Is Transport for the North’s budget being reduced by 40%?

“Is the 40% cut to Transport for the North’s budget part of the Prime Minister’s plans for levelling up the north?”—Dame Diana Johnson.

“There has been no such cut, Mr Speaker. We intend to invest massively in Northern Powerhouse Rail, in railways in the north and across the entire country.”—Boris Johnson

During Prime Minister’s Questions on 24 February, Boris Johnson denied there were plans to reduce the budget of transport body Transport for the North (TfN) by 40%. The organisation describes itself as “England’s first sub-national transport body”, formed to “transform the transport system across the north of England.” It receives its funding from the Department for Transport (DfT).

It was reported in the media that Mr Johnson was wrong to say this, and he was criticised by Labour MPs including Angela Rayner, Jim McMahon, Emma Hardy and Tanmanjeet Singh Desi. 

Dame Diana Johnson MP has said the Prime Minister “either lied or had failed to do his homework” and was “being economical with the truth”. She has since raised a Point of Order in the House of Commons saying she believes the Prime Minister “misled” the House in his response, and has written to the Speaker of the House of Commons to outline her concerns.

So what is really happening?

TfN’s total planned funding allocation from the DfT is due to fall from around £101 million in 2020/21 to £81 million in 2021/22, so a fall of 20%. This includes funding for integrated and smart travel, intended to improve payment methods and travel information, ending entirely, while funding for the Northern Powerhouse Rail project, which aims to update rail connectivity in the north of England, remains at the level provided in 2020/21. 

The component which is TfN’s “core funding” was due to be £10 million in 2020/21. TfN now actually only expects to be allocated £7 million in 2020/21 and this is due to fall to £6 million in 2021/22. This represents a 40% reduction on the planned allocation for 2020/21. 

It was discussed in a TfN board meeting on 14 January, which has been cited by Dame Diana Johnson and others and received coverage in the media

However, TfN board papers, from a further meeting on 18 February, state that TfN and DfT had agreed that TfN can charge £2.5 million of costs that previously came from the core budget to the Northern Powerhouse Rail programme, 

The papers state: “This will relieve c. £2.5m of cost pressure in relation to core funded costs, essentially reducing the impact of the reduction in core expenditure from a cut of £4m to a cut of £1.5m.” 

This means that, although the core budget will be reduced by 40%, the actual reduction of core expenditure will be more like 15% (although this additional money will be from another programme within TfN).

TfN’s board paper from 14 January says: “Whilst the reduction in the core allocation is relatively small in relation to the overall allocation, inclusive of the programme funding for [the Northern Powerhouse Rail programme], it is important to note that the core funding pays for all of the non programme activity undertaken by TfN and currently resources the significant majority of staffing and business infrastructure costs.”

A spokesperson for the DfT told Full Fact that TfN will “have access to over £70 million of funding, the majority of which will help develop proposals for Northern Powerhouse Rail. 

“There is also a significant proportion of money remaining in their reserves, enabling them to carry out all their statutory functions effectively.”