Select Committee on Transport Fourth Report

2. Economic Impact

9. One of our concerns was the influence of rail services on economic and social development in the region. We were struck by the degree of agreement among our witnesses that not only were existing rail services essential, but enhancement of rail services would bring significant benefits.

10. Witnesses from conurbations and urban districts pointed out the importance of rail in:

a)  dealing with commuter flows which would otherwise depend on road transport;[8]

b)  providing links between regional urban centres and between those centres and other parts of the United Kingdom;[9]

c)  providing access to other transport hubs such as Manchester Airport, Liverpool Airport, the Mersey ports and the Port of Heysham.[10]

11. The North of England contains several important freight corridors. In particular, Yorkshire Forward and the Yorkshire and Humber Assembly pointed out the region contained Immingham, the UK's busiest port, in terms of freight tonnage, and the port of Hull. There was general agreement that rail routes to each port needed upgrading.[11]

12. Witnesses also pointed out the important contribution rail could make both in providing effective links between centres of population in largely rural areas, and in promoting the sustainability and attractiveness of tourism. As Cumbria County Council said:

"The rail network plays an important role in improving the sustainability and attractiveness of tourism. In particular it provides an important mode of access to the Lake District via the Windermere Branch line and has great potential to expand tourism in west and south Cumbria via the Cumbrian Coast line and Furness Line. The Settle-Carlisle line has developed to provide an attraction in its own right as well as access to rural east Cumbria and the Yorkshire Dales".[12]

13. Not only does rail increase the sustainability of tourism, particularly in places which are valued for their natural beauty, but several witnesses also noted that tourists arriving by rail typically spent more in a region than tourists arriving by car.[13]

14. There is also an issue of social inclusion. Car ownership is below average in many parts of the North.[14] Passengers in the North East said "it should be an objective of the SRA within the overall transport plan, not to reduce car ownership but to reduce the need for car use to make rail-appropriate journeys".[15] A healthy rail infrastructure not only reduces the disadvantages of those without a car, but has the potential to deliver other Government objectives, such as a reduction in pollution.

Targets and Policy Making

15. When we began this inquiry, many witnesses were concerned that infrastructure investment was overly focussed on the South East.[16] The SRA disputed this, claiming that the pattern of investment arose because of the concentration of passengers around London, and the fact that the railway network, with some important exceptions, was focussed on London. Mr Jim Steer, Strategic Director of the SRA claimed:

"The major routes go to London and that is where the major investment is going. However, that does not mean that the investment is in the south of the country and it certainly does not mean that the benefit of that investment is in any way, in my assessment, skewed towards the south of the country".[17]

16. Since the Sub-committee took evidence last June, the SRA's investment plans have been curtailed. The new priority is to improve the industry's productivity which has fallen rapidly. Indeed, the rising costs of improvement to the rail infrastructure were drawn to our attention by many of our witnesses. No one could disagree that the rail industry's cost base needs to be brought under control.

17.   The Minister told us that the previous focus of the SRA toward large schemes might need to be corrected "because a considerable number of smaller schemes may deliver quite substantial enhancement to the network".[18] Since then, of course, the SRA's new Strategic Plan has appeared, and it is clear that the current priorities are for a better and safer railway, rather than a bigger one.

18. There was concern that the Government's own targets acted to direct investment away from areas in which it would be most helpful. The 10 Year Plan sets a target for growth in passenger kilometres. The Department itself told us it "is aware of comment from stakeholders that the Ten Year Plan's use of passenger kilometres to measure passenger growth focuses investment on long distance routes and services in London and the South East. The department believes, however, that passenger kilometres is a more appropriate measure than passenger journeys, which would … focus investment even more on south east commuter services, at the expense of longer distance services which benefit different parts of the country".[19] That is true, but it does not address the fact that the target will inevitability skew investment toward long distance journeys, which account for 33% of passenger kilometres, but only 8% of journeys.[20]

19. The Government has rightly set itself targets for transport which address wider issues than simply moving people from A to B. There appears to be a real danger that the SRA's current targets encourage investment in areas which are already well served, or on long distance routes, rather than where investment may most benefit the wider community.

Target setting and Investment Appraisal

20. It is far from clear that the SRA is sufficiently responsive to the transport needs in the North. The Greater Manchester Passenger Transport Authority and Executive told the Committee that there was serious concern that the "growing congestion will stall the region's recovery".[21] Better rail services were needed to reduce this. We were also told that "rail massively underperforms in Greater Manchester. In 2001, the whole of the local rail network carried only 14 million passengers compared with 18.3 million carried on two Metrolink Lines".[22]

21. Friends of the Earth drew our attention to the finding that the supply and modal share of public transport in Manchester was the lowest in seven comparable European cities.[23] There is clearly room for improvement and Mr Mulligan of the Greater Manchester Passenger Transport Executive was confident that "If we can develop the rail network as a mass transit system, then we will see a major effect on our economy".[24] It was striking that the Authority and Executive's belief that it was economically necessary for infrastructure to be upgraded so that rail traffic could be increased was shared by most other local authority witnesses.[25]

22. As Manchester Airports plc pointed out:

"The objectives of the [10 Year] Plan are to achieve a 50% increase in passenger kilometres, reduce overcrowding and an 80% increase in freight tonne kilometres. When judging schemes to go forward, the SRA applies value for money and affordability tests. This inevitably will focus investment into rail schemes in the South East where subsidies are lower, and on Inter City routes where their combination of high value fares and long journey sectors will always look better value than investments in the high subsidy regional rail networks. This one size fits all approach is ill equipped to make rational and balanced judgements on schemes outside the south east. The North of England has very real problems with rail services that need investment to solve them. They are different in nature and scale to the south east, but no less important to the regional and national economy". [26]

Appraisal Criteria

23. In April 2003 the SRA finally published its appraisal criteria, which had been approved by the Secretary of State.[27] They include road user benefits and potentially unpriced rail user benefits[28] such as:

  •   Journey time, reliability and punctuality;
  •   Service frequency;
  •   Crowding;
  •   Station facilities and rolling stock quality.

24. However, the appraisal document is more guarded about the value to be ascribed to wider economic benefits, noting that enhancement of services may have adverse effects on a local economy, rather than beneficial ones, and that even where benefits are achieved, they may simply be activity displaced from elsewhere. The SRA does expect an assessment of wider economic benefits for the following types of expenditure:

·  "where it is expected to have a clear impact on regeneration areas, sponsors should complete an Economic Impact Report following its introduction from DfT. Guidance on the preparation of an Economic Impact Report is available from DfT.

·  Where major investment might change the balance of economic advantage between different regions. Such cases would include new high speed routes".

However, it made clear that:

·  "The SRA is keen to encourage joint sponsorship for projects with significant regeneration benefits, where these meet regional objectives of other sponsoring bodies. The SRA will take regeneration effects into account in the appraisal, but it will not provide additional subsidy in lieu of such benefits".

25. This contrasts with the Highways Agency which says:

"The Highways Agency will, in its role as a network operator, assist regional planning organisations to develop their strategies and implement elements of the adopted strategies. This includes supporting regional economies through the improvement of the trunk road network, where this is consistent with national economic efficiency and gives due weight to the non-economic impacts of improvements".[29]

26. In our report on the multi-modal studies we were concerned about the imbalance between road and rail schemes.[30] The SRA has to consider how best to apply limited funds to the benefit of the network as a whole. It is understandable that the SRA would not wish to fund projects of limited value to the network, but this issue needs to be addressed.

27. Where roads are promoted which offer potential regeneration benefits, the funding, design and development is driven and assured by the Highways Agency. By contrast, on the rail network, those proposing improvements have to beg and borrow from a diverse range of agencies, applying for an uncertain small amount of SRA funding and, if successful, having to ensure that the project is included in Network Rail's work programme. This is not a level playing field.

28. Major regeneration decisions should not be taken by individual infrastructure providers. Some may be funded by local or regional bodies; some may be too large for them to support. There should be clear consideration of transport needs in regeneration planning, and some way to meet those needs.[31]

29. The Department should ensure that the railway network sustains the Government's policies on economic regeneration. Our colleagues on the ODPM Committee have repeatedly expressed concern about the difficulty of ensuring that transport is taken properly into account in regional or local strategies; we share their concern.

Smaller Schemes

30. Local authorities and passenger transport organisations already support some services which are considered desirable, but which are not effectively funded by the SRA. Here, too, the current system of funding rail improvements does not appear to provide any means for a clear view to be taken on the relative priority of improvements.

31. The bidding guidelines for the Rail Passenger Partnership (RPP)[32] illustrate the lack of coherence about rail priorities.[33] The RPP "provides funding for improvements to regional and local services that are not commercially viable, but which meet other objectives such as integration with other transport modes".[34] Schemes have included re-opening stations, interchanges with other transport modes and new or enhanced rail services.

32. The RPP Guidelines state:

"RPP is a form of partnership funding and therefore only one of possibly many funding components in a scheme. Bidders for RPP should ensure that they have fully explored the opportunities for support, both financial and non-financial, available from other sources, before completing an RPP bid".[35]

33. Potential sources of funding could be:

—  Fare revenue;

—  Railtrack;

—  TOCs;

—  Other private sector companies;

—  Devolved governments, local and regional authorities, TfL;

—  Development Agencies;

—  DTLR;[36]

—  The European Union;

—  The National Lottery.

34. Where the scheme is capable of delivering regeneration benefits, the SRA will take this into account during scheme appraisal but will expect the applicant to approach other organisations to fund such benefits. "For Major Schemes, where regeneration benefits will be significant, sponsors should approach Development Agencies whose prime objective is to promote such benefits. Similar principles apply to Fast Track schemes where appropriate initiatives may exist".[37]

35. This diversity of funding may be admirable, but it means that the SRA will be faced by a series of ad hoc competing bids for partnership funding and, indeed, effectively for permission to undertake certain enhancements. Each scheme will address the objectives of whatever groups are involved. This may produce a stream of high quality strategic improvements which enhance the network as a whole. It is not certain that it will do so.

36. Central Government has to play a role here. The 10 Year Plan made it clear that the Government would be prepared to reallocate funding between particular modes of transport.[38] Central Government should have clear criteria for considering funding rail infrastructure improvements which offer social, economic or environmental benefits or, at the very least, assisting local authorities to do so.

8   Ev 75, Ev 114, Ev 116. Back

9   Ev 45; Ev 116; Ev 124. Back

10   Ev 47; Ev 55; Ev 81; Ev 139; Ev 177. Back

11   Ev 42; Ev 55, Ev 56. Back

12   Ev 105. Back

13   Ev 57; see also Ev 53; Ev 184. Back

14   Ev 76; Ev 88. Back

15   Ev 90. Back

16   Ev 49; Ev 94. Back

17   Q 285. Back

18   Q 440. Back

19   Ev 187. Back

20   Ev 186. Back

21   Ev 94, see also Q 127. Back

22   Ibid. Back

23   Ev 110. Back

24   Q 138. Back

25   Ev 181; Ev 189. Back

26   Ev 50. Back

27   Appraisal Criteria: A guide to the appraisal of support for passenger and freight rail services, SRA April 2003. Back

28   Under some circumstances there may be values ascribed to aspects of these benefits. Back

29   Better Value from Busy Roads: Highways Agency Economy Strategic Plan. Back

30   Transport Committee, Third Report of Session 2002-03, Jam Tomorrow?: The Multi Modal Study Investment Plans, HC 38-I, para 173. Back

31   We note that the Committee on the Office of the Deputy Prime Minister has recently criticised transport planning in its report on Planning for Sustainable Housing and Communities: Sustainable Communities in the South East. Eighth Report of Session 2002-03, HC 77-I, para 136. Back

32   Rail Performance Fund Bidding Guidance, 1st edition, May 2002. Back

33   There is also a Rail Performance Fund which is "a form of co-funding designed to encourage improvement in rail network performance" by "small scale enhancements and other measures". The bidding rules for RPP and RPF are similar, although not identical.  Back

34   SRA Strategic Plan 2003, p 90. Back

35   RPP Bidding Guidance, SRA. Back

36   The guidelines have not yet been revised to take account of machinery of Government changes. Back

37   Ibid. Back

38   Transport 2010: The 10 Year Plan, Department of Environment, Transport and the Regions, July 2000, p 38. Back

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