Select Committee on Environment, Transport and Regional Affairs Eighth Report


How the development of Light Rapid Transit schemes could be assisted

New sources of funding

38. Of the many ways in which the development of LRT could be assisted, one of the most important would be the provision of consistent funding.[118] The Government explained that there were many ways in which LRT projects could be funded, and that some had received financial support from a number of different sources. In the past most schemes were funded conventionally by the public sector, although later projects, such as that planned for the Nottingham Express Transit, were being taken forward under the Private Finance Initiative. It was however intended that the proposed guided bus network in Northampton would be financed entirely by the private sector, through contributions from property developers with projects along the routes, although it was not thought that such funding would often prove adequate elsewhere.[119] In future money might also be available from the new fuel duty fund,[120] and from revenue from workplace parking and road user charges, where they are implemented.[121]

39. While acknowledging the role that workplace parking and road user charges could play in raising revenue for transport investment and for altering travel habits, the PTE Group confirmed that there are difficulties associated with their implementation. It has been made clear to Government that in order to make the charges acceptable, improvements in the forms of transport alternative to the car must be put in place before workplace parking or road user charges are implemented. The West Midlands, for example, is seeking £400 million of capital investment in alternative modes before deciding to introduce new charges.[122] The Minister told us that he accepted "that high quality alternatives to the car need to be in place before charging can be introduced".[123]

40. While a number of our witnesses said that the new sources of funding, including charging, merit further exploration,[124] there were concerns that the Government has yet to make clear how capital can be raised for transport projects on the basis of future revenue from the new charges. Furthermore, clear Government support for local authorities promoting the first schemes using the new revenue streams would be particularly important in view of the considerable uncertainties involved.[125] It was also questioned whether sufficient overall funding would be available to pay for transport improvements which would enable the Government to meet its integrated transport policy objectives.[126]

Streamlining procedures

41. In determining whether or not LRT projects should be allowed to proceed it is obviously important that a balance be struck between the needs of promoters of such schemes and the rights of those affected by them. Nevertheless, the development of LRT schemes would be assisted if the complexity and time-consuming nature of the procedures to secure the powers and funding for a new system could be diminished.[127] There is also considerable potential for savings to be made if funding procedures could be standardised.[128] The Light Rail Transit Association confirmed that the biggest hurdles facing a promoter are obtaining clear Government support for a project at a reasonably early stage, and raising the necessary finance. Both of these issues are "crucially interlinked".[129] Viable schemes would benefit greatly if Governments could overcome their traditional reluctance to support a project at an early stage rather than waiting until the last moment. Such a change would generate confidence in the scheme, increase the likelihood of private sector participation and generally raise the chances of the proposal coming to fruition.[130]

42. The Institute of Logistics and Transport thought that existing procedures could be improved by adopting a two-stage process, whereby a promoter would seek planning permission for a project before incurring the effort and expense associated with trying to obtain an Order under the Transport and Works Act.[131] While some witnesses, such as Merseytravel,[132] made a number of detailed comments on how procedures under the Act should be improved, others stressed the more general importance of ensuring that an operator's experience is added to a project from an early stage in its development.[133]

43. The Minister acknowledged that there has been "a certain amount of discontent" about the Transport and Works Act procedures, although he argued that applications have been dealt with more quickly than was the case with Private Bills. His Department is, however, reviewing the procedures to see if they could be expedited.[134] The introduction of local transport plans has, in the DETR's opinion, provided a better and more consistent framework within which LRT proposals can be considered. Advantages will also result from implementing the new approach to appraisal which should, in particular, reduce the delay between completing the process set out by the Transport and Works Act, and obtaining final approval, and an Order, from the Government.[135] The Minister also said that his Department wants to simplify and systematise the process used by promoters for applying for Government funds, and to provide local authorities with feedback on their applications more quickly. These problems will be addressed by updated guidance on local transport plans, which will be issued shortly.[136]


44. While most scope for reducing the cost of LRT schemes was to be found in revising the procedures for obtaining powers and funding, worthwhile savings in the order of 5-15 per cent could also be made in the procurement of vehicles and other equipment. It was suggested that the cost of a typical new street-running system could be reduced by 12 per cent of that for the South Yorkshire Supertram if 'off the shelf' components were used within a complete design and build package. The most profitable area for standardisation is rolling stock, where use of a common specification might produce cost savings of around 15 per cent.[137] Rolling stock costs would also be reduced if vehicles of the same specification could be purchased in bulk.[138] The ability to exploit such economies of scale is evident in the proposal to expand Metrolink through a package of three extensions rather than procuring each route separately. The cost of the three lines was estimated to be £473 million, a figure which would be reduced to £445 million if, as intended, they were procured as a single contract.[139]

45. Although the consolidation of the light rail manufacturing industry and the use of modular construction had gone some way to reducing the proliferation of vehicle designs, more progress could still be made.[140] The PTE Group has attempted in the past to encourage standardisation, but had found that its efforts conflicted with the need for competitive tendering for certain forms of contract.[141] For the Government's part, the Minister thought that it was difficult to see how standardisation might be achieved.[142] There may be a clear conflict between European Union rules on competitive tendering and attempts to standardise the vehicles and equipment used in LRT schemes: nevertheless, there must be scope for ensuring that the specification of equipment can be standardised, allowing the promoters of LRT projects to benefit from economies of scale.


46. Although it had certain reservations about the implication of competition law, the Confederation of Passenger Transport was confident that Quality Partnerships[143] between operators and local authorities are sufficient to ensure that existing bus services are planned in a way which complement rather than compete with a new LRT system.[144] It believed that the West Midlands provides a good example of how light rail, bus and local heavy rail services and ticketing can be integrated, in spite of the fact that bus services outside Greater London are deregulated. In this instance, however, the operators of those services, including most of the bus services, were part of the same group: National Express.[145] The Minister was also of the opinion that partnership arrangements have been very successful and that Quality Contracts are not an indispensable condition of joint ticketing arrangements.[146]

47. While the PTE Group agreed that there is potential for integrating bus and light rail services through Quality Partnerships and other voluntary arrangements, it thought that problems might arise because the commercial instincts of a bus operator would not be to integrate his services with a new light rail system if he saw the system as a competitive threat. The Group said that it continued to examine whether Quality Contracts have a part to play in ensuring integration.[147] One of its members, South Yorkshire PTE, was sceptical that partnerships can fully address the need to integrate services, and emphasised the importance of giving transport authorities powers to enter into Quality Contracts to provide fully integrated ticketing and services where voluntary arrangements were found to be inadequate.[148]

Guided bus network demonstration project

48. One of the problems that became apparent during our inquiry was the difficulty in making true comparisons between rail- and bus-based LRT projects in the absence of major examples of the latter. While stated preference surveys tend to indicate a strong preference for light rail above other modes, the PTE Group felt that it would be difficult to obtain meaningful market research data until there are more extensive bus-based systems.[149] The establishment of a number of demonstration projects would enable the actual performance of alternative forms of transport in service to be measured, and would enable the costs and abilities to alter travel habits to be compared with existing light rail schemes.[150] London Transport was keen to see a trial of a guided busway network with very high levels of priority over other traffic. It thought that there are good reasons to believe that its performance could be comparable to that of a rail-based system. There is a need, therefore, to establish whether a bus-based system could meet such expectations.[151]

Incremental approach to LRT development

49. As well as being valuable in its own right, the construction of a guided busway might be an important stage in the development of LRT along a busy corridor. Conventional bus priority measures could be upgraded over time to include sections of guided busway, which in turn might give way to light rail, and ultimately to a metro scheme, if warranted by demand.[152] Indeed FirstGroup thought that the greatest encouragement that could be given to LRT would be to encourage the provision of bus priorities on all major urban corridors. This would enable the public transport market to grow and thus support the more expensive enhancements to guided busways and light rail.[153] Such an approach, in principle, has been adopted in London. While LRT schemes are being developed for certain corridors, the existing bus services along those corridors are being given higher priority and facilities for buses are being improved. If it was decided to proceed to one or other mode of LRT, this might be done by providing even greater priority, or upgrading to a guided system, until performance, demand levels and the economics of a corridor justify the introduction of light rail.[154]

50. While an incremental approach to LRT development offers the advantages of spreading the capital costs of a project over a longer period and allowing capacity to grow in line with demand, it might prove more expensive overall. In addition, its use in certain circumstances would be infeasible or inadvisable. Both the Docklands Light Railway and Croydon Tramlink, for example, operate for at least part of their route along former railway structures or alignments which would have been unsuitable for bus-based LRT.[155] Moreover, the Light Rail Transit Association believed that while this approach looks attractive, in reality it was probably a 'fudge', and there was no obvious case in which the incremental approach had been seen through to completion. Moreover, many of the corridors considered for an incremental progression between modes may well have sufficient patronage to justify the introduction of light rail at an early stage in any event. In the Association's view, choosing the incremental approach was a way of avoiding a decision. By contrast, it pointed out that light rail schemes tend "to have the virtue of forcing difficult decisions to be made". The Association also noted that it appears to be easier to reallocate road space to light rail than it is to give buses greater priority.[156]

Conversion to heavy rail and track-sharing

51. Most of the United Kingdom's light rail systems, with the exception of the South Yorkshire Supertram, have made considerable use of former heavy rail lines or disused railway alignments. As well as helping to reduce a scheme's cost, light rail can provide new links by bringing separate and possibly under-used heavy rail lines into a wider urban rapid transit network. Potentially light rail could be more cost-effective than renewing heavy rail infrastructure and rolling stock, and might provide a more attractive service. Conversion offered the prospect of more frequent services being provided at lower cost, the provision of electrification without having to replace overbridges, and the introduction of additional stations without any increase in overall journey times because of superior operational performance.[157] Significant increases in patronage have been recorded as a result of conversion to light rail and associated improvements.[158]

52. In addition, the prospect of track-sharing has generated considerable interest, with light rail vehicles using the same lines as heavy rail services in the suburbs and then switching to on-street running in the city centre. Passengers benefit from through services with less need to change from the train onto to a tram or a bus in order to complete their journeys.[159] Track-sharing had long been an aspiration of the Passenger Transport Executives and Passenger Transport Authorities, and recent technical developments, particularly in train protection systems, have made it more feasible.[160]

53. There is considerable potential for converting heavy rail lines to light rail or for track-sharing,[161] although it was noted that as a consequence of growth in rail traffic over recent years the opportunities, especially around London, have diminished considerably.[162] Careful consideration will also have to be given to how best use can be made of scarce track capacity on the heavy rail network by balancing the competing demands of passenger, freight and light rail services.[163] It will also be necessary to take the interests of existing and potential heavy rail users into account when considering any proposals for conversion or track-sharing,[164] as well as the relevant local transport plan and regional transport strategy.[165] It will be important, therefore, for the potential for conversion and track sharing to be taken into account during the shadow Strategic Rail Authority's deliberations over its first strategic plan, and its consideration of the long-term options for replacing existing passenger franchises.[166]

54. It is also intended that the shadow Strategic Rail Authority should fund the integration of LRT systems with the heavy rail network. The Minister confirmed that it is important for the Authority to have a stake in light rail, since light rail represents a significant proportion of all rail activity. He envisaged the Authority having "a positive and pro-active influence" in the development of new schemes.[167] While the shadow Strategic Rail Authority might have a positive influence on the promotion and development of new LRT schemes, our witnesses expressed some concern that funding for such schemes could be absorbed by heavy rail projects.[168] The PTE Group also had reservations about the Authority's role in this regard, although it felt that these had now been substantially allayed by the Government.[169]

Conclusions and recommendations

55. If the Government believes that it is important to attract motorists out of their cars, alternative forms of public transport must be put in place first. As the evidence shows, people will not switch to public transport unless it is reliable, frequent, efficient, safe and clean with affordable fares. Light rapid transit systems meet these criteria, and so, where appropriate, they should be pursued.

56. LRT cannot provide an appropriate solution for all urban transport problems. Investment in heavy rail services will be required to cope with large passenger movements, while upgrading conventional bus services will be the most cost effective way of improving services along quieter corridors. The Government should adopt a 'horses for courses' approach to ensure that investment is directed to the mode of transport which is best suited to local conditions and passenger flows.

57. If the Government is serious about enabling LRT to play its full role in tackling traffic congestion, it must go beyond statements of support and be prepared to contribute public funds to projects which are unable to cover all of their costs through fare revenues, but which reduce congestion, bring environmental improvements and can stimulate economic development. In that respect its recent announcements about the Sunderland Metro Extension, Manchester Metrolink, Nottingham Express Transit and Docklands Light Railway have been most welcome, and we look forward to similarly positive decisions in future.

58. The impact of a new light rail project will be greater if it is opened as a complete system rather than line by line. Similarly, extensions to existing schemes should be implemented together, as in the case of Manchester Metrolink. We recommend that the Government provide the funding, where necessary, to enable complete networks or groups of extensions to be opened in one go rather than on a piecemeal basis over a long period.

59. The Government must now make it clear whether local authorities will be able to borrow capital for investment in LRT systems on the basis of future income streams from workplace parking and road user charging. If so, it should provide guidance on how this should best be done, and should provide adequate financial and other backing to ensure that uncertainties over such funding do not prejudice the development of LRT projects.

60. The potential of guided busways has yet to be fully exploited in the United Kingdom. We recommend that the Government assists the development of extensive guided bus networks in a number of locations in the United Kingdom which reflect different operating conditions. These would act as demonstration projects, allowing the viability of guided busways to be properly assessed.

61. Along many routes bus lanes could be upgraded to guided busways and subsequently further enhanced to become light railways where warranted by demand. Where investment in a guided bus or light rail project is not justified immediately, we recommend that, wherever feasible, schemes be developed incrementally.

62. We recommend that the Government bring forward further changes to procedures for obtaining funding and approval for LRT schemes, if such procedures are not significantly speeded up by the introduction of the new local transport plan framework.

63. In view of the discontent with its current operation, we urge the Government to complete its review of the Transport and Works Act quickly so that the additional delay and expense that is being suffered by LRT promoters is reduced. If amendment of the Act proves necessary the Government should immediately introduce legislation to do so.

64. The cost of light rail schemes could be reduced by adopting common designs for vehicles and other equipment. We recommend that the Government bring together local authorities and other promoters of LRT projects to ensure that where possible vehicles and other equipment are standardised in order to realise economies of scale.

65. We do not agree that the utilities should be allowed to reduce the contribution they make to the cost of diverting their pipes, cables, and other equipment away from a light rail route. We recommend that the utility companies should continue to pay 18 per cent of the cost of diverting their services.

66. Trams and buses must be given priority over other vehicles to minimise the disruption to LRT services caused by traffic congestion.

67. We welcome the Minister's comment that high quality public transport schemes, such as LRT, should be introduced in advance of implementing road user and workplace parking charges.

68. Evidence shows that LRT is more effective for achieving modal shift when it is accompanied by measures to discourage car use. We recommend that complementary car restraint measures be implemented simultaneously with new LRT schemes in order to increase the number of motorists who transfer to public transport.

69. Although Quality Partnerships and other voluntary arrangements may be sufficient to ensure integration between bus and light rail in some areas, the Government must, without hesitation, allow local authorities to enter into Quality Contracts where necessary.

70. We recommend that the Government amends planning guidance to place even greater emphasis on integrating LRT schemes with urban development where appropriate.

71. We recommend that the shadow Strategic Rail Authority examines the potential for converting heavy rail routes to light rail and for track-sharing, as part of the franchise replacement process that is currently under way. Any proposals should, however, only be taken forward if they comply with the relevant local transport plans and have taken into account the interests of existing or potential heavy rail users, as well as safety considerations.

118   For example, see Centro (RT 29, para 7.4). Back

119   Q 173 Back

120   Announced in the pre-Budget Report, HC Deb, 9 November 1999, col 889. The Fuel Duty Fund was the scheme announced by the Chancellor in autumn 1999 whereby any real increases in road fuel duty would be hypothecated to transport investment. The Minister explained that a one per cent increase in duty above the rate of inflation would yield £210m. The Chancellor decided against any real increases in duty in the March 2000 budget because of the rate at which oil prices had risen (Budget sets Britain on road to better transport and environment, HM Treasury Press Notice, 21 March 2000).  Back

121  Q 345. The Government had established the Congestion Charging Development Partnership to enable the DETR and local authorities interested in implementing this form of charging to exchange information on schemes and the use of the revenue generated by them (Q 415). Back

122   Q 164. It was reported that Leeds City Council had questioned whether it would be able to proceed with plans for road user charging because it was not given sufficient funds by the Government for its key transport projects, including the city's proposed light rail scheme (Surveyor, 13 January 2000). See Q 349 for the Minister's comments on this issue.  Back

123   Q 339. See also Q 344. Back

124   RT 34, para 6.3. Back

125   Institute of Logistics and Transport (Q 23). Back

126   RT 17. The Institute of Logistics and Transport had estimated that an extra £3,000 million needed to be invested in surface transport infrastructure each year. All forms of public transport required an additional £2,000 million per annum. Back

127   For example, the PTE Group (RT 34, para 7.2). Back

128   RT 34A. Back

129   RT 30. Back

130   QQ 80-82. Back

131   Promoting New Transport Projects: the Role of the Transport and Works Act 1992, Chartered Institute of Transport in the UK, 1998. See also RT 3, para 5.6. Back

132   RT 34A. Back

133   RT 35. Back

134   Q 350. The Minister was referring to an ongoing exercise of reviewing the operation of the Transport and Works Act process. A number of measures were in hand (see RT 31B). Back

135   QQ 350 and 351. Back

136   Q 338. Back

137   RT 34A, annex 3, paras 2.3-2.8. Croydon Tramlink uses vehicles of a type used by another operator with only minor modifications. Each vehicle was thought to have cost approximately £1.3 million. By contrast, the South Yorkshire Supertram vehicles were of a bespoke design and cost £1.6 million each. Back

138   It has been estimated that the price of a single Manchester Metrolink vehicle would be £6.75m. At the other extreme, if 100 vehicles were bought, the unit price would fall to £1.3m (ibid). Back

139   Ibid. Back

140   RT 30. There was also scope for track costs to be reduced. Back

141   RT 34A, annex 3, paras 3.1 and 3.2. Back

142   Q 396. Back

143   Quality Partnerships are based on co-operation between local authorities and bus operators. The former introduces traffic management schemes, such as bus lanes, which assist buses. The latter provides better quality (e.g. more comfortable vehicles), improved marketing, greater integration and higher reliability. By contrast, Quality Contracts would require operators to bid for exclusive rights to run bus services on a route or group of routes according to a local authority service specification and performance targets (A New Deal for Transport: Better for Everyone, paras 3.16-3.20). Back

144   QQ 37 and 38. Back

145   Q 44. Back

146   Q 414. The Minister also noted that provisions were being made in the Transport Bill to encourage the development of joint ticketing schemes (Q 366). Back

147   Q 150. Back

148   RT 22, para 17(b). Back

149   RT 34, para 4.1. Back

150   RT 34, paras 4.7 and 4.8. Back

151   Q 221. Back

152   RT 17. Back

153   RT 35. Back

154   RT 27A. A similar approach was being taken in Western Sydney where an extension busway network was planned with provision being made for conversion to light rail operation if ever justified by passenger volumes (Liverpool-Parramatta Transitway: overview report, PPK Environment & Infrastructure, 1998, section 5.5). Back

155   RT 27A. Back

156   RT 30A. Back

157   RT 17A. Conversion to guided busway may also be appropriate in certain circumstances. Back

158   Manchester Metrolink's Altrincham branch carries 14 million people per year around twice the number that used the former British Rail service (Q 127).  Back

159   This form of operation was developed in Karlsruhe, Germany where it has proved very successful. It is has been implemented or proposed in other European towns and cities. The Sunderland extension of the Tyne and Wear will be operated in this way (RT 17).  Back

160   QQ 162 and 163. See RT 19A for details of the technical and administrative issues concerning track-sharing. Back

161   RT 17A. Back

162   Q 260. Back

163   QQ 254-56. Back

164   RT 7 and RT 42.  Back

165   RT 17A. Back

166   IbidBack

167   Q 393. Back

168   For example, the Light Rail Transit Association (Q 64). Back

169   Q 139. Back

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