The headline in last week’s Budget for the industry was the £1.7bn give-away to improve local transport in cities with the regions, mainly the north and midlands, to receive an investment boost in an effort to reduce the concentration of the country’s economy in London.
There are no details on how this money might be spent to improve local transport, and I remain to be convinced that it will make much difference because it will be thinly spread across a number of local authority areas.
Where will it go?
Half of the money will be shared by six areas with elected mayors. This all works out at just over £140m per area. For the other half of the £1.7bn, cities will have to submit bids before they can get their hands on the cash.
Now, don’t get me wrong, £140m per city is a lot of money and I’m sure, spent wisely, can make a real difference. But I have this nagging doubt that at the end of the day we won’t see a huge amount of difference, although I accept that until we know how the money will be spent, I should reserve judgement.
The north-east was also specifically targeted with proposals that could see the North of Tyne area get its own mayor in 2019 as part of a devolution deal that includes £600m of investment – but that is spread over 30 years and so amounts to just £20m a year.
When the headline figures are boiled down, they start to look a little less generous. But the money is welcome nonetheless, and with the public finances continuing to be under strain, we couldn’t expect much more.
And, bus operators beware: If the North of Tyne area is to get an elected mayor, I wonder how long it will be before we start to hear talk of bus franchising being introduced following Nexus’s failed attempt to introduce Quality Contracts?
Of course, the real headline takeaway from the Budget was the appalling GDP growth forecast of less than 2% for each of the next five years – the lowest forecast since 1983.
Productivity growth is the biggest single driver of GDP growth and prosperity, so the effect of this forecast for households is grim. It means that earnings will be outstripped by inflation for the next few years and then rise only marginally above prices.
This is terrible news for the government.
Double whammy
Low productivity and low wage growth deliver a double whammy to the public finances, eroding the tax take and increasing the reliance of poor households on welfare and benefits.
Philip Hammond may have done enough in this Budget, from a political perspective, to save his job.
But the economic outlook is gloomy, to say the least, and unless there is some more upbeat economic news sometime soon, this government could find itself in serious political difficulty.
