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Defra's budget for day-to-day spending is to be cut by 15% over the next four years. This will be difficult to achieve since total budget reductions of about a quarter during the last Parliament have already identified easily achievable savings and removed the more obvious inefficiencies across the Defra family. Defra is one of the smaller government departments, with Exchequer funding of just over £2 billion, but it performs vital functions. We endorse the Defra Secretary of State's vision for a world-class food and farming sector, a robust rural economy and an enhanced natural environment. Managing environmental and rural economy issues together can help deliver that vision but this, together with meeting the challenges of protecting the UK from natural hazards, requires adequate resources. Protecting the nation against, for example, flood and animal or plant diseases carries multi-million pound costs; the costs to the economy, society and the environment of not doing so may, however, be even greater. The challenges facing Defra are first whether the reduced budget available to it is sufficient for its task, and second how to make the correct policy choices so as to allocate smaller funds effectively.
While this report welcomes the additional investment in road and rail infrastructure projects announced in the Autumn Statement, it expresses concern that the regions are not as well provided for as London and the south east. There are also real concerns about how those projects were chosen. Ministers need to provide much more information about how the department's funding of the Regional Growth and Growing Places Funds has been used. While the presentation of financial information is in a clearer, simpler format than previous years, the key performance indicators fail to show whether the DfT's policies are effective and, overall, the DfT's 2010-11 annual report gives a very thin account of the department's performance during the year. The Department must publish much more information about changes made to its budget within any given year. MPs noted that the DfT underspent on its budget in 2010-11 by more than the budget cuts made during the year. They recommend that the new rail schemes announced in the autumn statement be regarded as additional to those which the Government will agree to fund as part of planning for the 2014-19 rail spending period. Finally, the Committee repeats its call for the Department to publish a national transport strategy to explain what the Government aims to achieve by spending money on transport and how its policies support these aims.
As part of the 2010 Spending Review the government announced a significant reduction in the budget of the Department for Transport, with spending due to be 15% lower by 2014-15, in real terms, than the Department's £12.8 billion budget in 2010-11. The Department prepared early, identifying areas for budget reductions based on good analysis. But for road users, railway passengers and taxpayers, there are many questions which remain unanswered. The Department doesn't fully understand the impact of its cuts to road maintenance. There is concern that short-term budget cutting could prove counter-productive, costing more in the long-term as a result of increased vehicle damage and the higher cost of repairing the more severe road damage. Another area of concern is rail spending. The Department spends two-thirds of its budget through third party organisations such as Network Rail and Transport for London. While information and assurance have improved over some third party spending, there is still a lack of proper accountability and transparency for Network Rail. Rail budgets aren't being reduced as much as other areas, yet passengers still face high fares. The Department hands Network Rail over £3 billion each year, underwrites debt of over £25 billion and continues to treat it as a private sector company. The National Audit Office must be allowed full audit access as quickly as possible.. Better contingency plans for dealing with threats to its planned budget reductions also need to be developed - for example if some of its planned efficiency savings do not deliver or if inflation is higher than forecast
Dated May 2007
In this report the National Audit Office identifies issues and risks which may arise as the Department for Transport devolves more control over funding and delivery of transport services to local bodies. The Department has recently announced proposals to devolve funding for major transport schemes to new local transport bodies and is also consulting on devolving bus funding and some responsibilities for rail services to local authorities. The spending watchdog is calling on the Department to clarify its approach as it implements these changes and moves into the new ways of working. This includes being clearer on who is accountable for local transport funding and how they will be held to account. The Department has already said it will assess whether local transport bodies have appropriate systems and processes in place. But it should clarify how it will check that these devolved arrangements continue to meet its standards and what action it will take if standards are not met. In the context of increasing pressure on local budgets, the Department should clarify how local transport data can be better used to judge value for money and to compare performance between local areas. It also needs to identify areas and activities most at risk of a drop in performance and clarify under what circumstances it would expect to intervene.
In this report the Transport Committee calls on the Government to publish a White Paper on its transport strategy, explaining in particular how spending on transport will deliver economic growth and development. Such a strategy must set objectives for all transport spending and explain the criteria Ministers will use to decide between different claims on limited financial resources. The report welcomes the commitment to undertake transport investment that will deliver sustainable growth and enterprise, including 'green' industries, balanced across all sectors and in a manner that will reduce regional disparities. Ministers must however ensure that this vision for transport investment is backed up by a pro-active and fully integrated economic development strategy. This is so far absent. The current Government has swept away the regional tier of planning and many institutions that played a key role in the development of strategic priorities for transport spending in support of economic development. This has created a vacuum that has left regions without the institutions and arrangements they need to plan and prioritise sub-national transport schemes and other significant transport infrastructure. The Coalition also needs a much stronger strategy for developing the UK's major ports and airports. The Government must also do more to correct regional disparities in transport investment. The Department for Transport's 'New Approach To Appraisal' process, which plays such a major role in deciding which transport schemes get Government funding, is highly controversial. Small schemes, including sustainable transport projects, may be cut disproportionately under new transport funding arrangements.