Last week’s much anticipated Comprehensive Spending Review, unveiled by the UK’s chancellor George Osborne, has pleased those in the logistics industry. Freight operators learned that the government plans to invest £30 billion ($47.5 billion) in capital spending on transport projects over the next four years, including £10 billion for road improvements and £14 billion for improvements to the rail infrastructure.
The increases came despite Osbourne’s plans to cut £81 billion from the budget over the next four years in an effort to reduce the country’s deficit.
Until transport secretary Phillip Hammond’s report on exactly what that investment will mean for infrastructure on the ground, the details of which are revealed this week, a full assessment is premature, but for those involved in automotive shipments the initial news has been welcomed, albeit with some caution.
“The £30 billion of capital spending on transport infrastructure over the next four years is, in the current economic climate, unexpectedly good news for our industry,” said Ray MacDowall, managing director of finished vehicle carrier ECM (Vehicle Delivery Service). “Congestion on our main arterial routes is a major contributor to both economic waste and environmental damage, and any improvements to our road networks that helps alleviate this burden to society must be viewed as positive news,” he told Automotive Logistics News.
But MacDowall was keen to put the announcement in perspective and highlight that the government is also proposing cuts that will affect highways maintenance.
“We have to balance this positive news with the proposed cuts of £1.5 billion for the Highways Agency, which will undoubtedly mean less money for regional road maintenance, such as resurfacing and repairs to potholes which cause untold damage to suspension and tyres. If we have another harsh winter like the last one this will be a major concern to all road users,” he said.
DHL, which provides a range of automotive logistics services in the UK, not least to Jaguar Land Rover in the Midlands, added that it welcomed the government's decision.
“The investment will provide a welcome boost to the UK transport industry, and it is promising to see that the continued development of UK infrastructure has rightfully been recognised as an integral element of the policy for economic growth.
DHL said the £10 billion set aside for road networks was essential for logistics and business and would help to reduce congestion, as well as improve the ability of logistics providers to meet their customers' needs in the process.
The spokesperson added: “The £14 billion for improvements to the rail network will help progress multi-modal projects if a strategic rail freight network is to be developed within this. Furthermore, such an investment would significantly contribute to the ongoing reduction of carbon emissions from the UK transport industry."
Transport associations based in the UK were also quick to commend the investment.
Freight Transport Association spokesman James Hookham said: “We are encouraged with Osborne’s declaration of support for transport projects and it is good news that many of the trade routes that FTA identified to transport ministers as priority projects demanding further investment have been protected.”
The Chartered Institute of Logistics and Transport’s chief executive Steve Agg added: “The chancellor has clearly recognised the fundamental and undeniable link between transport investment and economic growth, and appears to have retained plans for continued considerable investment in the nation’s key road and rail infrastructure.”
In terms of investment in people, Skills for Logistics (SfL), the UK’s Sector Skills Council for the freight logistics industry, also welcomed the CSR and said it presented the industry with “a great opportunity to enhance and expand the provision of apprenticeship schemes designed to support the sector’s increasing demand for skilled people.”
A £250m a year increase in funding has been allocated for adult apprenticeships to 2014-15 and according to SfL it means an additional 75,000 apprenticeships that will receive funding.
“The £250m for adult apprenticeships in logistics is excellent news for our industry which has for many years, since the demise of the RTITB, lacked a proper training scheme to attract quality people into the sector,” added MacDowall.
Formerly known as the Road Transport Industry Training Board, the RTITB used to involved in training car hauliers, but now – under charitable ownership – it focuses mainly on training for materials handling equipment.