Department for Transport fails to spend £1 billion, has to give half back to the Treasury

By Jonathan Walker on Feb 23, 12 01:16 PM in Politics

The Department for Transport managed to underspend its budget by a whopping one billion pounds in 2010-11, it has emerged.

Aren't there plenty of transport schemes which will benefit local economies - both by providing jobs in the shorter term (eg in construction) and helping employers in the longer term by giving them access to better transport links?

The underspend is revealed in a Commons Transport Committee report published today. Here's an extract:

"£300 million of new DfT spending was announced [in the 2011 Budget], comprising £100 million in grants to local authorities for road maintenance and £200 million in rail projects.

This was in addition to another £100 million in road maintenance grants announced in February 2011.

The DfT attributed the new commitments to "savings" but no further explanation was offered. We wrote to Mr Hammond, the then Secretary of State, on 26 April 2011 to ask where and how these savings had arisen and had to wait until 21 July to receive a reply

This explained that the savings had arisen as follows:

• £336m from "successful commercial negotiations"
• £273m from efficiencies, such as reduced dependence on consultants
• £229m because buoyant rail demand had reduced subsidy payments to train operating companies
• £94m from other rail budgets
• £29m from the early sale of HS1

Mr Hammond concluded that:

Overall the Department spent £1,029 million less than originally planned in 2010/11, of which £486 million was recycled into transport initiatives and £543 million surrendered to the Treasury.

We return to the underspend issue below, but it is worth noting that without our intervention the DfT would not have been obliged to explain how it could make new spending commitments in March 2011."

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