A closer look at the DRD budget consultation

Having written at length about Belfast commuting in a post written after midnight the other day, and which I have to admit showed it, I wanted to look more closely at the DRD consultation.

Current expenditure

The baseline cash available for “current expenditure” is reduced from £344.6 million in 2014/15 to £322.1 million in 2015/16, but this masks the true savings required to stand still.  These are as follows:-

£ million
2014-15 Opening budget344.6
Remove funding to freeze car park fees 2014/15-7.6
Remove funding to replace income from assets to be sold-1.5For four assets, not sold as land still required or because it wasn’t good value
2015-16 Opening budget333.5
15.1% decrease in baseline-50.7
Belfast Harbour release of value20.0This reflects money removed from the budget in 2014/15 which the Budget Review Group said should have been returned to DRD in year, but has not yet been returned
Funding to bring concessionary fare funding up to 2014/15 prices9.5Based on passenger numbers before free fares were brought in, and capped at 80% of the single fare.  Ringfenced solely for concessionary fares.
Funding for other pressures7.8Will only partially cover £15million increase in NI Water costs (including from a rates revaluation of their properties)
2015-16 proposed allocation322.1

The cash savings required amount to £65.5 million, although the allocation is only £22.5 million lower – the missing £43 million is made up of the £20 million release of value from Belfast Harbour which belongs to 2014/15, the £9.5 million ringfenced for the Concessionary Fares scheme, the £15 million increase in NI Water costs, less the £1.5 million allocated to cover lost income from selling assets which never happened.

Transport’s allocation of the £322.1 million will rise from £69.7 million to £79.7 million in 2015/16, almost entirely due to the rise in concessionary fares.  Roads’ allocation will be cut from £174 million to £142.1 million, and Water’s allocation will be cut from £100.9 million to £100.3 million.

Looking first at water, I see that £1.1 million is at the DRD end, and NI water is being asked to live within its 2014/15 allocation of £99.2 million, requiring massive cuts due to fixed costs of treatment and pumping water and sewage; PPP contracts taking up 23.2% of NI Water’s budget; and the increase in the rates bill of £13 million (110% increase).

Public transport will suffer from the end of the bus duty rebate and a reduction in rail subsidy, as Translink’s funding falls by £15 million to £58.9 million.  The company has almost 4,000 staff, of which 3,197 are front-line passenger facing (drivers, conductors, inspectors, station staff), and while some staff savings have been identified, it needs to be remembered that all head office functions for the three companies have been merged since 1997.  One wonders what efficiency savings are left, given that ticket office opening hours have already been reduced – and inevitably, this sort of funding cut means service cuts, as well as fare rises, because there are relatively few profitable routes in Ulsterbus or Metro, and thus a lot of cross-subsidisation between routes.

All three companies within Translink have massively increased services over the last ten years in a massive attempt to encourage ridership.  Ulsterbus has already rolled back a pile of improvements in town services, and it looks as though they will all be gone, and worse as a result of these cuts. I look at the proposals and wonder whether not providing a bus or train when potential customers would need it to save cash now will end up costing DRD more money as people either can’t get a bus or train when they want it or it’s too awkward, creating a spiral of services becoming more and more uneconomic.

The document also notes that rural and community transport would be affected, which would further impact on Ulsterbus services in particular.

Roads maintenance for 2014/15 is estimated at £12 million less than what is actually required to keep the roads in order.  This shortfall was met in-year during the quarterly monitoring rounds when spare cash was moved between departments, but 2015/16 increases that deficit to £42 million.  Faced with fixed costs of £84 million, £64 million is left for staff costs (ie what little staff there are due to contracting out) and £12 million for maintenance, including pot holes, street lighting, and road salting.  £2 million could be saved in redundancies, but that’s a drop in the ocean – to keep street lighting alone in order is £13 million.  Therefore they propose cuts to winter service (gritting and snowploughs), street lighting and maintenance, and roads maintenance, because raising car parking fees won’t be enough.

Of the proposed maintenance cuts, road salting is the controversial one, because standards of driving in NI imply that there will be a massive increase in accidents next year due to motorists and other road users not adjusting their behaviour for icy roads if, as intended, all road gritting is stopped on the grounds that there is no statutory duty to carry it out.

Capital expenditure

Business area£m (2014-15)£m (2015-16)
 Roads 174.0 142.1
 Transport48.240.0
 Water and sewerage163.8131.8
 EU Structural funds0.3not known

NI Water will be constrained under this from meeting its requirements under the draft NI Authority for Utility Regulation determination, but the A8, A2, A26 Glarryford-Drones and A31 Magherafelt bypass schemes are to continue to completion.

Money is to be set aside for cycling schemes, while Belfast Rapid Transport may have to have “delivery over a longer timeframe” which presumably means that the first route or two will hopefully proceed but others might not (yet!)  Cash is also set aside for replacement of the Strangford and Rathlin ferries.

Phase 2 of Coleraine-Londonderry railway line is budgeted for subject to business case approval, but as NIR is already considering cancelling lightly-used services, bringing back echoes of the days of “lesser-used” lines, there might not necessarily be cash available to run extra services.

There is no mention of funding for new buses, so they will presumably get older and grottier, with the danger of running buses not accessible to the mobility impaired continuing, and vehicles becoming more liable to breakdown due to engine obsolescence.

All in all, and as I noted yesterday, the picture is grim.  It’s a picture to be repeated in all departments over coming days and weeks.

Responses to the consultation can be sent to budgetconsultation@drdni.gov.uk

  • ted hagan

    Well researched and congratulations. And yes, it’s a grim picture.

  • salmonofdata

    Really insightful stuff. They’re doing a similar trick at the Department of Education, where the stated reduction in spending of £94m masks the additional £68m they are planning to spend on unavoidable items such as teacher salary increases and Special Educational Needs, which means that the cuts needed to be made in cash terms sum to £162.5m.

    The budget cuts have been presented as cuts of £213m; in fact, when the increase in the Health budget of £150m, the £10m at DETI, and the hidden increases at the DRD and Education are accounted for, the total cash cuts to be made are more like half a billion. This is a staggering amount of money, and the underhanded way that the consultations are being carried out over Christmas when people’s attentions are likely to be elsewhere is appalling.

  • Dan

    “£1 million to meet the Carbon Reduction Commitment in respect of
    street lighting”

    What in the name of god is that?
    More enviro-whackery, as ridiculous as those Eco vehicle charge points lying unused all over the country. How much was wasted on that flight of fancy?

  • It means you reply the bulbs with LED lighting, saving a large electricity bill from now to eternity. But it requires some spending up front.

  • Dan

    Thanks

  • Ian James Parsley

    Great piece, clearly explained.

    The case for concessionary fares for over-60s at all times is demolished; as really is the case for continuing without domestic water charges.

    I suspect the real reason politicians don’t want to “go there” on such issues is it would draw attention to their failure to manage the budget properly. I think the events of the past few days have already highlighted that somewhat, however! 🙂

  • Labourite

    But electricity for street lighting is not metered in NI

  • delphindelphin
  • jimbo

    It’s is paid for as a fixed charge for the connected load. If the load is reduced ie using LED lamps the energy consumption is considerably less and maintenance ie replacement of lamps is reduced. It’s actually a good example of investing to make long term savings