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Transport and Development issues in the Budget


Policy adviser Marianne O'Sullivan looks at some of the key transport and development announcements and how this will impact the North East.

Overall, on behalf of our members, the Chamber was mostly pleased with the transport announcements in the Budget. After having previously received large amounts of funding with the Metro fleet renewal there was still some transport funding for the North East announced including funding for Northern Powerhouse Rail and increased Transforming Cities funding for Tees Valley which was positive. There were also some development announcements with increased funding for regenerating high streets, which our members have asked for, as well as increased funding for housing, but we need to see how this funding will be allocated. This Budget did have limits in the amount it could announce due to the ongoing nature of Brexit negotiations so waiting for the Spring Statement and spending announcements on infrastructure and development after the conclusion of the negotiations will be crucial.

Firstly, I’m going to look at the transport announcements in the Budget. One of the headline transport announcements was £37 million for Northern Powerhouse Rail. The Northern Powerhouse Rail project aims to connect Hull, Leeds, Liverpool, Manchester, Newcastle and Sheffield. The Chamber supports this project as it increases connectivity and help to grow trade between businesses in the North and give employees a greater choice in where to work resulting in an extra £100 billion into the northern economy. The £37 million will help fund the planning for the project but more funding will need to come from the Government in the future to get construction on the rail links started. The Chamber along with Transport for The North will be campaigning for this as part of our Stronger North East Campaign.

The Chamber will also be campaigning to ensure that Northern Powerhouse Rail does not only benefit Newcastle but the whole of the North East. Northern Powerhouse Rail will also stop at Darlington and Durham, we will campaign to ensure that the platforms at Darlington are realigned to ensure that Northern Powerhouse Rail trains can stop in Darlington and people can then reconnect to more frequent trains to the rest of Tees Valley.

Phillip Hammond also announced that the Transforming Cities Fund will be extended by a year to 2022-23, providing an extra £16.5 million for the Tees Valley. This will be important in increasing connectivity around Tees Valley and the Chamber will look to work with the Combined Authority to see how this funding can be best used including possible upgrades to platforms at Middlesbrough station. The North East Combined Authority area will be eligible to bid for an allocation from a new £440 million pot under a competitive process. The Chamber welcomes this but we also argue that it is essential that the North East gets funding to make key improvements such as improving the East Coast Mainline regardless of the outcome of the bidding process.

In terms of more local transport issues £420 million will be allocated to local authorities in 2018-19 to tackle potholes and repair damaged roads and bridges. An additional £150 million will be made available to local authorities in England for small improvement projects such as roundabouts to ease congestion.

For the larger road network, the Chancellor announced a strategic roads investment package worth £28.8 billion from 2020-2025. This will help to progress key projects such as the A66 Trans-Pennine route which would help improve connectivity to Tees Valley and to Teesport and improve resilience around key junctions on the A66 including with the M6 and the A1.

The Government also said that it will publish a National Infrastructure Assessment in 2019, which will form the Government’s response to the National Infrastructure Commission’s ‘National Infrastructure Assessment’ report. It will be important to see plans for Treasury infrastructure spending in the future. Especially after Brexit the need for better infrastructure and connectivity, such as East Coast Mainline improvements or improvements to key roads such as the A66 or the A1, will be important in growing the North East’s economy. The Chamber will be campaigning for a reform in Treasury rules on infrastructure spending to ensure that funding is also given to areas such as the North East where there is high development potential rather than focusing on overheating developed economies in the UK.

In terms of transport and technology up to £78 million will be allocated to the Stephenson Challenge, supporting innovation in electric motor technology. The North East is in a prime position to benefit from this, building on our capabilities in manufacturing and low carbon technologies. The government is confirming £115 million to extend funding for the Digital Catapult, which has centres in the North East, South East and Northern Ireland. The digital catapult centre in North East and Tees Valley allows larger companies to work with smaller innovative SMEs on issues such as Artificial Intelligence which could have an impact in the transport sector.

There were also lots of key announcements in relation to the development of town centres. A new Future High Streets Fund will invest £675 million in England to support local areas to develop and fund plans to improve their high streets and town centres. There will also be a consultation on planning reform to make it easier to establish new mixed-use business models on the high street. The Chamber has been arguing for more support for businesses on our high streets and has undertaken research with Lichfields to see how we can help to reinvigorate town centres. The Chamber will continue to work with businesses and Councils to see how we can continue to work with this new funding to improve our town centres in the future. The Chamber will be arguing for the funding to be distributed in an equitable manner rather than based on a competitive bidding process to ensure that different regions can benefit. The reform to business rates will also help the high street with business with a rateable value of £51,000 or less getting up to a third off their bills. This will cover up to 90% of independent shops, pubs, restaurants and cafes and help to ensure that businesses can remain on high streets.

In terms of housing, there was an increase in the Housing Infrastructure Fund up by £500 million to £5.5 billion helping to unlock 650,000 new homes. This fund is available for local authorities to bid into on a competitive basis and helps support infrastructure such as roads around housing developments. This is supported by the Chamber as ensuring that there are good road and public transport links to new housing developments is crucial in ensuring people can get to work and will benefit the region’s economy, but as the funding is allocated on a competitive basis there are no guarantees on the amount the North East will receive.

Additional support for neighbourhood groups and SME housebuilders was announced with the British Business Bank set to deliver a new scheme providing guarantees to support up to £1 billion of lending to SME housebuilders. This will aim to improve the mix of housing building built across the country and could benefit SMEs in the North East. The Government has also lifted the cap on local authority borrowing for housing sought to enable the development of new council houses. The Chamber supports this announcement as this will increase ability to build social housing. But we will need to work out the priorities for where to build and the impact of right to buy schemes, councils will also need time and funding to increase their housebuilding capabilities in order to build new social housing.

The Chancellor also announced a Special Economic Area for the South Tees Development Corporation site. The 500-acre site includes the former Redcar SSI steelworks will be given up to £14 million to kickstart development and to enable the two major metals projects. This has been welcomed as this funding will help to develop the area.

Finally, 10 areas will also receive support from a £5 million fund to develop proposals for new University Enterprise Zones. They will promote collaboration between universities and businesses, support start-ups and scale-ups, and share management skills. As we have many high-class Universities in the North East the Chamber will support any University Enterprise Zone being developed in the North East.

This Budget has delivered some funding for transport and development which is positive. It will be important to see how this funding is allocated and how much the North East will receive. Looking towards future announcements on funding after Brexit the Chamber as part of our 2019 Stronger North East Campaign will be on behalf of our members putting the case forward for more equitable funding and a long-term plan for investment in the North East both in terms of transport and development. Key issues looking forward that have not been fully addressed in this budget include the UK Shared Prosperity Fund which is set to replace EU structural funds and improvements to the East Coast Mainline in time for projects such as Northern Powerhouse Rail. We will continue to campaign on these issues to ensure that the region’s economy can continue to grow.