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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 378-iii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE Transport committee
the future of light rail and modern trams in britain
Monday 14 March 2005 SIR HOWARD BERNSTEIN, COUNCILLOR RICHARD LEESE, CBE, COUNCILLOR ROGER JONES, MR CHRISTOPHER J MULLIGAN and LORD SMITH OF LEIGH
MR JOHN PARRY, MBE, MR CASPAR LUCAS and MAJOR KIT HOLDEN Evidence heard in Public Questions 305 - 403
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Transport Committee on Monday 14 March 2005 Members present Mrs Gwyneth Dunwoody, in the Chair Clive Efford Mrs Louise Ellman Ian Lucas Miss Anne McIntosh Mr Graham Stringer ________________ Examination of Witnesses Witnesses: Sir Howard Bernstein, Chief Executive, Manchester City Council and Clerk to the Greater Manchester Passenger Transport Authority, Councillor Richard Leese CBE, Leader of the City Council, Manchester City Council, Councillor Roger Jones, Chairman, Mr Christopher J Mulligan, Director General, Greater Manchester Passenger Transport Authority and Executive, and Lord Smith of Leigh, a Member of the House of Lords, Chairman, Association of Greater Manchester Authorities, examined. Q305 Chairman: Good afternoon to you gentlemen. You are most warmly welcome here this afternoon. Would you be kind enough to identify yourselves, starting on my left. Lord Smith of Leigh: Good afternoon. I am Peter Smith. I am Leader of Wigan, but I am here in my role as Chairman of the Association of Greater Manchester Authorities. Councillor Leese: My name is Richard Leese. I am the Leader of Manchester City Council, but I am here in my role as Deputy Chairman of the Association of Greater Manchester Authorities. Sir Howard Bernstein: My name is Howard Bernstein. I am the Chief Executive of Manchester and, also, Clerk to the Passenger Transport Authority. Mr Jones: My name is Roger Jones. I am Chairman of the Greater Manchester Passenger Transport Authority. Mr Mulligan: My name is Chris Mulligan. I am Director General of the Greater Manchester Passenger Transport Authority. Chairman: Gentlemen, we have a little bit of housework before we commence our Committee. Members having an interest to declare? Ian Lucas: I am a member of Amicus. Miss McIntosh: I am doing a placement with the Industry and Parliament Trust, for Network Rail and FirstGroup. Chairman: I am a member of ASLEF. Mrs Ellman: I am a member of the Transport and General Workers' Union. Mr Stringer: I am a member of Amicus and an ex-member of the Greater Manchester Passenger Transport Authority and Manchester City Council. Q306 Chairman: Gentlemen, do you have something you wish to say to open the batting or may we go straight to the questions? I should point out to you that the acoustics in this room are difficult, so you will have to speak up because your words are being recorded but not projected. Lord Smith of Leigh: Chairman, if it is possible I would like to make an opening statement on behalf of my colleagues. First of all, we are delighted to be here and we thank you for giving us the opportunity to supplement the written submission we have made already. We welcome the Committee's timely review into light rail. We think it is a very significant issue for us in Greater Manchester and there is the support of all the ten local authorities who are willing to pay 25 per cent of the costs of the Metrolink Scheme. Greater Manchester has enjoyed comparative economic success over the past few years and Metrolink is a key factor in that success. However, there are parts of Greater Manchester that have not benefited from the success and we believe Metrolink would provide the connectivity to regenerate these areas. We thought, when we met the Minister for Transport in February 2004, we had reached certain shared conclusions: namely Metrolink was crucial to the economic fortunes of the region; the cost increases were significant. In the main, these were attributable to the significant changes in the perception of the private sector to risk as well as delays in taking decisions. The £520 million cap agreed in December 2002 was not sustainable with the progression of the Metrolink expansion of at least two lines, and it was undesirable to change procurement policy. The Minister indicated to us that he would consult with the Secretary of State and come back to us. Several months later, about 20 minutes before the announcement on 20 July, we learned that Metrolink was to be cancelled or, in DfT speak, not to be proceeded with. We have worked hard to reposition Metrolink in the Government's list of key priorities and we now have the full support of senior Ministers that Metrolink must happen. Chairman, we see your inquiry as a major opportunity to set the record straight, to highlight the importance of light rail as a conduit to economic change as part of an integrated transport strategy and the importance of making early decisions to ensure new jobs and investment are not slowed down or completely lost. Q307 Chairman: Mr Smith, that is helpful. I hope we will be able to examine some of those aspects in the questions we want to ask you. Can I begin by saying we would like to know why you thought light rail met your transport needs? Mr Jones: In terms of light rail, all of us have been impressed with the success of the system since it came in about 12 years ago. What is more important to us is not what we think, it is what the public think and the public are massively in support of light rail because it has done everything we expected it to do. It is not just providing an efficient transport system for the public, but, also, it has got people, for the first time, I think, out of their cars and onto public transport. That has been absolutely phenomenal in Greater Manchester. When we had this hiccup from the Minister in recent months, the public have backed our campaign to the hilt because they know how successful it is and how successful it will be once it is expanded. We are more than happy with the current system as it is, but obviously we need to expand it right across the conurbation, which is what we would like to do. Q308 Chairman: What was the most important reason, the regeneration benefit or how much the transport needs of the corridors concerned took precedent? Councillor Leese: I think it is combination of both of those with an equal balance. The work which is being done on the proposed corridors for the Metrolink expansion shows that in terms of the number of people who can be carried in comparison with other public transport or other alternatives is significantly greater, perhaps as much as 35 per cent greater. Journey times are significantly smaller and, in particular, the mode of transfer - people getting out of their cars onto public transport - is very much greater. I think the transport argument is a very strong one. At the same time, the economic analysis indicates that - I will give one example - the growth in GVA for the conurbation would be around 1.4 billion per year by the time the whole of the network is built out. Again, that is double the impact of any other possible alternative. At a more immediate sort of level, Peter Smith referred to parts of the conurbation missing out, which includes parts like Oldham and Rochdale where the economic performance is not as good as the rest of the conurbation. Things like their Housing Market Renewal Pathfinder are absolutely postulated on light rail being delivered to those particular areas. It is a real impact in terms of not just regeneration but, also, neighbourhood renewal. Q309 Chairman: Did you do any work on buses before the Department asked you? Mr Mulligan: We have always looked at the alternatives available to us. Working in the transport field, one sees there are various roles for various forms of transport: heavy rail is very good at medium and long term trips; intermediate trips, which Metrolink tends to cater for, are five to seven miles; buses, the average distance travelled is about two and a half miles. Nobody underestimates the importance of bus to passenger transport in Greater Manchester, about 85 per cent of trips are taken by bus. What Metrolink does is give a speedy, reliable, quick access to the city centre for the large numbers of people it carries. Q310 Chairman: Did you make it clear that you had looked at the bus alternative in your region? Mr Mulligan: We were required to do so, Chairman, because of the social cost benefit analysis on a number of occasions. Q311 Chairman: What was the effect when the Department asked you to investigate bus options in terms of time lost and expense? Mr Mulligan: We were quite willing to do that because one would not come forward with a proposal, such as light rail, with all the benefits which Councillor Leese and Lord Smith of Leigh have described, without having examined the benefits and cost of the alternatives and, indeed, if it is a requirement of the evaluation of the scheme. In all cases since 2000, we have been able to demonstrate to the satisfaction of the Department's economists and civil servants the scheme is much better value for money in their own terms than bus. Q312 Chairman: What about FirstGroup's new bus? They say it has got the advantages of the tram, it can be used with bus priority measures and it ought to be more efficient. Would the availability of such a vehicle change your view? Mr Jones: I do not want to deprecate FirstGroup's bus, it has to prove itself in use. Also, I think it suffers from the handicap of all street-borne trouble of traffic lights, congestion and so on, whereas a segregated tramway is rather better. Q313 Mrs Ellman: If deregulation was dropped, do you think then the buses would run as effectively as Metrolink? Mr Jones: We have campaigned on this regulation issue for a number of years now. We are absolutely clear that all the major cities outside London are at a massive disadvantage when it comes to the way buses operate. In Greater Manchester, at the last count I had there were 44 bus operators operating within the county. You have got two that dominate the market which never compete against one another and we have no regulatory powers whatsoever, as you know, to sort out the frequencies of the buses, the fares, the timetables and so on, so we are really in a mess when it comes to trying to make some sense of the bus. The public cannot understand what is happening, they cannot understand how a passenger transport authority does not have the powers which they have in London and the fact that we have been left with this situation. What do we intend to do about it? Hopefully we then moved on to the quality contract argument, which I am sure you have heard before, but it just does not happen. The operators have said, more than once, they will boycott such a system if a system comes in. We do not feel the current Government are answering our point on regulation, which is crucial. Q314 Chairman: Mr Jones, I have to say, frankly companies manage to accept it quite well when they find themselves operating like they do in the London system. Councillor Leese: I think an analysis would show that whilst re-regulation would mean the operation of a properly integrated public transport system would be a lot easier to do - indeed, I think we could only do it if there was regulation - I do not think regulation on its own would change in any way the comparisons in performance terms between buses as against light rail in those particular transport corridors. Whatever you do, there is only a limited capacity on the roads in those corridors and buses can only carry so many people. Even with regulation, you would still have a massive shortfall in the performance of buses against light rail. Q315 Mrs Ellman: The Department say they will only fund light rail if there is a properly integrated transport service with it. Are you saying you are not able to produce that under the current system? How close can you get? Councillor Leese: First of all, our LTP one, that was accepted as a centre of excellence for integrated transport, so we would say the Metrolink proposals were already built within - to the extent which we can - a proper integrated transport strategy. Some of the things you need to do, like integrated ticketing, integrated timetabling and a measure of price stability in terms of fares, can only be done if you have a fully regulated system. Integration can go a fair way along the track - if I can use that phrase - but only a certain way along the track without that regulation. Q316 Mrs Ellman: Would you say the Government has gone cool on light rail systems? Mr Jones: I am absolutely convinced of that. Although the Minister said that is not the situation, it seems to us that decisions were taken in the Department for Transport, maybe because of lack of resources, but they seemed to have made a decision that light rail has got to be put on the backburner. Certainly that is my inclination in all the meetings we have had over the last 12 months or so. Although that is denied by Ministers, I am convinced that is the situation. Lord Smith of Leigh: My short answer would be, yes. I think the real question is why, why do we think it is happening like that? Is it the question that they do not believe light rail can deliver the transport solution - we think Metrolink proved that it can, it is part of a system - or is it because there are problems over affordability which I think are a different set of issues. Q317 Chairman: What conclusion did you reach? You have posed a question, which of those two do you think is the answer? Lord Smith of Leigh: I would tend towards the second of those. Q318 Mrs Ellman: Would you say the current appraisal system gives a proper evaluation of your scheme? Councillor Leese: No. Q319 Mrs Ellman: How should it be changed? Councillor Leese: For a proper evaluation of any scheme, as well as looking at the benefit cost analysis which is currently carried out which is done almost purely in transport terms, it does have to go beyond that and look at the competitiveness agenda, the social inclusion agenda and the regeneration agenda. There are some signs that evaluation is moving in that direction, but that has not been applied in any proper way to our proposals in the past. It grossly undervalues the contribution Metrolink would make to the Greater Manchester conurbation. Q320 Mrs Ellman: On these schemes you are now looking at, the extensions you are looking at, which are more important: regeneration issues or alleviation of congestion? Lord Smith of Leigh: I think it is a cause for the coffin, if I may say so. We think connectivity is the key to economic success, transport success and regeneration in a major conurbation and we think that is what we will get out of Metrolink. There will be an efficient means of transport which will encourage a large number of people to use it, which in turn will regenerate the conurbation. Q321 Chairman: Mr Mulligan, would you like to add to that? Mr Mulligan: No, that has been dealt with satisfactorily. Q322 Ian Lucas: I want to ask you about risk. Mr Smith, you particularly mentioned risk as being the reason why there had been a large increase in the cost of the project. Can you expand on that? What type of risk and how did that manifest itself in the process? Mr Mulligan: If I can illustrate from some of the figures which we have that when we had the arrangement with the Minister back in January 2002, the gross capital cost of the scheme was £705 million. The scheme which was rejected in October 2003 had gone up to £824 million and we think about 50 per cent of that was due to a very cautious attitude on behalf of the private sector. Q323 Chairman: "Cautious", by which you mean they wanted to transfer all the risk from them to you? Mr Mulligan: Yes, but the most startling thing which happened in the net cost was in January 2002 we were told the private sector equity in the scheme would be £252 million; by October 2003, that had shrunk to £60 million, based largely on Standard and Poors' view that light rail was a risky investment based on private sector experiences dealing with the SRA where the revenue risk was being taken and based basically on the fact that the private sector felt that overall these schemes were extremely risky because they have got into trouble themselves and so have others. When we talk about schemes trebling and that sort of thing, the capital costs have not trebled, but the perception of risk, which is a concessional value, is the one which collapsed. Q324 Ian Lucas: Your analysis has led you to stay with the Design, Build, Finance and Operate structure, but put in some extra safeguards to protect the public sector. If you were to start again, do you think that is the correct approach? Sir Howard Bernstein: Put simply, what we have said is given the existing risk profile which you are trying to achieve on procurement, our procurement approach has been appropriate. Equally, I think it is fair to say, also - and we acknowledged this in recent meetings with the Department for Transport in working party meetings over the past few months - the existing procurement approach, which we have been pursuing in the context of private sector assumption of risk and their appetite for risk, is not as efficient as it ought to be. Therefore it would be appropriate to review procurement options, and we said as much in working party meetings with the Department just before Christmas. Q325 Ian Lucas: Which other options would you like to look at? Sir Howard Bernstein: I think there are a variety of options, as I think was indicated towards the end of last week under your cross-examination of ministers. Looking at a lack of private sector appetite for risk starts to generate the question, "Is the public sector procurement in operation an option which needs to be reconsidered?", and the answer to that is, "Yes". Equally, there is some evidence elsewhere in Europe where the appointment of an operator and the development of single line bids on an incremental basis have also demonstrated the ability to capture efficiencies. There are a range of options which we are currently evaluating and which need to be brought to bear as part of the process. Q326 Chairman: What was the response to this suggestion? Sir Howard Bernstein: There was no answer to that. Q327 Chairman: There was no answer in the sense that no one commented or that the discussion moved on? What was the response? Sir Howard Bernstein: They went away and looked at that and they came back to it and said: "We need to do a lot more work". Certainly, in the context of the substantive discussion we had around new procurement options, there was no detailed response given to us. Councillor Leese: The question rightly focused on risk within the procurement process. One of the other factors for increasing cost is the slowness of the procurement process. Quite often there are six to twelve month delays in getting responses from the Department for Transport. Again, another factor which is taken into account in our written evidence is that any advantages we might gain from an alternative procurement process might be lost simply because the time delays would put the costs on in a different way. Q328 Chairman: Did you tell us why you went to Design, Build and Operate in the first place? Sir Howard Bernstein: That was the Department for Transport's preferred approach. Chris and I led those negotiations over a period of some years. There were two broad options, the traditional PFI approach or, alternatively, the DBOM approach, which is the one we subsequently moved forward with. Mr Mulligan: It is true - I was doing those negotiations - that the Department preferred DBOM. Q329 Chairman: Design, Build and Finance. Mr Mulligan: Yes, Design, Build, Operate and Maintain. At that time the Treasury looked favourably on the Private Finance Initiative, similarly to the Nottingham Scheme. We had a happy nine months debating with the Treasury and the then DETR as to whether it should be DBOM or PFI. Q330 Chairman: It is not true that, in effect, the time taken in order to get this scheme off the ground is entirely due to people sitting on it, it is rather due to the fact that you could not agree in the first place what you were doing? Mr Mulligan: Before we went into the market and before we were allowed to put an OJEC in the European press we had to decide with the Department --- Q331 Chairman: What is an OJEC? Mr Mulligan: It is a journal of the European community which would advertise a scheme to prospective tenderers. Before we were allowed to do that, we had to establish the procurement methods to the Government's satisfaction. Q332 Miss McIntosh: Have you quantified the work you did? Lord Smith of Leigh said you did some work on the buses for the Department for Transport, have you quantified what the cost of that work would be? Sir Howard Bernstein: Page eight of our detailed submission identifies both the cost and the benefits of our Phase 3 expansion and, also, the comparable alternative options in relation to buses. What we clearly show there is that Metrolink has a superior cost to benefit ratio; total benefits are nearly three times those of the bus; Metrolink carries 25 per cent more passengers than the bus; it takes 3.6 million more journeys off the roads and would generate an operating surplus. Indeed, the cost of bus is at £527 million compared with the cost of Metrolink of £764 million. Q333 Miss McIntosh: Yet earlier on you said that 85 per cent of the trips that would have used these are travelling by bus? Mr Mulligan: Correct. 85 per cent of the public passenger transport trips are taken by bus within the county and about 15 per cent are by heavy rail and light rail. Of course they are subsidised, whereas Metrolink is not. If you look at the same figures which Howard is talking about, operating costs of £16.1 million for the bus option and £15.4 million is the revenue, so there would be a real subsidy required for the bus network and that is not the case for the Metrolink network. Q334 Miss McIntosh: Would you agree or disagree with the National Audit Office report which found that while light rail had improved the quality and the choice of public transport, it had not brought all the benefits expected? Mr Mulligan: I would disagree extremely strongly. I wish to dispel an illusion that the National Audit Office was anti-light rail in its report. I read it and there were comments which I disagreed with, but one of the exceptions they made within that report was in talking about Manchester Metrolink which they described as one of the most successful schemes in patronage terms which the country had experienced. Q335 Miss McIntosh: If you look at France, they have much more landmass than we have in this country and that is why, I understand, with transport, planning tends to go much quicker in countries like France. Do you have evidence that the consultants are seeking to prolong the process for putting forward an application? Councillor Leese: No, I do not think we have evidence of that. We have clearly looked at other examples like Cityside Lyons, which will probably have similar densities and in part of the city even greater densities than the Manchester conurbation, and they appear to be able to accelerate the procurement at every stage of the process. Compared to the United Kingdom, more of the expenditure decisions are taken at a local level and do not require this batting backwards and forwards between the local level and government. Q336 Miss McIntosh: Would you say the fact that MetroLink was not extended has been to the benefit or disbenefits of passengers? Councillor Leese: Overwhelmingly to the disbenefits. Q337 Miss McIntosh: Would you like to elaborate? Councillor Leese: In a number of areas. First, journey times along those corridors are significantly longer by public transport than they need to be, and with MetroLink they would be a lot quicker. There are lots of people now who do not really have a good choice of public transport, and MetroLink can give them a good choice. The evidence does come from phases 1 and 2 where we have had very significant modal transfer that far exceeds modal transfer that comes from bus-based alternatives. Both in terms of choice, accessibility and journey time, passengers have a disbenefit in all those ways. Lord Smith of Leigh: Part of the extension is on existing heavy rail routes, which are in a state of dilapidation, and there is very poor experience for the passengers that use them, so we wanted to improve that, very much as we did on the Bury/Manchester line. Q338 Miss McIntosh: What is the difference between modal transfer and integrated transport? Lord Smith of Leigh: Modal transfer is jargon shorthand for getting out of cars and onto public transport. Q339 Mr Stringer: We are getting a very different impression here today than we had last Wednesday when the Minister told us that he was cracking the whip over officials to get a decision on refurbishing the current MetroLink lines. Is that your impression? Councillor Leese: No, it is not. It is a question that has already been asked about how often we have, and did we, do a bus comparison with MetroLink; and it would appear yet again on the refurbishment of phase 1 and phase 2 that we are having to do a benefit cost analysis from scratch, which would include those sorts of comparisons, which from our point of view does not seem to go along with "cracking the whip" not least because that is work that has already been done and has already been presented to the department. Q340 Mr Stringer: When do you expect the Department to give you an answer on that? Mr Mulligan: The Minister of Transport was given the application for phases 1 and 2 in January. About a fortnight ago I received a letter with a whole series of questions about this scheme, largely dealing with issues which had been dealt with at length in the preceding months. Last week there was a meeting held on 8 March and the Department made it fairly clear that they were going to treat this as a fresh application for a major scheme. I think that we are in for a little bit of a minuet, Chair, with Department of Transport officials and civil servants before this scheme sees the light of day. Chairman: It sounds more like a funereal march to me! Q341 Mr Stringer: We have had some answers so far on this arrangement, and there is some evidence in your written submission, but I would like to be clear about the increased costs. How much is due to utilities; how much is due to delays by Government; and how much is due to a change in financial environment? Mr Mulligan: I would say a fairly small amount was due to the utilities because the order which increased the proportion which was payable by the PTEs had come and gone before phase III. Delays by Government: in January 2002 we had the initial bids at 520 million. In December 2002 we received approval from the DfT. In May 2003 we had discussions with Direct over the best and final-offer funding requirement. In December 2003 the final submission for the revised one, and July 2004 funding was withdrawn. Between our meeting with Mr McNaulty in February 2004 and August 2004 there was absolutely no correspondence between ourselves and the department; and they ran weekly, and I was told that it was all part of the public expenditure review. Sir Howard Bernstein: Something like £200 million, which is the difference between private sector equity contribution, took place between January/December and October 2003; so we are effectively talking about an increase of the order of £350 million in total cost, something like £200-250 million was attributable to what Chris has already described as being the outcome of the private sector either taking a much harder view about risk assumption both in terms of operational costs and revenues and also in the context of what they would wish to bank in terms of capital and its impact on the Capex programme. The net public sector grant requirement, which went up to about £300 million - something up to £250 million was attributable to private sector risk. Q342 Mr Stringer: Could you have gone ahead in January 2002 if the Department had been lightning fast in its responses? Could you have gone ahead in January 2002 at those earlier costs? Sir Howard Bernstein: No, for the simple reason that Chris and I talked to the department at that stage. What was clearly coming out was provisional outcomes in terms of the tendering process. We were very clear that we did not wish to waste more time and contractors' time or expense in terms of overseeing the process without registering with Government that costs were increasing and the reasons why costs were increasing as well. At that stage, revised funding arrangements were agreed and then the private sector bidders were asked to bid within that overall envelope. Q343 Mr Stringer: Mr Mulligan has partly answered this question, but if now you were given carte blanche to go down any procurement route or any mix of those, what scheme, if you could determine it, would you follow? Sir Howard Bernstein: At this stage there would be two broad options, and I do not think anyone can make a final decision on that. One would be the public sector option, and the other would be a single operator and the ability to differentiate between the actual building of individual lines; so somebody to come in and build individual lines, i.e., contractors, and also a separate operator. One of the reasons why the private sector risk has changed quite considerably is the particular mix of contractor, operator, mechanical engineering type of activities; and that particular mix has contributed very significantly to a downgrading of risk which they are prepared to assume. That point has become widely acknowledged certainly within the industry. Q344 Mr Stringer: The Secretary of State and all ministers who have been questioned in this Committee and on the floor of the House of Commons have said absolutely categorically that the only issue for them has been affordability as they look at this scheme. Do you accept that, and within that affordability can you come forward with another scheme that would satisfy the Government that the scheme was a good one? Sir Howard Bernstein: The answer to that is "no". Affordability has not been the only issue. There has been more on the table in relation to MetroLink than just affordability. Very early on in the process of the working party, as Chris has already indicated, for the third time we were asked to evaluate buses as an alternative to MetroLink, and we were able to show again, in our view very, very clearly, that in terms of the quantum of change we needed to deliver in terms of the scope and nature of the benefits we wanted to capture sub-regionally, MetroLink not only was the best value for the public sector but was the only optimum public transport solution. I still think that within the Department there are still very clear views that the bus is a more low-cost option to MetroLink and should be pursued. Councillor Leese: If affordability is the sole issue, then I would say the issue should be about the pace of delivery rather than whether MetroLink has delivered or not. That something that we have always been open to discuss with the Department, the phasing of delivery so that it can fit in with an affordability profile that meets Government expenditure requirements. Councillor Jones: Madam Chairman, I hope this is not a red herring but ----- Q345 Chairman: I shall tell you if it is! Councillor Jones: I should not have said that, should I? We have had a proposal in Greater Manchester for many years now for a guided bus-way between Manchester, Salford and Leigh. We can argue about exactly how long that has been on the stocks, but let me say six years, and even now we do not have government approval, although we are told it may come later this year. So much as I am annoyed and upset about what has happened with MetroLink, I have to say that for the Department to say the bus may be an alternative in certain circumstances, I cannot understand why, after six years of proposing a guided bus-way, where the total costs even at current prices are around £42 million, we are still waiting for approval. Chairman: Councillor Jones, you are obviously having difficulty understanding the difference between a bus and a guided bus! Q346 Mr Stringer: Last Wednesday the official from the Department of Transport, supported by the Minister, said that there was no problem in taking into account regeneration objectives because although they were not objectives in local transport plans, they were in an overall framework and therefore regeneration was right at the top of the Department's agenda. Is that your experience? Councillor Leese: I can quote from a report published by the Office of the Deputy Prime Minister in January of this year, prepared by Professor Michael Parkinson. This is talking about delivering regeneration and competitiveness and talks most especially about the constraints placed on urban competitiveness and cohesion by transport policy. This is the section dealing with the approach of different Government departments, so it would appear that at least one part of government believes that the current approach being taken by the Department of Transport is not taking proper account of regeneration and the economic agenda, and indeed is an obstacle to taking proper account of those factors. Q347 Mr Stringer: If you were given the go-ahead now to produce MetroLink, how long would it take you to deliver the original project, and how much would it cost, if you could go down any procurement route? Mr Mulligan: Of the order of £900 million over a period of 5-7 years, depending on how fast you were allowed to proceed with the availability of funding. Sir Howard Bernstein: Based on where we are now, I think we would do very well to secure an operator within two years, but, equally, we should be starting building new lines within that two-year period. We believe that that is in the context of the existing three and a half line expansion package and that between five and seven years all of those lines will be wholly implemented. Q348 Mr Stringer: So this delay we have been through means you have lost the potential bidders. Sir Howard Bernstein: Yes, there is no doubt whatsoever about that. Mr Mulligan: Both of the leading consortia for the scheme have invested many millions of pounds in developing a scheme in design and build terms, all of which will have to be written off by them. Q349 Chairman: They were however the same people who managed to up their prices. Mr Mulligan: Yes. Q350 Chairman: So we do not have to worry too much about them. Mr Mulligan: I do not shed tears at night, but many million of pounds have been spent. Councillor Leese: Whilst, Madam Chairman, we might not shed tears, history would suggest they will get those costs back and probably from other public contracts somewhere else. Q351 Clive Efford: In regard to your answer to Mr Lucas about design, build, finance and operate, that was the model put forward by the Government that you were encouraged to follow. In your opinion, could you have got better value for money under another model and have you any idea what sort of model that might be? Sir Howard Bernstein: We are all professors of hindsight, but at the time the DBOM model certainly served phase I of the MetroLink system very flexibly. Given the private sector's changes in risk and how they perceive risk - my personal view is that DBOM is no longer appropriate if you are going to secure maximum efficiencies in the way that light rail in particular has delivered. The reasons for that is that the mix of contractor, operator, maintainer, all militates against the definition and delivery of shared values, about outcomes, about performance targets, which therefore impacts upon the level of risk that consortia in cumulative terms is prepared to assume. If you are looking at the alternatives, we have already given the answer to Mr Stringer, which is that because of the question of risk we need to look at the public sector option more carefully in the future, or other innovative approaches that seem to have worked well in other countries, notably the single operator and the ability to bring in constructors to build particular lines. Q352 Clive Efford: If you go down the route of more conventional funding, and that requires conventional borrowing approval, do you have any other localised forms that you might consider, for example the Transport Act 2000 gives local authorities the right to raise money through congestion charging or workplace parking charging? Is that an option in Greater Manchester? Councillor Leese: Can I deal with the congestion part of that, and Sir Howard will deal with other finance alternatives? First of all, I do not think there is a lot of evidence that congestion charging is an effective alternative form of taxation, which is what it would be if it was simply being used to finance alternative forms of public transport, but we do need to look at congestion in the context of Greater Manchester, which is at the moment primarily within the motorway network rather than the A and B road network, the sort of corridors we are talking about in terms of MetroLink expansion. Over 1991 to 2002, traffic on A and B roads only grew by 2 per cent in Greater Manchester, whereas it grew by about 50 per cent on the motorway network; and clearly congestion charging, in the way it has been operated elsewhere, would have no impact on that whatsoever. A number of measures have been taken to deal with traffic management, in particular reducing road capacity, and coupling that road capacity with quality bus corridors by limiting, particularly in Manchester city centre, the availability of long-stay commuter car parking and also more positive measures of putting park-and-ride in at various locations on both the light rail and heavy rail networks. That, over the last four or five years, has led to an increase of from 51-59 per cent of people accessing the regional centre by public transport rather than by private transport. The economy of Greater Manchester, although Peter Smith talked in the introduction of improvements, is still a fragile recovery. One of the things we need to be very careful about is not taking restraint measures that would damage rather than contribute to the economic development of the Greater Manchester conurbation. Sir Howard Bernstein: In terms of the funding, my basic point is that we need to join up the debate on reform of local government finance with the debates we are now having about initiatives such as this. I think if you talked to national figures from the CBI or any of the other private sector-based organisations and discussed business rates, they would tend to move in one particular way, and that would be against any reversion to local control. I think if you had the same conversations with local business leaders, certainly in the city region of Manchester, they will say, "providing we have real influence over the way in which those supplemental rates were deployed, and we were satisfied that they were adding real value to the sub-regional economy"; then that is a debate we ought to be having about business rates, no differently than we should be looking at the whole question of land value, and also on the back of the transport innovation fund that the Government is to introduce - though we all wait for guidance about how that will operate in practice. We would be keen to see local authorities being able to use prudential borrowing and to use the TIF to see that borrowing re‑financed as resources coming forward; and it gives us a real opportunity to connect mainstream funding for major transport projects with local initiatives of strategic significance. Councillor Jones: We mentioned Lyons in our submission. When we talked to the Mayor, not only did he say he had one bus operator running the whole service, which I was rather jealous of I have to admit, but he also said that he did have access to local business tax that he could put forward to that kind of extension of light rail. Again, it is something that ought to be looked at. Chairman: Lyons is a wonderful city, Councillor Jones, but access to some methods might get you into a certain amount of difficulty. Q353 Clive Efford: Would business enterprise zones not apply in this case where you hypothecate a top-up of the business rate to put back into the transport scheme? Under a prudential borrowing scheme, 10 per cent of your £100,000 of finance is roughly £1 million - is that right? How big a scheme would you need and how big a top-up on the business rate would you need to devise a scheme like that, if that is the option you are considering? Sir Howard Bernstein: We are looking at all of those options at the moment. I am more or less talking about the principles that are involved here. Very clearly, based on the conversations we have had, there is a lot of support locally to examine those sorts of initiatives, particularly having regard to the fact that Manchester taken in isolation is a net contributor to the central business pool of something over £100 million a year. Q354 Clive Efford: I am trying to find out whether there are local funding methods that you have considered other than straightforward ----- Councillor Leese: At the moment there are not because the ability to raise local income is very much circumscribed by government. Sir Howard is saying that a review of local government finance could bring forward solutions that could do a lot more, but by and large they are not available at the moment because of the amounts they would generate are very limited. An additional caveat is that in some parts of the Greater Manchester conurbation - and I go back to parts of Oldham and Rochdale - we are talking about bringing back values to where they were some time ago, rather than getting lots and lots of added value. We are talking about stemming decline. Lord Smith of Leigh: When the phase III extension was announced by Mr Prescott, he brought in an innovative scheme then called the Transport Infrastructure Fund, which was to help those two authorities, i.e., Wigan and Bolton, which were benefiting directly from the MetroLink because, as I said in my introduction, we all contribute to the cost of MetroLink and it would seem to be a fair and equitable thing to do. We should go back and sit down with all ten different authorities and all the separate decision-making bodies to find out how we could fund it. Quite frankly, the imperative for us all is to produce the integrated transport strategy, which is what the Department said was the priority. I think you have had a draft. That is what we have to do first of all. Then we submit that to see whether we can get some of the new transport innovation plant and then we can see what we need to raise the rest of the money. Q355 Clive Efford: Why do utilities need to be diverted? Mr Mulligan: Quite often utilities are required to be diverted, but one of the big problems that scheme promoters have had in recent years was the decision taken by the Government that when these utilities are diverted and moved, there is always an element of betterment, in the sense it is bringing forward the replacement, or replacing it with better equipment. Until two or three years ago the Government used to say that 18 per cent of the cost of utility diversions was attributable to this type of betterment. Then out of the blue came an order that 7.5 per cent was attributable to betterment, and I know that has caused a major problem for many scheme promoters. I said earlier that we have factored it in to phase III of the scheme, but we have never received a convincing explanation of government apart from the lobbying of the DETR as it then was by the private sector utilities as to why that was done. Q356 Clive Efford: In a nutshell you are saying that when public sector schemes like this come about, the private sector makes a killing by masking some of its costs. Mr Mulligan: They do tend to mask some of their costs. The difference between 7.5 per cent and 18 per cent is quite considerable when there is a large bill for utilities to pay. Q357 Clive Efford: What is loose current? Mr Mulligan: Stray current. It takes a technician to answer you properly but let us put it this way: at 750 volts you will not feel very much; but when I told BGC GMR it was 750 kilovolts you would be fried alive, that is ----- Q358 Clive Efford: What dangers does it pose? Mr Mulligan: I think a technical person would have to answer that question. Q359 Clive Efford: Is there an additional cost involved in dealing with that? Mr Mulligan: Insulating against it. Network Rail is extremely sensitive because safety systems can be influenced by stray current. For example, it can turn a red light green. Chairman: You are really telling us that the scheme has taken an inordinately long time, partly because of the debate between yourselves and the Department as to the method of finance; you have more than once done the estimated bus substitution and come up with information that you have handed on to them; there is still an argument because there has been change in minor elements but important elements like the costs of the movement of utilities, and it is still not clear from the department's overall view whether they accept the fact that what you are putting forward is a viable scheme. That is quite clear, gentlemen. Thank you very much indeed for coming this afternoon. Examination of Witnesses Witnesses: Mr John Parry, Chairman, and Mr Caspar Lucas, Engineering Manager, JPM Parry & Associates Ltd., and Major Kit Holden, Director, Holdfast Carpet Track Ltd, examined. Q360 Chairman: Good afternoon. Mr Parry, I think you win our award for the most persistent of our witnesses, although you cheated a bit by getting the Deputy Speaker on your side! However, we will allow you to escape any suggestion of favouritism! You are most welcome this afternoon. Would you like to tell us your full name and designation, and introduce us to your colleagues. Mr Parry: My name is John Parry. I am the chairman of a small engineering company in the Black Country, which has, in spite of all efforts to the contrary, maintained a manufacturing capability; but the majority of its manufacturing activity is through creation of supply chains of companies, which is traditionally the way things are done in the Midlands. We created a new company in 1992 to embark into light rail. Caspar Lucas is from the railway industry and is a mechanical engineer. My colleague Major Holden is somebody this Committee has met before in another guise, as he was former senior inspecting officer in light rail in the Railway Inspectorate. Q361 Chairman: Mr Parry, you say light rail in Britain is distorted by the fact that the consultants involved always have vested interests in prolonging the process. Surely customers have a greater interest in speeding it up? Mr Parry: At the beginning of my presentation I had a gripe about consultants and it was really the interface between the consultants and the public officials, that it can be a career-building exercise to keep the work of study and review reports ping-ponging backwards and forwards, and almost if you say "we will go ahead and build now" it turns off the tap of the fees, and so we have to be realistic that the professionals are interested in furthering their interests as well as furthering the profits. Q362 Clive Efford: That sounds very anecdotal. What evidence is there of anyone in any scheme you could name where funding has been turned off in order to prolong the consultation process? Mr Parry: There is no point in picking instances. I can certainly provide adequate follow-up of instances where it has happened. The real issue is the over complication of everything. This is going to be very much the thrust of our presentation, that things do not need to be as complicated as they seem to be. The professionals could be better than they are at the process of simplification. Q363 Clive Efford: You can forward that argument against anyone you disagree with, but you would have to back it up with some evidence and examples to demonstrate your argument. Mr Parry: Well, you heard it from the previous speakers from Manchester; that there does seem to be a remarkable prolongation of the process of consideration and the more complicated the reporting the longer it takes to consider, and that is why the Department takes a long time to make up its mind, because sometimes massive documentation is submitted where things could have been presented more simply. Q364 Chairman: Do you think that trams as opposed to other modes get extra costs imposed by the planning and approval process? Mr Parry: Yes, indeed, because if you wish to introduce a bus to the public roads you do not have an enormous amount of activity to study whether it fits the infrastructure and meets this, that and the other regulation; in fact my colleague will probably be able to provide a comparison but it is probably ten times longer to introduce a tram than a new type of bus. Q365 Chairman: Major Holden, do you know of any such formula? Major Holden: No formula, Chairman. Certainly the legislative process, the Transport and Works Act Orders now, the old private bill process under which MetroLink was built, takes up an inordinate amount of time both in terms of public officials' time and the preparation for it. Certainly some of the evidence you were hearing earlier indicated that there is an awful lot of time spent on preparing these schemes, whereas apart from the necessary operator's licence for buses, it is comparatively easy to put in a new bus service. Q366 Ian Lucas: Do you have any experience of exporting your product? Mr Parry: Yes, the other side of the business is almost 90 per cent export. This is what has stimulated the product on the rolling stock side in that our business is in human settlements. We have been responsible for school buildings, housing settlements all over the world; and probably our manufacturing products have got to 80 countries, mainly in the tropical developing world. I participated in the Technology Foresight Programme in the mid 1990s, and that looked at what it calls in world environment terms the burgeoning cities of the third world, where you have poverty and yet you have traffic jams, which is absolutely bizarre because nothing consumes international resources greater than a traffic jam with all these engines turning over burning fuel, and the traffic not going anywhere. We went into our introduction of this new lightweight people-mover development with exports in mind because we felt a simplified version of light rail had a world-wide market. Q367 Ian Lucas: I ask because I was interested as to whether in more developed economies that are analogous to our own you have experience of the system for procurement being more straightforward than in the UK - in mainland Europe for example? Mr Parry: I have no experience in exporting to mainland Europe so I am not the right witness for that. What I am very well aware of is the tropical developing countries. If you want to get somewhere and there is a mountain in the way, you know it is a physical obstruction, or a river; in Britain it is because of some regulation that somebody has written. Q368 Chairman: I do not want to stop you, Mr Parry, but you have, from your very excellent newsletter, a lot of experience in building in Africa, but the money has almost exclusively come with the assistance of government departments or international organisations? Mr Parry: Would it were so. To try and get money out of DFID to support British manufacturing products is a conjuring trick I have not yet mastered. Q369 Chairman: You are saying you have not had to apply to them for money for those things. Mr Parry: No. Most of our markets around the world are individual businesses and local money, people buying British products as good value for money. Q370 Mrs Ellman: What are the problems in introducing new track? Mr Parry: You cannot do anything unless you can trial it and demonstrate it, and this is where the weakness of the public sector comes in. It is not necessarily the politicians because politicians very often want to do something but then find they cannot do it. It is really the failure to respond and take up opportunities or to give the facility for a trial that gives us the problem. You throw up the business case and everybody says "my God, this is wonderful, but we will not believe it until you try it" and we say, "yes, let us try it". It goes on and on. The danger is - and this is what we are really focused about - that it endangers the supply chain. We may have a twopenny-halfpenny company in Cradley Heath but we have got very serious engineering companies and we come to them and say "we have something here; we think it fits the need of the time but we are going to need your large factories and your engineering sophistication to be able to deliver this product". They say: "All right, Mr Parry, that is a good idea; we will come along behind you. You deliver the market; we will deliver the product." Then I find two or three years later I am waiting for a committee to do this or a local authority to do that, and it does not happen, and I could lose my supply chain. Q371 Mrs Ellman: Who should be funding the trials? Mr Parry: Until recently the Department of Transport has had no innovation funding, I believe; it has all lain with the DTI. I know more recently there have been discussions particularly under the new legislation to provide innovation funding so that the Department can push new technology forward. David Rowlands, the Permanent Secretary of the Department mentioned this when he appeared before the Public Accounts Committee, so this is good. Previously, it was always with the DTI. The DTI were judging what they should support in terms of innovation based on appraisal by technical experts rather than reference across to market need as being thrown up by other ministries. One of my tasks in recent months was to get the DTI and Department of Transport to talk to each other, and for the Department of Transport to say to the DTI, "yes, we need this". Previously the DTI was arriving at decisions about transport innovation without referring to the Department for Transport. Q372 Mrs Ellman: So this is a new problem. Mr Parry: It is a problem that seems to have been resolved because - I do not know whether there is an election coming or something, but a clear light of reason seems to be bathing the whole situation now and people are listening more than they have listened for a very long time. Q373 Mrs Ellman: Are you saying there is not a problem now? Mr Parry: Well, I would not be here if I thought the game was won. Q374 Mrs Ellman: New trams, new vehicles - what are the problems there? Are they resolved? Mr Parry: My young colleague Caspar Lucas is engaged in an exercise that is like the Greek legend of the chap who keeps on rolling boulders up the hill and they roll back down again. Q375 Chairman: It does not look like Sisyphus to me, Mr Parry. Mr Lucas: Not yet, Madam Chairman. Q376 Chairman: Do you want to tell us, Mr Lucas, about hour Herculean task? Mr Lucas: I will attempt to explain. I would first like to say that I have come to this maybe not late in the day as it will turn out - we will see - but prior to my arrival at the company at the beginning 2004 the vehicle was built in 2001, and since then the company has been attempting to operate the system on a branch of the national rail network on which no other trains can gain access to at the same time, on a day when there are normally no other services. We are now in 2005 and we have had a great number of discussions with the relevant figures within the railway industry. The minimum time it will take to achieve this approval of a single car running on a single railway that is three-quarters of a mile long is four months minimum, we believe, with considerable scope for that to be extended. What really gets us frustrated is that the greatest effort we will be expending is not in demonstrating that the system is safe, because we know that it is because it has already been accepted as such by Her Majesty's Railway Inspectorate, but in measuring the system and the operation against a completely different form of transport, namely the heavy rail operation, and in justifying every single reason why our vehicle necessarily is different from a heavy rail vehicle. Mrs Ellman: What needs to be done to improve things? Q377 Chairman: How could that not be the case? Who is to know how efficient your vehicle is? To be Devil's Advocate, you are producing something which is a lighter vehicle expected to run on a different track. Mr Lucas: Or on the same track. Q378 Chairman: If it ran on the same track would it not automatically be expected to maintain the same level of safety? Mr Parry: Can I bring in the question of community railways because ----- Q379 Chairman: No, I want Mr Lucas's answer to this. Mr Lucas: My answer to this is that it is very difficult to assess an alternative to the status quo by standards that are entirely based upon ----- Q380 Chairman: I accept that is your argument, but what is the alternative? That is what I am asking. Mr Lucas: The alternative, in my opinion, would be to assess not the system against a different form of transport but the actual risks associated with the entire operation, which we are well capable of doing. Q381 Chairman: What standards would I use, Mr Lucas? I have a rail that is in existence; I have given you permission to work on a day when other trains do not have access: what standards would I use to judge your efficiency and your safety if I did not use those existing ones that are already there to protect the public? Mr Lucas: The judgment to be made is an informed engineering judgment based on actual risk. Q382 Chairman: Are you saying that is not happening, or are you saying that because you are being judged on a different basis you are neither fish, flesh, fowl nor good red herring? Is that what you are telling us? Mr Lucas: Effectively, Madam Chairman, yes. As I said, the major effort is not being expended in demonstrating the safety of the operation but in going round a long way. It can be done, but it is an unnecessarily long way to go round to measure it against something else. Q383 Chairman: We accept that. Have you now managed to get it running on this rail? Mr Lucas: No. Q384 Chairman: I thought it had been accepted you were able to do it on a Sunday. Mr Lucas: No. It is operated on this same track under engineer's possession, which means that it cannot carry passengers, and which for the purpose of our demonstration does not count as running. Q385 Chairman: What do we now need to get further? Mr Parry: An objective - and we might continue on this long, long road, which is already four years long with at least four months and probably longer to go, on the basis that we will try and make the thing behave as if it was a train, even though the comparison say between other lines or networks where you have 125 miles an hour with vehicles weighing 500-600 tonnes is a totally different energy environment to a short branch line where the vehicle is doing 20 miles an hour and only weighs 12 tonnes. The factor of difference is 10,000:1 in terms of energy and risk. Q386 Chairman: If I were in control of both those lines, a mainline and a branch line, would I not have to bear in mind the fact that your vehicle would have to measure up to some of those same restrictions? Mr Parry: I will hand this over to Major Holden. Q387 Chairman: Major Holden, a child's guide, please. Major Holden: The easiest way to illustrate it is from the Manchester MetroLink system where for 1600 metres the system runs on Railtrack or Network Rail controlled infrastructure from Deansgate Junction down into Altringham. The trams they use are a very different construction with very different crash-worthiness and resistance to the mainline standards. They were accepted - and dare I say I helped give them permission to do so - on the basis that they were running to all intents and purposes on a self-contained network. Q388 Chairman: There is no interface with the main system, therefore it was quite permissible. Major Holden: Correct, because you are judging that vehicle in ---- Q389 Chairman: In a vacuum. Major Holden: Well, against itself or against its own part of the system. Q390 Chairman: Why can that not be done with this present vehicle? Major Holden: It could be, apart from the licence regulations and the railway safety case, which Network Rail have for operating, because the Stourbridge town branch is still theoretically part of Network Rail infrastructure. Q391 Chairman: You are saying that were there an innovation system, were there a specialised rail line that was independent of the main system, none of these problems would arise. Major Holden: Correct. Q392 Clive Efford: Major Holden you mentioned how easy it is to introduce a bus service in comparison. Is it not true that if someone wants to introduce a bus service under current regulations that exist outside of London, they take all the risks? You are asking other people to take the risks with the development you are seeking. Major Holden: Not necessarily, no. What we are asking people to do at the moment is to permit us to operate the vehicle taking presumably the revenue risks, and to operate it on Network Rail infrastructure for a period to be determined - at the moment it is one year. We have to go through a load of regulatory hoops which are quite properly in for train-operating companies; but the difficulty arises as we have been discussing, that the vehicle is not "the same as" the heavy rail vehicles. We submit that there is no need for this. A bus company does not have to go through that same regulatory set of hoops; it goes through different ones, I agree, but they are not as long. If it buys a bus which conforms to regulations, they can operate that bus. Our vehicle does not conform to the Network Rail standards. Q393 Chairman: It is an ultra light vehicle. Who does it serve? It does not take as many people as a full tram; it is not as tough as a full train. Mr Parry: It is really rather like in the aircraft industry; you have all different sizes of aeroplanes, from 747s down to Dakotas or very little ones. You really need vehicles which match the service requirements. Q394 Chairman: They do have the advantage of not requiring to run on rails if they are up in the end, although they are constrained where they can fly but on the whole they try and avoid one another. Mr Parry: Yes, but rails are just two bits of metal lying in the ground to guide the vehicle. They are just inherently safer than a road system. They are lowering energy use and there are many advantages and there is no reason why the use of railways should be monopolised by a railway industry which demands very elaborate procedures when it is not necessary. Q395 Mr Stringer: In regard to your ability to get these vehicles on to the rail, last Wednesday the Minister said that there is absolutely no problem to have mixed running, trams with trains, light rail with trains, ultra light rail. What would you say to that response? Mr Parry: Theoretically it ought to be no problem, and I think within previous ministers in the Conservative administration there was a sense of encouragement and that there was a need for it - "go ahead and do it". We have really got bogged down. Q396 Mr Stringer: What should the Minister do, though, if that is what you believe should happen? You are saying in practical terms it is not happening. How should we change the world so that we can get your vehicles on to tracks? Mr Parry: That should not be the objective, to get our vehicles on to tracks; the objective should be to drive down costs in public transport and choose the appropriate mode. We feel we have done that. I would say this is a Gordian knot situation; and this is where this Committee might be helpful. We struggled again and again to try and get through the regulatory framework and it keeps on changing. We are not trying to buck the system; the system keeps on changing. The answer should be for the line to be leased from Network Rail to a suitably constituted organisation that will take over the administration of the line. There are examples of that. The Wensleydale renewable is a Network Rail infrastructure, but it is leased to the Wensleydale Railway, to do what they want to do. This now should be the procedure, because it seems to be beyond the ability of all the different safety, regulatory and operating organisations within the national network to do something quite simple, and that is just give the approval for the vehicle to run on the network as it is. Q397 Ian Lucas: But if you leased Network Rail's track to somebody else, that would not remove that track from the influence, depending where we are in the system, of either the Health and Safety Executive or the Railway Inspectorate, would it? Are they not part of the problem? Mr Parry: The Railway Inspectorate has approved the vehicle. In 2002 the vehicle was moved to the branch under engineer's possession. The inspecting officer in charge of light rail of the Railway Inspectorate came to the branch and carried out the necessary tests. He put it through the Disability Discrimination Act Regulations and it passed. He even tested leaves on the whole line, and the whole lot. Clearances he ran, and on Christmas Eve 2002 Miles Sibley, the chief panjandra for the Railway Inspectorate, wrote an approval saying "this vehicle is approved for carrying the public". Our bugbear right the way through has been the infrastructure owner, which has changed its corporate nature three times over the years and there has been this confusion. Q398 Chairman: I do not think that was necessarily done entirely to complicate your life; there were one or two other minor reasons for that, I think. Mr Parry: No, it feels like that! Q399 Chairman: Did Mr Webber give the Bristol Electric Railbus Company any explanation of the decision not to fund the service? Mr Parry: I do not think that Mr James Skinner's company has taken any interest in the Stourbridge branch as such. He has had a similar struggle, I believe, trying to get out ----- Q400 Chairman: So you have not heard of any particular arguments. Mr Parry: No, we just sympathise. It is a different organisation, and Bristol Electric Railbus bought a previous vehicle from us, number 10. Q401 Clive Efford: Why did it stop? Why was it not funded? Mr Parry: Because Bristol City Council realised it was a successful experiment at Bristol Harbourside but it had to be subsidised because there were very few passengers; it is a windswept harbourside, and the City Council then wanted to go ahead with a full-sized light rail scheme, which they were encouraged by the Government to do, but now it looks as though their funding has been cut and so it is now being revived, the idea of an ultra light service from Princess Street into Ashton Gate. Q402 Clive Efford: But if your services there were successful, being on a line with low demand, why did they not do it on a bigger scale as a light rail scheme or an ultra light rail scheme? Mr Parry: I think due to the size of the vehicles. At that time, in 1998 and 2001, the engineering capability of our organisation was to produce a vehicle with a capacity of 50; but working with our supply chain partners, including Brush Traction, the major locomotive builder, we have now brought forward a concept where we can go to 80 passengers and 170 passengers; so we are now moving much nearer into the field of not super-trams but reasonable sized tramways, and using a non-electric infrastructure, which we think is profoundly significant as far as your other discussions went - infrastructure and diversion of services and things like that. It is all to do with the confounded electricity that these huge costs are being incurred in building these tramways; so we think that there needs to be more gumption on behalf of the public sector to say, "let us try to put in a tram system somewhere which will meet the environmental objectives - it emits low noise, it is nil emission - and eliminate the need for the overhead infrastructure, particularly the current running in the rails which caused the stray currents that you were asking about, which means that you have to divert all these services. Q403 Chairman: Mr Parry, on the hopeful note that we will get some gumption in the public sector, I thank you all for coming to see us this afternoon. Mr Parry: My colleagues and I are most grateful to you, Chairman, and to your colleagues on the Committee for giving us a sympathetic hearing.
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