safely and reliably: o Over £2 billion of confirmed funding in the first quarter of 2021-22 for rail services, building on the estimated £12.8 billion of support for transport services that the government has already committed to provide in 2020-21 • Levelling-up local and national infrastructure o Road Investment Strategy 2 (RIS2) and local roads and rail. Over £58 billion of investment for road and rail transport between 2021-22 and 2024-25, delivering some of government’s largest capital programmes. o £1.7 billion in 2021-22 for local roads maintenance and upgrades to tackle potholes, relieve congestion and boost connectivity – to help deliver against the government’s 2019 manifesto pledge to launch the biggest ever pothole-filling programme. o Local transport improvements - £850m for the Transforming Cities Fund and a multi-year settlement for the Intra-City Transport Fund, maintaining the government’s commitment of £4.2 billion for five-year, consolidated settlements. o £4bn national ‘Levelling-up Fund’ to invest in local infrastructure (joint between HMT, MHCLG and DfT) • Decarbonising Transport to support the Government’s commitment to Net Zero by 2050 o A one year capital settlement which includes additional funding for zero emission buses and measures to support the Prime Minister’s Ten Point Plan for a Green Industrial Revolution. o Multi-year settlements for Plug in Vehicle Grants (£582m) and Electric Vehicle Infrastructure (£1.3bn) 4 • Transformation of bus services and active travel (in line with the PM’s public £5bn ambition) o £257m in 2021-22 for cycling and walking o £120m for zero emission buses and £300m to drive transformation of bus services in 2021-22.
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