Examination of Witnesses (Questions 338
- 359)
WEDNESDAY 1 MARCH 2000
MR KEITH
HILL, MR
RICHARD BIRD
AND MR
MIKE WALSH
Chairman
338. Minister, may we welcome you to this Committee.
I believe it is your first attendance before us.
(Mr Hill) It certainly is in the witness stand, Chairman!
339. We always like to see poachers turn gamekeepers.
The Committee welcomes you today. We have already set two precedents.
I have already upset one Minister today so I promise to be very
nice to you. The second one is that we are all Europeans here,
so if you wish to use Spanish, French, Italian or German feel
free to do so. Do you have some general remarks you would like
to make in opening or are you strong enough to go straight to
the batting?
(Mr Hill) Chairman, I know how tedious lengthy opening
statements can be, but I have prepared just one or two observations
which I hope will be for the benefit of the Committee. At least
at this stage it is a pleasure to be back with you and this is
where, as you know very well, I spent five very happy years in
the last Parliament. I am accompanied by Richard Bird, who is
the Director of Integrated and Local Transport, whose responsibilities
include light rail schemes outside London, and Mike Walsh, Head
of Economics and Local Transport and he deals with the appraisal
of such projects and with your permission I propose to call upon
them to assist me with my replies to your questions if only because
they know a great deal more about these matters than I do. The
Government believes that light rail systems have an important
role to play in delivering integrated transport in some of our
major towns and cities. The Metrolink in Manchester shows just
how successful light rail can be. Supertram in Sheffield is improving
and we also have new systems in Birmingham and the extension of
the DLR to Lewisham with Croydon to follow shortly. We have also
approved new schemes in Nottingham and Sunderland. The Government
supported all these schemes because they represent good value
for money and form an integral part of a strategy demonstrating
clearly that the objectives of that strategy cannot be met in
other ways. However, we have to bear in mind that the capital
costs of light rail systems are high when compared to bus priority
measures which may in some circumstances offer a more cost-effective
alternative. It is a question of horses for courses. A wide range
of factors, such as the level and density of likely demand on
a particular corridor need to be considered and that is done through
the economic appraisal promoters have to carry out when seeking
government funding. We are seeking to simplify and systematise
that process and provide earlier feedback to authorities on their
applications and the updated guidance on local transport plans
to be published shortly will cover this. Authorities need to decide
whether revenues from congestion charging schemes or workplace
parking levies could be used to finance alternative modes to the
private car, including light rail and to show that this fits in
with their overall transport strategy for their area. We accept
that high quality alternatives to the car need to be in place
before charging can be introduced. We also need to take account
of other potential sources of funding, such as the fuel duty fund
and any increases in conventional funding. Chairman, we expect
that light rail schemes will be an important component of the
ten-year strategy the Government is preparing which will draw
on the best that technology has to offer, but it will continue
to be essential to demonstrate in each case that light rail is
the best solution for a particular area.
340. That is very satisfactory, Minister, and
I am sure the Committee welcome what you have got to say. How
many LRT schemes do you expect to be opened in the ten-year period
that you are talking about for an investment programme?
(Mr Hill) We already know that there are a number
of schemes. The Sunderland extension of the Metro and the Nottingham
light rail scheme have been approved and we certainly expect them
to open within that ten-year framework. It is no secret that other
authorities have light rail projects in mind. Certainly, Greater
Manchester is seeking to secure extensions of the Manchester Metro.
In the West Midlands there is a wish to extend their Metro system.
Bristol has light rail projects in mind and also Leeds. None of
these have been approved, but if approved then I imagine that
those schemes would certainly be open within the ten-year period.
341. It is still a little wish-list, is it not?
I think what we would like from you is a firmer indication of
which of those you would expect to be approved.
(Mr Hill) I wish I could assist you in that matter.
However, natural caution about premature commitment on these matters
prevents me from doing so. Let me say that we are very well aware
of all of these projects, that we are in close consultation with
the authorities concerned and that we are eager to see schemes
which can prove best value in their localities go forward.
Mr Bennett
342. How soon do you think you could answer
the question?
(Mr Hill) I am tempted to say after the Budget. I
would hope that we can begin to think about making some announcements.
Of course, the schemes will come through mainly in the shape of
components of local transport plans because, as you know, we are
now expecting the local transport authorities to bring forward
their five-year plans.
343. You dodged that pretty well. The Budget
or is there any hope of it happening before the Budget?
(Mr Hill) I think it would be extremely unlikely—I
regret to tell you and I know from which neck of the woods you
are coming—that there would be any announcements prior to
the Budget. The Budget is not very long away. Essentially I think
we would expect to see these projects as part of local transport
plans. They will be submitted in July. They will cover the next
five years and we will be making announcements on them in December.
Mr Stevenson
344. Minister, could I ask you to elaborate
a bit more on your statement that public transport alternatives
need to be "in place" before charging is imposed. We
have received a significant amount of evidence from all sorts
of organisations which suggests very clearly that public transport
alternatives, light rapid transit schemes, etcetera need to be
in place before charging is imposed otherwise it will be unacceptable.
You seem to concur with that view. Can we conclude that the Government
is sympathetic to the view that says that the money needs to be
made available so that public transport alternatives, including
LRT, can be provided before charging takes place?
(Mr Hill) Perhaps I might call upon my experience
as a Member of this Committee in the last Parliament when we undertook
an inquiry into urban road tolling and, in fact, as part of that
inquiry we went to Norway—not quite as far as I understand
the Committee has recently travelled—and I think we were
all very struck by the experience in Oslo where, very interestingly,
prior to the introduction of tolling in that city the Norwegian
authorities had already constructed a lengthy road tunnel under
the city. In other words, when the tolling came in the motorists
could see what they were paying for and I think that is absolutely
critical and I think there is a broad view across all of the potential
charging authorities that in order to justify charging regimes
of whatever description they need to be able to show in some form
of completion what exactly motorists are paying for.
345. That is very encouraging. To what extent
do you see Government allowing local authorities to borrow on
the back of future revenue streams?
(Mr Hill) I think there are a number of possible routes
to the funding of these projects of which borrowing is part of
conventional funding and that has been the traditional way in
which these things have been funded with the exception of the
Nottingham light rail scheme which is a PFI scheme. The PFI is
a second route. A third route is the Fuel Duty Fund which, of
course, the Chancellor announced in the Autumn of last year, a
scheme whereby if there were to be any real increases in fuel
duty that would be hypothecated to transport investment. Thirdly,
there would be the revenue streams which resulted from charging
regimes.
346. Could I press you a little further on what
appears to me to be a significant element in that package and
that is borrowing, i.e. PFI or PPP as distinct from others that
you have talked about. Of course, these tend to be complicated,
they tend to be medium to long-term projects. If the Government
is determined to do what you have said they are intending to do,
that is allow authorities to plan ahead and to use whatever mechanism
is appropriate on the basis of future revenue streams, is it not
right that local authorities will have to put it in their transport
plans now and that the Government has to be saying to local authorities,
subject to the appropriate scrutiny, "This is appropriate.
Get on with it"?
(Mr Hill) Yes, they do need to be embarking on these
projects now, but one of the things that the Government would
want to look at, if local authorities propose some form of borrowing
as a means of funding the scheme, would be how it would be paid
back and we would certainly want to see the sources of revenue
which would enable them to do that. Of course, none of these sources
of funding need be exclusive. We certainly think it is perfectly
possible that these projects could be funded by a combination
of various means of funding.
347. Have you any idea how much may be generated
by the Chancellor's announcement of above inflation increases
in fuel?
(Mr Hill) A one per cent real increase yields £210
million for Great Britain as a whole. It is worth bearing in mind
that that sum would be compounded if there were to be a further
one per cent real increase in fuel duty in the following year.
In other words, this is a financial device which can lead quite
rapidly to the availability of very substantial sums of money
for investment in all aspects of transport.
Mr O'Brien
348. The West Yorkshire Passenger Transport
Authority covers my constituency and they are a partner in the
Leeds Supertram scheme and the authorities in the private sector
have spent over £6 million trying to meet the changing criteria
in the funding framework set by the Government. Are we going to
have a system or criteria where there will be no changes and no
waste of money and there will be a saving to council tax payers?
(Mr Hill) This is the argument that there are changing
criteria in terms of Supertrams specifically or the integrated
transport package which Leeds have put forward?
349. The Supertram criteria in particular and
also the question of the transport mode that we need in some of
our cities. The West Yorkshire Passenger Transport Authority are
saying that there needs to be a clear framework of criteria and
rules which are not subject to continuing change.
(Mr Hill) Mr O'Brien, I rather think this relates
to a concern which I know Leeds City have had about the Government's
response to their last local transport plan package and the fact
that there was a feeling that to some extent the Government was
rewriting the requirements and the criteria for that package.
I have had a meeting with irate local councillors on this subject
and my belief is that we have been able to set the record straight
as to the Government's intention. The Government is very supportive
of Leeds as a transport authority. We believe that Leeds is a
highly innovative transport authority. We know that many of the
schemes that Leeds has introduced, guided busways, high occupancy
vehicle lanes, a number of interesting bus priority provisions
in the city, have proved to be extremely good value for the local
public. I have been anxious to reassure Leeds that there is no
backtracking on the Government's support for those sorts of measures.
What we do need is a thorough justification in the light of changing
patterns of transport and to some extent the population so that
we can be absolutely sure that the package they are proposing
is right.
350. What proposals does your Department have
in revising its procedures for deciding whether or not a light
rapid transit scheme should be funded and avoid the delay and
the additional expense incurred like with the Supertram scheme?
There has been a lot of to-ing and fro-ing. What proposals do
you have to try and streamline that kind of application?
(Mr Hill) I suppose I could answer that at one level
on the issue of Transport and Works Act where I know there has
been a certain amount of discontent and certainly we are in the
process of reviewing the procedures under the TWA to see if they
can be speeded up. It ought to be noted that applications under
the TWA have been dealt with much faster than under the old Private
Bill mechanism. I rather suspect that yours is a more precise
question about Supertram. At this point I am going to ask Richard
Bird to come in on this. Are you aware that there have been changes
in terms of the Government's approach to the Supertram?
(Mr Bird) I think the most important change is the
arrival of local transport plans on the scene which provide a
proper planning context for looking at proposals like the Leeds
Supertram which previously could only be considered ad hoc
and can now be looked at in relation to a transport and planning
strategy for West Yorkshire and Leeds as a whole. I think that
has provided a better framework and a more consistent framework
than in the past. The other change that we are proposing is in
relation to the appraisal process and with the Minister's permission
perhaps I could transfer the question to Mike Walsh.
(Mr Walsh) What we are doing is bringing in a unified
system of appraisal which is the new approach to appraisal that
has been introduced following the White Paper which will look
at the whole range of issues including the old cost benefit but
bringing into account, on a standard procedure all the methods
for appraisal. It is based on the five criteria of economy, environment,
safety, integration and accessability.
351. Will this speed up the process of approving
the funding because obviously these are some areas of delay that
we have to try and meet and so reduce the delay?
(Mr Walsh) I think one of the proposals is that there
would be a greater deal of agreement on the quality and the performance
of the scheme from our point of view before it goes to the Transport
and Works Act and that would reduce the period between the Transport
and Works Act and final approval.
352. So what do you do about schemes that are
admitted and do not have a chance of being involved but still
there is money spent on these schemes? Are there criteria set
to try and deter people from submitting schemes that do not have
a chance?
(Mr Walsh) We have always worked very closely with
promoters as they develop their schemes and we have always stood
ready to give them guidance as to how we thought the scheme was
developing, as to whether it was a potentially positive scheme
or not and I think we will continue to do that. I think the new
procedures will make that a bit easier, but I think it is something
we have always been very keen to do.
Mr Olner
353. If the promoter wanted light rail and you
assessed it and found it to be wanting, would you automatically
give guidance to the promoter that they should be going for the
guided bus or does the whole process have to start all over again?
(Mr Walsh) No, when they come forward with proposals
we have always asked that they assess not just their preferred
solution but the alternatives as well. If they were coming forward
with light rail as their preferred solution we would expect there
to be evidence that they had not just settled on this and that
earlier in the process they had looked at the alternatives and
that light rail was the best in this particular context and then
at that stage we would give them a clear steer. It would be unlikely,
having done that, that it would then fail as a light rail scheme
and reappear as a guided bus scheme.
Mr Gray
354. These schemes are hugely expensive. Let
us focus on the funding first of all with regard to the petrol
tax duty. You mentioned in answer to an earlier question that
one per cent equals £210 million and if it is compounded
it could be more than that. We are talking about an awful lot
of money that the Government will have. Where will they spend
it? How will you decide which scheme to go for?
(Mr Hill) The first thing which I think we need to
recall is that the Chancellor has made it clear that this money
will be hypothecated wholly to local transport and roads improvement
schemes of various sorts, so we know that it will go on transport.
Beyond that, quite clearly we will look at the various bids made
via the local transport plans by local transport authorities and
on the basis of the persuasiveness of the case made out and the
appraisals that are made particularly for these major schemes
we will obviously seek to offer support to those schemes.
355. Would you accept that unlike workplace
charging and congestion charging where the new scheme benefits
the very people who are paying the tax in that area, a tax on
petrol would be raised on people who would not necessarily be
benefiting from the light rapid transit system that the Government
would then choose to spend it on?
(Mr Hill) I think that is clearly the case in that
direct sense where you have between a driver who is paying petrol
tax in Aberdeenshire, some of which may not go into expenditure
in Aberdeenshire although some of it almost certainly will because
there will be local transport plans in each part of the country
into which this additional government funding will go. It is perfectly
true that there will be large projects in some of the major conurbations
which will receive large sums of money. I have to say as well
that regionally there is an equalisation so that you do not find
a situation in which disproportionate sums of money are being
devoted to particular areas or particular cities.
356. The hypothecation advanced is that the
money that is raised from that particular passenger is spent on
that particular passenger and surely, given what you say, it will
be the rural driver who pays higher petrol taxes but it will be
the urban individual who will benefit from the light rapid transit
system. How would you react to that criticism?
(Mr Hill) It will be the rural motorist who will benefit
from the roads maintenance component of the allocation in the
local transport plans. It will be the rural dweller who will benefit
from the continuation which I was pleased to announce on Monday
of this week of the rural bus grant. There are many ways in which
people in the countryside, both motorists and non-motorists, will
benefit from increased expenditure on transport.
357. Let me focus on workplace parking and congestion
charging in particular. What happens if the amount of money raised
through particular schemes does not come anywhere near the amount
of money required for a light rapid transit system in that particular
area?
(Mr Hill) As I said, we would anticipate that the
funding of major schemes of this sort may occur through a combination
of sources of funding. Therefore, the revenues generated from
one or other form of congestion charging may only be a part of
the way in which the scheme is funded, but it may be wholly the
source of the funding as well.
358. It may be, but by admitting that and by
admitting that the Exchequer funds large parts of the scheme,
are you not undermining the whole argument in favour of hypothecation
of workplace and congestion charging because the theory in the
driver's mind is "I will pay that tax and in return I will
get that", but the truth of the matter is that the amount
of money raised from the workplace parking tax is extremely unlikely
to come anywhere near or even be roughly equivalent to the costs
of the scheme and therefore that demonstrates that hypothecation
is a PR exercise to try and persuade the motorist he is getting
something worthwhile.
(Mr Hill) On the contrary, I think that the motorist
in a locality which imposes a congestion charging regime will
actually be able to have the assurance that all of the monies
he/she is expending in congestion charging will go wholly to local
transport projects. Of course, these local transport projects
will not be wholly funded by the congestion charging regime and
the normal processes of national funding will also come in. I
have made it clear that congestion charging is supplementary—
Mr Gray: We will return to these matters next
week in the Bill Committee.
Mr Donohoe
359. In Edinburgh dedicated bus lanes have generated
a perception in the minds of the public that the roads that have
these lanes have become very restrictive and that it is rather
anti-car. The Government is accused by some of the press as being
anti-car. What would you say in terms of the advancement of similar
schemes to the additional problems that you are heaping upon yourself?
(Mr Hill) I am very sorry to hear that that perception
has arisen in the case of Edinburgh because I think our general
experience is that where you have dedicated bus priority lanes
you have two interesting effects. Firstly, the predictable and
desired effect which is that you speed up bus journeys but also,
interestingly enough, on the whole you speed up other traffic
movements on the road at the same time. There may be a number
of reasons for this. One rather obvious reason is that one of
the most tedious experiences for the motorist is having to wait
in a queue while a bus comes out of the bus lane and negotiates
around the illegally parked car and then proceeds along the bus
lane. This is a bit of a hostage to fortune, I acknowledge, but
let me cite the case of the well known M4 bus lane where not only
has the bus lane speeded up bus and taxi movements but overall
speeds in that stretch of the motorway have increased as well.
Let me give you another example. There is the new so-called "whole"
route 32 over eight kilometres of North London where you have
effective enforcement of a bus lane, that is why it is known as
a whole route, because you have extremely effective enforcement.
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