Examination of witnesses (Questions 40-59)
WEDNESDAY 26 JULY 2000
RT HON LORD MACDONALD OF TRADESTON AND MR WILLY RICKETT
Chairman
40. Miss Mcintosh will give you a list of the
parish councils in her constituency before you leave!
(Lord Macdonald of Tradeston) Madam Chairman, the
Commission for Integrated Transport have been meeting to give
us advice on bus services—and, indeed, I hope coach services,
a very frequently overlooked aspect of our road transport—but
we are very encouraged obviously by the success of the rural bus
grants and the rural bus challenge schemes, so we have increased
the monies there and we are also hoping that with that money and
with other measures we might take, that we can extend the range
more deeply into the remoter countryside of these new services
which, as you know, total about 2,000 at the moment. I was in
Devon just a few weeks ago and they told me what they had been
able to do in one county. Some 500 communities and villages had
now been served by these additional bus services. We want to build
on that. We want to look to community transport to see how flexible
we might become through taxi bus services. We would like also
to take the success of this scheme in rural areas—and, by
the way, it will now be extended to services for market towns
up to around 25,000 population—we want to take the success
of this rural initiative and see if it can be applied in urban
areas, with an Urban Bus Challenge scheme.
Chairman: We will want to come back to that.
Mr Donohoe
41. Can you just confirm within this ten-year
plan that there is no content on the question of air traffic and
the effect air traffic will have and the growth of that, particularly
amongst the low cost carriers, over the next ten years on the
investment that you are intending to put into public services?
(Lord Macdonald of Tradeston) This is a plan for surface
travel. As you will know, we have got studies going on in the
regions of the United Kingdom on the future of aviation policy.
We are awaiting the decision on Terminal 5 at Heathrow by which
time most of the regional studies will be completed. We will put
the findings of the regional studies out to consultation with
a view to a White Paper on Aviation Policy over the next 30 years
emerging subsequent to that. We do know that the Strategic Rail
Authority, for instance, is looking at the possibility of a franchise
which would bring together, say, the Heathrow Express, services
to Stansted and to Gatwick to see whether there would be an interest
in people coming forward to take such a franchise and develop
new routes to those airports.
42. What has been taken into account of the
likely continuing growth of low cost airlines in that whole formula
because if you are investing, as you are, fairly substantially,
and it is good to see, over the next ten years in railways, and
if at the same time an individual finds that it is by far cheaper,
as is the case now, to travel by air, low cost travel by air,
then perhaps a lot of that investment is going to be wasted, or
is that not the case?
(Lord Macdonald of Tradeston) I think there has been
some work on the possibility of substitution and maybe Mr Rickett
could advise you.
Chairman
43. Mr Rickett, as part of your conservative
estimates.
(Mr Rickett) Our forecasts of demand growth on the
railways take account of that. I do not think that is a risk to
the rail investment plans in the ten-year plan.
Mr Donohoe
44. When you answered the question, my Lord,
on the whole question of investment and on air traffic you indicated
that it was not part of this. What kind of investment can we expect
to see? Is it as proportional in growth for air as this is for
land over the next ten years?
(Lord Macdonald of Tradeston) As I say, this is for
land transport but I would look forward to addressing the questions
raised very thoroughly in the consultation process that would
be running up to the issuing of a White Paper which I anticipate
we would have in a couple of years' time.
Mr Stevenson
45. Could I return back to rail and specifically
the West Coast Main Line which I think you have now described
as an exceptional project. I suppose we could discuss what is
meant by that for some time. I understand that you decided to
assist in a significant way to make up the increased costs of
the project, £2.3 billion originally to £5.8 now, by
direct payments. Could you assist us in explaining why that decision
was taken to use direct grants to this scheme as distinct from
either Railtrack funding the scheme themselves or access charges?
(Lord Macdonald of Tradeston) I believe that it was
a very exceptional project clearly with a cost going up to around
six billion pounds and that would not be affordable by a single
company like Railtrack. The benefits of such a renewed line would
be obviously of use to many of the train operating companies and
to the freight companies involved. On the advice of the Rail Regulator
and working in conjunction with the Strategic Rail Authority we
felt this was the best way forward to ensure that vital economic
artery was completed.
46. Yes, of course, but we have other vital
economic arteries like the East Coast Main Line, the Midland Main
Line and whatever. What I am trying to get at, other than the
history of this scheme, the delays and frustrations that we are
all aware of, particularly if you use the West Coast Main Line,
is what in particular is so exceptional about this particular
artery that Railtrack would not argue is similar to other important
arteries and, therefore, would be pressing the Government for
further direct grants?
(Lord Macdonald of Tradeston) My view would be the
question of scale, Mr Stevenson.
47. The scale?
(Lord Macdonald of Tradeston) Yes, the scale of the
funding involved does make it exceptional.
48. So do I take it from what you have just
said that the Government have accepted that the principle of direct
grants to a private company in specific circumstances is one that
is acceptable?
(Lord Macdonald of Tradeston) No. What we have accepted
is that our Rail Regulator will look very closely at the sums
of money involved and will advise us accordingly on that.
49. That leads me nicely to the Rail Regulator
and to my next question. Why then, if the Government has taken
this decision for direct grants into this scheme, has the decision
been taken to do that before the new franchising and access charge
regime has actually been announced by the Rail Regulator?
(Lord Macdonald of Tradeston) We have tried to be
clear. I certainly emphasised in the House of Lords that these
are general apportionments here and in no sense are they dependent
on deals being done. We will take that process forward.
50. Let us talk about the shortfall £2.3
to £5.8 billion, for example. How much of that is going to
be made available to Railtrack through direct Government grants?
(Lord Macdonald of Tradeston) I think these are discussions
that we will be involved in in the months ahead.
51. So you do not know yet, it could be one
billion, it could be two billion, ten per cent, 20 per cent, 30
per cent?
(Lord Macdonald of Tradeston) If I could bring Mr
Rickett in.
(Mr Rickett) The general approach to rail financing
here is that the renewal of the infrastructure will be dealt with
by Railtrack and funded off the review of track access charges
which the Rail Regulator will be publishing shortly. The support
for exceptional renewals, like the West Coast Main Line, and for
enhancements, the additional infrastructure that is required,
can be a mix of traditional track access charge funding and capital
support of the kind that we have just been discussing. That is
the general principle. On how much is actually going to be spent
on the West Coast Main Line, I think we all have to wait until
the Rail Regulator's final conclusions which I believe are going
to be published later this week and, indeed, how much Railtrack
will be asked to bear.
52. I think I understand that. Nevertheless,
prior to a new access charge regime being announced by the Rail
Regulator, prior to the new franchises being announced, Government
have taken a decision to cough up for Railtrack a few hundred
million, a few billion, we do not know yet.
(Mr Rickett) No, what we have said is—
53. Ten per cent, 20 per cent of the cost, whatever
it is, you have done that prior to the access charge regime. Does
that not seem to be, as my grandmother used to say, back to front?
(Mr Rickett) No, I think it is the right way round.
What the plan sets out to do is to set the size and quality of
the railway in this country that the Government believes is necessary.
In the end that boils down to the level of public subsidy unless
we were having a purely commercial railway. What we have tried
to do here is to set out what we think is the public subsidy requirement
to deliver the 50 per cent growth in rail passenger use, the 80
per cent growth in rail freight moved and the quality and service
improvements that we have talked about. It will be for the Rail
Regulator to set the new regime for the track access charges for
Railtrack, and for the Strategic Rail Authority to set out its
strategy for passenger and railfreight which will govern its re-franchising
and which will govern the use of the Rail Modernisation Fund.
That is putting in place, as it were, the detail of the broad
framework and strategy that we have provided in the plan. We have
been working very closely with the Rail Regulator and the Strategic
Rail Authority so that it all knits together and is all reasonably
consistent.
Mr Stevenson: May I ask two more questions?
Chairman: As long as they are sharp, we are
getting very close to the wire.
Mr Stevenson: When is your Department, Lord
Macdonald, likely to know how much the direct grant in the West
Coast Main Line will be?
Chairman: We are talking big money here, £2.3
billion to £5.8 billion.
Mr Stevenson
54. Yes, I know, but I think it is timescale
now. I have made my point on that. I wonder when you are likely
to know how much public money will be required?
(Lord Macdonald of Tradeston) We will be working closely
through in the months ahead. We are already in detailed discussions
with the major players involved in it.
(Mr Rickett) The first step is the Rail Regulator's
conclusions on the renewals and enhancements.
55. I have made my point on that. My last question
is on a different topic touched on by my colleague, Miss McIntosh.
What involvement did the Commission for Integrated Transport have
in the ten-year plan?
(Lord Macdonald of Tradeston) They have been very
fully involved. Certainly at Chairman level I have seen David
Begg frequently and Sir Trevor Chinn, the Deputy Chairman. They
have had input at official level all the way through because we
service the Commission. They have been doing work for us and will
continue to do work that is directly relevant to the ten-year
plan.
56. Finally, it may not be possible for you
to answer this question now but would it be possible, if not,
to let the Committee have specifically where the input of the
Integrated Transport Commission had an effect on the plan itself,
directly had an effect, in either changing the plan from its initial
draft to what we have now or areas in which their input actually
influenced and changed what is in the plan?
(Lord Macdonald of Tradeston) If I feel that we can
make meaningful judgments like that then I will certainly do that.
(Mr Rickett) I think it will be very difficult because
it implies that we had some plan which was then changed by the
intervention of the Commission so we could identify what it was
they changed. It was a collaborative process. They provided us
with a number of reports. For instance, they did a survey of public
opinion on transport which showed that what people want is roughly
what we are delivering, I hope. They also did a survey of best
practice lessons from Europe which fed into our plan. I think
it would be very difficult to say that this bit or that bit was
changed.
Chairman
57. You are not against going away and thinking
about it, Mr Rickett?
(Mr Rickett) No, certainly not.
58. Can I ask you a number of quick questions
because I know you have to go quite soon. I want to make some
important points for us. Can we build our way out of congestion
with new roads?
(Mr Rickett) No.
(Lord Macdonald of Tradeston) No. What we can do is
to reduce congestion with a package of measures. I am delighted
to say if you take the calculations of the Task Force, say, on
the anticipated increase in congestion without any plan by 2010
on our inter-urban trunk roads and motorways, that would have
gone up by 28 per cent in terms of congestion but it will now
come down on our calculation by five per cent. That is a 33 point
difference. Of those 33 points, 20 points come from the impact
of integrated strategy, investing in rail and in other forms of
public transport.
59. What is your attitude then to Friends of
the Earth who say that all your bypasses, for example, will be
fought "tooth and nail"?
(Lord Macdonald of Tradeston) I would point to our
40 road schemes in the targeted programme of improvements which
has been there now for a couple of years. They were taken into
that programme after surviving our new approach to appraisal which
is much more environmentally sensitive, much more rigorous, it
was acclaimed by environmental groups. Of those 40 major road
schemes that have been sitting in the TPI, and they are added
to frequently, 20 of those are bypasses. We have not specified
in the plan where bypasses would be built, just as we cannot specify
who would get a tram route, because we have said as far as roads
are concerned many of these decisions are conditional on multi«modal
studies and we will not try to subvert that process which is based
on consultation with local communities, with environmental groups,
making a much wider assessment of the impact of such schemes than
was ever the case in the past. There is no u-turn on to policies
of previous administrations, there is no going back on our environmental
concerns, this is very much a ten-year plan based on our Integrated
Transport White Paper of 1998.
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