Select Committee on Environment, Transport and Regional Affairs Eighth Report


Transport Sub-committee's visit to the Croydon Tramlink and the Docklands Light Railway:
19 January 2000

1. The following Members of the Transport Sub-committee participated in the visit: Mrs Gwyneth Dunwoody, MP (Chairman), Mr Andrew Bennett, MP, Mr Brian Donohoe, MP, Mr Clifford Forsythe, MP, Dr Stephen Ladyman, MP, Mr Bill O'Brien, MP, and Mr Bill Olner, MP. They were accompanied by the following members of staff: Mr Gavin Devine, the Sub-committee's Clerk, Mr Kevin Lee, Committee Specialist, Miss Frances Allingham, Committee Assistant, and Miss Leslie Young, Committee Secretary.


Participants from Croydon

2. The members of Tramtrack Croydon Limited (TCL) who participated in the first part of the Sub-committee's visit were Mr Bob Dorey, Chairman of TCL, Mr Charles Lenox Conyingham, Deputy Chairman, Sir William MacAlpine, Director, Mr Peter Hendy, Director, and Mr Roger Harding, General Manager.

The Tramlink system

3. The idea of bringing trams back to Croydon grew out of a study of local transport conducted by the British Railways Board and London Transport in 1986, covering the whole of the greater London area. Since 1990 Croydon Council and London Transport have worked together to promote the Croydon Tramlink project.

4. We were told that the London Borough of Croydon regards the Tramlink project as important for a number of reasons. These include a desire to improve the transport facilities available to the 25,000 inhabitants of New Addington, for whom buses have previously been the only form of public transport. The construction of the Tramlink will reduce the journey time from there to central Croydon from 35 to 17 minutes. We were also told that the Council sees the project as a means of improving the quality of life of other residents of the Borough, by providing an additional, and particularly efficient, mode of public transport. It is also seen as important for the Borough's economic development.

5. Powers to construct the Tramlink were sought in a Private Bill deposited in 1991 (the Croydon Tramlink Bill [Lords]). The Bill was opposed by petitioners in both the Lords and the Commons, but was eventually enacted on 21 July 1994. Work to construct the Tramlink began in January 1997.

6. Approximately 17 kilometres of the 28-kilometre Tramlink network runs along lines converted from heavy rail operation or used former heavy rail alignments. Around 3 kilometres of the system operates along existing highways with the remaining 8 kilometres using new rights of way, mostly adjacent to existing roads. The network consists of a clockwise loop in Croydon town centre with four branches. The initial service pattern is planned to be as follows: a service between Wimbledon and Elmers End every 10 minutes; between Croydon and Beckenham Junction also every 10 minutes; and between Croydon and New Addington every 6-7 minutes.

7. The cost of the project for which TCL was responsible was approximately £185 million, which excludes the cost of utility diversions (about £20 million), paid by London Transport. This compares with the estimate of the project's cost of £160 million at 1992 prices made during the passage of the Croydon Tramlink Bill. The cost of the project has been divided almost evenly between the public and private sectors: £125 million has been provided by central Government. Despite the project's costs, an assessment of the different transport options for the area concluded that Tramlink enjoys a benefit to cost ratio of 2.7 to 1, and is a more attractive option than bus-based improvements to the transport system. Moreover, the benefits of the project might have been understated in the assessment, since no estimate has been made of the increase in property values and creation of jobs as a consequence of Tramlink: there is, in any event, no mechanism by which the scheme can capture betterment of this kind.

8. Once operational Tramlink will have 120 employees of which 72 will be tram drivers. Particular emphasis has been placed on maintaining a flexible workforce: managers, for example, have also been trained to drive. Drivers, as well as controllers, are salaried, and their rates of pay are better than those offered to local bus drivers.

The Tramlink concession

9. Following the enactment of the Croydon Tramlink Act, the project was put out to tender. Four consortia entered bids for the 99-year concession to design, build, finance and operate the project: the successful group was Tramtrack Croydon Limited, which is made up of First CentreWest Limited, a subsidiary of FirstGroup plc, Bombardier Transportation, The Royal Bank of Scotland plc, 3i Project Finance, and Sir Robert McAlpine/Amey Construction Limited. The concession was awarded to the bidder that required the lowest level of capital grant: TCL undertook to take the project, operating and traffic revenue risks.

10. The project's financing was modelled over a 30-year period, rather than the full length of the 99-year concession. This was because TCL has assumed that it will have to replace the vehicles and other equipment at that time, and it regards it as important to ensure that new investment will be available to renew the system. Agreements have been reached with Bombardier and Amec for maintaining the system's trams and infrastructure respectively.

11. TCL expects 40 per cent of its revenue to come from the Travelcard scheme, 40 per cent from cash fares, and 20 per cent from concessionary passes. The company will not have the commercial freedom to set fares, since fares will be decided by London Transport. For that reason, the concession provides some protection to TCL from the effects of any non-inflationary fares increase policy which might be adopted by London Transport in the future. This takes into account any increases in patronage which would be generated by lower fares in future. Apart from the project delivery risk, the main commercial risk that TCL is taking is in the number of passengers who would use the service. Nevertheless, the consortium felt that the concession carries a relatively high risk in comparison with PFIs, which were limited to the provision and maintenance of infrastructure.

12. It is estimated that 500,000 people live within half-a-mile of a Tramlink stop, and that the system will carry more than 20 million passengers each year. This forecast is based on existing bus and rail usage, TCL's forecast of the modal switch from cars, and the extent to which the system will encourage additional trips. The consortium expects around 11 per cent of users to transfer from cars (removing 2 million car journeys per annum) and 9 per cent of passengers to use Tramlink to make new journeys: the remainder will transfer from other modes of public transport. TCL felt that it had won the concession because of the robust view it had taken of passenger volumes. There are some risks associated with its forecasts: for example, the proportion of passengers diverting from bus to tram might prove to be an over-estimate. However, by contrast with earlier light rail schemes outside London, Tramlink will not have to face competition from bus operators, since London Transport intends to restructure bus services in the area to complement Tramlink, and some dedicated feeder routes will be provided. This will leave the volume of bus mileage operated in the area broadly unchanged.

13. TCL told us that the costs of bidding and drawing up the concession arrangements and its subsidiary agreements had been substantial. More than 100 separate legal agreements had been put in place between the various parties. It also observed that each light rail scheme in the United Kingdom had been carried forward according to different financial policies: Tramlink, for example, was the first to be taken forward under the Private Finance Initiative. TCL hopes that the procedure for planning, financing and building light rapid transit projects might be improved as a result of this and other recent experiences.


14. As part of the concessionary agreement, London Transport has specified the minimum hours of operation and service frequencies for Tramlink. TCL, however, plans to operate more services than the minimum requirement. Moreover, Tramlink will operate more frequently than the heavy rail services it, in part, has replaced. The intervals between trams running in central Croydon has been tested to sixteen trams per hour (ie one tram every four minutes), but testing continues in order to achieve the company's objective of three minute headways. Trams will operate from 6.00 am (7.00 am on Sundays) to approximately midnight. Other sections of the concession deal with further performance indicators, such as standards of cleanliness. While Tramlink will be included in the Travelcard scheme, the possibility of offering through-ticketing to destinations on the national rail network outside the Travelcard area is being discussed. The train operating companies providing services in the area view Tramlink as complementing, rather than competing with, their own services.

15. TCL is content with the degree of priority planned for its vehicles over other traffic in areas of on-street running. In central Croydon, the trams will benefit from a degree of freedom from other traffic that is unknown for buses. TCL told us that it believed that this reflects policymakers' more favourable perception of light rail compared with the bus, and the widespread belief that it can attract people from their cars.

16. No decision has yet been taken on whether bicycles would be allowed on the trams, although all stops would be provided with bike racks. While the trams are of a low floor design, with areas for buggies and standing passengers, TCL does not think that bicycles could be accommodated easily. Each cycle would require the same amount of space as up to six passengers and the consortium is keen to ensure that standing areas are available to passengers with push chairs or those using wheelchairs.

17. TCL said that it regretted that it had not proved possible to open the system in November 1999 as originally planned. The delay was caused principally by delays in the design and approvals process, but during testing and commissioning there had been problems with the system's hardware. There have also been a number of accidents during the testing process including minor collisions between trams and motor vehicles. A more serious incident involving a car had occurred in October 1999, and is the subject of an inquiry by the police. No accidents involving pedestrians have been reported. At the time of the Sub-committee's visit, TCL expected that operations would start in late February 2000, although this deadline was also subsequently missed. The system has not yet passed through the 14-day 'proving period' which must be completed before the construction joint venture, McAlpine/Amey, is allowed to hand the system to TCL. The system procurement contract includes a provision for liquidated damages in respect of delay in opening Tramlink.

18. Approval of the system from Her Majesty's Railway Inspectorate (HMRI) is required before it enters public service. TCL told us that HMRI has assembled a dedicated team of specialists for this work, and has built up considerable expertise, despite the limited application of light rail in the UK. TCL is concerned, however, that proposals for charging for the Inspectorate's time might represent a significant additional cost for a project like Tramlink: it has been suggested that charges might be as much as £1,000 per day.

Future developments

19. TCL felt that Tramlink, as well as other light rail and tram projects, is particularly important for addressing suburban transport problems, especially on the orbital routes where congestion is most severe. It thought that there are three or four other potential schemes in London with sufficient passenger demand to justify investment in light rapid transit: for example, there is what appears to be an attractive proposal to construct a light railway along the line of the Uxbridge Road in west London. These projects are the subjects of London Transport's intermediate modes study.

20. TCL believes that new schemes could progress more quickly, since it has been forced to follow a steep learning curve, and others can learn from its experience. Despite the fact that, on occasion, it had been difficult to find specialists who could advise on certain technical aspects of the project, it has now put together an expert and experienced team which might be used on other light rail projects. However, if new projects do not start soon, there is a risk that the pool of expertise created for Tramlink will disperse. A particular lesson TCL has learnt from its experience in Croydon is that the long timescales involved with developing schemes like Tramlink mean that it is vitally important to gain local cross-party support for projects, since elections will inevitably occur during the development of the project. Without such support, would-be promoters will be discouraged from starting schemes for fear of experiencing financial losses.

21. In the future, TCL foresees a number of possible extensions to the original system. Under consideration are a link from Mitcham Junction to Wimbledon via Collier's Wood, and routes to Sutton from the north and the east. Another possibility is an extension to Crystal Palace, which will probably be the first of any new projects. The procedure for extending the system has yet to be agreed in detail, although TCL is obliged to consult London Transport first on any proposals and vice versa. As most extensions to the system will require public funding, Transport for London is likely to take the lead in calling for expansions of the network. It is known that the system will be able to accommodate more services as technically it is capable of handling trams running at two minute intervals: however, some further traffic management changes in the centre of Croydon will be required to achieve such headways.


22. TCL concedes that the circumstances in Croydon which favoured the development of light rail, such as the existence of major traffic generators and the potential to convert lightly-used or disused heavy rail lines, might be atypical. In the absence of the number of positive features of the Croydon Tramlink project, it probably would not have been as attractive to those providing public or private sector funds.


Participants from Docklands Light Railway Limited

23. Those members of the Docklands Light Railway Limited (DLR Ltd) who participated in the second part of the Sub-committee's visit, to the Docklands Light Railway, were Mr Ian Brown, Chief Executive, Mr David Keep, Company Secretary, Mr Brian Abbott, Public Affairs Manager, Mr Howard Smith, Planning and Development Director, and Mr Paul Wren, Commercial Manager.

The existing system

24. The 26-kilometre light railway system is owned by DLR Ltd, which is a Non Departmental Public Body sponsored by the DETR. DLR Ltd manages the franchise held by Docklands Railway Management Ltd (DRML) for operating the railway, and the concession let to CGL Rail for building and maintaining the Lewisham Extension. It is also responsible for planning and developing the railway's assets.

25. We were told that the Docklands Light Railway has been successful for a number of reasons. The redevelopment, at a high density, of much of Docklands has led to much increased demand for public transport. Limited parking provision and traffic congestion on the local road network has also helped to increase patronage of the railway. More recently, the opening of the Jubilee Line Extension means that the Docklands Light Railway now acts partly as a feeder to and distributor from the Jubilee line, and while patronage of the Docklands Light Railway actually increased after the opening of the Extension, passenger flows are now becoming more balanced across the system. Integration with other forms of public transport is important to the Docklands Light Railway as two-thirds of journeys made on the system begin on buses or on the Underground. This fact underlines the importance of the Docklands Light Railway's participation in the multi-modal Travelcard scheme.

26. Under the terms of the franchise agreement, the franchisee, DRML, is entitled to fares revenue from most of the railway plus a subsidy. In addition, bonus payments are made (or penalties levied) according to its performance against a range of indicators including those related to train services operated and lift/escalator availability. Satisfaction surveys have been undertaken, and if passengers are unhappy with services, payments to the franchisee will be reduced accordingly. Performance targets have been raised over time.

27. Bicycles are not carried on the Docklands Light Railway because of the network's underground sections. A bicycle park-and-ride scheme, which would provide a secure bicycle storage facility at stations, is under consideration.

Recent and future extensions

28. The Lewisham Extension, which was financed by a Public-Private Partnership, was completed two months early and within budget. The revenue risk of the project is borne almost entirely by DLR Ltd for the first nine years of the 24-and-a-half year concession, with the concessionaire, CGL Rail, paid on a daily basis (around £65,000 per day) according to the availability of the infrastructure. This provision acted as an incentive to open the extension earlier than scheduled. As well as assisting the regeneration of the areas served and providing opportunities for new journeys to be undertaken, the link integrates the Docklands Light Railway more closely with the heavy rail and bus networks.

29. Of possible future extensions to the Docklands Light Railway, proposals for a new line to London City Airport are the most advanced. It will be a largely free-standing and partly self-financing project. The scheme has been designed to benefit local residents, as well as users of the airport whose numbers are forecast to double over the next three years. The 4.4kilometres extension to the airport and North Woolwich will include two or three intermediate stations. An application for a Transport and Works Act Order to construct the line was submitted on 7 March 2000, and it was expected that the line might be open by early 2004. It is likely that a concession to build and maintain the new line, based on the model used for the Lewisham extension, will be let.

30. At present, most passengers travel to the airport by taxi (56 per cent), with 22 per cent travelling by car and the remainder using dedicated bus services. The objective of the extension to the Docklands Light Railway is to provide an alternative, for which passengers travelling to and from the airport will be charged higher fares (an extra £2.50) in order to raise sufficient revenue to justify investment in the scheme. The cost of travelling by taxi or airport bus will be taken into account when setting the Docklands Light Railway fare. DLR Ltd stressed, however, that local residents and airport workers would not have to pay premium fares. Once on the Docklands Light Railway it is expected that about half of the airport passengers will change onto the Jubilee line at Canning Town rather than continue their journey into central London on the Railway.

31. While the volume of traffic to and from London City Airport alone justifies the extension, the intermediate stations will bring significant regeneration benefits to brownfield sites. The favoured route has been chosen, in part, in order to maximise the impact on economic development. Moreover, the proximity of possible development sites to the stations will allow dependence on the car to be reduced, and enable housing developments of a higher density than would otherwise be the case. Consequently, more than 50 per cent of passengers using the new extension are expected to join at the intermediate stations. According to DLR Ltd, there is considerable support among local communities, local authorities and English Partnerships for the project.

32. The projection of the line beyond North Woolwich and across the river Thames to Woolwich Arsenal has also been considered by DLR Ltd and London Transport. The Docklands Light Railway could provide a high frequency service (15-20 trains per hour) over the route and, at an approximate cost of £150m, it would be cheaper than a heavy rail alternative, the cost of which has been estimated at £245m. However, construction of a light rail link to Woolwich Arsenal would end the possibility of running heavy rail through-services over the route. However, even the heavy rail alternative did not allow for the possibility of freight traffic.

33. Another possibility being evaluated is the conversion of the North London line between Canning Town and Stratford from heavy rail to light rail operation. The use of the existing low frequency heavy rail service over this section is expected to decline following the opening of the Jubilee Line Extension. The Docklands Light Railway could provide a higher frequency service with additional stops which would improve access to development sites along the route. The scheme would cost around £30m. In addition, a short Docklands Light Railway link between Stratford domestic and international railway stations could also be incorporated into this project, enabling through services between the Eurostar station and London City Airport. More importantly, the link would also serve the railway land around the existing Stratford station, which has considerable potential for development.

34. In all, the three possible extensions, to London City Airport, to Woolwich Arsenal and over the North London line to Stratford International station, might eventually increase the number of passenger journeys made on the Docklands Light Railway to close to 100 million per annum.

Light rail's potential

35. There is considerable potential, according to DLR Ltd, for further conversion of suburban heavy rail services to light rail operation: particular opportunities exist around Manchester and Glasgow. Light rail services are more cost effective than heavy rail (the Docklands Light Railway requires a subsidy of only 4 pence per passenger kilometre) and use vehicles which are more appropriate to the amount of demand. In any event, light rail services can carry up to 8,000 to 10,000 people per hour per direction, which is of a similar magnitude to the capacity of heavy rail. DLR Ltd emphasised the benefits which would be gained by franchising bus routes which feed the light rail system as part of future light rapid transit projects.

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