Examination of Witnesses (Questions 106
WEDNESDAY 26 JANUARY 2000
106. Good afternoon, gentlemen. In no particular
degree of order or status, may I ask you to introduce yourselves?
(Mr Wicks) Roy Wicks, Director General, South Yorkshire
(Mr Donald) Rob Donald, Director General, Centro,
(Mr Mulligan) Chris Mulligan, Director General, GMPTE,
(Mr Scott) Bill Scott, Assistant Project Director,
Tyne and Wear.
(Mr Scales) Neil Scales, Director General, Merseyside
107. Gentlemen, could I just ask you to remember
that when you are in agreement we assume you are not going to
double-guess one another, and that when you are in disagreement
we should be delighted to hear from you. Is there someone who
wants to make some general remarks?
(Mr Mulligan) No, Chairman, we are quite happy to
108. Let us start off. Can you tell me what
lessons you have learned from the experience of the first year
of Supertram's operation, in order to ensure that similar problems
are not going to recur in future?
(Mr Wicks) If I could talk a bit about
the experience in Sheffield, to start. I would just explain, for
the Committee's benefit, that I took over in Sheffield in the
last 15 months, but I am still very familiar with the scheme,
as I worked in West Yorkshire and South Yorkshire prior to that.
There are three key things that I think we certainly learned when
I was in West Yorkshire, which I think may be of benefit to the
Committee. First was the long time that Sheffield took, as a scheme,
to bring forward. The scheme developed in the early-80s and was
ultimately built in the mid-90s. During that time not only were
the authorities, such as the county council, changed but there
was bus deregulation. At the same time, those who are familiar
with South Yorkshire will know, there was a massive change in
the economy, the steel industry changed dramatically, and those
two things very much affected the demand for the system when it
opened. So a system that had taken some time to be achieved
109. What was the real timescaleten years?
(Mr Wicks) If you take from the first deposit of a
Parliamentary Bill, which was in 1985, the scheme opened in 1996,
and obviously there was a planning period before that. Some of
that time was down to the fact that we did have to review the
scheme in South Yorkshire to try and actually estimate the effect
of bus deregulation. So the scheme opened in 1996 with much lower
demand than was predicted, and that, in turn, I think, caused
a further problem, that of the financial viability of the whole
scheme which had originally been based on higher estimates. So
I think the lessons that were learned when I was working, at that
time, in West Yorkshire in trying to plan the scheme in Leeds,
was to try and accelerate the processes to the extent we could,
as a public sector, in bringing schemes forward. Secondly, to
get a better estimate of how the scheme would work in a deregulated
market by bringing the private sector into the project at an earlier
stage. Thirdly, to learn some of the detailed lessons in terms
of the construction process. The South Yorkshire Supertram was
a major public sector investment£240 millionproject.
It was built to time and to budget, which I think is a major achievement,
and it was the first complete construction of a street-running
system in the country (my colleagues will talk about their own
systems). However, it did mean that there was some disruption
in the city centre. A lot of lessons have been learned by the
successors to Sheffield on how to manage that situation.
110. Do you think that you can plan light rail
in conjunction with properly integrated land-use planning?
(Mr Wicks) I certainly think we can now plan it better
than we did. PPG 13 will assist a lot in achieving that. What
you cannot mitigate for are major economic changes, such as the
down-turn in the steel industry.
111. That would be true of any project, though,
would it not?
(Mr Wicks) Yes.
112. If you build it on a particular customer
base and then that customer base disappears, that is almost inevitably
going to affect any business.
(Mr Wicks) I think the creditable thing now is that
the system is doing well, from about six million passengers in
1996 it is now carrying eleven million, with a year-on-year growth
of about 10 per cent. It is very interesting to seeto support
the point you made, Chairthat the land-use along the route
is developing at a premium. There are a lot of developments going
along the route, particularly in the section down to Meadowhall,
which is a major retail park, and the Don Valley, which is where
a lot of the steelworks were. So it is actually now working as
a catalyst for development, and so I think we are, therefore,
able to go back to the PPG 13 and have a very effective integrated
Chairman: Anybody else quickly on that?
113. Could I ask if there are any proposals
to extend it, in South Yorkshire?
(Mr Wicks) That is, actually, the other bit of good
news. We now have the university and the hospitals interested
in extensions out towards them from the city centre. That is a
fairly modest extension, and we are now lookingobviously
in conjunction with the Objective 1 status that South Yorkshire
now hasat extensions out towards Sheffield Airport and
the Tinsley area. In a sense, there is a lot of, if you like,
satisfaction within Sheffield with the scheme. I think the final
lesson we have learned from the whole Sheffield project was that
Sheffield was the first scheme to actually establish a new market;
other schemes are built on existing rail markets, or whatever.
So another issue, in terms of how well we are able to forecast
what people will do has been learned from Sheffield, and how that
can be done in deregulated bus markets.
114. Have you reached the forecast levels of
passengers, or are you still short of that?
(Mr Wicks) There were two forecasts. There was the
forecast done very early on in the process in the mid-80s when
the Bill was submitted, and that forecast something in the region
of 20 million passengers after about three years. Now, the actual
opening patronage was about 6 million. During that time the forecast
was revised, because, clearly, there had been, as I say, the downturn
in economic activity. The bus market, for example, declined 40
per cent between 1987 and 1994 in Sheffield.
115. Is that due to fares, though?
(Mr Wicks) South Yorkshire's fares policy up to 1986
had been the low fares policy, but by 1987 that had changed. In
fact, the case for the scheme was based on assuming that the 1987
bus market would stay stable, but it declined. I think that led,
if you like, to a revision of the forecast. The actual revised
forecast by 1996 was an annual patronage in the region of 9 to
10 million, which we are now exceeding.
116. A lot of tramways are very expensive. Do
you think the DETR is correct in asserting that modest guided
bus schemes or comprehensive bus priority measures could bring
similar benefits at a much lower price?
(Mr Mulligan) Through you, Chair, in terms of the
White Paper which was published, there were reservations expressed
by the Government about the cost of light rail schemes. I think
it is very pleasing that over the last six months the Deputy Prime
Minister has begun to accept that there can be major benefits
from light rail schemes. We are not present here today saying
that there is not a role for guided bus. The bus itself will always
be the workhorse of the public transport system. I think, however,
that Members of the Committee will need to appreciate the sorts
of processes we have to go through in order to validate a light
rail scheme. We have to submit something called a Section 56 Justification.
In terms of that justification we are obliged, by the DETR and
the Treasury, to look at lower cost alternatives, such as guided
bus, such as bus. In the case of the Manchester Metrolink Phase
1, which has been hugely successful, it was quite clear that compared
to those alternatives, the benefit-to-cost ratio (which is the
economists' term for the value for money of the scheme) was substantially
higher for that scheme than for any other option, showing a benefit-to-cost
of about 2:1. I can also tell the Committee that for our future
extensions, on a single contract, we are looking at a benefit-to-cost
ratio similarly of about 2:1.
117. What is that? Economies of scale or cost?
What was the big factor in that?
(Mr Mulligan) The big factor, in terms of the Phase
1 system, was the calculation of user benefit, which is time and
the waiting time for people. The system is reliable, it is quick,
it is accessible and it is safe. All those factors calculated
together produced a very healthy benefit-to-cost ratio. Indeed,
I would venture to suggest that if it were done again at a patronage
level of 14 million compared to a planned design capacity of 11
million, you would see a benefit-to-cost ratio far higher than
2:1, simply because the demand forecasters for the Manchester
system under-estimated the travel patterns of people in Greater
Manchester. In particular, they thought that travel patterns would
be between Manchester and Altrincham and Manchester and Bury.
What they failed to take into account, which is the limitation
of demand forecasters, was the major suppressed demand for travel
right across the county, from Bury in the north to Altrincham
in the south.
118. You thought only the posh bits would need
it. You are just snobs!
(Mr Mulligan) No, no. I would say this about the success
of any light rail scheme, particularly when it is talking about
car abstraction, that I feel it is essential that at any end of
any given scheme you have a substantial travel generator, and
it is a fact of life that at the Altrincham end of the scheme
and at the Bury end of the scheme there are very high car ownership
119. Have you got any proof that people will
get out of the car and use the tram, or get out of the car and
use the bus?
(Mr Mulligan) I can provide attitudinal evidence on
car-to-bus transfer, but it does not happen a great deal. In terms
of evidence on car-to-tram transfer, we reckon that about 20 per
cent of the passengers who are currently using Phase 1 Metrolink
were previously car owners, car users, which accounts for about
2.5 million trips. I think Mr Donald may have something to add