Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence

Examination of Witnesses (Questions 338 - 359)




  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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