Examination of Witnesses (Questions 160-179)
MR MIKE
SHIPP
12 JANUARY 2005
Q160 Ian Lucas: How much
did the German scheme cost?
Mr Shipp: The scheme is quite
different from ours in a number of respects, so I am not sure
that the comparator really works.
Q161 Ian Lucas: How much
did it cost? Just to give me an idea of how much a system costs—not
necessarily the system we are going to use, but the German system.
Mr Shipp: I believe that the German
Government pays the consortia that operates that scheme something
of the order of 600 million euros a year—something like
that.
Q162 Mr Donohoe: And the
Swiss scheme?
Mr Shipp: That I am afraid I do
not know.
Q163 Mr Donohoe: Can we
turn now to the revenues themselves that you are going to get
from this charge, and in particular that you will get from lorry
road users. Is that to be hypothecated or not?
Mr Shipp: The revenue . . . ?
Q164 Mr Donohoe: The revenue
from the Lorry Road User Charge—will that be hypothecated?
Mr Shipp: LRUC has been established
as a tax and the revenue that we draw from it—our working
assumption is that those net proceeds go straight into the Consolidated
Fund.
Q165 Chairman: The Transport
Minister, in representations to the EC earlier this year, made
application on the basis of some other charges that this should
in fact be hypothecated—in other words, European charges.
It would seem sensible, would it not, to have both on the same
basis and that the hypothecation would take place, so that the
benefit would be to the industry itself and not to the Treasury?
Mr Shipp: As I say, my understanding
is that this is a tax, as other taxes are that are administered
by my department and it was therefore straight into the Consolidated
Fund.
Q166 Chairman: You are
surely not telling us, Mr Shipp, that you would not like to express
an opinion on the policy?
Mr Shipp: It would be inappropriate
for me to do so.
Chairman: That comes as a great surprise
to us!
Q167 Mr Donohoe: It certainly
is a surprise. I would have thought you would have told us that
you were all in favour of hypothecation! What is now the date
for the full implementation of the Lorry Road User Charge? Do
you have a date?
Mr Shipp: We have working assumptions.
Our expectation is that we will sign contracts around the end
of this year. We will then enter into a system-build phase, during
which we will be testing and trialling elements of the scheme.
We are expecting to set up registration facilities and to begin
installing equipment in lorries during 2007, and then introducing
the charge towards the back end of the year 2007-08. Those are
the dates that sit in my programme plan. Of course, there is a
dependency on exactly how those negotiations proceed and what
we learn from the proof-of-solution testing and trialling that
goes on during that period. However, our working assumption is
that the scheme will go live in 2007-08. Again, our working assumption
then is that we would look for a phased introduction, probably
starting—
Q168 Chairman: Phased
in relation to the strategic network or one particular motorway?
What are we talking about when we say "phased"?
Mr Shipp: Groups of lorries.
Q169 Chairman: So you
are thinking of doing it by the type of lorry?
Mr Shipp: One of the problems
that our colleagues in Germany encountered was introducing LRUC
in one go, and the severe strain that placed on the logistics
of equipping all those lorries—many hundreds of thousands
of them—within a fairly short time line: building the equipment;
arranging for its installation; and then persuading hauliers to
be available. That is a lesson that we are determined to learn
from and we are hoping to do it in more manageable phases.
Q170 Mr Donohoe: You are
already subject to delays. There have been delays to its introduction
as it stands, have there not?
Mr Shipp: The original date for
implementation was forecast as 2006, but I think it is fair to
note that those announcements were qualified on the basis of,
"This is our plan, and there is still a lot more work to
do before we can be certain about that". It is when we have
begun to undertake that work that we have found that we are in
a better position to make a more realistic assessment of what
it is possible to deliver in a prudent timescale. I should add
that this is not a revision that we have made within the bowels
of Whitehall: this is a project plan that we have shared with
our colleagues in the road haulage industry, and they too are
very keen for us to get a date that works, for them and for us.
Hence, I think that it was around the Budget of last year that
we announced that 2008 was more realistic.
Q171 Mr Donohoe: When
do you think that you will be in a position to award the contracts?
Mr Shipp: At the end of 2005.
Q172 Mr Donohoe: How much
do you estimate these contracts to be worth?
Mr Shipp: I am afraid I regard
that as commercially sensitive information at the current time.
Q173 Mr Donohoe: If we
go back to Mr Lucas's point, what was the equivalent cost in Germany?
Mr Shipp: I am not familiar with
the detail of the contracts in Germany. You will understand that,
although I have fairly regular contacts with my counterparts in
Germany, and given that there is quite a large civil action going
on at the moment where the German Government is taking court action
against the German suppliers, they are rather reticent to share
some of that information even with civil servants in another administration.
So I am not very close to that, I am afraid.
Mr Donohoe: I do not think it is worthwhile
asking any more questions on that matter!
Q174 Mrs Ellman: Going
back to the contracts, have any of the bidders applied for more
than one contract?
Mr Shipp: We went into the procurement
with three separate contract services bundles, as we describe
them, and a number of the bidders had bid for all three. We have
been going through a process firstly of qualifying them—where
not all the bidders qualified for all three of the contracts—and,
more recently, short-listing them. Again, not all of the bidders
have qualified for all of the contracts. At the beginning of the
procurement, therefore, yes, quite a number of the organisations
that responded to us put in a bid to do all three of our service
contracts; but, as that has moved forward, some of them have fallen
by the wayside.
Q175 Mrs Ellman: So how
many companies are now involved?
Mr Shipp: We have short-listed
six companies. In August we selected ten, through a pre-qualification
process. One of those subsequently dropped out, so we were left
with nine. We are now moving forward with six to the short-list
stage. We are in the process at the moment of going through a
series of debriefing meetings with those bidders, to explain our
perceived strengths and weaknesses of their bids.
Q176 Mrs Ellman: The Government
does not seem all that successful in big IT projects. Do you think
that you will be able to make a success of this?
Mr Shipp: I very much hope so.
That is my job. We are asked a lot of questions by a number of
interested parties, with just that thinking in mind. We are also
subject to regular reviews by the Office of Government Commerce—Gateway
Reviews, which I imagine the Committee is familiar with. To date,
we have passed those successfully and have recently been through
another Gateway Review. The advice from that review team is that
they think we are well placed to deliver these successfully.
Q177 Mrs Ellman: Are you
going to have any testing systems?
Mr Shipp: We are. Some of that
testing has already begun. Before we short-listed bidders, we
asked them to commit to entering into proof-of-solution testing.
Q178 Chairman: Prudent
solution testing?
Mr Shipp: Proof-of-solution testing.
Q179 Chairman: I am sorry—I
thought that I was missing something there that had been ignored
for years.
Mr Shipp: We have contracted with
the Transport Research Laboratory, and the successful bidders
will now be going through a process of demonstrating to us that
the solutions they have advocated will work. The results of that
process will form part of our evaluation, before we move into
the later stages of the negotiations. Once we have awarded contracts,
further testing will take place before we go live.
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