Annual Policy Review 2015




  • Electrification of several rail routes
  • Earmarked funds for large future infrastructure spending

1More-to-doMore to do

  • Make decisions on UK airport capacity
  • Completion of upgrading existing infrastructure

1UnexpectedThe unexpected

  • HS3 and a ‘Northern Hub’
  • Plans to privatise Eurostar stake


  • Major transport project announcements
  • Upgrade of the existing rail network



If the Coalition is to be remembered as the government of cuts, it will certainly not be because of its policy on transport.

The Department for Transport’s spending is now £3.5 billion a year more than 2010, and is one of the only places where the government seems keen to announce extra capital spending for the next Parliament. Transport is seen as an area where the Government can leave a lasting legacy and one of the few where it can sensibly target public money.

It is on issues of rail that the current Government was perhaps most active in 2014. The Coalition has, in its own words, committed to “the biggest investment in rail infrastructure since the Victorian era”, and is pushing for an overall modernisation of all existing lines.

Claire Perry replaced Stephen Hammond as Rail Minister in July 2014. She has adopted a harder line with rail operators. In line with this, George Osborne capped rail fare increases at 2.5% for the second year running. While this has given some relief to rail users, the bill for long-overdue investment means average fares have now increased by nearly a quarter since the beginning of the Coalition Government’s time in charge.

The consultation over the major investment project, HS2, rumbles on. Despite solid government backing, the Bill will not become an Act before this Parliament ends, and the Government’s legacy on high-speed rail may not emerge quite so quickly as it hoped. As for rail industry structure, the government has not sought any great reform. It stuck to its guns in letting the East Coast mainline franchise to a private operator, while it was an accounting decision that saw Network Rail reclassified as a public sector body.

While rail has become a priority for the Government, airport expansion has dropped down the pecking order. The Airports Commission, headed by Sir Howard Davies, was set up precisely to stall the big decision on where to build a new runway until after the General Election, and continues with its consultation process. However the commission has ruled out plans for a new hub to be built on the Thames Estuary. ‘Boris Island’, the plan backed by the London Mayor, was dropped from consideration in September. Only three proposals remain in contention (two are designed for Heathrow, one for Gatwick).

A more definite legacy on aviation came in the 2014 budget, with the decision to scrap the highest Air Passenger Duty (APD) tax bands on long-haul flights. The announcement brought an end to a system which saw flights of a similar distance vastly vary in price. The move was roundly welcomed by the aviation industry, but received little publicity elsewhere. Abolition of APD for children in the Autumn Statement was a more eye-catching measure.

In the North of England, the Government is pushing ahead with huge transport infrastructure spending to create a regional hub, with Manchester at its heart. Plans for HS3, a high-speed link across the Pennines, is the latest big project to be green-lighted by the Government, though details about routes, costs, and feasibility are still scarce. The Government has even scrapped the ban on cruise ships docking in Liverpool, in a bid to open a new ‘Atlantic Gateway’. The Autumn Statement added further road projects to the list, and spread the benefits to the South West.

If success was measured on announcements, this Government’s record on transport would be revered. But there are vocal critics of the Government’s progress. Big organisations representing engineers and businesses have voiced concerns that headline-grabbing projects like HS2 and Crossrail 2 are coming at the cost of less grand but more immediately needed spending on roads and runways. As the work on most of the announced infrastructure schemes will not start for years to come, the legacy of these projects is likely to be associated with those who cut the ribbon, rather than the ministers who issue the project green light.