The Minister of State, Department for Transport (Andrew Stephenson)
Let me start by saying that delivering high-quality, world-class transport infrastructure in northern England and following through on our commitments to level up remain a top priority for the Government. Transport for the North shares that ambition, and I am surprised and disappointed that its latest funding settlement has provoked such a great deal of consternation. Let me assure Members across the House that Transport for the North’s funding settlement is appropriate and fair and enables it to continue to carry out its statutory functions, which is what it was established to do. Given the level of scrutiny that its funding settlement has received, I think it would be helpful if I laid out all the facts here today, so that we can finally move on and focus on what is really important to people in the north: delivering for the north.
Dame Diana Johnson
I am surprised that the Minister did not pay the usual courtesies at the beginning of his speech, but I will leave that to one side. I want to ask again the question that I posed in my speech: can the Minister confirm whether the budget for Transport for the North, which was £10 million, has now been reduced to £6 million—yes or no?
Andrew Stephenson
No. I will now continue, and as the right hon. Lady did not observe the usual courtesy of only taking 15 minutes, I will not take any further interventions.
Dame Diana Johnson
On a point of order, Madam Deputy Speaker. I am rather annoyed by that comment, as I was in the Chamber waiting to be called to speak, and the Minister did not even have the courtesy to be on the Front Bench when the debate started.
Madam Deputy Speaker (Dame Rosie Winterton)
That is not really a point of order, but it is up to the Member who has the Adjournment debate to take a reasonable amount of time, and I have to say that I have seen Adjournment debates in which the Member in charge has taken considerably longer than the right hon. Lady. I think the Minister does have adequate time to reply.
Andrew Stephenson
I will always defer to your guidance, Madam Deputy Speaker. For the record, I was waiting behind the Speaker’s Chair for at least five minutes, but there was a Minister at the Dispatch Box and, due to social distancing, it would have been inappropriate for me to come into the Chamber and on to the Front Bench while the previous Minister was here.
At Prime Minister’s questions on 24 February, the right hon. Lady said:
“Is the 40% cut to Transport for the North’s budget part of the Prime Minister’s plans for levelling up the north?”
In response, the Prime Minister said:
“There has been no such cut, and we intend to invest massively in Northern Powerhouse Rail, and in railways in the north and across the entire country.”—[Official Report, 24 February 2021; Vol. 689, c. 911.]
Transport for the North became a statutory body in April 2018. I was proud to serve as a Government Whip on the statutory instrument Committee that oversaw the process at the time.
Let us first look at the budget that has been available to Transport for the North since it was established. Transport for the North has had a core funding grant of £10 million per year since it was established as a statutory body. That settlement has been used to support core operations, as well as to underpin Transport for the North’s medium-term financial strategy through the maintenance of reserves. The Department and Transport for the North have agreed a minimum reserve of £2 million.
However, this financial year, partly as a consequence of the coronavirus pandemic, Transport for the North underspent its core grant and built up significant reserves. According to its own forecast, its reserves would have grown to an excessive £9.5 million if its funding had remained unchanged this year. Ministers therefore took the decision to adjust Transport for the North’s core settlement this year, allocating £7 million for the current financial year and £6 million for the next. That is a prudent and sensible use of taxpayers’ money that ensures that Transport for the North still has enough to continue to deliver on its statutory functions while making sure that it does not continue to build up unnecessarily large reserves.
To come to the crux of the argument, it is important to note that the core funding grant is just one of several funding streams that make up Transport for the North’s budget. During 2018-19—its first financial year as a statutory body—some £388,000 was available for the Rail North partnership grant. That has risen year on year, with £680,000 available this financial year and a further rise to more than £750,000 anticipated for the next financial.
Likewise, when Transport for the North was established as a statutory body, £15 million was made available for Northern Powerhouse Rail in 2018-19. Again, that amount has risen year on year, with £59 million available this year, rising to £67 million in the next financial year, subject to the usual agreement of programme activity with the Department, as co-client.
In the 2015 spending review, Transport for the North was allocated up to £150 million to support its integrated and smart travel programme. It has utilised only £24 million in the past five years to enable the roll-out of smart ticketing throughout the north. Additionally, it incurred development, business-case and other project costs of around £10 million, but was unable to produce a business case for its ambitious multi-modal projects that was acceptable to all transport operators in the north.
The multi-year funding for Transport for the North’s integrated and smart travel programme was always due to expire at the end of this financial year. We are considering how best to deliver more effectively the roll-out of smart ticketing to improve passenger services throughout the region.
What all that amounts to is that the Prime Minister was right in his assertion that there has been “no such cut”. Taking into account all the funding streams available to Transport for the North, its budget has not been reduced by 40%. To that end, impartial website Fullfact published a piece on 3 March, in reference to the 40% reduction quoted by the right hon. Lady. It stated:
“This much is being removed from Transport for the North’s core funding, though not from its total funding. It will be able to access some extra funding from other programmes to supplement its core funding.”
I am happy to provide even more clarity on those figures. First, the 40% reduction in Transport for the North’s core funding will not take place until the next financial year. Secondly, looking at its core funding for 2021-22, the Department has agreed that Transport for the North can charge £2.5 million of the costs that previously came from its core budget to the Northern Powerhouse Rail programme, significantly reducing the impact of the reduction in its core expenditure.
The right hon Lady again asked the Prime Minister, in a written question on 1 March, about Transport for the North’s funding settlement, and the Prime Minister responded promptly on 4 March that Transport for the North’s overall funding means that it will have access to over £70 million this coming financial year alone.
For the avoidance of doubt, let me quote what the Prime Minister said in response to the right hon. Lady:
“A reply will be sent in due course. Transport for the North’s overall funding means they will have access to over £70 million this coming financial year alone. We are building on the £29 billion we have invested in transport in the north since 2010 with: the Integrated Rail Plan bringing together HS2, Northern Powerhouse Rail, and our multi-billion-pound rail investment programme; our £5 billion investment into local bus and cycle links, including in the North; our £4.8 billion Levelling Up Fund which will benefit communities across the region; and our £4.2 billion intra-city transport fund, benefitting bus, train, and tram services across our 8 largest city regions. And at Budget, we reaffirmed our commitment to northern infrastructure, with: the launch of the UK Infrastructure Bank, headquartered in Leeds; a new government economic campus in Darlington; investment in offshore wind port infrastructure in Teesside and Humberside; and over £450 million in Towns Fund Deals for towns across the north—investing in infrastructure and culture from Middlesbrough to Bolton, to Rochdale and Scunthorpe.”
I think that more than clarifies and settles the matter of the adjustments to Transport for the North’s funding. The settlement is fair, reasonable and appropriate, and indeed Transport for the North will continue to receive more funding than any other sub-national transport body.
Lately, the subject of Transport for the North’s funding has too often been conflated with investment in northern transport and the Government’s commitment to levelling up more generally, and again I would like to set the record straight. To be clear, Transport for the North is not, and has never been, a delivery body. It is a strategic body, there to provide advice to the Government—something that it is perfectly able to do within its current funding settlement. Therefore, a reduction in Transport for the North’s core funding will not impact on the delivery of the vital infrastructure projects that the north needs. The Government are wholly committed to levelling up all parts of the country, including the north. Therefore, £29 billion has been invested across the north since 2010. There is still a long way to go, but we are on the right track.
I do not have time tonight to list the many schemes and investments that we are progressing across the north, but I will mention a few. The dualling of the A66 has seen its construction time scale halved by the Government’s Project Speed. The planned reopening of the Northumberland line to passenger services will better connect our communities in the north-east. We are embracing our ambition of a zero-carbon future with a planned hydrogen transport hub in the Tees Valley.
Last July, my right hon. Friend the Secretary of State announced an initial £589 million, with more to follow, for the trans-Pennine route upgrade, delivering much-needed rail capacity and reliability between Leeds and Manchester. In addition, I am pleased that the right hon. Lady shares my joy at the new freeport being established on the Humber, alongside two other sites in the north, at Liverpool and Teesside. Furthermore, I am surprised she did not mention that the work on the improvement scheme for the A63 Castle Street in Hull is under way. She mentioned the incredibly beautiful bridge, to which many of her colleagues have paid tribute—the Murdoch’s Connection bridge—that is providing safe and convenient crossings for pedestrians and cyclists. The very fact that we are getting on with these schemes underlines our commitment to levelling up.
I could go on, but the point is that changing Transport for the North’s core funding settlement does not alter the Government’s commitment to the north or to levelling up. Our ambition is to deliver world-class infrastructure in the region and unlock the potential of the northern powerhouse. Opposition Members will continue, I am sure, to play games and try to score points, but this Government will not be distracted from building back better and delivering record investment to the region.
Question put and agreed to.