Memorandum by the Department for Transport
(LR 72)
INTEGRATED TRANSPORT: THE FUTURE OF LIGHT
RAIL AND MODERN TRAMS IN BRITAIN
1. INTRODUCTION
1.1 There is no doubt that some existing
light rail systems have been extremely successful in recent years.
In England, light rail now carries 140 million people annually
and continues to widen the choice of public transport available,
encouraging modal shift from car to tram in many cases. However,
the findings from last year's National Audit Office (NAO) Report
into light rail and recent experience on new proposals for Manchester,
Leeds and South Hampshire, where plans had been dogged by successive
cost increases, have led the Department to look at how light rail
could be made more cost effective and whether it is the best solution
in all cases.
1.2 The Department sees a role for light
rail in some places—it works best for routes with the highest
traffic and passenger flows—but we need to learn from experience
to date so that light rail schemes are only pursued where they
provide the best value for money way of delivering local authority's
wider transport strategies.
1.3 The Department recognises its role in
setting the strategic policy context for the development of light
rail, for example in the White Paper "The Future of Transport"
and in guidance for Local Transport Plans (LTPs). It has also
established a Transport Innovation Fund to help develop coherent,
innovative local and regional transport strategies. However the
Department does not promote light rail as a mode per se.
Local authorities are responsible for assessing what is the right
solution for their area, in the light of local conditions and
local and regional strategies.
1.4 This paper sets out the Department's
written evidence for this Inquiry, under the following headings:
Light rail: (a) costs, (b) benefits and (c)
the choice of light rail vs alternatives;
Light rail as part of an integrated transport
system;
Barriers to the development of light rail;
The effect of differing financing arrangements
on the overall cost of light rail systems;
Conclusion and way forward.
2. LIGHT RAIL:
(A) COSTS,
(B) BENEFITS
AND (C)
THE CHOICE
OF LIGHT
RAIL VS
ALTERNATIVES
(a) Recent cost increases
2.1 The NAO reported that all the existing
schemes were built to time and to budget. However, the recent
history of new proposals has been of estimated costs increasing
significantly following approval.
2.2 In July 2000 the Department agreed an
upfront public sector contribution of £282 million for the
Manchester Metrolink Phase III extensions. However, it became
apparent that the bids would come in significantly above this,
and in December 2002 the upfront public sector contribution was
increased to £520 million. It was made clear that any future
cost increases would have to be met locally. But in 2004 the promoters
came back for additional central government contributions, and
the scope of the project was reduced. The public sector funding
requirement was increasing partly because of private sector pessimism
about light rail and partly because of failings in the original
cost estimates. There was no guarantee that costs would not continue
to rise. This led to the Government's decision in July 2004 to
withdraw funding and to ask Greater Manchester Passenger Transport
Executive (GMPTE) to work with the Department to look at the cost
base for light rail again and to look at alternatives that would
benefit Manchester, but at a better price.
2.3 A working group was set up with GMPTE
to see whether light rail could be made affordable in Manchester
and to consider alternatives. It became clear that continuing
with the three line scope of the scheme would mean committing
to an upfront public sector funding of £900 million and the
Department could not agree to that. In December 2004 the Department
confirmed that the £520 million budget was still available
subject to GMPTE developing a satisfactory plan for the areas
included in the original scheme. GMPTE are able to supplement
this budget, both from their own resources and by bidding for
funding from government through the Transport Innovation Fund.
The Department is currently considering a bid from GMPTE for the
maintenance and renewal of the existing Metrolink system.
2.4 There was similar experience with the
Leeds and South Hampshire schemes. In March 2001 the Department
approved Leeds Supertram and South Hampshire Rapid Transit (SHRT),
subject to public sector contributions of £355 million and
£170 million (in present values respectively). However, the
costs increased to more than £500 for Leeds and to around
£270 million for SHRT. These prices were not fixed and costs
could have increased further. In the light of these cost increases,
in July 2004 the funding approval for these schemes was also revoked.
The Department is working closely with the promoters on developing
revised schemes. Talks are continuing and the Department is currently
considering revised proposals from the promoters.
2.5 There have been a number of factors
causing the costs to increase on light rail schemes, including
poor estimating of costs in some cases. However, some additional
costs could not reasonably have been foreseen such as the high
rate of construction inflation, and increases in insurance premia
following the 11 September disaster. The schemes were to be procured
using the Design, Build, Operate and Maintain (DBOM) model, with
the farebox risk being transferred to the private concessionaire.
A prime driver for the increasing costs has been the high price
being placed on the revenue risks by the market, due to patronage
falling short of forecast on most of the current systems and subsequent
financial losses, eg Sheffield Supertram and Midland Metro.
(b) Benefits of light rail
2.6 Light rail can provide a fast, high
quality and reliable service. The segregation of all or part of
a system can allow trams to avoid delays from traffic congestion
and the flexibility of on-street running allows trams to penetrate
city centres more effectively, providing greater access.
2.7 Light rail can provide an attractive
alternative to the car, by offering faster and more reliable journeys
than bus. There is some evidence that trams attract people out
of their cars—an impact study reported that 19% of Croydon
Tramlink users previously used the car—a reduction of over
7,000 car journeys per day. Manchester Metrolink now carries over
19 million passengers per year, of whom an estimated 3m would
otherwise travel by car. Midland Metro attracts 31% of its passengers
from those who could have otherwise undertaken the same journey
by car. The Department does not expect light rail to be a solution
to congestion on its own—light rail schemes need to be supported
as part of an integrated package to tackle congestion.
2.8 The NAO Report found that light rail
systems are delivering many of their expected benefits. However
the NAO also reported that patronage had fallen short of expectations
and the potential benefits had not been fully exploited. Early
operational problems affected services on Midland Metro and Metrolink
II, depressing patronage. In the case of Sheffield, the removal
of high density housing along the routes and the collapse of the
steel industry contributed to the shortfall. Patronage is increasing
on all systems, but is still significantly below that forecast
on most systems, around 55% of forecast in the case of Sheffield.
To help improve forecasting, the Department has undertaken a review
of the modelling guidance to be published shortly, and commissions
independent audits of the promoters' models.
2.9 In addition, the Department now places
more emphasis on supporting measures, such as park and ride and
integration with buses, to ensure that the benefits of light rail
are delivered in practice.
(c) The choice of light rail vs alternatives
2.10 Any light rail scheme has to show that
it represents value for money, taking account of the wider benefits
and that it is affordable in terms of both central and local contributions.
Demonstrating vfm includes showing that it is better than the
alternatives. It is very much the case of what works best in the
particular circumstances.
The bus alternative
2.11 Buses have a number of advantages.
In particular they do not require the expensive infrastructure
that is necessary for light rail. They can operate on existing
roads, and improvements such as bus lanes and signalling priorities
are relatively inexpensive. Buses are much more flexible—they
can be deployed rapidly and their routes can be altered in line
with changing journey patterns. Whereas the provision of light
rail requires long term planning and once installed is likely
to remain so for a very long time. This is both a strength and
a weakness, depending on whether stability or responsiveness is
considered more important. Bus priority and segregation can help
buses provide much of the benefits of improved journey times and
reliability than trams deliver.
2.12 Intermediate between bus and light
rail are guided bus and "bus rapid transit" (BRT).
Where a new light rail scheme is being considered,
promoters are required to provide a full assessment of the "next
best" and lower cost options. Generally guided buses and
BRT offer a good alternative to light rail. There are guided bus
services operating in Leeds, Bradford, Crawley and Ipswich, with
several more systems being developed elsewhere. Guided bus requires
dedicated trackway where the guidance system is in use, either
as part of a carriageway or on a separate alignment. Guided buses
can also operate on stretches of normal road. The idea of BRT
is that it should also run largely on dedicated trackway, to improve
speed and reliability, and create the journey ambience similar
to that of light rail.
2.13 The cost of providing trackways for
rubber tyred vehicles would be considerably less than the infrastructure
for a light rail system. For instance the Rapid Transit Monitor
(2004) published by TAS reports that the construction cost of
guideway on the highway is approximately £2.4 million per
km, rising to £3 million per km for the conversion of former
rail alignments. In comparison, the NAO reported the construction
costs of a sample of existing systems ranged from £5.4 million
to £21.2 million per km (including the purchase of vehicles).
With bus guideways the purchase of vehicles will also be less.
The Department only helps to fund the infrastructure for bus schemes
and expects the operators to provide the necessary vehicles. However,
on heavily trafficked corridors light rail could still offer better
vfm due to the higher capacity.
2.14 One important distinction is that buses
(outside London) operate in a deregulated market—and this
applies equally to guided bus or BRT. Investment in new buses
is normally a matter for operators to decide on commercial grounds,
while investment in bus priorities is a matter for local highway
authorities. Quality partnerships, under the Transport Act 2000,
can help secure investment on both sides and other agreements
about service standards. West Yorkshire PTE is currently working
on statutory quality partnership schemes for the Leeds and Bradford
guided busways.
2.15 A guided busway or BRT service may
experience competition from standard buses operating on normal
roads—so too, for that matter, may a light rail system.
There may be a place for both types of service on busy corridors—for
example a standard bus may offer lower fares, more frequent stops
and possibly easier access, though it is likely to be slower and
less reliable. But where such competition is seen as a threat
to the optimum use of a dedicated system, local transport authorities
have the option of proposing a quality contracts (QC) scheme.
Under such a scheme, the deregulated market is suspended and,
subject to affordability, a local authority can specify the network
it wants, the frequency and the fares, and invite tenders. Hence
"on-road" competition is replaced by "off-road"
competition between operators for a contract to provide bus services
(as in London). QC schemes can only be made if they are the "only
practicable way" of implementing a bus strategy and are economic,
efficient and effective, and they must be approved by the Secretary
of State. Depending on circumstances, a QC scheme may be justified
as part of an integrated transport strategy involving light rail
or other guided systems.
Innovative modes
2.16 The Department recognises there may
be possible markets for what is generally known as ultra light
rail technologies, which are less expensive and involve smaller
vehicles moving smaller numbers of people. Examples could include
lighter, alternatively powered tram systems or personal rapid
transit systems. The Department has already provided £2.65
million for the development and testing of the personal rapid
transit system, ULTra. By their nature these systems are currently
unlikely to offer a viable solution for corridors of heaviest
demand, which current tram schemes are focusing on, but they may
offer solutions for less heavily used corridors.
2.17 If local authorities see ultra light
rail technologies as offering a practical solution to solving
local transport problems and offering vfm the Department is willing
to support demonstration and pilot projects for these modes through
the LTP system. Promoters of innovative light rail systems need
to obtain the interest of authorities in demonstrating and implementing
the systems. New LTP guidance makes clear that the Department
would be willing in principle to support major scheme bids for
local authority showcase/demonstration projects—even if
the project would cost less than £5 million.
LIGHT RAIL
AS PART
OF AN
INTEGRATED TRANSPORT
SYSTEM
3.1 To be successful, light rail schemes
need to provide the best value for money way of delivering local
authorities' wider transport strategies. The Department is not
minded to approve funding for further light rail schemes unless
they are part of an integrated transport strategy involving integration
of buses and trams, appropriate park and ride facilities, and
traffic restraint measures. There are sufficient powers available
to local authorities to deliver a strategy of this kind.
White Paper Opportunities
3.2 New opportunities for supporting strategies
to tackle congestion in towns and cities are contained in "The
Future of Transport" White Paper. These enable local authorities
to take decisions about public transport in the round, for example
by making it more attractive to introduce bus franchising through
QCs in specific circumstances. These include bus/rail substitutions
where this is best value for public expenditure and demand management
methods for car use, including forms of congestion charging. These
measures could be used to help make light rail more successful.
3.3 The White Paper also sets out the Government's
intention to establish a Transport Innovation Fund to help its
delivery partners to develop and deploy coherent, innovative local
and regional transport strategies. The Fund will support the cost
of such local transport packages (including road pricing, modal
shift and better buses); support mechanisms which raise new funds
locally; and provide an exchequer contribution to regional or
local schemes with the capacity to make a contribution to national
productivity.
Physical integration
3.4 When schemes were first opened physical
integration was not always as good as it could have been, although
where this has been the case promoters have made efforts to improve
it. For example, Midland Metro terminates at Birmingham Snow Hill
station, well away from New Street and the shopping centre, although
the intention is to extend the system to these areas and through
the city centre. Access from Sheffield railway station to the
Supertram was poor until 2002. Good physical integration should
help strengthen the business case for any scheme, so it is certainly
something the Department would look for in the appraisal of new
light rail proposals.
Park and Ride
3.5 Park and ride facilities complementing
light rail systems can help increase patronage and are more appropriate
when trying to reduce car trips along the main corridors leading
into city centres. During scheme development the Department expects
promoters to consider whether park and ride is appropriate.
3.6 The NAO stated that park and ride sites
have sometimes been missed out or delayed to save money thereby
reducing the benefits of the scheme. However, park and ride provision
is now extensive on schemes: Manchester Metrolink has one site;
Midland Metro four; Nottingham five (with two more planned on
proposed extensions); Sheffield five; and Tyne and Wear three.
The Department routinely challenges promoters on the adequacy
of their proposal in terms of park and ride provision.
Bus Competition
3.7 Competition from buses can reduce the
viability of light rail, but only if it is meeting some customers'
needs better. For example, following bus deregulation in 1986
bus operators in Tyne and Wear started competing with cheaper,
if slower, services which had an adverse effect on the Metro's
patronage. It showed that there were situations where the bus
can serve some people better than the tram along the same corridor.
3.8 Bus operators have to make their own
commercial judgment in each case on whether it is better to compete
with tram services or rather to concentrate on providing complementary
feeder services. "The Future of Transport" recognizes
the scope for use of bus quality contracts in local authorities'
wider strategies to combat congestion. This is permissible only
as a way of implementing authorities' bus strategies and not just
as a device to boost light rail finances.
Bus and tram through-ticketing
3.9 Combining ticketing with bus can help
make light rail travel more attractive. While commercial bus operators
are free to set their own single fares (and debarred by the Competition
Act 1998 from agreeing them with competitors) there are special
provisions for multi-operator through tickets and travelcards
covering, bus, rail, light rail and ferry services. Similar ticketing
schemes can be made by local transport authorities under the Transport
Act 2000. The local transport authority can act as "honest
broker" but essentially the price of the product needs to
be agreed between the participating operators.
3.10 Despite some misconceptions in the
industry, it is not normally regarded as anti-competitive to issue
through tickets between connecting routes (eg one operator runs
a bus between A and B and another runs one between B and C) because
these are not in competition with each other. This will often
be the case for a ticket combining light rail with a connecting
bus service. The Department will be requiring the promoters, as
a condition of approval, to specify the acceptance of through-ticketing
in the concession agreement.
3.11 There is some degree of through-ticketing
and multi-mode ticketing on all English schemes allowing travel
between modes, but not all bus operators participate in these.
Nottingham Express Transit have integrated with Nottingham City
Transport buses offering bus/tram tickets and smartcards. The
bus company have also revised their services to complement those
of the tram.
Car restraint measures
3.12 "The Future of Transport"
also puts a new emphasis on car restraint measures as a complement
to public transport improvements. What is appropriate will vary
in individual cases, so it is not the case that the Department
will only consider a light rail scheme alongside a congestion
charging proposal or a workplace levy scheme. For any future light
rail scheme the Department would expect that all possible ways
of getting the most out of the scheme by encouraging reductions
in car use would be exploited and incorporated, such as park and
ride, where possible.
Priority over road vehicles
3.13 Fast and punctual light rail services
can be secured by giving priority to trams over road vehicles
at key junctions. All existing schemes have priority at junctions,
although the amount varies depending on local circumstances. Local
politics often restrict the amount of priority given to light
rail over cars. The Department expects promoters to demonstrate
commitment to making their light rail proposals work by providing
appropriate priority.
Passenger information
3.14 Transport authorities have the powers
they need to ensure good information is available about local
transport services and although these provisions do not extend
to light rail, authorities have no difficulty in obtaining travel
information from light rail operators. On Nottingham's light rail
network all platforms have electronic displays providing real-time
timetable information while the trams provide both electronic
displays and audible announcements communicating the tram's destination
and next stop. A timetable service can also provide tram and bus
times direct to a passengers' mobile phone. Transport Direct is
providing a new internet-based facility for passengers to plan
multi-modal public transport journeys throughout Britain, and
this has links to ticket retailers.
4. BARRIERS TO
THE DEVELOPMENT
OF LIGHT
RAIL
4.1 The NAO identified several barriers
discouraging the wider take-up of light rail and the Department
has considered these. The Department had already identified some
barriers and had started work on ways to overcome them.
4.2 Cost is the most significant factor
discouraging the further development of light rail. Light rail
is inherently a very expensive mode which is likely to be cost-effective
only on corridors where there is very intense passenger demand.
However there is useful scope for reducing costs in future light
rail schemes. There are several key issues to be addressed:
The lack of standardisation in the design of light
rail systems has increased costs
4.3 The NAO recommended that efficiency
savings should be sought by requiring promoters to demonstrate
greater standardisation in the design of their systems. The Department
expects promoters to show that they have learnt from practical
experiences elsewhere and will look to see if there are opportunities
in future projects for promoters to work in partnership.
4.4 UK Tram, which brings together private
and public representatives of the light rail industry, is working
on an early link to industry best practice for standards. Additionally,
the proposed Urban Rail European Directive is being developed
to ensure that light rail systems across Europe are standardised,
cutting costs for procuring vehicles and systems.
The cost of diverting the utilities is expensive
4.5 Utility companies are understandably
keen to have all utilities along a tram route moved to avoid damage,
negate stray currents and facilitate easy access. In recent schemes,
utility diversion has proven extremely costly. For example diversions
on Croydon Tramlink cost £19 million.
4.6 Some promoters have been working on
strategies to reduce utility diversion costs, through a more selective
approach to diversions. The Department have been giving more detailed
attention to this matter with the Passenger Transport Executive
Group on Light Rail, with a view to issuing guidance on appropriate
strategies for promoters to manage risks better. The Traffic Management
Act 2004 introduced a range of new powers for highway authorities
to control utility works in the highway, including those which
affect light rail schemes. This includes the power for authorities
to run permit schemes, under which those digging up the street
will have to obtain a permit before they do so. This will allow
authorities to ensure that utility works are carried out more
quickly thereby reducing the costs involved.
Costs are inflated by the application of heavy
rail standards
4.7 There has been a tendency to apply heavy
rail technology to light rail schemes and this has resulted in
some scheme designs being over-specified, bringing higher costs.
For example, there additional costs on the Midland Metro system
as a result of adopting heavy rail design for overhead wires as
well as heavy rail points and interlocking, and automatic train
protection.
4.8 HMRI has been working with the Department,
light rail promoters, operators and industry to encourage development
of lower levels and detailed standards for light rail. They are
examining the possible standardisation of wheel and rail profiles
for tramways. HMRI have also produced guidance for the construction
of tramway systems (Railway Safety Principles and Guidance, Section
G Tramways HS(G) 153/8). On the industry side, the Light Rapid
Transit Forum and UKTram will consider proposals for more specific
standards for light rail. The proposed Urban Rail European Directive
should also help in this area.
Poor financial performance of some existing light
rail systems is discouraging interest in supporting light rail
and the costs of new systems are increasing as a consequence
4.9 Recent systems have delivered revenue
levels below original estimates leading to reduced confidence
in forecast income. This is reflected in discounted bids, poor
lending terms and high equity return requirements. To counter
this, promoters of schemes currently in development are now actively
considering the retention of some, or all, of the revenue risk
in the public sector, either through direct acceptance of the
risk, revenue sharing or revenue guarantees. This correlates with
current practice in rail franchising.
4.10 Although the market appetite for schemes
with a large element of revenue risk transfer is now weak, the
market is still interested in light rail—this is confirmed
by the formation of Light Rail Forum and strong market interest
in DLR Woolwich extension with four consortia invited to tender.
The Department remains confident that there will be good market
response to future schemes provided the proposed risk transfer
is appropriate and procurement efficiently managed.
Local authorities are concerned about being able
to secure sufficient funds at local level to promote a system
and help pay for its construction
4.11 Although the Department has a long-established
principle that local bodies should contribute to the costs because
light rail schemes primarily deliver local benefits, the levels
of local contribution has varied from case to case. The arrangement
is usually that the local authority promoter will fund 25% of
the net public sector cost of the scheme. Having to provide significant
contribution towards the overall costs of the scheme ensures local
authorities fully consider whether light rail is the most appropriate
solution to their local transport problems, along with supporting
policies in relation to buses and traffic management.
It takes too long for local authorities to be
granted legal powers for light rail systems and whether schemes
will be funded is uncertain
4.12 The Department has been working to
ensure that statutory procedures deliver decisions more quickly.
Under the Transport and Works Act (TWA)1992, promoters of light
rail schemes can apply for an Order giving them powers to construct
and operate a scheme. New TWA rules introduced in August 2004
will help to make the inquiry process more efficient. Of the three
TWA Order applications for new light rail schemes decided since
the TWA Orders Unit transferred to the Department for Transport
in March 2003, two decisions were well within published decision
targets and the other was only just outside.
There is insufficient in-house expertise in some
local authorities to develop light rail and a lack of steer from
the department
4.13 The Department has a role in setting
the strategic policy context for the development of light rail.
In recent years the department has been in early discussions,
and sat on working groups, with the promoters of various schemes
and this proactive approach has helped to influence the scale
of the proposals. We have also worked closely with promoters throughout
scheme development being on hand to pass on expertise to local
authorities.
4.14 However it has to be remembered that
it is up to local authorities and not the Department to gauge
what is the best solution to their specific transport needs. The
recent LTP guidance will help make authorities aware of the requirements
against which their proposals will be assessed.
5. THE EFFECT
OF DIFFERENT
FINANCING ARRANGEMENTS
(PUBLIC/PRIVATE)
ON THE
OVERALL COST
OF LIGHT
RAIL SYSTEMS
5.1 New scheme proposals are discussed with
promoters at an early stage to help ensure the best procurement
approach and consistency with economic and vfm appraisal. The
Department is now playing a more strategic role across projects
having built experience and expertise in PFI and public/private
partnerships. The Department now requires more information on
procurement in the bid documentation and will not sanction approval
in principle of a scheme if there are concerns over procurement.
5.2 No single procurement model will be
appropriate for all schemes—particularly where extensions
to existing systems are concerned. Promoters seeking funding approval
are therefore encouraged to consider procurement issues carefully
and key to this consideration will be the vfm achieved.
5.3 Procurement models for light rail systems
have developed over time learning from previous experience and
will continue to be developed as new projects come forward. Of
the recent procurements, Sheffield Supertram was the last public
sector "traditional" procurement.
5.4 Private finance has shown some advantages.
In the current PFI/Public Private Partnership projects, exposure
to significant cost overruns during construction has been avoided
by the public sector risk transfer. For example:
— Croydon Tramlink—concessionaire
cumulative losses before tax of £19 million over five years.
— Midland Metro Line 1—concessionaire
cumulative losses before tax of £17 million over four years.
— Nottingham Express Transit—£10
million loss from construction cost overruns reported by Carillion.
Under traditional procurement, these losses
would have been borne by the public sector.
5.5 Nottingham was signed in 2000, before
patronage performance became clear on Croydon and Midland Metro.
However, recent tender exercises for Leeds, South Hampshire Rapid
Transit (SHRT) and Manchester Phase III demonstrate that the market
has learned from these experiences. There is very valuable work
being undertaken by the promoters of Leeds and SHRT with the support
of the Department to look at revisions to procurement approaches
including the approach to revenue risk and utilities diversions.
The Department will work with the industry (including through
UKTram) to continue to develop the procurement models that seek
to deliver best value for money. The Department will produce guidance
shortly on procurement issues and solutions.
5.6 New scheme proposals are discussed with
promoters to help ensure the best procurement approach and consistency
with economic and vfm appraisal. The Department now has a body
of experience to draw upon to challenge new proposals.
5.7 Where risks are retained within the
public sector these must be both affordable and robustly managed
and mitigated. "The Future of Transport" White Paper
provides levers to authorities to manage revenue better as part
of demand management strategies.
5.8 The European LibeRTiN programme is further
developing template tender documents covering core areas, eg operations,
vehicles and infrastructure—which can be used separately
or together. These, combined with the development of new technical
standards, will help to reduce tender preparation time, and improve
market response.
6. CONCLUSION
AND THE
WAY FORWARD
6.1 There are a number of schemes in the
pipeline. The Department is currently considering whether to give
Merseytram Line 1 full approval. The Midland Metro extensions
to the City Centre and Brierly Hill are approved in principle.
We are also considering revised proposals from Leeds and South
Hampshire, and a bid for the maintenance and renewal of Manchester
Metrolink. In addition, we have a number of schemes seeking "approval
in principle" in order to progress to TWA inquiry including
Merseytram Line 2, plus extensions to the Nottingham and Sheffield
systems. The Department is also in discussion with authorities
about their proposals for an upgrade of the Blackpool Tramway,
the reinvigoration of the Tyne and Wear Metro, and options for
rapid transit in the Tees Valley.
6.2 The Department recognises the need to
help local authorities learn the lessons from what has worked
and what hasn't. The Department is now taking a more active role
than it has in the past: working with promoters of light rail
schemes from an early stage on what is likely to be worth pursuing
and issues to be addressed; and ensuring better guidance is available
in the future.
6.3 The Department is working with the promoters
on looking at how light rail could be made more affordable by
changes in the risk allocation, alternative approaches to utility
diversions and an examination of different procurement options.
Costs could be reduced by placing the risks where they are better
managed, but it's vital that local authorities have in place strategies
to manage any retained risks to ensure value for money.
6.4 The Department also recognises the value
of evaluating existing schemes. Joint evaluations with promoters
of several existing schemes have been conducted in recent years.
The lessons learnt from evaluations enable future light rail schemes
to be designed, appraised and better implemented on a sound bed
of evidence from existing schemes and user behaviour. Evaluations
are expensive and establishing the impact of a tram scheme as
opposed to the situation where it had not been built is difficult.
A comprehensive scheme evaluation may only have value 10 or more
years after opening, however the Department will also ensure that
lessons are learnt from the evaluation process as we proceed with
developing schemes.
6.5 The Department agrees with the NAO that
light rail projects need to be better integrated. Any proposed
light rail project will need to be assessed as part of an integrated
transport plan making use of the new levers contained in "The
Future of Transport" White Paper. No future light rail schemes
will be allowed to progress without a comprehensive plan for integrating
local transport.
6.6 New guidance is being issued shortly
on major schemes; this will place more emphasis on need for good
project management. In line with best practice, we will be requiring
all of the larger major local schemes to be subject to Gateway
Reviews, carried out by 4Ps. This will help improve the management
of these major projects.
6.7 The Department is also improving its
own processes. In future, final approval will not be given for
schemes until there is confidence in the estimated costs, through
market tested prices. The Department has also set up a major projects
and economics division, with increased resources for dealing with
light rail projects.
DfT
February 2005
| 
