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

Memorandum by Liverpool Electric Tram Systems (RT 41)


  With most of the UK transport system in the private sector, new ways need to be explored to promote and fund infrastructure based urban public transport systems that are proven to attract commuter car trips and so reduce urban environmental impacts. LETS Ltd in Liverpool has addressed this issue and is promoting a demonstration tramway on a commercial basis, without the need for Central Government Grant Aid. The first line between the city centre and Liverpool Airport awaits approval for Outline Planning Permission. The second and third lines are in preparation for an ultimate eight line network.

  The present statutory planning process for infrastructure based public transport distorts the commercial market, compared to the ease of entry for bus services, as well as distortion by indirect subsidies given to bus operators by the rebate of fuel taxes and the free use of public roads. Reducing of barriers to entry and the equality of treatment between different transport modes needs to be addressed. A rapid adoption of electric traction must be achieved, to attract motor car commuters and reduce congestion, and urban air pollution. This is important if global warming is to be avoided and public health improved. The strength of the private sector needs to be harnessed, by reducing the actual and perceived risks to entry. At the present rate of progress it will take 100 years to electrify most cities. By the LETS approach significant progress could be achieved in 20 years.


  Professor Buchanan observed in the 1963 "Traffic in Towns" Report that the suppressed demand for car use in urban areas is very high. So high that any new urban road will always fill with traffic, without any reduction in congestion. This is a classic example of the economist cost-demand curve. New roads reduce the cost of driving and therefore increased demand generates new traffic. Indeed the Public Inquiry into the London Motorway Box showed in the 1970s that the Box would increase traffic on local roads as a result of traffic generated by the motorway. There would thus be an increase in congestion. Buchanan's 1963 case studies showed that full motorisation would only be possible in towns of under 100,000 population, assuming that car parking space could be released.

  Unfortunately the growth of motor traffic, and the earlier conversion to buses of tram and trolleybus services has generated a burden on air pollution that has reached "Los Angeles" proportions in many cities. This is especially so during periods of atmospheric inversions, like the December 1991 incident in London which led to an increase in cardio-respiratory deaths. Many UK cities now experience a significant number of days when air pollution is above the World Health Organisation danger level (at which health is threatened) for a significant number of days per year. In Liverpool this is about 50 days pa. Motor traffic is now the main air pollution source in UK cities. Factories with the air quality of many urban roads would be closed by the Factory Inspectorate.

  Presently there is no mechanism to feed back to motorists the costs of the environmental damage from urban car traffic. Indeed the experiment last year in Leicester to find the level for a congestion toll that would deter or divert commuting car trips was abandoned when motorists showed that an £8 per day toll would not reduce significantly the volume of traffic. The annual real increase in the price of petrol introduced by the last Government was aimed at reducing carbon dioxide emissions in line with the Rio (and Kyoto) Treaties. This petrol price increase has not reduced car travel, nor even reduced the rate of increase of car travel. Nor is it targeted at the use of motor cars in urban areas.

  Ironically although the volume of urban traffic has growth continuously for the last 30 years, the number of trips made per week has remained virtually constant at about 21 per person. People have exploited the real reduction in motoring costs by making longer trips, especially by living further away from places of work. At the same time a number of enterprises and institutions have also exploited the widespread availability of motor cars by rationalising activities onto few but larger sites to generate scale economies. This itself increases the average length of access journeys. The example of supermarkets is well known but hospitals, schools and government departments have also rationalised, or centralised, at the expense of the poor who cannot travel by car and suffer therefore social exclusion.


  The growth of car traffic is due to the real reduction in the cost of motoring over the last 20 years. At the same time the real cost of using public transport has increased. This growth has created rising congestion, kept tolerable until recently by traffic management and a natural equilibrium of traffic speed, which in London has little changed in the past 100 years at about 11mph. Indeed Mogridge has postulated that the only way to increase road traffic speed is by increasing the average speed of public transport services. Faster public transport services attract marginal car trips, releasing capacity to enable the remaining traffic to drive faster, up to the new equilibrium speed set by faster public transport.

  In Britain the opening of new urban roads, whether the widening of Park Lane in London or town centre "relief" roads, have had the effect of attracting marginal public transport users to car travel, taking up the new capacity until the old equilibrium speed is attained. The Pimlico Precinct traffic project of the late 1960's showed that the elimination of "rat running" routes through Pimlico resulted in no measurable increase in traffic on adjoining roads. The closure of the City of London to through traffic after the IRA bombing campaign, again resulted in no significant increase in traffic on roads outside the city. More recently the closure of Hammersmith Bridge for over a year for repairs, displacing 35,000 vehicles per day, led to no significant increase in traffic elsewhere.

  The growth of car traffic in the UK has been in line with the growth of car ownership. Britain has a level of car ownership somewhat lower than that in Austria, Belgium, Denmark, France, Germany, Holland, Italy, Sweden and Switzerland. Yet car usage in the UK is higher per capita and public transport patronage lower per capita than those other countries. Now that "predict and provide" is no longer the guiding objective for road traffic planning, the experience in other European Countries can help to show how the link between car ownership and car usage may be weakened.


  There is considerable market research which shows why people stop using public transport and indicates what would be required to win them back. Rarely is price the main determinant, since many people spend up to 15 per cent of household income on the ownership and use of their private car, and those who do not have cars have been increasing their use of taxi, in place of cheaper bus travel. Three factors normally rank very highly. These are service dependability, frequency and reliability. In trying to determine what influences household locational decisions, up to 90 per cent would locate near an electrified rail service, 50 per cent to a diesel rail service, and less than 10 per cent to a bus service. The long term dependability of public transport is crucial if people are to be attracted to public transport, since moving house or jobs requires the certainty that the service will be there in five or 10 years' time. Frequent services, with short waiting times and the need not to know the timetable are highly rated. Finally service reliability, knowing departures will be on time, so that people can arrive punctually for work, or school.

  This is almost the opposite philosophy of many bus companies which have aimed at aping the door to door nature of car journeys, by offering a large number of routes, over a diffused network, at low frequencies, in the belief that people will not change routes. Indeed towns with bus only public transport systems have lost patronage faster than those with rail systems. Runcorn new town provides an interesting case study. A dedicate busway has since 1967 offered a level of bus service far better than traditional towns of 70,000 people. Yet bus use in Runcorn has declined as fast as other similar sized towns. There would appear to be an intrinsic market reluctance for people with cars to use buses. Those same people are happy to use rail services.

  Motor car companies spend considerable sums in market research to identify and supply the combination of features that attract people to buy their cars. Together the motor industry spends about £25 in advertising for every £1 spent by all public transport services in the UK. Public transport enterprises have in the past been production rather than market orientated. There are now signs that the new public transport suppliers are beginning to research and respond to market conditions. Since without that the generic market for public transport based on the trends of the last forty years would be for a further decline, as has occurred in America where less than 3 per cent of personal travel is by public transport, including internal air services.


  Until recently all new or improved rail schemes have been promoted and funded by the public sector. The objectives of public sector scheme have rarely been commercial, since the availability of "free" capital from the public sector has a distorting effect on the design and equipment of rail systems. Objectives of urban regeneration and even vote winning have sometimes been the driving forces behind schemes. The equipment suppliers have also been influenced by the availability of public funding in failing to innovate or in finding ways to reduce costs. Indeed the idea of a captive, if small, public sector market gives some of the major suppliers a secure and profitable outlet for their products. The contrast with North America where private mainline railways have demanded lower locomotive costs and better products, leading to General Motors and General Electric being able to supply better diesel locomotives to the UK, at lower prices than European manufacturers.

  If urban public transport is to break out of the spiral of decline of the last thirty years when car costs have fallen and public transport prices risen, then new more cost effective equipment and methods of operation will be needed, not based on operational considerations but reflecting market requirements and those factors which are crucial in winning car users back to public transport. Indeed the view that buses are cheaper than trams needs to be seriously reviewed (appendix one).


  LETS has created a package of software and hardware that aims to provide urban rail services on a commercial basis. This means that some new rail lines could be built without the need for capital grants from Central Government, or revenue subsidies. To achieve this LETS must provide services that satisfy market aspirations to maximise revenue, and matches the capital investment required only sufficient to meet the immediate expected demands, and capable of being operated at a profit large enough to service the capital debt.

  This philosophy has been refined over 12 years of market research and product development[6]. The starting point for LETS is to serve only existing and measurable demands. LETS cannot promote urban rail lines in order to satisfy long term urban regeneration objectives, or other political aspirations. On the other hand LETS can help Local Authorities achieve road traffic reduction targets, by means of co-ordinated investments between the private capital of LETS light rail services and publicly funded traffic calming measures.

  The second strand of LETS is to reduce risk into manageable steps, given the present and unpredictable, and burdensome statutory planning procedures. Thus to reduce risk and costs in Liverpool LETS has applied for Outline Planning Permission for its first planned line. This will establish an "in-principle" agreement for the construction of a new rail line. This is a relatively simple procedure, although as a first ever in the country, a year has elapsed since the application was submitted. LETS hopes that the second and subsequent Outline Planning Application will be processed more quickly, once a precedent has been established.

  The next stage will be an application for Detailed Planning Permission, when the location of tracks, stations, access, highway arrangements etc will be approved by the Local Planning Authority. The final step will be an application for an order under the Transport & Works Act 1992 for the technical powers to operate rail vehicles, erect equipment, immunity from nuisance prosecutions etc. By splitting the statutory procedure into three distinct stages, the private investors in LETS are faced with reducing risks but increasing expenditure. If the private sector is in future to bear the burden of promoting new rail projects, then the statutory process will need to be reviewed, the costs reduced and the risks made more predictable.

  In the experience of LETS, as a pioneer private sector urban light rail system promoter, the statutory approval phase is likely to be the longest, most convoluted and in relation to the total investment disproportionally expensive. If rail is to play a larger role in urban transport, the cost of entry for private promoters will need to be reduced, or the risks eliminated.

  The planning philosophy for LETS is to reduce the capital costs, below the full cost of bus services, to that which can be serviced by the anticipated revenue. This means no tunnelling, and surface operations along existing rights of way, since creating new rights of way is very costly and disruptive to the urban fabric. The majority of existing rights of way in towns are roads, where the majority of personal movements are made. The majority of the LETS target market drive cars along those roads, which therefore provide natural and convenient corridors.

  Finally LETS as a friend of the environment sees electric traction both as a way to reduce air pollution and also to provide a degree of market re-assurance needed to attract permanently long term car commuters, who will be prepared to (re)build their life style around electric rail systems. Car commuters switching to light rail and tram services will help to improve the health of urban areas. In order to satisfy this commercially, LETS is part of the development of an affordable British light rail vehicle, which has been on test since 1997.


  If the private sector is to make rational choices in investing to improve urban public transport systems, then the regulatory cost of entry should be the same irrespective of different methods of transport. Presently an enterprise can for example introduce a new bus services giving 42 days notice to the Traffic Commissioners. This right is automatic, and bus routes can be registered along any road on which there is no Traffic Regulation Order banning heavy road vehicles. There is no need for an environmental impact assessment, even though diesel buses are noisy, produce significant air pollution and create ground vibrations. In comparison an enterprise wishing to introduce the same sized buses along the same route but powered by overhead electric wires, as a trolleybus service, will need an Order under the Transport and Works Act 1992, costing about £1 million and presently taking over 30 months on average. This provides no incentive for bus operators to consider other technologies, even though trolleybuses are quieter than diesel, emit no air pollution and therefore will help to reduce the level of urban air pollution. Indeed there is a regulatory entry cost against environmentally benign trolleybuses.

  To create a level playing field, either the approval procedure for infrastructure based systems(eg trolleybuses, tramways and light rail) should be simplified to that of bus service regulation. Alternatively bus registration should be as difficult and costly as a Transport and Works Act Order. Possibly a new system for urban public transport approvals for street based systems could be somewhere between these two but the same irrespective of the transport technology.

  As a result of the experience of LETS to date, a bus type 42 day registration system would be the most attractive to the private sector. Here the system promoter would obtain an Operator's Licence from the Traffic commissioners, demonstrating professional competence, financial strength and a satisfactory maintenance system. After gaining the Operator's Licence, the promoter would give 42 days notice of the intention to build an new system, eg trolleybus or tramway line.

  The alternate approach would mean that bus companies would need to apply for an Order under the Transport and Works Act 1992, submitting Parliamentary Plans, Book of Reference and an Environmental Impact Statement. Then the bus operator would face the risk and cost of a public inquiry and up to two and a half years before a new service (or service alterations) could be introduced. This would immediately reduce the instability in the bus network outside London but would mean that only the big five bus companies could afford to start new routes. Existing small bus companies would enjoy "grandfather" rights on existing routes.

  The third alternative could be to require all urban road based public transport to seek planning permission and thus restore to Local Authorities an input into public transport planning, lost with bus deregulation in 1986. This would apply equally to bus, tramway, light rail and trolleybus proposals where the right of way is an existing highway. Other aspects of road operations (eg, signage) could also be brought under planning control, and remove a number of other anomalies.

  There is a statutory three month determination period for planning applications. This increase for bus services from the present 42 days would reduce the turbulence in the bus system and slightly increase the cost of entry for new bus services. On the other hand it would enable bus operators to diversify into environmentally more benign forms of urban transit, proven to be acceptable to the growing target market of urban car users. If a significant switch from car use to public transport is to be achieved, then services which are acceptable to car users will need to be provided, in a commerically affordable way, in order to release the necessary investment capital within the private sector.


  To test the LETS philosophy an application has been made to Liverpool City Council for Outline Planning Permission to build a tramway between the City Centre and Speke, serving the airport en-route. The length of this first line is some 16km, and for about half the route abandoned tramway medians in dual carriageway roads will be re-activated. For the other half, conventional street tramway operation is proposed, with a large degree of priority over the other road traffic and pre-emption of traffic signals at road junctions. The cost of this for planning purposes has been estimated at £34 million.

  The proposal has been developed over five years through a Feasibility Study and Business Plan. The first line has been selected as it will serve the most affluent districts of South Liverpool, with the highest level of car ownership and the most economically active proportion of population. This provides a mobile personal travel market, LETS services operating every six minutes right into the centre of Liverpool and out to the Airport. The end to end journey time will be about 30 minutes.

  Low height platforms at every station will give level entry into the low floor electric rail vehicles LETS plans to use. From the start the LETS system will fully satisfy the Disabled Discrimination Act 1995. Already in planning are subsequent lines, to form an integrated network in Merseyside, including the use of the Ring Road (Queens Drive) 6 km from the city centre, and the Queensway Tunnel to improve public transport links between the Wirral and Liverpool. The new tramway will provide interchange with existing Merseyrail stations. LETS will encourage Merseytravel to open new stations at other strategic intersections. By this means nearly 85 per cent of Liverpool's population will be within 500 metres of a rail service compared to the present 15 per cent. Further the LETS network will be able to cater conveniently for the 70 per cent of Liverpool trips which presently are suburb to suburb and made by car.[7]


  The LETS philosophy is to deliver commercially orientated tramway or light rail systems, funded by the private sector and rewarded out of passenger revenue. This will have important implications for other congested English and Welsh Cities. The proven ability of light rail and tramway systems to attract car traffic, coupled with the ability of private sectors to promote, construct, equip and commission without the need for public funding will clearly make new systems deliverable throughout the Country, while responding to market requirements.

  With a more even handed statutory approval procedure, bus operators can use existing investment programmes for bus replacement, to construct tramway systems. At the same time this improves the local public transport product, is known to be effective in the local travel market and thus help reverse the historical decline of patronage since 1955, by attracting car trips. This can be clearly demonstrated by the traffic success of the Manchester Metrolink.

  Indeed the improved manpower productivity of trams coupled with non-transferable skills, means that public transport enterprises facing increasing staff shortages, can carry more passengers with a more stable workforce. Evidence from tramway systems on the Continent and in America shows that tram drivers are loyal and stay on average more than twice as long as bus drivers in the same undertaking. This workforce stability also helps the economics of urban transport enterprises, by reducing the costs of staff recruitment and training.

  The recent experience of light rail schemes in the UK have all been publicly promoted and financed. New schemes have been controlled not by urban need but by the willingness of the Treasury to release on average £100 million in grants for each new scheme. This has translated to one new light rail system every two or three years. At this rate of progress it would take a century for every urban area over 200,000 population to have a single light rail line, let alone a network.

  The LETS package which is privately financed without Government Grants, redraws the funding barriers for new schemes. The LETS philosophy enables the private sector to identify profitable lines and then raise the necessary finance from the capital market. Inevitably the first LETS commercial line will be the hardest to achieve, as credibility barriers and past experience have to be re-learnt. Once confidence has been established from the first commercial line in operation, this will enable capital markets to respond to the investment opportunities identified. It would be wholly practical for the private capital market to fund two or three new lines every year, and the majority of the Country being equipped with light rail systems within 20 years.

  A rapid conversion of urban public transport technology can be compared to the historic experience of the conversion from horse to motor bus at the turn of the century, and from tram to trolleybus in the 1930's. Such investment programmes will create opportunities and strains for the construction, manufacturing and supply industries. For example the demand for tramcars is likely to rise to about 100 pa, and about 50km of tramway being built pa. Given the slow down in road construction and the large size of that industry, the resources required for tramways are relatively modest, eg a mile of urban motorway costs more than a fully equipped tramway 10 miles long, which can carry five times more passenger traffic. Indeed new tramways will provide new challenges for supply companies, to find more economical techniques of construction and manufacture. Given the single European Market, there are also many enterprises in France, Germany, Holland and Italy, that have the required experience and capacity. This will be competition for UK companies but may also be the opportunity for forming alliances to gain the necessary know-how.

  A larger tramway industry will generate economies of scale and lead to lower unit costs. This will make more urban routes viable for the LETS commercial tramway treatment. As soon as second and subsequent lines are added, creating networks, a synergy of demand develops, not only by rewarding the new line but adding extra traffic, at a marginal cost, to existing lines. Such new tramways operated by bus companies will provide market, operational and economic incentives to co-ordinate services, integrate timetables, simplify revenue systems and make the total system more user friendly, which the bus industry has singularly failed to do over the last 30 years.

  The most recent experience of new tramways opened in France, shows that the tramway carries up to three times more traffic than the bus route replaced, and that the connecting bus routes increase their patronage proportionately, so that the whole network traffic increases.

  Finally the public sector has been effectively removed from its former role as a supplier of public transport service. Privately promoted light rail and tramways deliver a number of benefits which can be captured by the public sector. These benefits include: reduction in motor traffic, decrease in air pollution and improvement of health, and a catalyst for planning regeneration in the medium term. It has been well established since a pioneering study on the Yonge Street Line in Toronto in 1955, that high quality fixed track public transport has the effect of raising property values along the route, and especially around stations. This raising of values will be translated into higher rate income for the local authority. Secondly fixed track public transport system act as a magnet for new development, which by clustering around stops and stations will help to meet the aims of PPG13 for concentrating urban development and encouraging the use of public transport.


  Often in the past Parliament has not been seen as a promoter of innovation and economic development. Given that over 90 per cent of the UK's public transport system is now in the private sector, Parliament's role is not per se to discriminate between different forms of public transport but to ensure that all forms operate on a level playing field so that market forces can effectively work. Similarly Parliament must protect the public by the enforcement of equal safety standards, and that harmful environmental emissions (eg air pollution and noise) are reduced and eliminated.

  Presently there is a large gap between the entry barriers for new diesel bus services and infrastructure based public transport. Equalising these barriers will release private sector funding to invest in less polluting electric public transport, proven to attract private car users and thus create useful secondary reductions of pollution. The high risks associated with the Transport and Works Act 1992 procedures, in comparison to the automatic 42 day registration of new bus services provides no incentive for bus operators to innovate and indeed encourages the old mentality of depending on public subsidies.

  Given such an equalisation of entry barriers, the private sector is capable of generating sufficient investment capital to cover most if not all commercially viable tramway projects in the UK, with little need for any public sector capital grants. Transport services responding to market forces should ensure the most efficient and beneficial allocation of capital. Indeed just as Local Authorities take steps to attract private investors to create new jobs or to set up factories, in the new privately owned public transport future, local authorities wanting to achieve transfers of car traffic to environmentally friendly tramways, will try to attract such investment with packages of priority and pre-emption over general road traffic.

  In the absence of acceptable quality public transport, measures to force private cars off urban roads are likely to be counter productive. The failure of the Nottingham Zone and Collar scheme in the mid 1970s should act as a warning. Experience on the Continent where investment in improving the quality and speed of public transport, preceded traffic calming measures, making those measures both natural and acceptable.

  There is one further area where Parliament may consider its role and that is in setting standards for air pollution, urban noise and traffic volumes, to guide local authorities in achieving their responsibilities in Local Agenda 21. The setting of targets will also help to measure the success of policies to reduce pollution, especially greenhouse gas emissions. The Road Traffic Reduction Acts of 1997 and 1998, and the Environment Act 1995 give Local Authorities ill defined duties, and no objective measures for achievement. Given that the UK is committed to the Kyoto Treaty targets for greenhouse gas reduction, it would be sensible to translate these into local standards. Similarly standards for other and health threatening air pollutants should be no more difficult than the creation of smokeless zones 40 years ago under the Clean Air Act 1956.


  The last 50 years of publicly owned public transport has coincided with a significant reduction of urban bus use and an increase in private car traffic. Urban motor traffic is now the largest source of air pollution, which has increased illness and death, and creates congestion, which reduces the efficiency of the national economy. In comparison with many continental countries the UK has lower per capita ownership of cars but higher car use and lower public transport patronage.

  In 1999 over 90 per cent of the UK public transport system is in the private sector. This is unlikely to change in the near future. In order to energise the private sector to invest in commercial tramway and other environmentally friendly forms of public transport, the risk associated with promoting and the barriers to entry will have to be reduced. If bus companies are to rise to the challenge of new technologies, then the entry conditions must be equalised between diesel bus and infrastructure based systems, this includes the subsidies given to bus services through the DERV tax rebate and the use of public roads without payment. Logically there cannot be more publically promoted light rail projects, which then operate in competition with commercial bus (or tram) services.

  Parliament can create the conditions needed to release private investment into new infrastructure based public transport. Parliament can also set environmental targets for local authorities to achieve, especially for road traffic reductions and air quality improvements. A partnership between these approaches is a sound way for the UK to enjoy high quality integrated public transport and healthy urban environments.

Professor Lewis Lesley

October 1999

6   Electrifying Urban Public Transport International Conference 17 and 18 November 1987. Back

7   Merseyside Business Project-Volume 14, Number 1, July 1999. Back

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