Bloomberg News

U.K. Pledges 9 Billion Pounds for Rail to Boost Growth

July 16, 2012

U.K. Pledges 9 Billion Pounds for Rail to Boost Economic Growth

Rail passengers stand and wait for a train at Clapham Junction railway station in London. Photographer: Simon Dawson/Bloomberg

Britain is to invest 9.4 billion pounds ($14.6 billion) in the rail network over the next several years as the government tries to boost the ailing economy.

The investment, including 4.2 billion pounds of newly announced money, will be spent on upgrades to stations and tracks between 2014 and 2019, Transport Secretary Justine Greening said today. The cash injection aims to create enough capacity around cities for an additional 140,000 daily rail journeys at peak times.

“Over time, by the end of this package, we think that getting on by 75 percent of journeys by passengers will be on electric trains, so it’s really good news,” Greening told BBC Radio 4’s “Today” program.

Prime Minister David Cameron held a Cabinet meeting today in the Midlands, where he and his Liberal Democrat deputy Nick Clegg announced the investment plans. They used a joint press conference in Birmingham to emphasize their efforts to spur the economy after relations between the ruling parties reached a new low last week following a Conservative rebellion over plans to overhaul the House of Lords. One Tory lawmaker predicted the coalition would break up.

The East Coast Main Line linking Yorkshire, Lincolnshire and Cambridgeshire to London will get 240 million pounds of extra investment. By spending 350 million pounds to lengthen platforms at London Waterloo station, there will be extra capacity for 120,000 more daily commutes in and out of the British capital, the Department for Transport said in an e-mail.

‘Money Tree’

Greening said there is no “money tree” to pay for the improvements and that passengers faced fare increases, adding that the taxpayer had to subsidize money-losing train operating companies.

“Some of them make a surplus, some of them make a loss, and that’s something the taxpayers have to subsidize,” she said. “I think that’s one of the reasons to look at how we can make the underlying industry work more efficiently as a whole.”

Greening, who represents a district in southwest London that lies under Heathrow’s flight path, denied media reports that she is under pressure from Cameron and Chancellor of the Exchequer George Osborne to abandon her opposition to building a third runway at the London airport, run by BAA Airports Ltd.

“I’d be a funny transport secretary if I took a position that wasn’t government policy,” she said. “There is no policy for a third runway.”

‘Strongly Held Views’

The issue of airport capacity “is not susceptible to an immediate solution,” Clegg told today’s news conference. He said the government will examine where the U.K.’s new airport hub should be built. “There are lots of very strongly held views on all sides of the debate.”

Speaking alongside Clegg, Cameron said the government is committed to pressing ahead with a high-speed rail line between London and northern England.

“Don’t underestimate the extent to which high-speed rail can assist with this over the long-term,” he said. “If all the places that could be met with high-speed rail were, you’d take about 20 percent of the flights out of Heathrow, so that is part of the answer.”

Today’s investment announcement comes as the U.K. economy struggles to climb out of its second recession since 2009 amid government spending cuts at home and a deepening crisis in the euro region, the biggest market for British exports.

‘Jam Tomorrow’

The general secretary of the RMT union, Bob Crow, who frequently criticizes government policy, urged action. The RMT represents 80,000 rail, maritime and transport workers.

“What we need is investment in rail today, not yet another political promise of jam tomorrow,” Crow said in an e-mailed statement. “All of the rail projects on this shopping list have been talked about for years and with the surge in passenger demand we cannot afford further delays.”

Britain has already allocated 5.2 billion pounds of funding for rail projects. These include Crossrail, the capital’s east- west link under construction; Thameslink, which also traverses London; the electrification of the line between London and Cardiff, alongside tracks linking Manchester to Liverpool and Preston.

Other investment announced today include the creation of a high-capacity “electric spine” running from Yorkshire and the West Midlands to south-coast ports, allowing more reliable electric trains to cut journey times and boost capacity for passengers and freight, the transport department said.

Investment Targets

This comprises 800 million pounds of electrification and an upgrade from Sheffield -- through Nottingham, Derby and Leicester -- to Bedford, completing the full electrification of the Midland Main Line out of London St. Pancras. It also includes electrification of the lines from Nuneaton and Bedford to Oxford, Reading, Basingstoke and Southampton.

The U.K. will also complete the full electrification of the Great Western Main Line between London Paddington and Swansea in South Wales at a cost of more than 600 million pounds, as well as the electrification of the Welsh Valley lines, including Ebbw Vale, Maesteg and the Vale of Glamorgan. These will give two- thirds of the Welsh population access to new fleets of electric trains.

The government said it will complete in full the “Northern Hub” cluster of rail enhancements with the approval of 322 million pounds of outstanding track and capacity upgrades across Manchester city center, Manchester Airport and across to Liverpool.

It will also introduce a new 500 million-pound rail link between the Great Western Main Line and Heathrow allowing direct services to the airport for passengers from southwest England, the Thames Valley and Wales.

To contact the reporters on this story: Kitty Donaldson in London at kdonaldson1@bloomberg.net;

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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