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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