Mark Sinclair's Blog: 9 September 2009 - Green shoots in the tarmac
09 September 2009
Mark Sinclair is boss of leasing firm Alphabet
British drivers pay £45 million a year in motoring taxes but less than a fifth of this is invested back into the road network while the rest goes to fund other areas of public spending.
Reform, an independent think tank, has recently pointed out that road transport, which accounts for 90% of journeys in the UK, received £4.8 billion of Government investment in 2006-07. Rail, which accounts for only 7% of journeys, received £5 billion in the same financial year.
Even this modest level of spending on safer and less congested roads is already being threatened. Leaked papers seen by The Guardian in June contained plans to axe future increases in capital spending on transport. Nearly £29 billion-worth of projects, including £6 billion of motorway improvements, will be cut over the next 10 years to keep spending flat, assuming that the proposals go ahead.
It is safe to assume that they will. Public spending is already in deficit to the tune of £175 billion. Government borrowing is soaring and tax revenues are collapsing, so cuts are inevitable, whatever the Prime Minister tries to claim to the contrary.
The likely cut in capital spending on transport infrastructure - £29 billion - is not far from the total amount of revenue that the Government is due to collect from fleet operators through company car BIK and NIC payments over the next decade. What will it mean for business road users?
As BusinessCar reported in its most recent issue, it already costs nearly £1 billion a year simply to maintain Britain's motorways and trunk roads. And that doesn't include the cost of repairing minor roads, which is borne by increasingly cash-strapped local councils.
Fleets and private motorists are literally feeling the impact of cuts to road repair budgets. Warranty Direct, an insurer, estimates car owners have to pay out up to £320 million a year to repair wheels and tyres damaged by potholes.
Transport is vulnerable to spending cuts because it is politically a soft target compared with health, social security, education, law and order and defence.
We would all like to see wasteful spending eliminated, of course. Earlier this year Theresa Villiers, the Tory shadow transport minister, got the Government to admit that it has paid consultants £68 million since 1997 just to advise on widening the M25. That works out at £2 million per mile, over the sections in question; mostly spent before a spade even touched the soil.
The Reform think-tankers have called for smarter spending on existing infrastructure to help build the capacity of the economy and lay the groundwork for future prosperity. They want to see money invested in improvement such as motorway hard shoulder running, rather than the Government betting everything on "grand projects".
It seems crazy to be talking of building a new £5.5 billion high speed rail line when the DfT may be about to cut £30 billion of capital expenditure over the next 10 years. As it is, the entire annual transport budget - £23 billion - is just a drop in a bucket beside the £500 billion that the Government is ultimately prepared to spend to prop up the banks.
Let's hope that someone in power gets the message that what the UK needs more than anything is productive investment. Otherwise only green shoots your drivers are likely to see in the next five years are the ones poking up around the edges of an ever-increasing number of potholes in our roads.