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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 378 - ii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE TRANSPORT COMMITTEE
The Future of Light Rail and Modern Trams in Britain
Wednesday 9 March 2005 MR IAN AMBROSE MR PAUL DAVISON, MR ROGER HARDING, MR PETER HENDY, MR PAT ARMSTRONG and NEIL SCALES
MR TONY MCNULTY, MP and MR BOB LINNARD Evidence heard in Public Questions 139 - 304
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Transport Committee on Wednesday 9 March 2005 Members present Mrs Gwyneth Dunwoody, in the Chair Mr Jeffrey M Donaldson Clive Efford Mrs Louise Ellman Ian Lucas Miss Anne McIntosh Mr Graham Stringer ________________ Memorandum submitted by AEA Technology Rail,
Examination of Witness
Witness: Ian Ambrose, Principal Consultant, New Railways Team, AEA Technology Rail, examined. Chairman: Good afternoon to you, sir, you are most warmly welcome. We do have one bit of housekeeping before we start. Members having an interest to declare. Members having an interest to declare. Miss McIntosh? A division. The Committee is suspended, preferably for ten minutes. I am very sorry about this, Mr Ambrose, I have no choice; if there is a division in the House the Committee must be suspended. The Committee suspended from 15.47 to 15.56 for a division in the House Chairman: I do have a little housekeeping matter. Can we start with Members having an interest to declare? Mr Lucas. Ian Lucas: Member of Amicus. Chairman: Mr Efford. Clive Efford: Member of Transport and General Workers' Union. Chairman: Mrs Louise Ellman. Mrs Ellman: Member of Transport and General Workers' Union. Q139 Chairman: Miss McIntosh does have other interests which she will declare when she arrives. I apologise, I am afraid we do occasionally have these little frissons. Could we ask you to give us your name and official title for the record? Mr Ambrose: My name is Ian Ambrose. My current job title is Principal Consultant, New Railways Team, AEA Technology Rail. Q140 Chairman: Thank you very much. Could I just tell you that this is a difficult room and the microphone in front of you records your voice but does not project it, so if you would just remember that when you are talking to us. Did you have something particularly you wanted to say before we start, Mr Ambrose, or can we go straight to questioning? Mr Ambrose: I think what I would like to say is that as a company we have recently participated in a major European-commissioned research project on light rail. Q141 Chairman: Is this the European Light Rail Thematic Network? Mr Ambrose: Yes, which is a mouthful, I must admit. Essentially it is a Europe-wide group of experts brought together to discuss the issues that we believe were facing the European light rail industry, in particular with a view to identifying ways of getting benefits out of standardisation and harmonisation across the whole industry, both in the supply and operation. Q142 Chairman: As far as I can see there seem to be particular problems for us because of poor integration and cost escalation. Is that a particular difficulty for the British? Mr Ambrose: It would seem to be - I will not say a uniquely British problem - more prevalent in UK systems than most European ones. One reason would seem to be the time differential between inception and completion of UK systems compared to those that are being installed in France, Spain and Germany. Q143 Chairman: You do say that major vehicle manufacturers suggest that light rail in the UK costs 60 per cent more to procure than in other European countries. Do you think that is a reasonable estimate? Mr Ambrose: That is an estimate that they gave us as a price factor for risk, based on the fact that in a UK situation at the moment the winning consortium is expected to take all the risk, including things over which it has absolutely no control. Q144 Chairman: So you are really saying all they do is they transfer that to the passenger? Mr Ambrose: Absolutely. Well, to anybody else but themselves. Q145 Chairman: That is not an unusual attitude, which has been encountered by this Committee before. You say there are problems arising from the poor specification of the vehicle-infrastructure interface. Who could manage this effectively? Mr Ambrose: I believe the best starting point for this one is the promoter, or, as they often do on a number of European projects, the promoter in conjunction with what they are styling as a proto-operator, which is you appoint an operator to work closely with the promoter to develop the scheme in terms of design before you submit it for authorisation. Q146 Chairman: Doing it the other way around to the way we do it, in other words? Mr Ambrose: Yes, exactly. This is the way that Edinburgh in Scotland has done it and we will await with interest to see whether they make a better showing of things than some of the other schemes. Q147 Chairman: Are you saying in effect that the major difference, particularly about the risk, is that the public sector in other countries takes the risk and in this country, in seeking to shift it to somebody else, all we do is to wallop up the price? Mr Ambrose: Yes, that is right. Q148 Chairman: Is that the only drawback of Design, Build, Finance and Operate? Mr Ambrose: I do not think it is the only drawback; it is one that causes serious problems in terms of the performance that we have seen financially because often that estimate is not put in at the initial application for funding, and so we end up with the situation, as we have had recently, where there is a very large difference between the original expected price of the scheme and the actual costs that come in from the consortia who are bidding. I believe also that this is not helped by the fact that the timescales to go through authorisation will also cause cross-creep, particularly as inflations starts to get in the way as part of that process. Q149 Chairman: Can I be clear because I am not sure that I quite understand you. You are saying that there is so much time between the opening gambits and the time of allocation? Mr Ambrose: Yes. Q150 Chairman: And they have not priced the risk in properly so they add it in? Mr Ambrose: Yes. Very often it is the promoter that does the outline business case from which an application goes forward and the actual consortium bid does not come in until the Transport and Works Act is well in place and so you cannot guess the risk that the consortia are going to add on, or any other price increases; you are working purely from base costed information you have at the time you do your outline business case. Q151 Ian Lucas: In Europe, where the public sector does tend to take the risk, does that manifest itself only in theoretical terms or does it actually lead to a real cost increase for the public sector there? Mr Ambrose: There they have a different funding approach. Very often they will have allocated money - in France they use an employee tax, for public transport in Germany they use a different system - to public transport projects and effectively, as I understand it, it is allocated to public transport for the region or the city, not a tram scheme or a bus scheme or whatever, it is the transport required for that particular area, of which a tram scheme may be part. So there is a fixed amount of money raised through that approach. Q152 Ian Lucas: But it is a real additional cost for the public sector? Mr Ambrose: It is a budgeted cost. Q153 Mrs Ellman: How much more standardisation could be achieved? You point to the lack of standardisation in the UK. Mr Ambrose: If you look at the light rail schemes that we have had implemented in this country you could say there are not two the same, and it would be very difficult for any of the equipment on one to be transferred to another, which, when you are looking at long-term planning, would seem to be a short-sighted approach because you cannot join them up. Other benefits of standardisation in particular come in the design and manufacture of vehicles because at the moment the majority of the design cost of a vehicle goes in the first batch. So if you are ordering 20 vehicles you pay the full design costs on those 20 vehicles and if you then decide that you want another 80 then of course it is already paid. It is better to spread it over the whole 100 vehicles, and if you were buying the same vehicle in Strasbourg as you were in Nottingham, as you were in Frankfurt, that design of course could be spread over much wider, so you would bring the overall cost of the vehicles down. I use design costs as one example but clearly there is economy of scale in using standard spare parts as well because you can do your ordering better. Q154 Mrs Ellman: Why is that not done here and how could we achieve it? Mr Ambrose: It would seem that the reason is we start all our schemes from scratch. It also has to be said that the Europeans have only just cottoned on to this, which is one of the reasons why they commissioned the research, because they were feeling that the costs of the light rail industry were greater than they should be and they felt, particularly with the Union expanding, that there was benefit to be had in having a resale market for light rail vehicles and equipment. So to achieve that you need to move to a much more standard position than we had. I suppose you could argue that perhaps they looked at the Eastern European standard vehicles which are still doing sterling service after 40 odd years and saying that they can run on any number of systems and is that a better option? But then taking advantage of the benefits of the private companies that have since taken over the manufacture, using the standardisation techniques that will bring benefit rather than having a lot of things that all look the same. Q155 Mrs Ellman: Are we talking just about vehicles here? Mr Ambrose: No, not just vehicles, standardisation of control systems would simplify life as well because although you do not normally need complex signalling systems on tramways you do need control systems to communicate both where the vehicles are and between the tram and the control centre for various reasons; as well as some where you have single track sections you also need to be sure that you do not send two trams down the same section in opposite directions at the same time. So compatibility of communication and control systems would again enable equipment to be reused elsewhere. It is the same issue really as communication systems in IT; without international standards it would be very difficult for your computer to talk to another one. Q156 Mrs Ellman: Who would have to take the initiative to secure more standardisation? Mr Ambrose: In general the manufacturers are very keen to go down that road but they can only do that if the tenders they receive are actually able to specify some things that they can recognise as a vehicle or standard piece of equipment. One of the problems that we discovered from talking to operators and to vehicle manufacturers in Europe was that the vehicle manufacturers believe they know how to make trams because they have been operating them for 100 years, or whatever, and so therefore they will write a specification down to every last nut and bolt and the vehicle manufacturer will read this and think, "What are they talking about? I do not recognise this as a tram." So there is a language. This is why I referred to the benefits of using a common language standard specification for tendering documents. In other words, laid out in the same style, very much as they do in the bus industry now. Q157 Mrs Ellman: Where will that come from? Will that be a Government thing? Mr Ambrose: Really that is the promoters who write that. Q158 Mrs Ellman: Do you think there is scope for promoters to work together in terms of procuring vehicles like that? Mr Ambrose: I think there are very good opportunities to be had, although I am sure some of the operators here today may want to add their own thoughts to that. But it seems to me that if there are economies of scale in buying a large order of vehicles at the same type then working together would seem to be to the advantage of the scheme. Where we suffer compared to a lot of the European systems is that are systems at the moment are very small, so we have only had vehicle orders of 15, 20, 30 vehicles. Very often in a lot of the German systems they are ordering 100 at a time. So there are obviously economies of scale to be had there. Q159 Mrs Ellman: You do not see any block in opening this out to allow this to go ahead? Mr Ambrose: I think there is a will in the industry at the moment to explore ways of doing this. Certainly when you look at the willingness of the Light Rail Forum to share ideas on how we might move things forward in this country and the forthcoming body UK Tram, which is going to address some of the issues that were raised by the National Audit Office Report, it would seem that the industry on both public and private sector sides is willing to make a good go at bringing down the cost of light rail in the UK. Q160 Mr Stringer: How do you put together the ideas that you have about a standardised system with ideas about consultation? Mr Ambrose: I do not see that there is any conflict there because consultation should be about the key issues such as route, is the corridor the right one, is it going to affect people along that route in a positive or negative way? The actual design of equipment should not have a major impact on that except in certain sensitive areas. I do accept that there will always be some exceptions, such as where there are listed buildings or sites of historical interest. But when I say standardisation I am inclined to believe that it should not be so standard that you cannot have flexibility to meet certain special conditions. Q161 Mr Stringer: The real example was when people in Grenoble were consulted. The route was clear and they went very close to some listed-type buildings, but the real concern of the population there was disabled access and, if I remember correctly, they therefore completely redesigned the tram to put the engine elsewhere so that there was good disabled access. If you had a standardised tram you would be excluding that as a possibility, would you not? Mr Ambrose: No, you would not. As part of the LibeRTiN project we did a major exercise on access to look at the best practice to come up with some recommendations for design, to give the optimum access on and off the tram and also within the interior. There have always been clear guidelines; general VDV standards for instance specify the steps and the gaps quite clearly, and the difference you have to decide is whether you are going to low floor or high floor trams because that defines your platform height. Q162 Mr Stringer: Precisely. So that if you decide that you will go for very good disabled access you load some of your costs up front by having to put the engine in a different place, or you also exclude the possibility, as has been the case in this country in a number of situations, of running on old railway lines with high platforms. So you put your costs on removing the platforms. Mr Ambrose: Not necessarily. Your first point about where you put the engine, most tram equipment is up on the roof now, whether it is a high floor or low floor vehicle, and so it does not change the cost when you decide what floor height to have. In terms of whether you are using old railway lines, again, because they are standard designs of high and low floor you choose the one that is appropriate to your situation. Q163 Mr Stringer: So you would have more than one standard design? Mr Ambrose: Yes, because, as you quite rightly said, there are a number of different situations. In many situations you have standard designs but they cover a range to suit the different functions. Q164 Mr Stringer: How many standard designs do you think you would have? Mr Ambrose: In the tramway industry at the moment you have high floor, then 70 per cent low floor and 100 per cent low floor, and that would be the optimum because that would give you compatibility with heavy rail in this country and compatibility with the standard low floor heights found elsewhere. Q165 Mr Stringer: So three? Mr Ambrose: Yes. Q166 Clive Efford: On standardisation, what is the implication to existing light rail of standardisation? Mr Ambrose: The implication is that you would not retro-rebuild unless you were coming up to something like half life refurbishment, and so the systems that we have, if they are functioning perfectly well, I would say, "If it's not broke, don't fix it." Where it is important is thinking about your extensions and future design and future requirements. You may have to end up doing as Docklands did and selling up a whole range of vehicles and replacing them to meet new conditions. But, again, if there is a second-hand market then that is less of a problem than if you have to scrap it. Q167 Clive Efford: Presumably standardisation increases the second-hand market? Mr Ambrose: Exactly. Q168 Clive Efford: Do you think that promoters of light rail are pursuing it at the expense of other forms of transport? Mr Ambrose: Sorry? Q169 Clive Efford: Do you think promoters of light rail are pursuing schemes at the expense of other options for transport? Mr Ambrose: I think in most of the cases that I have been involved with they have done a very thorough examination of all the options. Clearly there have been some schemes which have not got off the ground where they have been looking for a gold plated solution or a light rail solution because it sounds good, but I think they have thoroughly examined the options of the schemes that have been implemented and it has come out as the best option for that particular corridor. I think of the ones that have recently been under scrutiny and were put on hold in the summer that there are probably some instances where the routes could have been rethought, although I guess that the promoters themselves may have other views. But I think the promoters should be looking at, quite rightly, what is the most appropriate form of transport for a particular corridor rather than just because something looks good. Q170 Clive Efford: What evidence is available about the relative merits of light rail, tramways, guided busways? Mr Ambrose: It depends on what sort of merits you want. Let us take simple carrying capacity. A bus is particularly good if you have up to 3000 passengers an hour, and after that you tend to find that you need more buses than will fit on the road. Light rail, typically 5000 to 10,000 people per hour, Metro and heavy rail above that figure. Q171 Clive Efford: So it would be guided by the amount of demand at any one time? Mr Ambrose: Your first guidance is, is this corridor going to generate this level of traffic? Obviously you have to look at it over the lifetime of the scheme rather than what is the situation now. So if you have a corridor that currently would generate about 3000, so it is on the borderline of a bus scheme, what is the growth potential for that corridor? Is it going to be 10,000 in two years' time or five years' time, in which case a bus solution would only be a very temporary one? Q172 Clive Efford: Are there any examples of where on the continent they have pursued a bus option for an extensive transport system? Mr Ambrose: Very few. There have been a number of guided bus experiments, most of which are dropping by the wayside at the moment, some through unreliability and some really because they have been found to be unsuitable. I think the best examples of successful busways, Adelaide is one of the best where they have put together a busway where buses can go at high speed --- Chairman: The Committee has seen the Adelaide scheme, thank you. Q173 Clive Efford: Have you got any knowledge of the system in Utrecht? We have had evidence to suggest that there has been a system there. Mr Ambrose: Is that the Phileas one or something? Q174 Clive Efford: I do not know the name of it but it is a high quality bus system. Mr Ambrose: I am not overly familiar with that one; I have to be perfectly honest. Q175 Clive Efford: How does the cost of guided busways compare to that of trams? Mr Ambrose: We have had much discussion about that in the last two or three days because for most of the guided bus schemes the figures published do not operate down nicely into the various components, and so the expensive bit, which is the segregated concrete guideway, which is clearly the most expensive, it is difficult to say exactly what that is per kilometre. We suspect that it is quite high and approaching the same costs as on street tram track. But, as I say, it is very difficult to prove that at the moment because if you look at a scheme most of them are quoted in whole numbers for the whole scheme, which includes the vehicles, the non-guided bits as well. Most of the guided bus schemes in the UK have very short guided sections too so you are not really comparing a like for like scheme. If you have a segregated tramway there are very few guided bus systems that have the same degree of segregation. So the guided bus scheme may appear cheap but it is not doing the same job. Q176 Clive Efford: Are guided buses practical in the cities in this country? Do we have the space? Mr Ambrose: The biggest problem with guided busways is that we do not have the space in the areas where we would get the most benefit, which would be in town centres, because the step involving a kerb guided bus would cause safety problems, particularly in pedestrianised areas. So you would not be able to build a guideway in that situation. If you were to put it on a completely reserved area you would have to buy up some corridor of land, probably already in use for some other reason at the moment, to create it; so that would be extremely expensive. Q177 Clive Efford: The likelihood of being able to do that along an entire route so that you would get the full benefit of guided buses in major cities in the UK is pretty remote? Mr Ambrose: Pretty remote, yes. Chairman: Mr Ambrose, we are very grateful to you for being so tolerant when being ejected from your seat. You have been very helpful this afternoon. Thank you very much indeed.
Memoranda submitted by Tramtrack Croydon Ltd., Transport for London, Nottinghamshire Express Transit and Merseytravel Examination of Witnesses
Witnesses: Mr Paul Davison, Managing Director, Tramtrack Croydon, Ltd., Mr Roger Harding, General Manager, Tramtrack Croydon Ltd., Mr Peter Hendy, Managing Director, Surface Transport, Transport for London, Mr Pat Armstrong, Head of Transport & Major Projects, Nottingham City Council and Mr Neil Scales, Merseytravel, examined. Q178 Chairman: Good afternoon to you, gentlemen. I am sorry to have made you wait. We cannot always control, like you, all the things that happen to us. Can I ask you to identify yourselves for the record, starting with my left and your right? Mr Davison: Paul Davison, Managing Director, Tramtrack Croydon Ltd. Mr Harding: Roger Harding, General Manager, Tramtrack Croydon. Mr Hendy: Peter Hendy, Managing Director, Surface Transport for Transport for London. Mr Armstrong: Pat Armstrong, Promoters' representative for Nottinghamshire County Council and Nottingham City Council. Mr Scales: Neil Scales, Chief Executive and Director General of Merseytravel. Q179 Chairman: Thank you. All of you represent a very wide range of experience, which is why we have asked you to come. I do not know if you have studied the National Audit Office Report but it says that almost all the old tram systems were closed down because they could not compete with motorised buses and cars. Why do you think that light rail is important for you? Mersey? Mr Scales: Thank you, Chair. We are basically trying to get to a single integrated public transport network that is accessible to everyone, which follows the 1966 White Paper, which set up the PTEs in 1968. When we went through the road transport planning process we did a new approach to transport appraisal across all the county to find out which mode of transport would suit each corridor. That analysis revealed 15-plus quality corridors, a three-line tram network and integration points across the county. We looked at it in very careful detail to make sure that we were starting off from a very good base. So what we came up with was a three-line tramway from the ground up rather than thinking that trams were a great idea, and start from that and work backwards. So we put a lot of work into this before put our road transport plan in. Q180 Chairman: How about Transport for London? Mr Hendy: Our view is very similar to what you have heard from both Mersey and the previous witness, which is that there are flows in London, which are big enough to justify a system more permanent than buses and yet less than you would need to justify a new rail system. Some of those corridors are by their nature unsuitable for light rail and therefore there are not proposals for those, but we have identified some corridors where we believe it is suitable and those are the ones that have either been taken forward or are being taken forward now. Q181 Chairman: Nottingham? Mr Armstrong: Nottingham has a very limited rail system historically and we have a very tight city centre, and one of the problems we have had, although we have managed to maintain it --- Q182 Chairman: Not a tight city centre, constrained! Mr Armstrong: Constrained. Where we have wanted to increase buses and have been successful in maintaining bus patronage, unlike most other places outside London, we have found it difficult to get the large number of buses we want into the constrained city centre, and the light rail proposal is partly put forward simply because it would go there and we have a clear zone which means it is highly compatible with pedestrianised areas and traffic free areas, which buses are not so compatible. Q183 Chairman: Croydon? Mr Davison: Our view is fairly simple and it was expressed by AEA, that in high volume routes into town centres or, as far as Croydon is concerned, across the South of London, then the most economic way to provide the service is through a tram system. Once you get beyond 3000 passengers per hour in the peak then it is cheaper to use trams, high volume vehicles, rather than use a string of buses. Q184 Chairman: Did you do that kind of calculation, precisely that kind of calculation? Mr Davison: We have done it in reverse. If you were to take the trams out of Croydon and replace them by buses you would actually have to run 144 buses instead of 24 trams and the cost of running those 144 buses would actually exceed the cost of running the trams by ten to 20 per cent. So in fact if we went back to buses then it would be more costly for the population and less satisfactory as well because you would end up with the 144 buses in the peak and you would have 120 of them trying to get into the centre of Croydon, which is constrained anyway, and it would be very, very difficult as a traffic management problem. Q185 Chairman: Mr Scales, we cannot record nods, but you are indicating that you agree with that? Mr Scales: I agree with that entirely, Chairman. One tram will take 200 people. If you try to load passenger loads above 3000 per hour you would need buses nose to tail. Trams are clean and green at point of use and fully accessible, and the tram system we are trying to put into Merseyside is basically an urban, linear regeneration. Chairman: I want to bring everybody in. Miss McIntosh first. Q186 Miss McIntosh: If trams are so clean and green, Mr Scales, why did we dig them up in the first place? Mr Scales: That is a very good point. We took the trams out of Liverpool in September 1957 and the reason for that was the overhead electrical systems were becoming really difficult to maintain. That is not just true for Liverpool; it is true for every city apart from Blackpool, who kept them as a tourist attraction. At that point the diesel bus was a lot cheaper, diesel fuel was a lot cheaper to buy and they were much more flexible; it was post-war and a lot of estates were being built outside of the city centre and buses could serve them a lot more flexibly and a lot more easily. Unlike our colleagues on the continent, who kept their tram systems as part of an integrated network, we decided to dismantle ours and now we are slowly putting them back. Mr Davison: Could I just add something to that? Q187 Chairman: An extension of that. If you agree, gentlemen, you are not going to tell me, are you? Mr Davison: I agree, but people forget that the old tram was a very small vehicle, it was not actually the size of a current tram carrying 240 people; it was actually the size of a bus. Q188 Chairman: How many seats were there, Mr Davison; do you remember? Mr Davison: I am not old enough to remember! Mr Hendy: That is not quite right. It is between 100 and 120. They were bigger but an important point for the historical record is that by and large the systems were completely clapped out due to a lack of renewal, and in fact the origin of the trolley bus certainly was that the track and the trams had clapped out but the overhead was not, so it got another life as a trolley bus, and then the electrical equipment was clapped out. Q189 Chairman: So it was a mixture of the two reasons? Mr Hendy: Yes. Miss McIntosh: I omitted to specify my interests in Firstgroup. Chairman: Miss McIntosh wishes to record an interest in Firstgroup. Q190 Miss McIntosh: The first witness, Mr Ambrose, told us that no two systems are the same and that means that they cannot be joined up. I would imagine that there would be potential in the long-term for joining them up. Do you agree with that? Mr Scales: Certainly I agree with that for Merseytravel, and we have actually agreed whilst sitting down here that when I order my 21 trams for Line 1 I will make 22 and we will do one for Croydon as well! Q191 Chairman: I am not sure you should be telling us these trade secrets! It sounds like a very good idea! Mr Hendy: You might find that the public sector might have an interest because I have the feeling that the public sector is going to pay for it. Q192 Chairman: Come now, Mr Hendy, everybody likes a free sample! Mr Armstrong: If I could make a comment on the procurement of vehicles? A lot promoters under the procurement system just ask for outputs and we do not specify precisely what the vehicle should be, and I do feel that I have some disagreement with the first witness in that our ability to specify is very limited by the procurement procedures and we are looking for outputs, we are looking for easy access, reliability and all these rather softer issues rather than precisely how it is built, what it is made of and whether it is actually like one in another city down the road. Q193 Chairman: That is interesting. You interpret his desire for standardisation as being constraints on your ability to specify those aspects? Mr Armstrong: No, quite the opposite. What we want is to have these attributes - and we know the industry can provide them - and we would very much like them to be standardised because that would mean we could get them cheaper. Q194 Miss McIntosh: Mr Armstrong, can I ask what delays have occurred in implementing your proposals, in particular in relation to the planning process? Mr Armstrong: We got our powers through a private Act, the last one that went through, and it did take quite a long time and at that stage there was no guarantee of Government money at all, and we had a very long period then waiting for Government to decide whether or not there should be a system in Nottingham. Then we were hit by the change from grant mechanisms to PFI and in effect we had to invent a completely new procurement process because it was all new. So it did take a long time and a lot of that is now better than it was, and in theory at least promoters are given the nod from the Department that the money will be available before they get the powers, and in theory that should have shrunk the process. I am not convinced yet it has; there is still an awful lot of uncertainty. Q195 Miss McIntosh: You do say in your evidence that you have a particular advantage because you have planning and highways authorities. Can you expand on that? Mr Armstrong: We always think that we are a poor relation to the PTEs who have control over a larger area on all the public transport and have more powers than we have, but we have actually found, certainly in terms of integration - because we are also the highway authority, the city council for its own area is a unitary authority and the county council is a highway strategic planning authority - we can make integration in its widest sense work by using all our powers. We make sure that it is an integrated process, that our planning looks for where development will happen and encourages it to happen on corridors where we have transport proposals, the tram or other methods. So everything the councils do works together to make it more successful than can happen where those responsibilities are split. That is not to say that other authorities cannot do it through partnerships and agreements, but we always do it because we are one statutory body. Q196 Miss McIntosh: Mr Scales, you have had an expedited procedure through the Transport and Works Act. Mr Scales: Yes, we applied for our funding and got an indicative allocation of £170m and then we launched the Transport and Works Act Order and we got that through in about 14 months. 28 weeks from close of inquiry to getting the powers. The inquiry closed in June and we got our powers on 21st December. So I think that is an excellent example of how the Transport and Works Act Order can operate in practice. Like my colleague Mr Armstrong has just said, he is in a much more powerful position having control over the highway network. I would dearly like to have powers over the highway network because it would make things a lot easier from my point of view. So our colleagues in the city council, with Knowlsey Borough Council, who are partners in line one have to be slightly schizophrenic because they are highways authority and planning authority and we have to look after both sides of the coin, if you like. Chairman: Mr Lucas then Mrs Ellman. Ian Lucas: The Department for Transport says that it will only fund light rail schemes if they are part of an integrated transport strategy involving park and ride and perhaps traffic restraint. Do you think that your organisations have sufficient powers to deliver such a package? Q197 Chairman: Let us try someone different - Croydon. Mr Davison: We do not have the powers. We are operating in a regulated environment run by Transport for London and it is quite clear that in order to use trams to their best advantage you have to think about restructuring bus network services, you have to have clear priority at traffic signals and clear routes into the town and looking at walking and cycle ways as well. Therefore it has to come as a package, it has to be an integrated package to make the best of the investment in trams. Q198 Ian Lucas: But that is not happening at the moment, Mr Hendy. Mr Hendy: That is an interesting contention. I have read the submission of my two colleagues on my right. Our contention is that one of our statutory duties in the whole of Greater London is to run an integrated transport system and a bus network and that in fact is what we do. What their evidence perhaps does not tell you is that at the time that the concession agreement with Croydon was signed in 1996 there was a side agreement about the effects on tram patronage in Croydon and changes in the bus network and there was an agreement about what routes, if they were changed, might affect the patronage, and in fact in the light of that agreement we have paid relatively small sums of compensation for pieces of the bus network which remain, which the promoters in their planning might have anticipated were withdrawn. We do not run those for fun, they are actually run because there is passenger demand for them. The further claims that somehow the bus network in Croydon has not been adjusted to suit the tram network, it is actually not its primary function; the primary function of the bus network, as with all public transport, is to satisfy public demand. Most of the routes referred to in their submission have nothing to do with the Croydon travel link and would not feed them. But we retain the duty to plan the public transport network totally and if their submission reads rather like a claimant's document that is exactly what it is. Q199 Ian Lucas: I do not sense a high level of integration in your approach to transport policy here. Mr Hendy: Oddly enough there is, and I think that what you are reading is a disappointed consortium who are not making the money that they thought they would be. There are some reasons for that but they have not chosen to tell you what they are in their submission. One of the reasons is because the system was built badly and opened late. In fact in public transport terms the Croydon tram link is properly integrated; it does serve a good purpose, it is a good system, it actually satisfies public demand, as does the bus network surrounding it. It is not easy to say, either in London and elsewhere, whilst it is true that it would be damaging for the financial case for a tram system to be directly competed against by buses it is not the case that the promoters of such a system or the operators deserve to be entirely protected against the public interest, causing people to interchange and make longer journeys. Q200 Ian Lucas: Mr Davison wants to respond to that. Mr Davison: I will respond to a couple of the issues. One is that it was late and over budget. Late it was, by about six months. It did not cost us a penny more than we said we would pay for it and it did not cost the public a penny more than we said we would pay for it. We said we would pay just short of £200m and that is what we paid the builder. Any costs overrun was absorbed by the builders and they took that on the nose. It was not a massive cost overrun - I do not have the detailed figures but I can probably get them for you - but it was of the order of ten per cent, which on a first of build for a long while - and certainly for the team who built it - is a reasonably creditable performance, and at £7m or £8m a tram route kilometre it is substantially cheaper than the figures I see at the moment, which are at least two and a half times that, and I have to say that I do not understand why they are two and a half times that, having looked very carefully at the build cost for a tram link. In terms of integrating the transport, we have looked at what was proposed and where we are now and if we just look at the number of bus miles that are run around Croydon, on routes that parallel the tram routes there are approaching 30 per cent more bus miles run over the period since 1995/6. I think it is odd that we are running more bus miles along the routes and not running more bus miles to join up with the tram scheme and then use the trams as the way to get into central Croydon. It is not meant to be a claimant's document, I am just trying to make the point that it is crucial to tram schemes in general that you restructure and integrate the buses. It has been done in Nottingham, to good effect. Equally, it is good that we have park and ride. There is no parking at all on the tram link, and park and ride takes people out of their car and puts them on public transport in circumstances where you can then get high volumes of people into the centre of Croydon or Wimbledon or wherever, fairly economically. It seems to me that we should have done more to try to get this integration since the tram scheme opened in 2000. Q201 Mrs Ellman: Is there enough certainty in Government funding for light rail systems? Mr Scales: I think on our particular scheme we are very fortunate to have the indicative funding of £170m. We then had to do a lot of work with our colleagues in the Department of Transport to satisfy in terms of the risk transfer, in terms of all the modelling that we have had to do - and fortunately we built a three-line model for Merseytram before we actually got this far. I think the real risk is our colleagues in the Treasury and the Department have got to go at the Treasury and fight their corner along with everybody else. So I think that is the real issue. The contractors and builders and our colleagues on the operating side like certainty. I think there is enough certainty as long as you have made your case and the Department have enough ammunition to go to the Treasury with. Q202 Mrs Ellman: Three lines are planned for Merseytram, how confident are you that three lines will in fact be built? Mr Scales: I think I am all right on Line 1. Our colleagues in the Department for Transport have got annex C, the public sector bid for Line 2 and we can evaluate that once we get Line 1 out of the way. Line 3, down to the airport, we could run into difficulty with that only because it is so far in the future and I do not know the exact route because we have not done the work on the route yet. But we have a heavy rail option and we are building a large interchange at Allerton, as you know, which is going to serve the airport as well. Allerton interchange is three kilometres from John Lennon Airport. Q203 Mrs Ellman: Mr Armstrong, you referred earlier to getting the nod from the Department. Is a nod good enough? Mr Armstrong: It is always very difficult to have that certainty. As I explained earlier, it was a very long time before we got the go ahead for Line 1 and that uncertainty is very difficult, particularly for the private sector, to live with and also to maintain public support locally both politically and from the general public. When I said, "nod", yes, it is something more than that, but it is certainly a very conditioned approval that we are hoping to get for our phase two, and we would like to think fairly quickly. If I can just make the note, Nottingham's Express Transit is exactly one year old today, so it is quite an auspicious time to be down here. Q204 Mrs Ellman: Mr Hendy, did you want to add to that? Mr Hendy: Yes, I think I should add to the previous witness who mentioned this UK Tram. The light rail and tram industry as a whole recognises that one of the criticisms and worries that Government has about these systems is the apparently rapidly inflating cost of building these systems, and a lot of that is around what the previous witness was questioned about, which is the particular procurement of individual systems, the low volume of cars, the experience which appears to be relived in different systems and about difficulties in construction. So one of the practical ways we can help Government feel more comfortable about the quoted costs and the quoted patronage is to do the work under UK Tram, which is about trying to establish better methods of procurement, the most appropriate procurement, reducing the risk premium particularly for construction and the equipment, and other things to get not standard cars, but standardised specifications. I do not think you will find anybody in the wider industry who does not believe that this is a good thing to do, to give Government a bit more confidence than it currently has that the cost of these things will not just spiral out of control either now or in the future. Mr Davison: If I could add one feature? I have been involved in major projects certainly through the first part of my career and one of the things that you do get is you get economies of expertise, and the fact is that if we were building tramways at a reasonable rate, as they do in the rest of Europe, we would get this economy of expertise and it would mean that people build higher quality products, they find the quick and easy ways to build it and they find the quick and easy ways to specify it, and you end up with major economies, and they ought not be discounted. They can be very, very high in terms of the way in which a £200m project might have over three or four iterations declined to be 50 per cent almost of the original process. Q205 Mrs Ellman: Do any of you detect any change in Government policy towards light rail? Do you think that Government is less keen than it was? Mr Davison: I feel we have actually to some extent prejudiced the future of light rail because everybody sees us as a problem. Q206 Chairman: "We" being who? Mr Davison: Croydon Tram Link, how we have been seen to be a difficult project at some stage. But I think that the benefits are not sold on the general integrated transport high volume routes, and the fact that if you make the risks predictable and share them properly they can be very good projects and they would be seen as being an advantage in the same way they are in major cities across Europe. Q207 Chairman: Mr Scales? Mr Scales: I think it is all about minimising risk, Chairman, and what we have tried to do on Merseytram is minimise the risk. We have done topographical surveys along the route, tree surveys, we have been working with the statutory undertakers for five years, we know where all the stats are on the route; we have dug about 1000 holes to make sure that --- Q208 Chairman: Do the utilities know where the facilities are along the route? Mr Scales: They do now on our route, Chairman; they did not before. It is all about minimising risk. Fortunately we have this three-line model as well, so our economists can talk to the Department's economists and do all sorts of sensitivities. But no plans of first contact with the enemy and the only thing you can guarantee about a business plan it will be wrong! So what we have tried to do with our colleagues in the Department is to get the 95 per cent and just go with it. That is what we want to do. So it is all about minimising risk. Q209 Mrs Ellman: But it is possible for the Department to withdraw funding part way through a project; is that correct? Mr Hendy: It is very hard for them to do that when people are digging holes in the ground and I think that is one of the difficulties, that when you start on one of these things you do have to finish it. The Department also, and I think with some cause, have been rightly worried about the fact that many of the projects in Britain have failed to achieve the passenger numbers which the promoters claimed in the beginning. We have already discussed some of the reasons for that and I think that it is incumbent on the promoters, both public sector promoters and the consortia that get into these things, to be realistic about passenger generation because there are some spectacular differences between the passenger numbers claimed for the systems before they operate and ones which turn up in practice. That does lead to giving the Department some considerable nervousness. Mr Scales: The practice we adopted was to get the operators on board very early - two years before we applied for the Transport and Works Act Order - and it is their numbers that have gone into our model, it is their numbers that have been validated and it is their numbers that are in the business case because at the end of the day we are looking for an operator colleague for 25 years, so they have to make that work for 25 years. So what we have done is not use silly numbers on our patronage figures, but we have had the private sector validate them and the private sector warrant them. Q210 Mrs Ellman: What about evaluation of light rail schemes? Do you feel that the criteria used are reasonable and the assessment is reasonable? Mr Scales: We used the new approach to transport appraisal, which is environment, safety, economy, accessibility and integration and our benefit cost ratio is really, really low because we are going through some of the poorest areas in the land - six of our pathways areas are areas of multiple deprivation. So our benefit cost ratio is just about over one because we are tying the tram fares to bus fares because the people along the route do not have any time value of money. So having embraced the new approach to transport appraisal, when the Department start loading the rates of 1.5 to one our scheme will necessarily be in difficulty. In Mr Stringer's area, where a metro link is already established, for example, they can easily get benefit costs ratios of two to one because they can do premium fares and we cannot. So I think we are okay as long as we recognise that there is no generic tram system in the UK, they are all different, but they are not all appraised in one single way and I think that is something that needs to be looked at. Q211 Chairman: I am going to stop you there. That is fine but you were asked about evaluations. Mr Rowland said to do an evaluation would cost between £10m and £15m. Firstly, do you think that is right, do you think it is necessary and do you think those are reasonable costs? Mr Scales: I think they are reasonable costs because Mr Rowland is the accounting officer for each of those projects so he has to be satisfied. Q212 Chairman: I accept that. Mr Scales: Whether they are reasonable costs or not, I do not have the figures, but we spent in Merseytravel something like £15m on Line 1 just to get it up and running. Q213 Chairman: Would you think that to say it would cost £15m to evaluate whether that was actually worthy and whether the figures were right would be a fairly sensible assessment or an over the top assessment? Mr Scales: I think that is excessive, Chairman. Q214 Clive Efford: Mr Hendy, why is there no park and ride on
the Croydon tram link? Q215 Clive Efford: Is it a missed opportunity for integration? Mr Davison: As I understand Croydon's position, they do not want to be a sort of parkway round the edge of south London, so that people park at a park and ride site on the tram link and then travel straight into central London, avoiding Croydon. There seems to me to be the opportunity to put park and ride sites to relieve road congestion and then use the relieved road congestion, for instance, for building another tramway. So if you put a park and ride site at Purley to take the cars off the road and then put a tramway Purley to Streatham, and that way you end up with moving people on to public transport rather than them just parking in a particular area when they are coming from the south coast, and you actually get modal shift that way. Q216 Clive Efford: Mr Hendy, with the West London tram and the tram link extension at Crystal Palace and the Canning Town, Royal Arsenal tram links we can expect better integration of those schemes because you are managing them from the start? Mr Hendy: I think you can expect us to seek to exploit park and ride opportunities where they would naturally occur, providing that local authorities are willing to accept park and ride into the local community. Q217 Clive Efford: What is the future for the park and ride that is currently taking place at Greenwich North station? There is a car park that takes over 1000 cars a day that is going to be built on and there will be no park and ride area any more. Mr Hendy: I would have to get back to you on that; I have no knowledge of that particular location. Q218 Clive Efford: So the income from the car park, does it come into Transport for London? Mr Hendy: I am sure it does not. Q219 Clive Efford: It must be phenomenal. Mr Hendy: That, if I may say, is a second or third order issue. You are talking about North Greenwich on the Jubilee line? I do not think all the car parking space is going to be built over. Q220 Chairman: Could you give us a note on that? Mr Hendy: We will give you a note; that is the easiest way. Q221 Clive Efford: This is not a question for you, Mr Hendy, it is a question for everybody else. The powers that you have to achieve integration in transport outside of London, if you are introducing a light rail or tram link, in order to adjust the existing bus network, for instance, is that a problem? Mr Armstrong: We certainly do not have any direct powers to adjust the bus network outside London. Nottingham is fortunate in that the city council has retained part ownership of the largest bus operator and we have had a very stable bus market in Nottingham even after deregulation, and we have worked very hard to do it through partnership, and even the other large bus company in the conurbation has reduced its services into the centre of Nottingham and now runs services to feed into the tram at Hutton. So it can work with partnership, competition and commercial decisions rather than by directives in the public centre. We do not have the powers but we have used every method we can to persuade and encourage that sort of integration and it has been successful. We are meeting our patronage expectations, although admittedly it is still early days. Mr Scales: On our rail network we control the rail network, we are compelled to integrate with the tram network when it is built, so the heavy rail side is okay. Our ferry network we control directly so that we can integrate the ferries with the trams on the Pier Head. On the bus network there are over 30 bus operators on Merseyside and we have no control over any of them. The only saving grace is that we tender 20 per cent of our network through Merseytravel and therefore we can weld in those services at appropriate points. What we cannot do because of the 1985 Transport Act is to replicate or duplicate any commercial service. Therefore, if the commercial bus operators wish to compete against us or wish not to serve those areas then there is nothing I can do about it. The only saving grace is that end to end there is no bus service in our corridor end to end, and this was examined fully during the public inquiry, and the major bus operator, Arriva, did not object to the scheme going in. So we will just have to wait and see. Q222 Clive Efford: On your scheme you broke it up into small packages for the contracts. What are the benefits of that? Mr Scales: I get better control basically. We have a contract with the operator and a contract with the systems integrator and a contract with the civil engineers, and a separate contract with the vehicle operator. So I have broken it up so that I have better control. The only difficulty we have with that is you have to be very careful on the systems integration side, and that is the only benefit, in my view, of Pier 5 because the systems have to integrate into Pier 5 or they do not get paid. So we have something called a RAFA Agreement - a Ratification and Fault Attribution Agreement - and that is like an umbrella over the agreements I have, and that means the first thing they do is fix the problem and the second thing they do is the lawyers go in a room and slug it out with each other as to who is actually liable to it. Q223 Chairman: Another lawyer employment scheme. Mr Scales: Yes. We always get two opinions, Chairman, so they can charge twice! The bottom line is I have better control. So I have direct control of the vehicle supply, direct control of the civils, direct control of the integration and direct control of the operator. Chairman: I think it is called divide and conquer actually. Q224 Clive Efford: Are you working with the Department of Transport on this and are they sharing information with you from other schemes that may be taking a similar approach? Mr Scales: I have no problems at all with the Department working with them. I do not know whether we are sharing that information, but we are happy to share it with anyone. Q225 Clive Efford: Has anybody else experience of using a similar method that Mersey uses? Mr Davison: Not in the same industry. In the defence industry it is done in a very similar way, they call it Weapon System Integration. Q226 Chairman: I do not think we necessarily want to follow that example! Nottingham? Mr Armstrong: Ours is a one-off contract and we have looked at the possibility of breaking it down and we feel that that fundamental problem of integration, if integration does not work and the public sector takes that risk, is that frankly we do not have the appetite for that and feel that we have been successful with Line 1 in having that risk with the consortium, and they have been reasonably content with taking it. Q227 Clive Efford: Do you have the ability within your contract to be able to beat down prices in the way that the smaller contracts can by increasing competition? Mr Armstrong: With the contract we already have, no, it is a done deal; but certainly with the way we are looking to do it in the future is to have a similar way possibly to the Edinburgh system to get someone in, to get a concessionaire or part of the concessionaire in very early and beat down the prices by reducing the risks and ensuring that the ultimate contractors have a lot more knowledge about what those risks are and how to manage them. Mr Hendy: I have to envy my colleague from Merseyside for his boundless optimism because the nearest thing I can think of to any relationship in London similar to that are the dreaded PPP contracts, which employ innumerable lawyers. I think that actually there is an elegance in having the smallest possible number of people involved in service delivery. One of the things we do like about the present agreement with Croydon is that it is one concessionary company who is totally responsible for delivering the output of the tram system, and that actually does have a relevant consequence which is that we, as the representative of the public, can expect total performance from contractors. Whilst we would probably choose now to divide up the future contract in a different way it would certainly worry me to have more parties in there than we needed. Q228 Mr Stringer: Mr Scales, you talked about problems that there might be from bus competition in the deregulated system. The Department in its evidence says that competition from buses can reduce the progress of light rail but only if it is meeting some customers' needs better. Do you think that is a fair comment by the Department? Mr Scales: I think, Mr Stringer, it is a comment by the Department. I feel the National Audit Office report recommendations on that about getting a single operator in that corridor is something I am working towards, because if we can get all modes of transport to integrate on tram corridors what will happen is that the whole transport market will grow and everyone will benefit, rather than having wasteful competition. On our particular corridor, the Merseytram Line 1, there is no single bus operator operating end-to-end and there are no services end-to-end - bus operators come in and go out. So whether it is a fair comment or not, it is a generalisation, but it is probably a good generalisation but does not work on Merseytram Line 1. Q229 Mr Stringer: Are vehicle costs for trams in the UK much higher than they are on the continent? Mr Davison: The cost of purchasing vehicles? Q230 Mr Stringer: Yes. Mr Davison: Certainly in the case of our vehicles they probably were, but then the vehicle build-up was part of the consortium that actually promoted and others financed the scheme. Therefore, they get some of their profit through charging top-notch prices on their vehicles. We have talked about the odd vehicle we might get from Mersey, but if we also went to Cologne as Cologne are buying 69 vehicles and said: "Could we get the 70th of the same vehicle that they are buying", of course we would get it at the same price as was offered to Cologne; there should be no difference in the price because there is, effectively, no difference in the specification, apart from one or two minor tweaks you need to make to the disabled access provisions special to the UK, but it is very, very small beer. Mr Scales: I think it is a function of small batch sizes. As an ex-manufacturer, if I was building 5 buses or 100 buses they are designing the bus the same. It is a fact that the UK has got a very small batch size and on the continent they have got very big batch sizes. I think my colleague on my right is correct, it is because the manufacturers have got a very small market, very small batch sizes and so prices do go up inevitably. Mr Armstrong: Certainly with our system, we were buying a relatively new tram that had only been used in one other place in Europe. The manufacturers did have some problems with things like the Disability Discrimination Act requirements and the special requirements of the Railways Inspectorate of the UK - although I am not sure that made a huge difference in the price. I think, now the market is more established in the UK, those problems should reduce. Q231 Mr Stringer: There are no extra costs to building to heavy rail standards, or do you expect extra costs because of the new specifications the Health and Safety Executive are considering bringing in? Mr Scales: The buffing loads on the end of a tram, they are higher end (?) buffing loads on heavy rail than they are lower end, so I do not think buffing loads are a problem. I think the issues tend to be more in terms of the Disability Discrimination Act requirements or whatever HMRI want. It is more to do with those than anything else. Q232 Mr Stringer: Can you be more specific about the last point? Mr Scales: On HMRI, for example, in another life I have bought the trams for Metrolink Line One, and we did a lot of work on those trams. The HMRI wanted to make them more distinctive for the streets of Manchester and made us put this huge sign right at the front. We could not understand it because a tram that is 30 metres long and 2.5 metres wide and 3 metres high is pretty distinctive as far as I am concerned, but we ended up putting these huge headlights at the front just to satisfy the HMRI, for example. Mr Hendy: I think, if I may add, that is now reasonably well understood. I think the important point for the Committee remains the difference in batch size. Continental and European operators are buying trams in dozens at a time; that is the real fundamental difference. Q233 Chairman: So economies of scale. I just want to ask one final thing: you are supposed to be easy on the utilities; you have not been negotiating the proper deals when the utilities need to be diverted. Are you in a position to challenge the estimates of what needs to be done? Mr Hendy, you seem to me to be a man capable of screwing people down. (?) Mr Hendy: One of the excessive costs of all these schemes is the amount of money it costs in utility diversions. I would be surprised if you could find anybody who has been involved in delivering one of these schemes in the last 25 years who did not find themselves in a position of believing that they paid for a lot of additional utilities work that in normal circumstances would have represented the maintenance and the renewal of utilities but, with the tramway scheme, had not come forward. The proportion of the cost which now has to be borne in the tramway scheme is now 87 per cent, I think, which is no incentive for utilities to minimise the amount of utility replacement. I think one of the things that we are giving some thought to - and, to give the Department credit, it is likely to support us - is just looking partly at new track forms which might enable us to get round the necessity of the utilities wanting to replace complete streets of pipes of various sorts when, actually, if you were indulging in road reconstruction or bus lanes you would never dream of replacing any of them. Q234 Chairman: Do you agree with that, Mr Scales? Mr Scales: Yes. We have spent a lot of time on the utilities, a full three-and-a half, four years, and then we also went and took all C3 and C4 costings. A C3 costing from a utility is an estimate and a C4 costing you can rely upon more. So all the costings on Merseytravel are C4 costings. I have seen C3 costings in other places go - for moving a water main, for example - from £2 million to over £10 million on the C4 costing. So you have to get the C4 costings. The point Mr Hendy has made is absolutely correct; we used to get 12-14 per cent betterment back from the utility (once we had moved it they would give us a rebate) and now that is only 7 per cent. So that figure actually causes a lot of difficulty on trams, particularly in Greater Manchester where we are moving millions and millions of pounds worth of utilities; to reduce the betterment from14 to 7 per cent just puts that straight on the project. I think the utilities do get a good deal out of it because ---- Q235 Chairman: I do not think we were doubting that they got a good deal out of it; we were ensuring that you, perhaps, were a bit better at negotiating a less good deal. Mr Scales: I think you can rely on me, Chairman, to get the best deal I possibly can. Chairman: On that joyous note, thank you very much gentlemen. It is always very helpful; we are very grateful to you. Memorandum submitted by Department for Transport Examination of Witnesses
Witnesses: Mr Tony McNulty, a Member of the House, Minister of State, and Mr Bob Linnard, Director of Regional and Local Transport Policy Directorate, Department for Transport, examined. Q236 Chairman: Minister, you are most warmly welcome, as always. I seem to have seen you somewhere before today. Can I ask you, first, to identify yourself and your colleague? Mr McNulty: Tony McNulty, Minister of State for Transport; my colleague is Bob Linnard, who will tell you what his title is because I cannot remember. Q237 Chairman: Mr Linnard, what is your present title? Mr Linnard: My present title is Director of Regional and Local Transport Policy, Madam Chairman. Q238 Chairman: We are delighted to hear the Department has got one. Did you have something you wanted to say to us, Minister, before we begin? Mr McNulty: Just that I would be delighted to answer your forthcoming questions. Q239 Chairman: It is very nice how end-of-term hysteria does relax people, I find. Mr McNulty: End-of-day, in my case; it has been one of those days. Chairman: Can I ask Mr Stringer to start? Q240 Mr Stringer: You say that you will give the go-ahead to light rail schemes if they are part of a fully integrated transport system. The Secretary of State has also explained that that does not have to involve charging for road use. Can you explain to me what an integrated transport system would look like for a city like Manchester or Leeds - one of the major metropolitan conurbations? Mr McNulty: I think there would probably be three or four key elements. One would be apropos our statement last July on buses; one would be the bus service operator grant will pass to the city so it could more readily control in a strategic fashion its bus services, north and south Manchester (we think that is one of the key quid pro quos for an integrated strategy), but it would also be how those bus services then fit in with what Greater Manchester would seek to do with its road network more broadly, including bus priority measures and those sorts of things, but more generally too, how bus and roads bed in with heavy rail and light rail in an integrated and sustainable way. It is not, as you rightly say, a code for road user charging, workplace levies, congestion charges, but they may or may not be a feature of it. Every time you seem to say it people assume that it is absolutely central to it, it is all code for congestion charges. It is not meant to be at all, it is just about what works best in terms of relieving congestion and having an integrated transport model in our cities and towns. The one caveat I would add is that increasingly we may move towards either city/regional basis, even something wider than simply a Merseyside area or the equivalents in West and South Yorkshire, or combine them in some way. Again, in the first instance that is a matter for the local areas concerned. Q241 Mr Stringer: You say that it would probably incorporate traffic restraint or constraint. Mr McNulty: It may. Q242 Mr Stringer: Do you not accept that if one of the city's objectives is to have urban regeneration they may want to increase the number of people going into the city centre and traffic restraint would restrict that? Mr McNulty: It would vary from town and city to town and city. I know, from the work we have done on light rail and other matters, that simply the pathways going into the centre of Manchester, for example, are very constrained and very congested. In other cases it may well be a mixture of both restraint and other elements of road and traffic management. You will know that Liverpool, for example, given the relative affluence and significant regeneration there has been over, perhaps, something like the last eight years has, from a very low base, significantly increased its car ownership and car rider-ship, which needs to be put in the balance. That is not the same issue or problem that Manchester or Leeds face, in those terms, so it is really about what works in each context for each city. Q243 Mr Stringer: Has there been a change in the Government's policy in relation to light rail and trams? Mr McNulty: No. Q244 Mr Stringer: How many people work on trams within the Department for Transport? Mr McNulty: In terms of light rail issues generally it is about the equivalent of 10 full-time posts working on what are now new and fairly new major projects in the light rail division. Previously, that was all just under local regional transport and was part of the team that worked just on transport, but it has clearly become a more significant issue. That does not include, clearly, those working on TWA orders and other aspects of the whole process in terms of light rail. Q245 Mr Stringer: The National Audit Office is critical of the Department's response time. Is that related to the number of people working there? Should there be more people working in that section? What are you going to do to improve the response time? Mr McNulty: Part of their retrospective criticism was about the TWA element of the process and they recognised in the report that we had pretty much doubled the staff in TWA. Certainly in terms of the specific light rail projects to do with TWA the last two or three have gone through - I think two have been done well within time and the third was just over time, I think, in the case of Birmingham. So we have dealt with that element of it. Beyond that, their concerns were about, I think, focus, which is why we have drawn out, from local transport major projects, a light rail team which we think is sufficient to deal with the workload. Q246 Mr Stringer: When did you alert Leeds and Greater Manchester to the fact that there was a likelihood that these schemes would not be approved? Mr McNulty: If you go through the whole phase and chronology, in the first instance you will know they were alerted to difficulties when we met both of them - I think fairly soon after I came into Parliament. It was almost a second iteration (?). In both cases, before I got to the Department, the cap had been increased - Manchester from 282 to 520 and for Leeds and South Hampshire I cannot remember exactly the figures. So, in the first instance, they came to the Department saying there were difficulties in terms of costs, can there be an increase in the cap, which there was. I think soon after I got to the Department I met with them again to confirm those caps and see what they could do in that regard. If you are referring directly to when were they notified about the decision in July, as I understand it they were not until Alistair made a statement, because these were key commercial decisions. Q247 Mr Stringer: That was the reason for not alerting them to the fact that there was a problem? Mr McNulty: No, there had been at various stages in the process, all the way back from the initial provisional approval, iterations and too-ing and fro-ing between officials about cost base, and various aspects of the projects that were on the table and their cost base. Was there a definitive meeting with either or both of them to say: "These are in trouble and we would like you to withdraw funding approval in July"? The answer is no, because they were on-going commercial processes and somebody like that we felt would have impacted on the promoters, their commercial considerations and everything else, and it was not something we could share with the authorities and, hence, the promoters. Q248 Mr Stringer: Of the increase in costs, how much would you apportion to the different headings that the National Audit Office report recognises in terms of the financing costs, the costs of moving utilities and non-standardisation? Where do you think the majority of the extra costs of those three schemes came from? Mr McNulty: I think, in one sense, it would be very, very difficult to apportion, not least because, say in Manchester's case, the project that we had initially for 282 changed in some regards by the time it got to the 520 cap, and by the time they came back to us on the run up to July, saying anything from 800 to 900 million for the three lines, again, the nature of the project under all those suspended headings changed considerably. Certainly since July, with the working group that I chaired between Manchester and the officials, quite rightly Manchester explored a whole host of areas where things could change - revenue risk, and all those sorts of areas - to the stage where what is on the table now, the various proponents of it, is completely beyond recognition of what we started out with with 282. So it is very difficult to apportion in a mechanistic way, under all those headings, where the majority of the cost increase comes from. Q249 Mr Stringer: Can you give us a rough order of magnitude of how much extra costs are attributable to the change in the attitude of the city? Fifty million, 100 million, 200 million? On the Greater Manchester scheme or the Leeds scheme. Mr McNulty: It would be difficult for me, beyond what limited expertise I have, to apportion that, to be perfectly honest. That is probably one to ask the city and the bankers, but they --- Q250 Mr Stringer: Do you not think the Department should have some idea of what those figures are? Mr McNulty: If it was as scientific as that then perhaps they should, but it is not a science. Throughout these processes, as and when we have discussions with many of the project promoters - and this is part of the delay, I guess - there are on-going arguments, disagreements and discussions about why and what proportion, and cost-base, is appropriate for each element. So it is very, very difficult to pass all that down and say what comes from which direction. Q251 Mr Stringer: The National Audit Office criticised the Design, Build and Operate process. What would be the Department's favoured method of procurement, at the moment? Mr McNulty: I think there is no favoured option, and certainly, given where we are at now, with the three extant schemes that we withdrew funding approval for, and the other schemes going through, of all the various elements - design, build, maintain, finance, operate - whatever mix works and works appropriately for any given project, when it goes through all the various new appraisal techniques and all the assorted other elements, the value-for-money, the affordability, the benefit-to-cost ratio - are all other things that are most important. I know there is a view abroad that says DfT have some fixed procurement model and it all has to be public/private, it all has to be PFI-dominated, and all that (and that is part of the problem). We have said, clearly, to Manchester and others: "Come up with a procurement scheme that works for you with all those elements and we will look at in the context of ---". Q252 Mr Stringer: Does that mean you would allow a wholly public sector scheme? Mr McNulty: Potentially, if it worked. In some of the cases where there has been a lot of work done over some of these extant schemes, part of the process has been simply to shift that private risk element to the public sector, and in some cases that may mean, as you work through the figures, no adjustment or increase in the costs in terms of the upfront element for the public sector, but down the line, in some five or ten years' time, a fairly substantial hit if the risk revenue formulae and speculation does not work. So it is about balance. If shifting all that risk revenue back to the public sector means, in cash terms, upfront and beyond upfront, significant increases in costs, then that is not achieving what we want any more than adjustments to the ---- Q253 Chairman: You do not think that there are private finance initiatives where the risk, when it gets shifted in theory to the private sector, actually results in estimates which are just absorbing all of that money at a cost to the taxpayers? Mr McNulty: Again, I have heard that suggestion but I would not have the expertise or knowledge on every aspect ---- Q254 Chairman: We must send you several reports, Minister, and you must study them carefully. They will explain it to you. Mr McNulty: I have certainly read a number of them but they are not necessarily germane to the various procurement models for light rail. Q255 Mr Stringer: If I can just finish on two fronts: I think the difficulty for those of us who are interested in Manchester's model (I think many people are interested in this from a public transport point of view) is that three schemes have been sought and it is very difficult to understand the ideal scheme the Department would have. It is easy for the Department to criticise, and I have failed to get out of you here, Minister, and on other occasions when we have debated the matter, exactly what hurdles would have to be got over for schemes to be approved. Mr McNulty: Part of the difficulty is understanding the entire chronology. Part of the thing that we are not doing, at the moment - and we should once it is all settled - is that at the moment we are trying to move things forward with Manchester, with Leeds and there are still talks and discussions with South Hampshire, so it is not appropriate, at this stage, when we are trying to resolve those elements going forward to go right back to the beginning. It may well be - I do not know - that the real question is: was there really any substantive chance of Manchester delivering three extensions to Metrolink for 282 million and the model that was approved in the first place? I do not know the answer to that, and I am not knocking those who made that decision; I am just saying that is a question of some validity that is worth looking at - and the same in terms of South Hampshire and the same in terms of Leeds. We are trying now to get in place a far more robust analysis that tries to ensure, by the time you get to provisional approval level for a project, that we feel far more confident about the robustness of the numbers than we have done previously. So there is not any template or blueprint, either now or then. Q256 Mr Stringer: If you put the finance on one side, do you accept, as we have had evidence this afternoon, that buses simply cannot provide the same capacity as trams can? Mr McNulty: In some of the more crowded corridors in urban areas (I have read the PTAG (?) report and everything else) that would seem to be the case but I would not accept the starting notion that somehow buses do not work as robustly as light rail in all cases; it is about - going back to the integrated transport - the links between --- Q257 Mr Stringer: Do you or do you not accept that there is a limit, as we have just heard, of about 3,000 passengers an hour, I think, on a bus corridor, and it is considerably higher on trams? Mr McNulty: I do accept that, in some instances and on some corridors; I do not accept it as a generality. Q258 Mr Stringer: Final point, and a very specific question because you have said publicly, in response to the refurbishment of the Manchester scheme, that there will be a quick response: when is that response going to be? Mr McNulty: Without being facetious it will be as quick as we possibly can. That element of the Metrolink project was always one of the elements of the 282 to 520 and the scheme that is on the table now. I have said time and time again that that was part of the element, and if you unpicked everything and go forward with the three lines with, maybe, a TIF (?) project element and all those sorts of elements, then you did have to uncouple the refurb, which is necessary and necessary soon. I will make every endeavour to have that decision with Manchester at the earliest possible opportunity. We have had the paperwork now for about three weeks; we got it, literally, the Friday before I was up in Manchester for three days for ODPM's urban summit, which was the end of January - so perhaps a bit longer, maybe four or five weeks - but I am cracking the whip on that one to try and get that element of the project determined sooner rather than later. Whatever happens long-term, we are going to have phase III, the refurb, the modernisation of Bury-Altrincham, and all that does need to happen and happen soon. I fully accept that. With the politics, watch this space because I am trying to get that done as soon as I can. Q259 Miss McIntosh: Could I ask you, Minister, about the new railway safety regime coming out from the Railways Board and, eventually, in the European Urban Rail Directive. Do you accept that it is going to be more costly for the companies operating those systems to adhere to? Mr McNulty: Firstly, I certainly hope not because the whole thrust of the Directive is to get costs down rather than otherwise. Secondly, I think there is a bit of a misinterpretation of the Railways Bill and putting light rail and tram schemes with all that migrates from the Health and Safety Executive to the Office of Rail Regulation. In essence, under the Health and Safety Executive the entire rail safety division was autonomous, separate and worked within its own terms, which is why it is easy, having made the policy decision, to lift that out of there and put it in the Office of Rail Regulation. It had, within its terms inside Health and Safety, light rail and trams, and if you take everything out and put it over to the Office of Rail Regulation it seems absurd, really, to leave light rail and trams back at HSE and not move them over as well. How the Office of Rail Regulation works with the light rail and tram element, in the context of their regulatory duties, economic safety and everything else, is a moot point and one that they are still discussing now as part of the transition and post-Railways Bill, post-SRA scenario. I am not entirely sure, even with light rail coming under a national heavy rail standards regime, that the argument that that somehow imposes greater costs and, somehow, means the gold plating of safety should be uncoupled from heavy rail stands up to much judgment. I have certainly not seen much evidence of that, although we are looking into that as part of our overall review of all light rail projects. Q260 Miss McIntosh: Perhaps you would read the evidence, when it is published, to this report. I understand from the HSE memorandum ---- Mr McNulty: I shall read the evidence; it does not follow I shall agree with it. Q261 Miss McIntosh: ---- to this Committee, they say that in its present form the draft proposal for the European Urban Rail Directive will establish a notified body of verification's regime for light railways and tramways, and therefore it will require another, separate body that the railway operators must apply to and be interoperable with. Mr McNulty: In part, at least, that is speculative. What we have got is a draft Directive and no more. We have got until March 25 to respond in full, as a Government, to the draft Directive. It is seeking, in terms of Metro tramlink and light rail schemes, some degree of harmonisation. All these schemes, on their own terms, on a Member State-by-Member State basis, are fairly heavily regularised at the local level; it is about how there can be some degree of harmonisation, not just in terms of regulation but in terms of pecuniary regimes and everything else as well, with a view to driving down costs rather than otherwise. As I say, we have not formally responded to it yet, but it is very early days and, really, quite speculative to say what the final Directive may or may not do in terms of safety, costs or any other aspect of light rail. They are called, by the way - I cannot remember what the acronym stands for - RMT schemes, in the Directive. Rapid Mass Transit, I think. Q262 Miss McIntosh: How is your Department going to set the standards and yet allow for innovation, in relation to both the European Directive and, also, working with the Health and Safety Executive to ensure that the standards set are reasonable? Mr McNulty: In the first case, we will respond in full to the draft Directive, and I am more than happy to ensure that the Committee get a copy of that when we have duly responded. Secondly, as I say, it will not be the Health and Safety Executive; if, God willing, the Railways Bill secures its Parliamentary passage, which I sincerely hope it will, then those light rail and tram elements of the safety regime will go to the Office of Rail Regulation, along with all the other rail safety elements. As I have just said, on its own terms the ORR is looking at now how those light rail or tram considerations sit with all it is doing in the broader railway safety sense once it takes the safety function over, and that we thought it would be inappropriate to leave light rail/tram hanging in the wind back with the HSE rather than coming across with it. So it is early days on both, is the short answer. Q263 Miss McIntosh: Presumably your Department does accept that light rail carries with it a different type and a lesser risk than heavy rail? Presumably, the standards that you are having to set will reflect that. What representations have you received in this regard? Mr McNulty: I presume nothing in that regard. You may be right, in the sense that we are starting to say now - in terms of our community rail partnership strategy and all the other elements - that what we want is a regime where, of course, safety is paramount but it is a safety regime that is fit for purpose. That would apply, I would suggest, to light rail as well as heavy rail, but as we have seen we need to have further talking done with the Office of Rail Regulation and, in terms of the Directive, with the Commission once we have submitted our draft. Of course, everyone knows that the sort of post-Hatfield gold plating and all those other elements that people have discussed (I am sure the Committee has) have led to a safety regime where the safety regime is paramount and fit for purpose in each case, whether it is a small community rail partnership line that does not need gold plating until 125 miles an hour or, indeed, light rail and how it differs from heavy rail. I do take your point. Q264 Clive Efford: You said that you are only going to fund light rail schemes if they are part of an integrated transport strategy involving integration, appropriate park-and-ride facilities and traffic restraint. When did the Department adopt that policy? Mr McNulty: Formally, last July when we issued the Transport Review White Paper as well as the Railway Review White Paper. Q265 Clive Efford: When was UKTram set up? Did DfT play a part in it? Mr McNulty: We played no part in setting it up. We welcome it and we certainly are encouraging it; it is a very, very useful, almost, industry one-stop-shop to deal with and give advice to those who seek advice in terms of procurement and other issues, but we had no part in setting the thing. Q266 Clive Efford: Mr Rowlands, in his evidence, has estimated that a complete evaluation of light rail will cost between £10 and £15 million and take about ten years. Given that the National Audit Office did that on existing evidence, do you think that is a reasonable estimate? Mr McNulty: It is one that has been market-tested and based on tenders, but I would say that if we are serious on a project-by-project basis to try and elicit all the benefits of a line, then it would be over a ten-year - at least - frame and would cost that sort of order, if we are serious about trying to get right down to what the regenerative, social, economic and other benefits as well as the other, narrower, transport and urban congestion benefits were for a scheme. Q267 Clive Efford: What plans does the Department have to evaluate schemes in the future? Mr McNulty: Without, again, being facetious, we had earmarked Manchester Metrolink Phase III as one that we would follow through and evaluate in that fashion. Clearly, we are not doing that because we need to start with at least one substantive scheme; clearly, we are not doing that now, given the approval for funding was withdrawn last July. We are hopeful, as I say, that Manchester and the other projects can get to a stage where we can go forward and we will revisit. It is important, when you are evaluating, to try and start as early as you can and develop with the scheme, rather than just, for example, parachute in and try and seek to evaluate over time Metrolink Phases I and II or the Croydon Tramlink, or whatever else. It is likely, I would think, although it has not been determined, that one of the larger projects that may go forward over the next couple of years will be one that we do earmark for this thorough research and evaluation. Research and evaluation of schemes is the one thing, without offending anybody, that the British public polity and civil servants do not do terribly well. Q268 Clive Efford: Does the Department have an idea of what it wants to know from these evaluations? Mr McNulty: We want to know whether all the elements claimed for a particular scheme, in terms of social regeneration and narrower cost-benefits in transport terms, stand up or not, which is why you do have to follow something through. The regeneration benefits of Merseytram or the third element of Metrolink are not going to happen overnight in a 3-5 year context; you do need to stick with a project and try and follow those things through, and then capture in monetary terms what they may or may not have done. Clive Efford: How robust is the Department's appraisal model? For instance, we have been informed that different values are given for the speed of bus and the speed of tram to reflect passenger preference, and that the loss of revenue on fuel duties is included in the costs. Is there a case for a simpler method of appraising schemes? Q269 Chairman: Could we ask Mr Linnard that? Would you mind, Minister, because I understand he might have some contribution to make? Mr Linnard: Thank you, Madam Chairman. We do try to improve the way we appraise these projects continuously, and we certainly do more detailed appraisal now than I think we would have done with some of the earlier schemes that were approved, and we try to do it more accurately. It is true that when we do the appraisal we take account of the evidence that people prefer trams to buses, and therefore at the margins we weight the appraisal against buses to reflect that. Obviously, one of the things ---- Q270 Chairman: If you are going to weight something in that kind of formula the size of the weighting is actually very important. Mr Linnard: As I understand it, it varies from scheme to scheme because it depends how many people you are carrying and, therefore, how important the weighting is. However, typically, in a scheme we would add perhaps 10 per cent to the time taken for a trip by the bus to reflect the fact that people prefer trams to buses, on the evidence that we have seen. However, to some extent, these are always assumptions that need to be revisited because new buses come on the market or there are better products that people may prefer to the old ones. So this is not a formulae, a piece of appraisal mechanism, that can be set in stone and left and not revisited for ten years; it has to be kept up-to-date. Q271 Clive Efford: Given that, how are you ensuring that the most efficient form of procurement is used? Mr Linnard: What we do is talk to the promoters at an early stage. As the Minister said, we have got no absolutely set model for procurement; it will vary from one scheme to another. We have now got more in-house, within the Department, expertise on procurement than we had for the early schemes, and there is new guidance that is going to be issued very soon on major projects to local authorities to promoters of light rail and other major projects, which will cover procurement in more detail. Q272 Clive Efford: Would the Department now recommend Design, Build, Finance and Operate for light rail schemes? Mr Linnard: As I say, we are not recommending one model. For some that will be the right model, for others the cost of transferring the operating risk to the concessionaire, who is also doing the design and build, will not make sense. Q273 Mrs Ellman: Mr Linnard, you have just referred to new guidance to be issued. Will that reflect the National Audit Office's recommendations for more standardisation? Mr Linnard: Not really, no. It will certainly refer to that aspect of it. It will cover mainly things like the way we appraise projects, guidance on procurement and what we would expect promoters to do by way of, basically, following best practice on procurement, on tendering and on project management. The standardisation aspect of it is something that we will be pursuing partly through UKTram, because that is an industry body which is better placed than the Department to advise and, possibly, to develop standards on that. Q274 Mrs Ellman: Could I ask Mr McNulty, then, the National Audit Office did make specific recommendations on standardisation. Do you agree with that and are you satisfied with the progress the Department has made? Mr McNulty: I agree with it in part on its own terms, but the key must be the most appropriate procurement model, and all other aspects of the model, for a project that is coming forward, which is why it is right that it may be that Design, Build, Maintain and Operate is an appropriate model in some regards, if the risk balance is appropriate. In others it might be more appropriate to follow the Docklands Light Rail-type model where management was taken away from Design, Build and Finance. So standardisation, yes, as far as you can, but you cannot lose the flexibility of what is appropriate for X town or X city on its own terms and in the context of its integrated transport provision. Q275 Mrs Ellman: Does that mean you are not accepting the NAO's advice that as a condition of grant there should be standardisation? Mr McNulty: Not, as I say, beyond a recognition that where you standardise you should. What are Liverpool and Manchester - forty miles apart? - yet they have manifestly different approaches to Merseytram, the first line in Liverpool, and the model for Metrolink I and II and Metrolink III is different. That is not criticising anyone; they are appropriate in their own terms for each of those cities. As far as you can standardise, in terms of best practice and all the other elements that UKTram may well give to promoters, that is perfectly fine; standardisation is not a magic bullet or panacea to try and solve many of the problems that have come up in the past for some of these projects. Q276 Mrs Ellman: On current information, how many new light rail schemes do you think would be put into practice during the period of the 10-year transport plan? Mr McNulty: I have no idea, off the top of my head, to be perfectly honest. Adding up the ones that are either done and fully operating, those that are in the pipeline and are not with us yet, and how many may or may not come off the stocks over the next couple of years - does it all add up to 25? I am not entirely sure. Will we go with Nottingham's second extension; eventually with South Hampshire, eventually with Blackpool, eventually with Leeds, etc, etc? I do not know. It would be speculative to put any number on it in the 10-year plan period. If the subtext is: are there going to be no more at all once we have got whatever is on the table off the table, then again I would say the answer is no. There is not an aversion to light rail. Q277 Mrs Ellman: You did answer a question earlier by saying the Department had not changed its view on that, but would you say it has cooled off, rather? It might not be making an official policy change so much as changing the assessment ---- Mr McNulty: No, I would say profoundly not - other than in the context of something that goes from 282 to 900 or 150 to 350. Neither have we changed our policy on affordability, VFM and getting the best bang for our buck in terms of each of these projects. I can manifestly say there is no gang of civil servants on the grassy knoll with a second rifle; there is no conspiracy against light rail, but we need to judge each of these projects on their own terms with VFM, procurement and all those elements fully robust. That is what we are trying to do now with the extant ones, like SHRT, Manchester and Leeds and will be doing with Merseytram and Nottingham extensions, and everything else. There is absolutely, profoundly not, a conspiracy between the politicians, the civil servants or the DfT against light rail. Q278 Mrs Ellman: On evaluation, do you think that regeneration impact is being assessed properly, if it is possible to do it? Mr McNulty: I think it is assessed better and better, but you will know that it is very, very difficult - extraordinarily difficult - to monetise or even quantify in some way what potential regeneration impact any project will have, but we are, I think, under the new appraisal scheme, including those social, regenerative and well as economic dimensions. Q279 Chairman: Do you look at evidence from elsewhere? The Committee found an example when we looked at Portland some years ago now; we went to Portland, and it was very clear that there was an enormous change in the rateable value and in the worth of central Portland buildings, simply because the new rail system had gone through the centre. Indeed, much to our astonishment, the prices of property had tripled because there were actually tram stops outside the door. Mr McNulty: I do not doubt that, but it is much easier to quantify and monetise regeneration benefits once a system is in place, which goes back to the point about longer-term early evaluations. Really trying to grasp and measure the claims in terms of regeneration and social and economic benefits is more difficult, but I think, under the new appraisal scheme, we are doing it better, perhaps, than was the case in the past because the notion that there are regeneration outcomes from the introduction of light rail schemes in many of our towns and cities is well-made and there is a growing - albeit small - evidential base that that is the case. It is at the appraisal stage that it is still difficult, but it is better than it used to be. Q280 Mrs Ellman: Do you think the Health and Safety Executive's standards are reasonable? Mr McNulty: As I was saying earlier, to Miss McIntosh, the ORR will need to look at that as part of the transfer of the safety standard and the rail safety brief over to them from HSE. I think it may well be that, again, standardisation across the piece, in terms of heavy rail, light rail, may not be the way to go in the future; we do need to get safety regimes that are fit for purpose in terms of the railway lines and what sort of traffic is on the railway lines as well as light rail. So the answer is, probably, maybe. Q281 Chairman: A definite maybe? Mr McNulty: A definite maybe. Positively a definite maybe. Q282 Mrs Ellman: What do you think a reasonable time limit would be to develop a light rail scheme and implement it? Mr McNulty: The sort of intuitive answer would be a lot less time than it currently takes. We are trying to address that. I do not think, again, you can standardise a process, but by - which is what we are seeking to do - intervening in the work with the promoters far earlier, trying to get difficulties and problems out of the way far earlier, so we get to a stage where once projects are finally assessed and move to provisional approval there is a greater robustness about them than there has been in the past, should truncate the process, but these are tortuously complex processes and I know they have taken too long in the past - I readily admit that. The most interesting thing is, as ever, people always say it is the TWA or the planning process that takes all the time. As I say, in the last three cases, I think, that has not been the case. With the ELR extensions the TWA has been turning over very quickly; I think in Birmingham Brierly Hill case it was slightly longer ---- Q283 Chairman: You are not actually homing in on the fact that they also say that the Department took a hell of a time once it got the Inspector's report to actually come up with a decision. Mr McNulty: Again, without casting aspersions on anybody else, not on my watch they have not. Q284 Chairman: Let me put it another way round: does the Department put out a detailed refutation of the NAO report? If it is factually incorrect we should say so. Mr McNulty: No, I do not think there has been or there are plans for a detailed refutation; I do not think it is as stark as that. Q285 Chairman: So you can tell us, for example, what proportion of the delays in the planning process were directly attributable to the Department? Mr McNulty: Not off the top of my head I could not but I could probably let you have that information if it was done. We did a similar exercise when I was at ODPM. We now have in place ministerial targets that, when we get them, as Ministers, they are turned around quicker, and with the increased resources in terms of the TWA division, again, that is far more robust and quicker. However, there still needs to be an integrity to the process. It is like the planning process, quasi-judicial, but, again, like the planning process the more pre-application discussion there is on a range of themes in terms of their complexity, the smoother, hopefully, the TWA will run. Q286 Mrs Ellman: Have you made any assessment of successful guided buses compared with light rail? Mr McNulty: Not in terms of direct comparison because there is not a whole lot, yet, of guided buses in place and working in any substantive fashion. There are small elements in Leeds and elsewhere. I think the Translink scheme from Luton to Dunstable, which is going through the TWA process now, so it is very, very early days on that, and the approval of the Cambridge scheme, will be the first two fairly substantive ones that might give us some notion or comparison between the two. You will recognise straight away that these are inter-urban and the conversion of heavy rail links between two towns, which might not be the most appropriate way to take light rail forward. The only one that remotely compares, I guess, is South Hampshire; that is inter-urban between Horsford and Gosport, but of course that is under the sea rather than inter-urban in the sense of utilising a heavy rail system. So I think there will be a bit of apples and oranges, in terms of comparison. There has not been substantive guided bus project experience in the equivalent areas of Liverpool, Manchester - as I say, Leeds has got some elements of it. We suffer, in part, from the nature of our infrastructure, both in terms of its significant underinvestment in the infrastructure - certainly since the war - and, in simplistic terms, by the width of our roads. People say (and maybe we will come on to it): "How do we compare with France, Germany and others?" Well, at least in some regards - and mostly they are urban areas - they had the foresight to have wider roads than we do. Q287 Chairman: Many people have said: "You should have been conquered by Napoleon; it would have solved a lot of problems." Mr McNulty: I do not think I would share that view, but that is another inquiry. Q288 Ian Lucas: Utility companies are not very popular with the tramway operators. They were telling us that they feel that the utility companies get a very good deal indeed when there are diversions of tramways. Is there anything the Department can do to address what they feel is an unfair bargaining position that the utility companies have? Mr McNulty: I suppose the starting point is to say that utility companies are very keen to have all their utilities diverted from a tramline and they are very keen that they should do the work themselves - which I think, from their perspective, is a fairly natural position. With the limited comparisons there have been with some of our European counterparts, far less utilities are diverted in the first place and there is far greater discussion and consensus about the cost and how you do the things. Those are elements that we, perhaps, should look at. I fear it will mean legislative changes to go in that direction, but I think there does need to be, perhaps, a greater balance between the rights and powers of utilities and those seeking to do schemes like light rail. I think I would broadly agree with that. Q289 Ian Lucas: So it is on the Government's agenda to legislate in that area to make the balance fairer? Mr McNulty: I am not sure I said that. There are serious enough questions abroad from promoters and others - in some cases local authorities as well - about utility diversions and the cost of them for the Government, at least, to look and look in detail. One of the things we are doing with some of the promoters when we are looking at schemes (I am thinking of Leeds in particular), is they are reviewing their whole approach and strategy in terms of utility diversion. It is, in comparative terms, as far as there is evidence with our European counterparts, an extraordinarily larger element in terms of costs than in Europe. It is something that needs looking at. Whether down the end of that line it means altering legislation and the relative balance between utilities and light rail promoters and local authorities, it is probably too early to say. However, I do think it is something of substance that does need to be looked at. Q290 Ian Lucas: What is the Department doing to look at more innovative schemes and trial schemes in light rail and the alternatives to it? Mr McNulty: We are working with local authorities, in the case of the three extant projects that were put last July. They have done an extraordinary amount of work looking at a whole range of alternatives, including new fancy bus transit systems - in some cases described as a tramway up the tramlines, and all those other elements - and looking at how robust that kind of model might be in the context of quality contracts and a shift of the bus service operators around, and all those sorts of elements. We are always seeking to work with people to look at innovative schemes in terms of both light rail techniques and other elements. There are a couple of small companies looking at particular ultra-light rail-type schemes that we watch with interest. I think we are looking, we have said in the guidance, to support innovation and new technologies and have put something like, I think, £5 million or so on the table to look at pilots to progress innovative schemes. We welcome innovation and imagination. Q291 Ian Lucas: There is a company called JPM Parry Associates, apparently, who say they have co-operated with Holdfast Level Crossings to produce a new form of tram track based on a panel system which can be inserted quickly and does not require the diversion of utilities. That sounds good. The bad news is that they feel frustrated that the Government is not doing enough to help them. Do you know anything about that? Mr McNulty: Because, essentially, in their case they have a proprietary system and they want the Government to fully fund the development of their proprietary system, which again - rather like the utilities - why would they not? We do not think that is an appropriate way forward. We will watch with interest how Parry and Bristol Electric Rail Bus and some of the other small companies move in this direction, but it is not really for us to fund private sector research and development around proprietary systems. That may change but that, I think, is our position at the moment. The points they have made about not needing to divert utilities, and things like that, are of course of interest, as are all the other elements in terms of innovation and new systems. We watch those all the time with interest. We are an open, caring and outward-looking Department. Q292 Ian Lucas: Do you think the Department should be concerned that it has taken four years to get approval for an experimental rail vehicle to run on the Stourbridge line on Sundays? That sounds like an awfully long time. Mr McNulty: It does sound a long time. I do not know the details of the particular one, but I will certainly look at it. We are very, very keen to do two things: firstly, to make sure that the initial decisions in terms of these projects and these types of experimentations are taken at the appropriate level, and are taken not quickly because there are processes to go through but not over an inordinately long time-frame for no apparent reason other than it has taken so long. Something like that should not take four years, I fully accept that. Q293 Chairman: It is important, is it not, Minister, not simply to pay lip service to the fact you are looking for innovative technologies? When there is something simple, like giving permission to run on an empty line, a little bit of urgency - - I do not think we necessarily want to go back to the original railway situation where the first train managed to kill a minister, but I am sure we could actually do something in between that. Mr McNulty: I will accept that comment in the spirit intended! Q294 Mr Stringer: Can I follow a question Mrs Ellman asked? You were talking about it being difficult to assess regeneration schemes. I accept that, but as the objectives for local transport schemes are safety, accessibility, congestion and pollution, why is regeneration not one of the objectives of local transport schemes? Mr McNulty: I think it is not one of the specific objectives because, in the broader sense of all the Government does, regeneration is one of the key elements. Those are particular elements in the new LTP guidance that we want local authorities to focus on in the context of local transport plans. However, I would say that in any of the schemes that come forward from the LTP, especially major schemes, regeneration will be a key element of the criteria too. There are specific, transport-related elements that we need to secure out of the LTP process - like congestion and accessibility, as you suggest. In the broader context regeneration must be a key element of that. I said to Mrs Ellman we are getting better at it, and part of getting better at it is to assess far more robustly, perhaps, and evaluate far more robustly, not just transport and its impact on regeneration but how successful or otherwise our regeneration projects have been. I know, across government, we are trying to do that far more and far more robustly. Q295 Mr Stringer: Your officials have been assessing local transport plans, quite reasonably, against those sorts of criteria, whereas out in the real world most local authorities, if you ask them what their top priority would be, it would probably be regeneration. So would it not be sensible to have regeneration as one of the objectives? Mr McNulty: Mr Linnard's cue to come in, I think. Mr Linnard: We have got the four specific transport objectives, which you mentioned, which are shared between central government and local government - the LGA - but the guidance we have put out on the preparation of the second round of local transport plans puts a lot of emphasis - much more than in the first round - on the need for local authorities to do their transport plans against the background of housing, regeneration and economic development to make sure that the transport plans fit with the wider plans for the area - and, vice versa, that the wider plans are informed by transport. So it is very clearly flagged in the guidance we put out on LTPs. Q296 Mr Stringer: It is interesting but I still have not had a really satisfactory answer as to why, when local authorities think it is important, it is not one of the objectives. Those are not really transport objectives, are they; they are a consequence of transport objectives? Mr McNulty: Well, in one sense, regeneration is a consequence of transport. Q297 Mr Stringer: A positive consequence. Mr McNulty: Absolutely, but the key point is that we have gone from not doing terribly well at the process of capturing, monetarising and quantifying regeneration aspects of it, to doing it far more robustly now. I think that is important in the context of light rail projects. As Mr Linnard said, far more eloquently than I, in the wider context of LTP guidance for the second round, certainly on major projects, regeneration is there and is there very, very firmly. Q298 Mr Stringer: What is the Department's view about running light rail or trams on the same lines as heavy rail? Mr McNulty: Show us a scheme and we will look at it. It is as robust as that. We have no template, no blueprint; if it stacks up in terms of the technicalities and safety, and all those elements, and stacks up on all the criteria of VFM, affordability, PCR, regeneration and all those elements, we will look at it. The one case where that was offered, there had not been sufficient or robust enough discussion between the SRA in terms of the heavy rail element and what Bristol and South Gloucestershire were trying to do, in this case, on the light rail element for the thing to stack up in any way, shape or form, and the scheme fell away before those elements were carried out. But it is something worth looking at. Q299 Chairman: Can you tell us how much the bus service operators' grant costs each year? Mr McNulty: I cannot, off the top of my head, but I am sure Mr Linnard will, in a moment. Q300 Chairman: Is that one of the things you carry in your head, Mr Linnard? Mr Linnard: It is on a piece of paper in front of me. Q301 Chairman: That is much more useful. Mr Linnard: The forecast is £365 million for this financial year. Q302 Chairman: When you are doing your calculations - bus versus tram - do you take account of the fact that that £365 million ought to be part of the calculation? Mr Linnard: Yes. Q303 Chairman: We have your word on that. Thank you very much indeed. As always, Minister, you are very good value and we enjoy listening to you and questioning you. I think I would only ask you one thing in closing: I think it is admirable that you are so open to different flexibilities, but could you accept that this might produce some difficulties for local authorities who want to come to you with particular schemes? What you are saying, in effect, is: "We won't tell them that we have a template", but, on the other hand there must be things that you are going to turn down. Is there any likelihood that you would be prepared to say to the local authorities concerned: "There are a number of options and these are what they are"? Would that not be, at least, a more targeted, a more structured way of giving them some idea of how to move forward? Surely, it is not helpful to have them doing very complicated schemes and then be told by you: "No, it does not comply"? Mr McNulty: I think that would be right if we did not engage with them at any stage before they came up with a project or scheme. What we are seeking far more than we have done in the past is to have that engagement, that discussion, about what might be the most appropriate thing for any particular local authority, long, long before they are committing either funds, expertise or resources into working on that definitive scheme. So we do stand ready to help at the earliest opportunity, which is perhaps what did not prevail enough in the past. Q304 Chairman: On that hopeful note, thank you very much for giving evidence to us. We shall look forward to your being in the Department after the next General Election. Mr McNulty: Unless I am run over by a train in the interim! |