Chancellor George Osborne has now delivered the coalition government's Comprehensive Spending Review and the impact for transport is starting to emerge.

The Department for Transport will reduce overall spending by 15% in real terms, making savings of 21% from its resource budget and an 11% reduction in capital spending. The CSR document reveals that the capital allocation for the Department has been relatively protected; in 2014-15 DfT capital investment will be higher in real terms than in 2005/06.

The settlement also includes £14bn of funding over the Spending Review period to Network Rail to support maintenance and investment, including improvements to the East Coast Main Line, station upgrades at Birmingham New Street and network improvements in Yorkshire, around Manchester and the Barry to Cardiff corridor.

Funding has also been approved for rail improvements in the North West (including electrification) and on the Great Western Main Line. However, a final decision will be made by the DfT after the Spending Review on the replacement of the High Speed Train fleet, indicating that the Intercity Express Programme could be dead in the water for now. However, plans for a new high speed rail network will be taken forward.

However, rail fares will increase substantially. The current RPI+1% annual increase will rise to RPI+3% for three years from January 2012. The Spending Review document says that the fare increases will be used to tackle and fund priority capacity improvements on the rail network.