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

Supplementary memorandum by the Light Rail Transit Association (RT 30A)

1.  How should the "vicious circle" affecting public transport investment be broken?

  A "virtuous circle" needs to be established to replace the "vicious circle". This virtuous circle would comprise improved public transport—with a good image—leading to transfer from car use—resulting in less congestion and greater public transport patronage—which would produce increased income (both through fares and through congestion charges and workplace parking charges)—funding continuing investment in better public transport. Public sector funding is needed to prime or kick start this process. Private sector funding will be fostered by this and the hypothecated charges will sustain the process.

2.  Is there a good case for taking an incremental approach to the provision of light rail services with conventional bus priorities being subsequently developed into guided busways and, where appropriate, light rail lines? What disadvantages might there be with this approach?

  Superficially the incremental approach looks attractive and sensible. In reality it is probably a fudge. There is no clear case of such an approach having been seen through to completion. The practical reality of bus priorities is that they are generally implemented where it is easy to do them rather than where they are actually necessary. The same could be said of guided busways so far in the U.K. The difficult bits are where there is insufficient road space for both road traffic and public transport. Generally speaking these are the situations where buses, even guided buses, have to merge back in with the general traffic instead of giving road space over to the public transport which, in terms of moving the maximum number of people, is obviously the rational thing to do. Local political considerations tend to prevent this from actually happening.

  Light rail schemes tend to have the virtue of forcing difficult decisions to be made. Whereas a bus priority or guided bus scheme can, effectively, be discontinued at the pinch points, when you are designing and building a light rail scheme it has, by its very nature, to cover every metre of route length from one end to the other. Also, perhaps curiously, experience is that it is easier psychologically (for politicians to do, and for motorists to accept) to re-allocate road space to accommodate a tramway or light rail scheme than it is simply to give buses priority.

  A decision to go for an incremental approach is probably, in reality, a decision to avoid taking any significant decisions about transit in a particular travel corridor. Although it may seem to be a logical progression from ordinary bus, to bus priority, to busway or guided bus and thence to light rail (and may eventually be so) the likelihood now is that corridors being considered for such incremental progression may well have high enough patronage to justify light rail at the earliest point at which it could be physically achieved (bearing in mind that in every case so far, that is at least six years from conception and probably more like ten years—still, it must be said, four or five years quicker than a major road).

  Because a busway or guided busway actually requires a higher standard (and more expensive) infrastructure than does light rail. Once built that infrastructure will, if of anything more than a nominal length, be expected to earn a return on its cost through use and so may delay the implementation of light rail which may actually be the mode most needed for the corridor in question—especially if car users are to be got out of their cars.

  All the evidence so far suggests that busways and guided busways are tokenism making it appear something has been done but effecting no measurable change in car use.

  On a more mundane note, one of the easiest things which could be done to improve bus services is to improve loading times. Driver only buses are seriously delayed (and often delay other traffic as well) in checking passes and taking fares. The answer may well be a combination of actions: (a) new technology with Smart card passes not requiring driver checking, (b) multi-entrance buses with all ticket purchase off-bus (as is often continental practice, and practice on most light rail and tramways in the UK) and/or (c) conductors on-bus to take fares. Conductors free up drivers to drive and speed up boarding, are very popular with passengers, especially those concerned about security and, arguably, with well laden buses (as often in central London) could be economic—after all they were only taken off as a cost-cutting measure when bus patronage was in seemingly terminal decline.

3.  With regard to reducing the cost of light rail schemes, should central government play a more active role in encouraging a standardised approach to vehicle design, etc?

  There is, fortunately, some evidence of the use of modular designs by manufacturers with the possibility of producing cosmetic differences to suit different cities. For instance, the same basis Bombardier vehicles run in Croydon and Cologne and the Derby built Adtranz Eurotram in Strasbourg, Milan and Nottingham.

  What the UK government could probably most contribute is its influence on various parties—including promoters—to not require different practices in the UK from what has been well proven in continental Europe. Requiring the wheel to be re-invented before it can be used in the UK seems to be a particularly British disease. Maybe we don't like to admit that any other nation can design things which work perfectly well?

  Her Majesty's Railway Inspectorate has been the institution which has most required change and additional complication and sophistication before vehicles which have been operating quite happily and safely in other countries have been permitted to be used here. The DETR is another culprit in enforcing specifications which cost more than they need to—the irony of this is that the sort of private-public partnerships so beloved of both the present and previous Governments are supposed to allow the private sector great scope in how an end objective is achieved, whilst in practice detailed performance specifications may have required vehicles, infrastructure and operating practices that few foreign systems would contemplate.

4.  Analysis of previous modes of travel of light rail passengers:

  As an illustration, a typical light rail line might have 10m passenger trips per annum. 75 per cent of these may be expected to be passengers who previously used another mode of public transport (eg bus or heavy rail). Ten per cent may be expected to be former car users. 15 per cent may be expected to be generated travel—partly travel to new developments which result from the existence of the light rail line and partly new trips which the individuals would not have made before the existence of the light rail line. Obviously the exact numbers and proportions will depend on the unique circumstances of each scheme, what previous public transport and road choices there were, the extent to which the light rail line fosters new developments etc.

  Clearly, when a new light rail line is built, the totality of local public transport will change. Typically, abroad, bus routes will be redesigned so as to integrate with this new form of mass transit and to avoid straightforward competitive parallel running with it. This is also happening in regulated Croydon, but is less easy to achieve in deregulated provincial Britain, though it has happened in the private sector monopoly situation which exists in the Birmingham-Wolverhampton corridor where National Express Group operates the vast majority of buses and holds the franchise to operate local train services and the new Midland Metro light rail line.

  There is plenty of evidence from foreign cities that, far from a new light rail line just switching passengers off of buses and on to light rail, the total patronage of the public transport system increases. Sometimes this has been very dramatic with increases in total public transport patronage up 35 per cent, 45 per cent or even more. Patronage increases on feeder bus routes to the new line may be even greater. When one thinks about it this is not surprising—a new light rail line offers both higher quality public transport and more/new opportunities to use this more attractive mode of public transport—which, naturally, people soon discover and exploit.

5.  A model to illustrate the relationship between the costs and benefits of a light rail scheme—in an endeavour to clarify the matter we have presented a hypothetical model which is, we believe, reasonably representative of actual light rail projects

  The actual details of particular schemes are regarded as commercially confidential information and the Association is not privy to them. It may be that the Sub-committee could ask individual promoters or owners if it wishes the general principles we explain here to be illustrated by actual examples.

  The key issue that the Sub-committee seemed to be interested in is justification—how is the expenditure of public funds justified on light rail schemes which, typically, cost £100 million to £200 million per line? As it happens the key matter which any promoter has to convince the DETR/Treasury about is the very same thing—justification.

  The justification of light rail schemes so far has taken place in the context of applications for project approval/loan consent and Section 56 grant (except in London where the relationships are different). The justification is a comparison of the costs and benefits of the proposed scheme to ensure that the net present value of the benefits the scheme will bring comfortably exceeds that of the costs. Further, if the scheme is actually to be approved and built, a number of other conditions have to be satisfied, (these are listed in our original submission under "Hurdles & Barriers") including, these days, those necessary under the PFI/public-private partnership regimes. Without doubt, in the past (and probably in practical terms in the future) no scheme is likely to be allowed to go forward if there is another one which is equally ready to go and which has higher net benefits.

  On the "costs" side of the equation are the costs of construction and the operating costs. These are converted into the net present value (npv) of expenditure over the notional 30 year life of the project (actual life is obviously likely to be much longer, but anything over 30 years has a negligible effect on the npv.

  On the "benefits" side of the equation there are two principal items—benefits to the users of the new system and benefits to non-users. It has been the practice (though we are not certain that it still is for schemes now being evaluated) that the only thing which could be reckoned as a user benefit is the level of fares that users pay (this has been taken as a proxy for the value of the system to its users). For road schemes, the "user-benefits" have been deemed to be the value of time savings made by users of the new road, with a much higher value being given to the time of those who are working as compared with those who are not. In the case of light rail schemes, the DETR/Treasury practice has been not to recognise any of the passengers as being at work and for the fares to be taken as a proxy of time saving value for passengers not at work.

  The irony has been that whether or not a light rail scheme has been able to be built has largely and crucially depended on the benefits it gives to non-users of it. There are a number of such non-user benefits—road decongestion (ie time savings to road users resulting from some people switching to the new mode of transport and thus freeing up the roads), reduction in accidents, benefits to the environment (generally not quantified and therefore of no significance in the justification), benefits to the mobility impaired. There may also be employment benefits if the line is likely to aid the economic regeneration of an area. There have also been adjustment factors to take account, for instance, of positive or negative effects on other modes.

  The final stage, of course, is to tot up the npv of the costs and of the benefits and compare them. For a typical LRT scheme the npv of construction costs may be, say, in the area of £140m and that of the 30 year stream of operating costs, perhaps another £60m making, say £200m the total npv of the costs. The npv of fares revenues might be, say £150m, decongestion benefits may be £100m, employment/regeneration £20m, accident savings £20m, benefits to the mobility impaired £10m. In this hypothetical case the npv's of the benefits add up to £300m, so there is a net benefit of £100m or a ratio of benefits to costs of 1.5:1. If there had been a net cost, rather than a benefit, the scheme would be dead in the water. At what point a scheme with a net benefit in npv terms is a "must-do" one is entirely a political judgement—there is a general assumption (which we cannot judge as these figures are never made public) that faced with a number of possible schemes with different net benefits, those with the highest net benefits will happen and happen first whilst those with the lowest will be held back and, if other better schemes appear on the scene, they may never happen. Presumably this may be the reason why the Leeds Supertram scheme has not been allowed to go ahead?

  Although the justification methodology looks at the costs both of construction and operation over 30 years, the reality with light rail schemes so far is that government has tried to screw down the original capital cost to arbitrary levels that it has set. This has grave implications for the longer term and for issues such as the environmental impact of schemes. Quite frankly it is short-sighted. The classic example is the Docklands Light Railway where the initial phase was screwed down to £77m capital cost. Later phases have of course been built and there has had to be major expenditure on improving the capacity of the system which should have been provided or designed for in the specification of the first phase. Total capital costs to date are approaching £1bn and it is highly likely that, if the promoters had been allowed to proceed with the first phase as the properly dimensioned and specified project they proposed in the first place, the cost by now could have been considerably less—perhaps even as much as £250m less. Despite this the Docklands Light Railway has been achieved at a fraction of the cost of building a new heavy metro system and indeed 20 UK towns and cities could now be reaping the benefits of light rail had one London Underground line not been extended (the Jubilee line).

  A penny-pinching attitude to the original project specification and cost comes back to haunt both promoters and governments and makes a mockery of the whole justification process to boot! Whilst the other light rail schemes do not have quite such a horror story to tell, it is probably true in every case that unwise reductions in specifications had to be made simply to get project costs down to within arbitrary limits set by government. Long term costs of several times as much as the amounts cut out will eventually have to be incurred to put these shortcomings right and do what should have been done in the first place.

6.  How important is it for light rail schemes to be funded/allowed to be built before congestion charges/workplace parking charges are imposed?

  Very. This is an aspect of the vicious/virtuous circle dilemmas explored in item 1 above. It will be very difficult to persuade local authorities to impose, or motorists to accept, the imposition of the new taxes (congestion charges and workplace parking charges) if there is not a clearly perceived and very major improvement in the extent and quality of public transport on offer in the city or town concerned. A few bus priority measures aren't sufficient to gain that acceptance—not least because, certainly by men of working age (the majority of commuters causing present traffic congestion), buses of whatever sort are perceived as for "no-hopers" (and those who have lost their driving licences).

  If Government allow the improvements in public transport to begin—and in a pretty significant way—and assist that to happen financially (which doesn't mean that the Government would have to find all the money—the very act of allowing schemes to proceed would actually lever in private sector money by giving the private sector confidence about Government plans) the flow of revenues from the new taxes/charges would, in combination with private sector funds attracted through increasing operating revenues, take over the funding of schemes. Indeed, central government investment may even be able to be repaid over time, so it can be recycled to other towns and cities.

7.  How significant are the potential revenues from congestion charges and workplace parking charges?

  Answer—very. Professor David Begg has illustrated how a £1 daily toll on all vehicles passing through a fairly widely drawn cordon around Edinburgh would raise in the order of £50 million revenue per annum. An annual revenue £50 million will fund capital expenditure of around £1 billion. Put that together with an increasing stream of passenger revenues as public transport improves and you could well be talking about a total investment package of perhaps £2 billion—and of course it is not a once for all situation as so often in the past public transport investment have been with no way of paying for renewals and replacements.

  A more substantial congestion charge would yield more revenue and persuade more car users to use the new alternatives.

  For larger cities, such as Manchester or Birmingham, it is clear that the new taxes, at acceptable levels, could be the most significant component in the financing of improved public transport and the key to progress to the virtuous circle.

8.  Additional points to do with the process for obtaining powers

  The Transport & Works Act powers work well if no public inquiry is involved. In these circumstances they are quicker and cheaper than the previous private Bill procedure.

  Where, however, there is a public inquiry, frequently there are excessive delays and costs, stemming from the wider number of issues which can be raised and persons who can object (as compared with the private Bill procedure).

  There would be a greater prospect of reducing delays (and costs) if TWA decisions were taken locally instead of by central government. At present some orders have been substantially delayed between the inspector's report and the Secretary of State's decision (over two years in the case of the Leeds Supertram application). Much of this delay is caused by staff shortages in the TWA Unit and with DETR lawyers.

  These delays could be minimised by allowing TWA orders to be made at local level, as proposed in the Government's initial response to the Report of the Joint Committee on Private Bill Procedure dated June 1990, paragraphs 23 and 24. This approach was earlier endorsed by Parliament in two private Acts which authorised the operation of trolleybuses—see the West Yorkshire (Parking and Transport) Act 1982 and the South Yorkshire Passenger Transport Act 1986.

  Transferring TWA decisions to local level was supported by the working party set up by the Chartered Institute of Transport (now ILT) in their paper Promoting new transport projects, dated February 1998, paragraphs 5.17 to 5.20.

  Planning aspects of transport have always been a matter for local decision and it is proposed to allocate further transport responsibilities to local government under the current Transport Bill—local transport plans, bus strategies and quality partnership schemes. It is also intended that road user charging and workplace parking levy administration should be dealt with locally, with a hypothecation of the resulting revenues to go to local public transport.

  Therefore, apart from the likelihood of reducing time and costs, we submit that it would be much more logical for TWA applications involving local transport issues also to be dealt with at local level.

  If the Association can be of further assistance with the Sub-committee's Inquiry it will be happy to do so.

Robert J Tarr

Secretary General

Light Rail Transit Association

March 2000

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