Examination of Witnesses (Questions 80
- 99)
WEDNESDAY 23 FEBRUARY 2005
MR KEITH
HOLDEN AND
MR STEWART
LINGARD
Q80 Mr Donohoe: Why is that the case?
Why were there certain expectations that were not achieved? Who
was to blame for that? Were you partly responsible for that?
Mr Holden: It is a combination.
The promoters make their own estimates of patronage, the private
operators make their own estimates of patronage and the Department
have vetted those figures as well.
Q81 Mr Donohoe: You do not play any
part in that at any stage?
Mr Lingard: We do not play any
part in that at all, no, we just comment upon what has happened.
Q82 Mr Donohoe: In the past tense.
You do not look at anything in any way, shape or form?
Mr Lingard: No, we do not intervene
at any stage.
Q83 Mr Donohoe: If you are looking
at it past tense, do you look at the investment and see if it
has been value for money?
Mr Lingard: That is right.
Q84 Mr Donohoe: In this instance
have you looked at it and seen that it is not value for money?
Mr Lingard: What we have done
is said that the systems have realised quite a lot of benefits.
They are fast, reliable, frequent, comfortable, and they have
attracted people out of their cars. They have delivered lots of
good benefits, it is just that their full potential has not been
realised and that is where the value for money has been lacking.
Q85 Mr Donohoe: In terms of earlier
questioning, it is based on the fact that in the main there have
not been the numbers that they predicted there would be as passengers
on a weekly basis. That is the main reason that these schemes
outside, say, the Croydon one, which is highly successful—
Mr Lingard: And the Manchester
one.
Q86 Mr Donohoe: And the Manchester
one. There are others that would not and could not be successful
and should not be allowed to be considered, is that what you are
saying?
Mr Lingard: We are not saying
that, we are saying that their full benefits have not been realised.
If they had been able to increase their patronage levels then
they may have been entirely successful, they would have made profits,
it would have been advantageous to all the local people and so
on, good value for money.
Mr Holden: If I could add to that.
Obviously one of the key things is when promoters put together
their proposals they will set out not just the anticipated patronage
but also the other benefits that are supposed to go with the light
rail system with regard to regeneration, the frequency of the
services, improvement in accessibility, those types of benefits
which are supposed to accrue to passengers and the local communities.
What our report is saying is using that as a base, using their
anticipated benefits, we have come along after the event to say
what has been achieved and there is a significant shortfall and
the key driver for that is the shortfall in patronage. We go on
in the report to explain why that is, why they have not attracted
the number of people on to these systems that they anticipated.
Q87 Mr Donohoe: In these circumstances
when some provincial authority anywhere in the United Kingdom
puts a proposal together to have one of these things introduced
for whatever reason and it does not come up to the levels of expectation
in terms of numbers, would you say the Government would be remiss
to allow such a scheme to go ahead?
Mr Holden: One of the key things
is that the Department is accountable for the monies, the grants,
that it will give to the promoters. There are key lessons here
for the Department because it agreed to fund systems that eventually
did not deliver the benefits that they anticipated. There was
definitely an issue around what we call optimism bias that is
all around forecasting of patronage beyond a level that could
actually be achieved in practice.
Q88 Mr Donohoe: That would be the
main barrier, would it? We are looking at barriers to the whole
question of investment and development of light rail and that
would be a major barrier to any possibility of those schemes in
those provincial areas being allowed to be developed and we should
take account of that fact.
Mr Holden: The lifeblood of any
tram system, the lifeblood of any transport system, will be attracting
passengers because that is the be all and end all really. That
is what will drive all of the other benefits. That will drive
your fare revenue, that will drive modal shift from car to tram.
Mr Stringer: You came perilously close
to making some value judgments earlier on.
Chairman: I thought Mr Holden skipped
rather rapidly away from value judgments.
Q89 Mr Stringer: Let me continue.
You seem to have an almost Stalinist belief in central planning.
Whatever drove you to the conclusion that the Department for Transport
would be better at making decisions about local matters rather
than local people and local authorities?
Mr Holden: I do not recall saying
that.
Q90 Mr Stringer: Those were your
precise words.
Mr Holden: In the report I do
not think we said they would make the decisions. What we are trying
to say is that there will be some areas that they will be receptive
to where it may be from their own experience they know where light
rail is likely to be effective, where it may deliver benefits
which are consistent with national transport objectives as well
as local needs and local transport objectives. At the moment that
has not been in place, it has really been left to the local authorities
to come forward without a central framework from the national
government level to help guide their deliberations.
Q91 Mr Stringer: I think you said
that the Department for Transport would have more information
and more international information about what was working and,
therefore, would be in a better position to decide where trams
went rather than local people. If that is a recollection you agree
with, can you tell me on what evidence you base that conclusion?
Mr Holden: Just to confirm, I
do not think I did actually say where trams should go, I think
it was more in terms of the localities within which they may be
successful on the basis of the fact that obviously the Department
has now had experience of seven systems over several years, some
decades, and has an opportunity to look at systems in operation
elsewhere, such as France, Germany or the US, and is better equipped,
I think, to bring that knowledge to bear to support local authorities
in the development of their proposals.
Q92 Mr Stringer: You are saying that
the Department has more knowledge than Passenger Transport Authorities
of tram systems on the continent, for instance.
Mr Holden: What I am saying is
that the Department has an opportunity because it is the only
body in this country, because it is obviously funding these systems,
to be in a place where it knows the real details of each of those
seven systems in operation in this country. Therefore, from our
perspective it would make sense for the Department to share that
experience and that knowledge with local authorities.
Q93 Mr Stringer: I can accept that
it collates information from the seven existing schemes but you
said rather more than that. You said that it is in a position
to decide whether they will be successful, partly by international
comparisons. I ask you again what evidence you have that the Department
actually has that information and has been able, or would be able,
to use it better than local people. It strikes me as being a centralised
view that the world would be better if things were controlled
centrally.
Mr Holden: I think what we are
saying in the report is that they have not been doing that and
our recommendation is that they should be doing that. The report
points out that they have adopted this arm's length approach and
what we are saying is at the centre, because it is accountable
for hundreds of millions of pounds of taxpayers' money in grants
that they give to local authorities to construct their systems,
we think it is in a strong position to identify the do's and don'ts,
the particular characteristics and factors that make light rail
systems successful or not and to help the industry in that regard.
It is not choosing the routes, it is not going down to the micro-level,
it will still be for the local authorities, in consultation with
their partners and the local electorate, to work out what are
the best routes but there will be factors associated with those
routes, as I pointed out earlier, with regard to making sure you
make connections with centres of economic activity and so on and
so forth. There will be factors that they could bring to bear
in consultation with local authorities when they come to assess
their proposals.
Q94 Mr Stringer: Do you believe that
they have got the information on international schemes already?
Mr Lingard: Certainly it has some
information about international schemes.
Q95 Mr Stringer: That is not very
precise, Mr Lingard, is it? You are saying that they are better
placed than local authorities.
Mr Holden: Yes.
Q96 Mr Stringer: Every time I ask
you for evidence you go back to theory. Give me some evidence.
Mr Lingard: Can I just say where
I think our recommendation on this comes from?
Q97 Mr Stringer: Yes.
Mr Lingard: It comes from promoters
and local authorities telling us that they were dissatisfied with
the Department being equivocal and being uncertain as to whether
they are going to fund their schemes and the length of time that
it was taking both to give them approval for their funds and for
the Transport and Works Act Orders and everything the Department
has to do in terms of looking at the business cases and approving
that. It is the number of years that schemes have taken to get
going and to get these approvals through the Department. Our thinking
was in order to remove some of that uncertainty about the Department's
position, perhaps it could give a lead in terms of those sorts
of schemes that would get approval in terms of funding and the
locality and so on. It is strategy in that sense. That is where
it came from and that is where our conclusions came from.
Mr Holden: I think you were asking
what evidence we have that the Department is better placed.
Q98 Mr Stringer: I asked that about
five times.
Mr Holden: What we are labouring
to say is that they have not been doing that. They have not gone
out actively to get that information, whereas they should have
been doing that and then disseminating it, even on the basis of
the evaluations of the systems, bringing together some key lessons
and disseminating those to the industry. In that regard, the direct
evidence is there is not any, they have not been doing that.
Q99 Mr Stringer: We have got there
at last.
Mr Holden: That is the key issue.
We are not saying that the Department is sitting on a heap of
knowledge somewhere in a cupboard and is not prepared to share
it. We are not saying that. We are not saying that we have found
evidence, what we have said is—
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