House of Commons - Transport, Local Government and the Regions

Select Committee on Transport, Local Government and the Regions Eighth Report

IV. IMPLEMENTING THE PLAN

Funding

81. This Committee recently reported on the problems surrounding the rail industry following Railtrack entering administration.[153] In the light of the continued uncertainty about when administration will end and the cost base on which the successor to Railtrack will operate, most of the evidence received was sceptical about the Strategic Rail Authority's ability to lever in the expected £34 billion of private sector investment.[154] The Railway Forum does not believe that the figures are based on a realistic cost-model of the industry or that borrowing £34 billion against an annual turnover of £6 billion to £7 billion is sustainable (even with a projected increase in fare revenue of £3 billion if the growth targets are met).[155] Although private capital would be available for rolling stock, National Express doubted whether private investors would "commit to rail infrastructure investment on anything like the scale previously envisaged".[156] Mr Bowker was confident that the amount of private capital that could be raised would be close to the £34 billion anticipated in the Plan and that it was based on the same cost model used by Railtrack.[157]

82. The public investment budget in the Plan is £18.6 billion. More than £10 billion is already committed to complete the Channel Tunnel Rail Link and as network grants to Railtrack. In addition, the Secretary of State confirmed that a further £3 billion was required for interest payments on private sector borrowing, leaving between £4 billion and £5 billion for investment in new infrastructure.[158] Mr Bowker admitted that the Great Western Main Line upgrade, Crossrail, West Midlands and Greater Manchester capacity enhancements and projects resulting from the Multi-Modal Studies that were all included within the 10 Year Plan would not now be started before 2010. The Strategic Rail Authority has had to prioritise due to funding and resource restrictions.[159] The Secretary of State told the Sub-Committee that some of these schemes could be brought within the Plan[160] and that "there is still £8 billion or so of unallocated provision within the 10 Year Plan".[161] He also suggested that further resources might be available through the Comprehensive Spending Review.[162] The Chief Executive of Railtrack, Mr John Armitt, told the Sub-Committee that Railtrack, or its successor, would need more funds to be able to maintain the network and that it intended to make a case to the Rail Regulator for an Interim Review over the next few months.[163] Railtrack also believes that the Plan does not address the historic under investment in rail, pointing out that the level of rail funding will be a smaller proportion of GDP by the end of the Plan than it is now, and that it will be less than most of our European partners.[164]

83. There is also considerable doubt over the phasing of investment on rail. A third of the private sector finance is expected to be delivered by April 2004. To date, £1 billion of private sector finance has been secured compared to an expectation of £3.7 billion within the 10 Year Plan.[165] Mr Bowker told the Sub-Committee that much of the investment in new infrastructure projects was back-ended within the Plan[166] and that the Strategic Rail Authority was currently developing a more detailed business plan.[167] The Secretary of State told us: "If the 10 Year Plan is going to be a success, we need to front load the spending because there are real issues that have to be tackled very quickly if we are to hit those targets in ten years time".[168] Railtrack told us: "Given that no commitments have been made by Government to significant new rail infrastructure investment since the Plan was published, it is clear that delivery of many projects will require funding towards the end of the Plan".[169]

84. The Committee remains concerned about the lack of clarity surrounding the financing of the rail improvements in the 10 Year Plan. The split of investment between rolling stock, maintenance and renewals and new investment remains fuzzy. It is clear that the industry is already far behind schedule in meeting the Plan's objectives although we have had difficulty in determining how far. The lack of any detailed implementation plan is a major barrier to improving the railways. The Strategic Rail Authority must publish its business plan urgently. We are not yet confident that sufficient private sector funding will be forthcoming for major infrastructure projects, which all come towards the end of the Plan, particularly while the cost base of the industry is uncertain. The Strategic Rail Authority made it clear that several projects originally expected to be delivered through the 10 Year Plan will not be possible without new resources. However, it still expects the target of 50 per cent passenger growth to be possible, which we find puzzling. It is essential that the Government commits to fund those projects that are necessary to provide a first-class rail system, and not just those that the private sector is prepared to support.

RAIL FREIGHT

85. The 10 Year Plan includes a target of an 80 per cent growth in rail freight.[170] The Rail Freight Group, English and Scottish Railways and the Freight Transport Association all endorsed this target.[171] Whilst an overall target of 80 per cent was supported, both the Rail Freight Group and the Commission for Integrated Transport suggested that it might be more appropriate to include new targets to reflect different market sectors.[172] For example, rail freight needs to break into new markets such as mail, parcels, food and drink, consumer goods and semi-manufactured goods as well as raw materials.[173] There is an expectation expressed in the Plan that there will be a significantly different split of public and private sector contributions for rail freight compared with that for passenger rail in order to achieve this target, with £3.4 billion public and £600 million private sector contributions.[174] The Strategic Rail Authority should investigate the merits of additional and more sector-focussed targets for rail freight growth.

Difficulties facing the rail freight industry

86. Several significant problems have adversely affected the rail freight industry in recent times. The current problems surrounding the Channel Tunnel rail link and the Fréthun freight terminal in France have over a period of months reduced freight train frequency to less than a half of previous levels, sometimes with complete stoppages. Channel Tunnel rail freight services are estimated to represent around six thousand lorries on the United Kingdom's motorways every week.[175] The Secretary of State told the Sub-Committee that the French authorities have failed to treat the issue as seriously as they should have.[176] The Department estimated that 5 per cent of the 80 per cent growth in rail freight was in international freight and was not an enormous part of the Plan.[177]

87. The West Coast Main Line is used by 43 per cent of all rail freight in the UK for some or all of its journey.[178] The continuing uncertainty over the future of the upgrade of the West Coast Main Line and disruption to freight services during the extensive engineering works[179] has also dented confidence in the rail freight industry. The Freight Transport Association told the Sub-Committee that its members chose the mode of transport that best suited the economics and quality of service of the industry concerned. There was no dogmatic desire to transport goods by any one particular mode. However, Mr Graham Miller, Projects Director for Logistics Development for Scottish Courage, told the Sub-Committee that the uncertainty surrounding the rail industry was a significant deterrent, saying:

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88. The rail freight industry needs improved reliability and reduced journey times as much as the passenger rail network. The disruption of rail freight services through the Channel Tunnel must be brought to an end. The French Government is quite capable of preventing illegal entry to the freight terminal at Fréthun. The Government has failed to bring sufficient pressure to bear on the French authorities. This is unacceptable. The European Commission claims to be committed to providing a Trans-European rail freight network yet has also failed to ensure that normal service is restored. In the UK, the problems for the rail freight industry have been further compounded by poor rail network performance and delays caused by line closures for engineering works. Every effort must be made to provide a stable and reliable service for rail freight operators if industry is to be encouraged to switch from road to rail and to stay there.

STRATEGIC ROAD NETWORK

89. The strategic road network comprises less than 4 per cent of the English road network but carries 34 per cent of all traffic and 67 per cent of freight. The network is the safest in Europe and the road maintenance backlog has recently been cleared. Seven per cent of the network suffers from heavy peak and occasional non-peak congestion, and a further 13 per cent suffers heavy congestion at least half the year. The 10 Year Plan estimates that without investment, demand on the network would grow by 29 per cent over the 10 years, creating more and larger congestion hot spots.[181] The Plan expects 360 miles of the strategic road network to be widened, 80 major new trunk road schemes to improve safety, and 100 new bypasses on trunk and local roads. It is expected that private finance will contribute 25 per cent of the funding of new major schemes.[182] The principal target is to reduce congestion on inter-urban trunk roads to below current levels by 2010.[183]

Progress

90. The Highways Agency has developed a 10 Year National Roads Strategy detailing how it will meet each of the Government's aspirations for the strategic road network as set out in the 10 Year Plan.[184] The Strategy contains details of the funding available for the different components of the Plan which include new schemes, maintenance, safety and environmental improvements and new driver information systems. The Highways Agency also provided the Sub-Committee with a detailed list of targets to 2010 and progress towards those targets to date.[185] Progress towards completing the measures identified early in the 10 Year Plan period has been good. This is perhaps not surprising as many of the schemes were designed and approved before the Plan started.

Forward Plan

91. It currently takes about 10 years from the design of a major road scheme to final construction. The early establishment of a detailed forward work programme is therefore essential. The Highways Agency has a target to reduce the time to deliver new schemes to between 5 and 7 years through improved procurement processes.[186] None of the schemes identified in the Plan will be sufficiently large to be fast-tracked through the proposed new planning reforms.[187] The forward programme of the Highways Agency is dependent on the outcomes of the multi-modal studies. Despite reductions in the time taken to build new schemes, the Agency states that by 2010 it will "commence construction of all the bypasses identified by 2003 in multi-modal studies, and have open any that were identified by 2001".[188] There have been delays with the multi-modal studies. The Chief Executive of the Highways Agency told the Sub-Committee that "it is certain that not all of the schemes identified within the multi-modal studies will be completed by 2010".[189] The forward plan developed by the Highways Agency is comprehensive and provides interim targets and transparency of funding. Their plan should be the model for all organisations that are responsible for implementing the 10 Year Plan. However, progress in implementing major schemes later in the Plan period will be limited as a result of delays to the multi-modal studies.

Strategic vision

92. The Highways Agency seems to have played no part in either developing the target of a 5 per cent reduction in congestion, or in discussions on how this might best be achieved. It told us that "the modelling for the 10 Year Plan is the responsibility of the central department" and that it was asked only "to provide the indicative pricing for the mixture of illustrative schemes in the published 10 Year Plan".[190] We are astounded that there seems to have been no strategic input from the Highways Agency into the 10 Year Plan. It seems that the estimates of congestion reduction are completely divorced from those who are responsible for achieving them. It is not clear whether a 5 per cent reduction in congestion is the best or most cost-effective objective to aim for. The Highways Agency is best placed to provide a strategic view of the inter-urban road network; it should perform that role.

BUSES

93. The 10 Year Plan states that "buses are, and will remain, the main public transport option for most local journeys".[191] In the year 2000-2001 there were 3,761 million bus passenger journeys, more than one-third of which were made in London.[192] The 10 Year Plan contains a target to increase by 10 per cent the number of bus journeys in England made in 2000.[193] The Plan also anticipated that the Mayor could achieve a 50 per cent growth in bus use in London. A target of 40 per cent was subsequently adopted.[194] Other targets were also set to reduce the average age of the bus fleet and to improve reliability, punctuality and rural access to bus services.

Bus use targets

94. The Government's target for increased bus use was almost universally criticised for lacking ambition. The 10 per cent target for bus growth will be achieved by the expected growth in bus travel in London alone.[195] Indeed, data from 2001 shows an overall increase of 1 per cent (37.2 million journeys) in bus journeys. That figure comprises an increase of 52.3 million trips in London, 4.5 million trips in the West Midlands, 3.3 million trips in the eastern region and a decrease of 22.9 million in journeys elsewhere in the United Kingdom.

95. The Confederation of Passenger Transport noted that the target of 10 per cent was based on discussions between consultees and officials and was not sufficiently ambitious.[196] A number of possible new targets were suggested, with a typical range of increases of 20 to 25 per cent.[197] Mr Rickett agreed that the Government needed to review the bus target and the Department was improving its model to inform the review.[198] However, much of the evidence received suggests that the Government should adopt targets based on those set in the Local Transport Plans because "achievement of bus targets largely depends on local actions".[199] In addition, measuring increases in bus use alone may not be appropriate. The bus strategy will be most effective in reducing congestion if it attracts existing car drivers rather than people who currently cycle and walk.[200]