1560 Transport CommitteeLetter from the Chair to Rt Hon Philip Hammond MP, 26 April 2011

In the Budget on 23 March plans were announced to allocate £200 million to new railway schemes and a further £100 million (in addition to £100 million already announced) to local authorities to mend potholes, following the extreme weather conditions during the winter.

Stephen Morrish’s letter of 30 March to the Committee, and the associated DEL written statement, explained that “DEL headroom” in 2010–11 had enabled certain rail schemes to be paid in cash in 2010–11, creating £216 million headroom within Network Rails’ funding settlement – presumably used to fund the rail schemes announced in the Budget.

The press statements released alongside the announcements of the pothole funding stated that “funding was made possible because of savings the Department made earlier in the financial year”.

Both measures appear therefore to have been met from savings in DFT’s expenditure compared to budget for 2010–11 – there having being no supplementary estimates or overall DEL budget increases for DFT during 2010–11.

The Committee would be grateful if you could provide details of the budgets from which the £400 million of savings has been generated to fund these new commitments and how these savings have arisen.

April 2011