Infrastructure projects fall into Reeves’ firing line

Rachel Reeves has unveiled a series of spending cuts in a bid to save the economy £22bn. Part of this included axing or curtailing four infrastructure projects.

Yesterday the chancellor took to the stands in Parliament and delivered potentially the worst bit of news since the new government have been in power – the financial situation inherited is far worse than originally thought.

Reeves has claimed the previous government had £35bn of pressures on its budgets that it failed to divulge publicly. She accused the former party of making ‘unfunded commitments after unfunded commitments’ and ‘putting party ahead of country’.

One of the covered-up funds disclosed by Reeves is a £1.6bn overspend in the Department of Transport which stems from handouts to private rail companies to make up for losses during the Covid-19 pandemic.

Against this backdrop, the chancellor remarked a number of ‘difficult decisions’ would have to be made to bridge the spending gap, including axing or delaying a number of infrastructure projects. In the short-term the cuts would make up £5.5bn of savings this year and over £8bn in 2025.

Stonehenge Tunnel

Previously the government were set to spend £1.7bn on a tunnel alongside Stonehenge and eight miles of dual carriageways past the monument, on a stretch of road from Amesbury to Berwick Down in Wiltshire. However, Reeves has confirmed the project ‘will not move forward’.

National Highways have claimed the scheme would remove the sound and sight of traffic passing the 5,000-year-old site and slash journey times.

Although, frequent battles with campaign group Unesco and the High Court have come from this project. In November 2020 development consent order (DCO) was granted against recommendations from the Planning Inspectorate. Campaigners took this to the High Court which overruled the DCO decision as it was deemed unlawful.

Despite this, National Highways continued to push for the DCO and a second application was approved by the Department for Transport (DfT) last summer. Constructure was due to commence this year, but there was one last legal hurdle to overcome, which was heard earlier this month.

Now all the effort, including the £166m spent developing the two DCO applications, has come to naught.

A27 Arundel bypass

In the lead up to the General Election Labour committed to fund the fixing of one million potholes across the country each year. They claimed the funds for this would come from deferring the A27 Arundel bypass in West Sussex. This project was hoped to increase capacity on the road and reduce congestion, but Labour described it as ‘poor value for money’.

Echoing a similar tone, a number of campaign groups – including the Sussex Wildlife Trust – opposed the projects constructure, claiming it would cause more environmental damage than good.

40 new hospitals programme

It’s no secret that there currently aren’t enough hospital spaces for the number of patients in England. In a bid to address this, former prime minister Boris Johnson announced a new hospital programme that would cost around £20bn and see the construction of 40 new establishments.

The plans was to create hospitals from old, derelict buildings by the end of the decade, but it has now been delayed.

In 2023 the National Audit Office produced a report that showcased of the 32 projects announced in 2020 a mere 11 qualified as ‘whole new hospitals’ and the project was failing to deliver value for money.

Plans to restore railways

Speaking of things Boris Johnson implemented, in 2019 his government vowed to restore railway lines and stations that had been closed as a result of the Beeching cuts in the 1960s. Fast forward a year and Johnson earmarked £500m for the programme which was expected to reopen 44 rail lines that had successful bids. However, only one line has been reinstated since 2020 – the Dartmoor line between Exeter and Okehampton.

In 2022 23 schemes were being funded, but it is understood these are now being scaled back.

Experts reactions

Marie-Claude Hemming, director of operations at Civil Engineering Contractors Association (CECA), said: ‘The Chancellor’s announcements are disappointing but will not come as a shock to industry, not least because a shortfall in funding for public projects has been evident for some time.

‘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.

‘As the UK’s public finances are clearly in a weakened state it is all the more important that government works with industry to identify how to move schemes towards delivery, rather than mothballing these crucial sources of growth.

‘What’s more, it is frustrating that firms are expected to bear the costs of delay without regard to their forward planning in terms of workload and skills.’

In addition, Darren Caplan, chief executive of Railway Industry Association, has also commented on the news.

‘The Railway Industry Association and our members will be closely following the announcement by Rachel Reeves of a three-year spending review, and news that the Restoring Your Railways programme is cancelled with individual projects now under review,’ Caplan said. ‘We support the need for a strategic review of transport schemes and urge the government to make sure that the spending review takes account of the crucial role rail investment plays in supporting jobs, local growth, connectivity and decarbonisation within and between the UK’s nations and regions. As the National Infrastructure Commission recently noted, a lack of rail capacity is at risk of holding back growth in key cities.’

Images: Zhu Hongzhi and Zetong Li