Transport cuts threaten Crossrail, reveals leak

2 July, 2009

The Guardian claims to have seen a leaked memo warning of looming spending cuts on major transport projects. It contains details of a potential £30bn spending gap which would appear after shoring up the UK's public finances.

The freeze, the memo reveals, would jeopardise major projects such as the £16bn Crossrail scheme, the £6bn roadbuilding programme, including hard shoulder extensions, and the High Speed 2 rail link linking Manchester to Heathrow.

The Department for Transport is braced for the cuts after the permanent secretary to the DfT, Robert Devereux, told a private industry conference that future growth in capital spend would be flat and no longer include 1.25% annual increases. Without the growth escalator, the department would have £28.9bn less to spend over the next 10 years. The memo was sent out to members of industry after the presentation.

An expenditure freeze could jeopardise major projects such as the £16bn Crossrail scheme

The blow comes after the nationalisation of the £1.4bn National Express rail contract yesterday. The train operation company walked away from its contract, saying that the falling take from fares made it non-viable, which rail secretary Lord Adonis called unacceptable.

Several other train operators have clauses allowing them to walk away from their contracts without penalty in the last years of their contracts, and five are already exercising clauses by which the government pays a percentage of any projected shortfall in projected revenues.

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