The final instalment of our public spending series looks at transport and law and order. On pages 50-51 we ask whether PFI is working in prisons and law courts. But first, Building finds out what's gone wrong with the government's £180bn plan to transform transport
Get stuck in traffic again today? Was your train late, or your Tube overcrowded? If you consoled yourself with the thought that the government's £180bn 10-year transport plan would soon get you out of a jam, then think again. Across the construction industry the feeling is that, one after its inception, the plan has broken down.

High-profile setbacks, such as the row over the private financing of the Tube and Railtrack's falling share price, have triggered concern that the government's ambitious targets will be undeliverable. Colin Wyatt, senior partner at cost consultant Gardiner & Theobald, voices the thoughts of many in the industry when he says: "Transport is in a real mess." In July, a CBI report warned that a lack of structure meant "the plan will be hamstrung before it even gets going".

Confidence has slumped dramatically since last summer, when a beaming John Prescott pledged £124bn of public money and £56bn of private finance is for transport schemes, and the industry cheered that copper-bottomed guarantee of a decade of steady work.

The government explained that the cash boost would provided 100 major bypasses, 360 miles of motorway widening and 80 schemes to rework bottleneck junctions. On local roads, £30bn was promised for some 140 improvements. The railway's share would be £60bn and there would be 25 light rail schemes that could squeeze cars out of inner cities and kick-start regeneration.

But the industry is still waiting for the wish list's big projects to materialise. "There is movement, and things have come through," says Jim Turner, economic adviser to the Civil Engineering Contractors Association. "But if you ask whether this has been as fast as the figures set out in the 10-year plan, the answer is no." What has emerged is a road programme for small £20-50m projects, but few on the scale of the £485m Birmingham Northern Relief Road, due in 2004. In the rail sector, there is little excitement beyond work on the West Coast Main Line and the £5.2bn Channel Tunnel Rail Link. "Other than that," says Turner, "everything seems up in the air".

And poor political co-ordination is not helping. Industry experts are pointing out that over 10 years there will be at least two elections and ministers will come and go, making consistent control of progress impossible. Colin Wyatt says momentum has already been lost as the latest set of politicians settle into their portfolios. "I don't think anyone will see the 10-year plan through with any dedication," he says.

And then there is the administrative conundrum of delivering integrated transport services using a system split between different public authorities and private infrastructure and operating companies. Besides Railtrack and London Underground, there are the two main organisations charged with procuring projects – the Strategic Rail Authority and the Highways Agency.

I don’t think any minister will see the 10-year plan through with any dedication

Colin Wyatt, senior partner, Gardiner & Theobald

Last month, the water was muddied further when prime minister Tony Blair appointed his own team to advise on rail strategy. The move has created a climate of conflict, with Sir Alastair Morton, the SRA's outgoing chairman, reported to be furious that Blair has set up a rival body. Morton has added his voice to criticisms of transport policy, saying the 10-year plan was at least £10bn short.

Clearly this fragmentation will not help the SRA deliver a strategic framework for investment, already months overdue (Mike Grant, page 48). "Implementation is spread out over too many people and the whole thing is very weak," says Richard Turner of the Freight Transport Association. "The government put a strong team together to draw up the 10-year plan, but it was disbanded immediately afterwards."

For others, transport minister John Spellar is seen as the light at the end of the tunnel. As reported in Building last week, he managed to call an emergency council of key figures to discuss a framework for getting the 10-year plan back on track. The effort impressed Robin Southwell, chief executive of WS Atkins. "Spellar has really started to engage with industry. He is at every meeting and breakfast you can think of and is really developing partnerships."

Spellar has a hard task ahead of him, however. As well as the muddle at the top there are the network's operational and financial problems. As a result of the Hatfield tragedy, Railtrack was forced to change its patch-and-mend approach to rail maintenance to a more thoroughgoing upgrade of the system, with the result that it has drawn on £14.5bn of state money earmarked for investment, and has said a further £2.6bn will be required. On top of this, a report by the Institute of Logistics and Transport last week warned that the £3bn needed to meet safety requirements recommended after the Paddington crash may bankrupt the rail industry.

These huge sums will have to come out of the £26bn the government committed under the 10-year plan, and it is extremely unlikely that the private sector, already expected to contribute £34bn, will make up the shortfall. Stephen Byers, head of the DTLR, has admitted he will need to bring out his begging bowl at the next spending round.

This dire situation is exacerbated by Railtrack's refusal to make any new building commitments and its scaling down of key schemes. The firm is said to want to get out of the contract for high-speed train lines on its late, £4bn-overbudget West Coast Main Line upgrade. This could mean that another firm has to be found to take over, and that Railtrack will be hit by more fines. It has already pulled out of the second stage of the Channel Tunnel Rail Link, as well as the review of the £1bn Thameslink 2000 rail project. Without Railtrack, construction has lost its main conduit of investment. "What has happened to Railtrack is the biggest crisis for the industry," says Kenny Laird, operations director for engineer Jacobs Gibb. "There is a huge vacuum now it's pulled out."

They blew the work out of the water and now Byers wants progress in two years? No chance

Nick Derbyshire, architect

A further blow to railway work came last month when Byers extended operating franchises by two years when the operators were hoping for 20. This means that the franchise holders are understandably reluctant to put money into infrastructure building projects. GNER, for example, is now reconsidering its planned £1.6bn boost to rolling stock and stations on the East Coast Main Line, as well as its long-term aim of raising £3.5bn with Railtrack for line renewal. "It was a bombshell," says architect Nick Derbyshire, whose practice was preparing to do the station designs. "The move has blown all the work out of the water. And now Byers wants progress in two years? No chance."

The situation with the London Underground is more difficult to call. The convoluted courtroom battle over the £13bn proposals to part-privatise the network has already put the government's flagship transport policy 18 months behind schedule, with more litigation and delay possible. On top of the havoc caused by London mayor Ken Livingstone and his transport specialist Bob Kiley, in August accountant Deloitte & Touche published a report that said the PPP model would be more expensive than the public sector. The findings have fuelled political opposition. Tom Brake, the Liberal Democrat's transport spokesman said: "It's official: PPP is a rip-off."

But there is some optimism. After the government's High Court victory and the sacking of Bob Kiley as chair of the London Board of Transport, there is a feeling that the plan, and subsequently the £5.5bn east-west London CrossRail project, does have a chance. "The PPP must be the priority," says Alan Chaney of Laing Investments. "There has been so much investment in getting it – nearly – to the starting post. There'll now be an emphasis on actual progress."

In roadbuilding there is better progress. The Highways Agency has a dedicated team of consultants on permanent standby, and is also appointing contractors before the public enquiry stage. These measures will streamline construction: roads should take five-to-seven years to build instead of 10. But there is still frustration with the slow progress. The main blockage is the review process for the big bypass projects set up when the government came to power. This should have pushed forward viable schemes, but so far few have emerged. "The government has to get its skates on – we need at least 50 additional schemes on the slipway," says construction economist Jim Turner.

It is also feared that good review results will not guarantee a project. The first to emerge was the notorious Hastings bypass which, despite a positive report, was turned down by Stephen Byers after local pressure groups threatened continued protest.

Against such a background, construction firms are finding it tough to believe the boom is around the corner. They are wary of gearing up and have not deepened their pool of workers. And since last summer, the skills shortage has worsened. The proportion of firms reporting recruitment problems has risen 11% to 56%, according to a report on workload trends by the Civil Engineering Contractors Association. "The supply side has adapted to low demand – you can't just click your fingers for the skills to cope," says Tim Sharp, director of communications for Balfour Beatty. "When the upturn hits, this will be the limiting factor."

Transport: Key aims

The government is committed to injecting £180bn into the transport network over the next 10 years

£60bn will be spent on the railways, another £60bn on major road building, and the rest on local improvements and light rail