Within weeks of taking the helm at the Treasury, Rachel Reeves began shelving major infrastructure projects. The termination of a road tunnel planned to run next to Stonehenge was quickly followed by the axing of an £800m donation towards Edinburgh university’s planned supercomputer.
A more upbeat chancellor is expected to stand at the dispatch box on 30 October to promote a budget packed with initiatives to drag the economy out of the doldrums.
Reeves will say the UK needs rail, water and energy schemes to support a growing economy and the move to net zero, all supported by rewriting the fiscal rules that govern how the UK accounts for debt.
Here we look at some of the big infrastructure projects that remain in the pipeline.
Lower Thames Crossing
A tunnel under the Thames east of the Dartford Crossing that would create a relief road for the M25 is at the top of the agenda for National Highways, England’s road-building agency.
Officially it has a £9bn price tag, but that was before the recent inflationary surge and without taking into account the cost of measures necessary to win over objectors affected by the long and arduous building programme. The final cost could be more than a third higher.
Reeves has asked officials to investigate bringing in private cash on the promise funders will get a slice of the tolls. Like many other projects, it will be handed to the National Infrastructure and Service Transformation Authority (Nista), a new arm’s-length body that was created by merging two existing organisations and will oversee the strategy and delivery of major works.
HS2 to Euston/extra Birmingham-Manchester rail capacity
After the previous government jettisoned the second leg of HS2 from Birmingham to Manchester, northern mayors clubbed together to push for an alternative, described in places as HS2 lite – another rail line heading north. An extension from the current “end of the line” at Old Oak Common in west London to Euston, where HS2 was originally going to terminate, has also been revived in recent weeks.
The idea has gained momentum in recent months and is likely to feature prominently in the budget.
Northern Powerhouse Rail
A review of NPR puts the final bill at £30.6bn, including connections to Sheffield, Hull and Bradford, which is supposed to get a new station. These add-ons were promised by the previous government and Reeves may ultimately decide they are unaffordable.
There is also the longstanding hope that Leeds station, which cannot cope with the current demand, will get an expensive makeover and the government agrees to fund the West Yorkshire mayor Tracy Brabin’s mass-transit system for the region.
The NPR project is expected to survive budget cuts after receiving the green light to spend £54m developing the scheme from Liverpool to Hull in this financial year. Brabin’s scheme could also get the green light, but £8.5bn of additional funding for a second round of city region sustainable transport settlements could be cut back or delayed indefinitely.
Railway restoration projects
Boris Johnson earmarked £500m for the Restoring Your Railway programme in the 2019 Tory manifesto, intending to reopen stations and lines closed down by Dr Richard Beeching in the 1960s.
At least three lines have opened or are under construction. Of the 23 schemes that had secured some funding and the 13 being developed further, most are expected to be delayed or abandoned.
Reservoirs
Thames Water says its plans to build a reservoir near Oxford would generate more than 900 jobs and take advantage of one of the few plots of land in south-east England available for a reservoir, which is needed to cope with climate change.
Local campaigners opposed to project say they sympathise with the aim, but counter that its 25-metre walls will be dangerous and that it is the least-effective method of keeping the taps running during a drought.
There is no direct subsidy from the Treasury needed for the scheme, but the regulator needs to sanction a rise in water bills to pay for it. With Thames Water in financial trouble, the focus is likely to be on a national scheme to tackle sewage overspills.
Schools
Schools could have an extra £36,000 each on average to spend on crumbling buildings if the Department for Education (DfE) reallocated last year’s unspent capital budget, according to analysis by the School Cuts coalition.
The Treasury gave the DfE a capital departmental expenditure limit of £6.3bn for 2022-23. Despite the National Audit Office and others reporting the desperate state of disrepair of England’s schools, the DfE spent only £5.3bn, leaving £1bn unspent.
But Treasury could decide to claw back the money. Schools are likely to be asked to begin bidding again for cash in the new Whitehall spending review.
Hospitals
West Suffolk hospital in Bury St Edmunds was built in the 1970s. It was one of 40 the previous Conservative government earmarked for a rebuild by 2030, which were paused by Reeves in July.
The local Labour MP, Peter Prinsley, is one of many elected in July’s general election on a wafer-thin majority and he is keen to make sure that one of the biggest pieces of crumbling infrastructure in his new constituency is overhauled. He is also a doctor who campaigned for the hospital project to be saved. While he may win the day, many other hospitals can expect to be told they must wait.
Low-carbon energy
The government has tasked the National Energy System Operator with providing the first blueprint for Great Britain’s infrastructure up to 2050, including plans for more low-carbon electricity projects and a rewiring of Britain’s power grids.
The multi-billion-pound buildout of renewable energy is supported by a subsidy auction, which is ultimately paid through energy bills, so it does not affect the central government budget.
To connect new renewable projects to the grid, the companies in charge of running Britain’s power lines and electricity grids are expected to invest £22bn in electricity distribution networks between 2023 and 2028 and almost £11bn in high-voltage transmission lines between 2021 and 2026. Again, the investment will be supported by energy bills rather than Treasury handouts.
The government is, however, expected to take a direct 20% stake in the £20bn-plus Sizewell C nuclear power project in Suffolk alongside the French state-owned energy company EDF. Ministers and EDF executives are in talks to find private investors to cover the remaining 60% of the project.
