Digging by Scrapbook shows the budget includes an eleventh-hour rescue of a state subsidy for railways. One of the key beneficiaries of this change is a 1,970 metre train track running up the northern slopes of Cairn Gorm in Scotland. The MP for the area just happens to be Chief Secretary to the Treasury Danny Alexander — who also worked for the Cairngorm National Park before he was elected!

HMRC budget documentation outlines the intention to continue with the subsidy to railways “that do not hold a Public Service Obligation”. This includes Danny’s toy train.

Climate change levy exemption: certain forms of transport — The exemption from the climate change levy for taxable commodities used in certain forms of transport includes supplies of electricity for use in rail freight and in public passenger rail services that do not hold a Public Service Obligation (PSO).

As a Parliamentary research note makes clear, the entire project is up the Spey without a paddle. In keeping with these austere times the intention was to let the exemption expire as another unaffordable state subsidy.

But a last-minute change of heart has left civil servants scrambling to get the scheme re-approved by the European Commission.

These two parts of the exemption are an approved State aid. The current approval expires on 31 March 2011. The UK Government is seeking re-approval but cannot legally continue with these parts of the exemption beyond 1 April without European Commission re-approval. If re-approval is not received by 31 March 2011 the exemption will be suspended to the extent that it applies to rail freight and public passenger rail services that do not hold a PSO, with effect from 1 April 2011. If re-approval is received after 1 April 2011 the exemption will be reinstated (with retrospective effect from 1 April if the terms of the approval permit).

So why the volte face on this life-size Hornby set? Word in Horse Guards Road is Coalition dynamics dictated the Tory overlords should “give Alexander something” for his slavish loyalty.

After all, what’s the point of high office if you can’t help out your old employer?

  1. Why does this fall to the UK Parliament to subsidise? Shouldn’t it be for the Scottish Executive to decide whether or not to do so on its own account?

  2. Is it because they realized this particular railway is part of a PFI scheme with a massive compensation clause should it fail? I think it might be! Full story is in Private Eye’s (2010) signal failures column (passim).

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