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Westminster Hall

Wednesday 30 November 2005

[Mr. Edward O'Hara in the Chair]

Light Rail

Motion made, and Question proposed, That the sitting be now adjourned.—[Frank Roy.]

9.30 am

Paul Rowen (Rochdale) (LD): I thank the House for agreeing to debate light rail. The subject is certainly timely, given yesterday's Government statement, which effectively killed off the Liverpool and the south Hampshire light rail schemes. Although it is not what I originally envisaged, the debate might more appropriately be entitled "What future for light rail in the UK?".

As I am the Member for Rochdale, my constituency has in it the Oldham-Rochdale loop line, which is included in the Manchester Metrolink phase 3 scheme. I seek an assurance from the Minister that that scheme will not be next for the chop. Since the Transport Committee reported earlier this year we have seen several light rail schemes picked off and dropped—those in Leeds, Merseyside and south Hampshire. Outside London, only the Manchester Metrolink and the Edinburgh scheme—the latter is funded differently—remain on the table. No doubt many hon. Members will want to comment on that.

How different that is from the 10-year transport plan of 2000, which envisaged 100 per cent. growth in the number of people using light rail, with Government support for 25 new schemes. Since then, we have seen the abandonment of the Department for Transport's 2002 growth target, the 2004 National Audit Office report on light rail, and the White Papers on rail and transport policy. The Government used the National Audit Office report selectively in order to justify retreating from giving approval to new light rail schemes, as yesterday's announcement demonstrates.

The prime reason cited in all cases is cost. The Secretary of State for Transport has repeatedly said that tram schemes cannot be funded at any cost. Why does the Department not apply the same logic to other transport schemes? The Hampshire and Liverpool light rail schemes are scrapped because of cost overruns of 26 per cent. and 40 per cent, yet I understand that trunk road schemes are now averaging a 53 per cent. cost overrun, and local authority approved schemes have an average 42 per cent. cost overrun. For example, the Kiln Lane link in Epsom showed a 76 per cent. increase on its 2001 approved cost, and the costs of the Rugby western bypass increased by 32 per cent.

Peter Viggers (Gosport) (Con): I want to follow up the point about Government encouragement for light rapid transit system schemes. Is the hon. Gentleman aware that local authorities in Hampshire—Gosport and Portsmouth—were encouraged to spend many millions of pounds developing a light rapid transit system? It would have been extremely viable, and was
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widely regarded as being one of the most cost-effective schemes in the country. Road schemes were delayed while that system was being discussed.

Paul Rowen : Yes, preparation for light rail schemes is often expensive, and local authorities and passenger transport authorities are expected to undertake a great deal of preparatory work. Why are the standards and criteria being applied to light rail not applied to road schemes? The same argument could be applied to many heavy rail schemes, welcome though they are. The Department for Transport does not seem to subject them to the same rigorous cost-benefit analysis.

The Select Committee on Transport concluded in April that

I hope that in the light of recent announcements, the Select Committee will have another look at the Department for Transport's support for light rail schemes. Why is the reverse happening on the continent? More light rail schemes are being developed there, yet in the UK we seem to be going backwards. The reason is partly cost, but some bureaucratic obstacles are being placed in the way of developing light rail schemes.

South London Trams has listed some of the advantages of the tram system in Croydon. Unemployment has been reduced; in New Addington, for example, it was reduced by 40 per cent. Congestion has been reduced, with about 20 per cent. of journeys being taken by tram that were previously taken by car; and road traffic has been reduced by 4 per cent. Trams can carry more than 200 passengers, which is the equivalent of three double-decker buses or two bendy buses. Trams use less fuel and do not emit fumes, so air quality is improved. More importantly, all sections of the community like them, unlike buses. Greater Manchester passenger transport authority has produced similar arguments to show the benefits of Metrolink—a subject to which I shall return.

South London Trams has produced a costing annualised over 30 years comparing the cost of conventional buses, bendy buses and trams. A conventional bus works out at £46 million, a bendy bus at £32 million and a tram at £20 million. There are different ways of measuring the cost, but although the initial cost of trams is higher, trams are cheaper over 30 years.

Kelvin Hopkins (Luton, North) (Lab): The hon. Gentleman rightly talks about the long-term costs and benefits, but other social, environmental and wider economic costs must be taken into account, and when they are, trams seem to be a very good buy.

Paul Rowen : I agree with the hon. Gentleman. There is no doubt that where trams are used regeneration has occurred and, as in Manchester, areas have been developed and improved.

Before considering what action should be taken to put light rail back on track, I want to look at the Manchester Metrolink scheme. As I said during my maiden speech in the House, the Rochdale-Oldham line was first proposed in 1987 and was expected to be completed and
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running by 1992, but we are still not there. Since their election in 1997 the Government had given every encouragement to the development of the Manchester Metrolink. Indeed, the Deputy Prime Minister, and then the Prime Minister, suggested that the passenger transport authority should submit all three schemes at once. However, that changed on 20 July 2004, when the Secretary of State effectively withdrew funding for the Metrolink scheme. Many hon. Members will be aware that that produced what has probably been the most successful all-party, all-community campaign in Greater Manchester, which resulted in the Secretary of State putting the £520 million back on the table in December 2004. I also understand that he has confirmed that the budget could be supplemented with additional local resources and with bidding under the transport innovation scheme.

Since then, Greater Manchester passenger transport executive officers have worked hard with Department for Transport officials to produce a viable scheme. The transport plan was submitted in June 2005 and funding has been agreed for phase 1 and 2 renewals. The original plans have been reworked and a detailed assessment of the non-transport innovation fund and the transport innovation funding implications of phase 3 expansion is reaching a conclusion, which includes a new approach to procurement and risk sharing.

I have no doubt that the plans for the Oldham-Rochdale loop line are sensible, and the costs stack up. For example, the heavy rail line currently has a £5 million annual subsidy which, if costed over 30 years, produces £150 million. The line needs urgent upgrading of track and signalling, some of which would not be needed if it were converted for light rail. That cost has been estimated at up to £60 million. Putting those two costs together would bridge the gap and make the line viable.

I want to ask the Minister three questions. Is the Department for Transport committed to the three Manchester Metrolink lines? Does he accept that the scheme is now an integrated transport solution, which will require additional transport innovation fund resources, and is the Department committed to giving the authority those resources? Finally, when does he expect an announcement to be made on when the third phase can proceed?

What can and should be done to get light rail back on track? Five things could improve the viability of light rail. First, the procurement method should change from design, build, run and maintain to splitting up the contract so that more companies and more people can be involved. Secondly, we should allow ROSCOs—rolling stock leasing companies—or similar operating companies to purchase and lease rolling stock, spreading the cost over the life of the tram rather than treating it, as we do currently, as an up-front cost. Thirdly, we can achieve economies of scale by commissioning two standard tram designs, low-front and high-front, and ordering enough of them to make it worth while. For example, Madrid recently ordered 70
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Citadel 302 trams and got a 15.7 per cent. reduction, bringing down the cost of each tram to £1.4 million. That was a considerable saving.

Kelvin Hopkins : I am very supportive of the hon. Gentleman, but he talks about ROSCOs buying trams, and on the railways ROSCOs charge extortionate amounts—up to 30 per cent. per year. Surely trams can be bought by the public sector at a reasonable return. It would just take the Government to agree that that borrowing could go on the public account rather than the private account to overcome the problem. The charges that ROSCOs make to the railways are out of all proportion.

Paul Rowen : I agree that the costs are high. However, I am trying to suggest a way forward in case the Government are not prepared to commit any more public money. I would far rather they treated light rail as they treat road schemes, on which it does not seem to matter how much costs overrun, but if they will not do that, we need some alternatives.

The fourth matter to consider is the cost of the public works. At the moment, a promoter has to pay 92.5 per cent. of such costs. For the Manchester Metrolink scheme, that is £45 million. In France the limit is 30 per cent. and in Germany it is zero. Public utilities are expected to bear the cost just as we here expect them to bear the cost of restoring any roads that they dig up.

The final change needed is to reduce the time that the Department for Transport takes to approve a scheme. We need a speedier and simpler process with more support from the Department for Transport so that, as the hon. Member for Gosport (Peter Viggers) suggested, some of the expenses that authorities currently incur could be saved and used in other areas where the money might be better spent.

Everybody wants to see the inexorable rise in road traffic halted. Light rail is popular with the public, and can deliver if the Government have the will to support it. I am in no doubt that many hon. Members want that to happen, as we can see from the recent formation of the all-party group on light rail. Now I seek a similar commitment from the Government—or has everything that we have heard recently been just warm words?

Several hon. Members rose—

Mr. Edward O'Hara (in the Chair): Order. Given the great interest in the debate, I ask hon. Members to bear in mind the fact that the winding-up speeches must start at 10.30.

9.45 am

Graham Stringer (Manchester, Blackley) (Lab): I congratulate the hon. Member for Rochdale (Paul Rowen) on having secured the debate. Let me remind the House that in October last year we held a similar debate on the future of light rail after the Secretary of State announced the cancellation and withdrawal of funds from three tram systems.

Since then, two important things have happened. First, during the general election, the Prime Minister announced in the hon. Gentleman's constituency that the big bang solution, as it is known in Greater
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Manchester—the three and a half extensions to Metrolink—would go ahead. I have no reason to doubt that the Prime Minister will ensure that that happens. Secondly, in April this year the Transport Committee presented its report, "Integrated Transport: the Future of Light Rail and Modern Trams in the United Kingdom". It is worth going over some of its conclusions, because it puts into context many of the hon. Gentleman's comments.

Six important conclusions came out of the evidence presented to the Committee. The first, which will surprise hon. Members, is that Metrolink, trams and light rail are a million times safer per billion passenger miles than either buses or heavy rail. That surprised me when I worked through the figures.

Secondly—the hon. Gentleman made this point—if we look properly at the figures, we see that although the up-front capital costs of light rail have been increasing, over the period of use light rail is actually cheaper than buses. There are two ways of working that out. The first is in the Select Committee report. The cost per passenger mile for trams is 2.4p; for buses, it varies from 3.5 to 6.5p, so trams are cheaper. The second way, which hon. Members will not find in the report unless they look very hard, is that if we capitalise all the subsidy that goes into buses annually—the bus service operator grant, the money that subsidises fares for the elderly and children, and other public money going into buses via county councils and passenger transport executives—we find that it is more than all the capital investment that has gone into trams and light rail so far. What do we get at the end? No capital, and not the transport infrastructure that we need, but fat bottom lines for the major bus operating companies.

Thirdly, light rail and trams have been the most important transport facility in getting people out of cars and on to public transport; they have been much more effective at that than buses. Fourthly, all the Committee's evidence showed that cities and major conurbations want trams, and that trams lead to regeneration. Shockingly, the Department for Transport and Ministers admitted that they were considering spending between £10 million and £15 million on a study enabling us to understand how regeneration works with light rail. That work really should have been done beforehand, because any city leader or mayor will tell you that light rail is vital to regeneration and future investment in cities.

Fifthly, the hon. Gentleman made it clear that trams are environmentally better, and that is absolutely true. Sixthly, people sometimes say that buses can do the job of trams more cheaply; however, they cannot provide the same capacity. Ten trams running at six-minute intervals will take between 3,000 and 4,000 passengers to the centre of a city. Buses simply do not have that capacity.

Tony Lloyd (Manchester, Central) (Lab): On my hon. Friend's point about regeneration, if we take a city or conurbation such as Greater Manchester, it is obvious that the existing Metrolink has had a regenerative effect there, and that it is a vital part of plans for the future. The lack of joined-up government on this issue is always a bit of a paradox; the Government, who are genuinely
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investing heavily in the regeneration of Greater Manchester, have not seen the logic of making Metrolink an integral part of the regeneration process.

Graham Stringer : My hon. Friend makes a profound and important point, which the Transport Committee has made to Ministers a number of times. Local transport plans have four objectives, and not one of them is regeneration. It clearly should be, because the people who run our great cities say that regeneration is their top priority, and transport should be fitted into that.

My next point is about an interesting connection. The Secretary of State and other Ministers have explained that the costs of tram systems have increased, and that is true. However, during its study the Committee found that the Department was part of the problem. It had persuaded and supported a procurement system that, as the hon. Member for Rochdale says, is expensive. The cheapest system would have been public sector procurement.

The Department had been a problem because of its response times to different tram schemes. There were two delays of more than 18 months in its response to one scheme, and all the time inflation was increasing in the building industry, and the banks and finance houses were getting more and more risk-averse because of the problems with Network Rail and one or two of the tram systems.

When we looked at the Department's evidence to the Select Committee, it was almost impossible to come to any conclusion other than that there was serious bias in the Department in favour of deregulated buses and against trams and light rail. I refer hon. Members to the evidence from FirstGroup, on page Ev 173 of the Select Committee report, and the Department's evidence on page Ev 185: the criticism of light rail is almost identical. However, most of the other evidence across the board presents a much more balanced view of where trams and light rail are appropriate. They are not appropriate in every case, but trams provide solutions that cannot be provided by anything else where there are heavily populated corridors in large urban conurbations.

While the Department was delaying its responses, in Greater Manchester it was encouraging FirstGroup and Stagecoach, in a deregulated bus system, to run in competition with trams. That was unhelpful. When there is such encouragement via quality bus corridors, that often means that feeder bus routes, both to the tram system and into those corridors, get worse.

I am aware of the time, so I want to finish with three quick points. Where has all this left us? As the hon. Member for Rochdale said, the £520 million is back on the table and the passenger transport executive in Greater Manchester is now going through a bidding process for the first phase of what would have been the big bang solution, which is refurbishment. However, the tram system in Manchester is not working as it has done and is not attracting so many passengers.

I phoned the deputy director general of the Greater Manchester passenger transport executive yesterday, and he said that the system works better when there are 32 trams, although they can get by with 28. However, because of the delays, often only 25 trams are in service, which means that my constituents—the people whom I
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represent—often have to wait in the cold weather at rush hour, finding that trams are not turning up. I ask my hon. Friend the Minister whether the process can be speeded up.

I shall suggest how that could happen. There is a £102 million contract; 10 trams that could move on to the system and improve the situation would cost only £16 million. What sort of centralised country are we living in? Not only can a great city such as Manchester not make such decisions itself, but it has to wait for the Department for Transport and the Secretary of State to make a decision to invest in a relatively small number of trams. We need those trams now. We need the final decision as soon as possible, because the travelling public are getting impatient; they like the system, but it is not operating as well as it could, because of the delays.

The hon. Member for Rochdale, in a comprehensive speech, made the point that we must ask ourselves about the centralisation in this country. Not only that, he said that we should consider how things happen in Lyon in France, and why a relatively small place in France—Clermont Ferrand, whose exact population I do not know—can put together a £190 million, 14 km tram system in four years from the decision to finance it, not the 15 years it is taking us to put tram schemes together in this country. That indicates that we have too much centralised decision making, which delays the process and is bad for the cities and regions of this country.

I will finish with a point that will not be controversial in Manchester, but might be here in London. The last time we had this debate, a number of us made the point that this subject illustrated the fact that the north-south divide existed, because at the same time as the money was stopped for the three tram schemes, one third of a billion pounds was announced for London transport—and since then, there has been the decision to hold the Olympics in London. I think that that is a disastrous decision for the cities and regions of England.

The Minister has a terribly difficult job, and is regularly conveying bad news to parts of England. I want assurances that the £3.5 billion now being talked about for a new sewerage system for east London and the Olympics will not—as The Guardian reported last Friday—influence the financing of the Manchester Metrolink. I would also like the assurance that none of the other extra resources going into transport in London that we have heard about on the Transport Committee will come out of the Manchester scheme.

9.58 am

Peter Viggers (Gosport) (Con): My constituency of Gosport is based on a peninsula, and the neighbouring town of Fareham is rapidly developing. The link between Gosport and Portsmouth is across a narrow 4,600 yd channel. The whole area is regarded as being ideally suitable for a light rail transit system, because road access is difficult. For decades some have thought that there could be a tunnel under the harbour at Portsmouth and some form of special transport system.

Such thinking was encouraged in 1997, when the present Government came to power, and there was much talk of integrated transport systems. Hampshire county council, Portsmouth city council, and Gosport
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and Fareham borough councils were encouraged to spend many millions of pounds of council tax payers' money investigating the possibility of a light rapid transit system.

Eventually the scheme was proposed, and it was indeed expensive. However, it was thought that it would comply with Government requirements, because the Government were talking so much about environmental issues being taken into account in cost analysis. Therefore, the local authorities felt justified in continuing. There was a public inquiry in Portsmouth, at which I made the first speech. I stressed that while there was the short-term disadvantage that roadworks in the area would cause congestion, the longer-term impact would be considerable, and future generations would have the benefit of this long-sighted planning, which the Government were encouraging and which the local authorities were undertaking.

Eventually, the scheme was given approval and was put through to Government. There was a long delay, at the end of which the Government rejected the scheme as too expensive. The local authorities went back to the drawing board and cut the scheme back to make it affordable. It went back to the Government for approval a long time ago. We were hoping for approval at the beginning of this year, and then we were pressing for it in July. I have tabled many parliamentary questions and written many letters to the Minister pleading for an answer, because all the time the local authorities are incurring expense. There have been months of delay. I tabled a question on Monday for priority answer next Wednesday—and now we have the announcement that the Government will not back the south Hampshire scheme. That will be greeted with great disappointment and anger in south Hampshire.

Hampshire county council—all credit to it—understands the problems of south Hampshire. The residents of north Hampshire have supported those in south Hampshire in putting forward this imaginative scheme, and the whole county has put a large number of eggs in the basket of light rapid transit in south Hampshire. As a result, all local road schemes, such as the Stubbington bypass and the improvements to the A32, have effectively been put on hold. Everything has been hanging on the decision on the light rapid transit system, and now we get this slap in the face.

I find it deeply disappointing that the Government have encouraged local authorities to spend so much money on such schemes. I find it equally disappointing that the Government failed to give the answer earlier, for I know not what reason. It would even have helped if they had been brave enough to give a negative decision earlier, rather than allowing the local authorities to continue to waste so much time and energy. Time and money have been lost. It is deeply and profoundly disappointing, and I can only ask the Minister whether he will take account of all those factors, and what special circumstances he will take account of to help south Hampshire come back to a new system of transport now that he has rejected our preferred option.

10.2 am

Mr. George Howarth (Knowsley, North and Sefton, East) (Lab): I shall confine my remarks to Merseytram line 1 and lines 2 and 3, which would have followed had
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it gone ahead. The line has been in the making for the past five or more years, with strong support from Liverpool city council—in principle, at any rate—and huge support from Knowsley metropolitan borough council. A enormous amount of work, most of it imaginative, went in from Merseytravel, the passenger transport authority for Merseyside. After a great deal of work, we were told yesterday by my hon. Friend the Minister that the scheme would not get Government approval.

It is important to get the context right. Line 1, which would have had a profound effect on my constituency, was routed in a particular way for particular reasons. Of the 20 most deprived electoral wards in England, 11 are in Merseyside, and Merseytram line 1 would have run along six of those. As a result of that deprivation, Merseyside has qualified for European Union objective 1 status since 1994 and 81 per cent. of the people in the catchment area of Merseytram line 1 live within the objective 1 area. It was deliberately sited along that route for that reason.

In figures published in July 2004, unemployment in Liverpool and Knowsley were, respectively, 96 per cent. and 59 per cent. above the average for the north-west. There is a clear need for the tram to make employment and education much more accessible for people in some of the poorest areas on Merseyside. Access to health and shopping facilities would also be a benefit. It is not just me saying that. The inspector at the public inquiry that was held last year recorded in his report:

He also said:

Line 1 would have had a huge impact on the local economy, especially in some of the poorest areas of Merseyside. The route would have hugely enhanced Kirkby in my constituency. Indeed, line 2, which would have terminated in your constituency, Mr. O'Hara, would have had a similar effect, and line 3 would have had a huge effect on south Liverpool.

Where are we now? I find the whole thing bitterly disappointing and I am perplexed by the way in which the Government have dealt with the main local authorities and Merseytravel. Back in June, when the Government started to get cold feet about the scheme, we had meetings with the Minister. There were also many discussions between the local authorities and Merseytravel. He set certain conditions, which were fair. With the benefit of hindsight, I understand why he did so.

The principal condition was that the local authorities would agree to fund any cost overruns, and a lot of work was done on that. However, I take slight issue with something that the Minister said in an interview on Radio Merseyside yesterday, at which I was also present. He said that no due diligence work had been carried out since June, but that is simply not true. Investec was commissioned by the local authorities to
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carry out that work and it came up with a figure that it felt reasonably represented the likely quantum of any cost overrun.

The Parliamentary Under-Secretary of State for Transport (Derek Twigg) : May I make it clear that that reflected Liverpool city council's legal advice? It said that it could not rely on assurances from the PTA without further due diligence work. It was in respect of that that I made my comment.

Mr. Howarth : I am grateful to the Minister for that clarification, but if he goes back to the transcript of his interview on Radio Merseyside, he will see that he did not give that qualification and that he incorrectly said that no due diligence had been carried out since June. If I am wrong about that, I shall apologise, but I followed him on the radio and clearly heard what he said. In fact, due diligence work was carried out, and the scale of likely cost overruns was identified as £24 million. A great deal of work went into finding a way to fund that overrun, and the consequence was that Knowsley council and Liverpool city council gave an undertaking to take out loans of up to £24 million to bridge the likely gap.

That still was not enough for the Minister and the Department for Transport, which asked for guarantees over and above the amount identified by Investec. The scheme's promoter, Merseytravel—it had the idea and put in all the work—then gave an assurance that it would meet any costs over and above the likely £24 million overrun. Indeed, it also gave an undertaking to do so within its £250 million annual budget. The likely cost overrun over the £170 million made available by the Government would therefore be covered by a loan guaranteed by Liverpool city council and Knowsley council, and Merseytravel undertook to meet any costs above that £24 million.

That was about as reasonable an offer as one could get. Although I have a slight criticism of Merseyside's attitude in general, which I shall discuss in a moment, I strongly feel that the guarantees offered to the Department should have been acceptable. Indeed, if the scheme had been proposed elsewhere, they would have been. A prejudice against Merseyside, or at least Merseytravel, seems to be at work in the Department, although that is not necessarily true of the Minister. That prejudice has played a part in this outcome, and that is wholly unacceptable. I am concerned that the Department will not allow us a fair crack of the whip in the future.

Criticism can be levelled at Merseyside, as the Minister will no doubt point out, and I share that criticism to some extent. Like you, Mr. O'Hara, I have been an elected politician for part of Merseyside for a very long time—in my case, almost all my adult life. I used to argue that we have always been unfairly compared with Greater Manchester. However, when Greater Manchester's section 151 officers—that is, officers with financial responsibility—were asked to give their assurance that it was within the means of the local authorities to meet any costs involved, they did. When Merseyside was asked the same, two of the local authorities—St. Helens and Wirral—turned their backs on it completely. They were not prepared even to risk
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any cost falling on the levy, and therefore on the council tax payers in the case of Wirral. They were not prepared to let anything affect tunnel tolls.

Sefton was far more generous, but in the end it did not think that it could go along with what was being asked of it. It was left to Knowsley, the smallest local authority on Merseyside, Merseytravel and Liverpool city council to provide as much guarantee as possible. Liverpool city council undertook to guarantee to meet most of the £24 million, but the officers of the council, as distinct from its members, have done everything possible to sabotage the scheme, even to the extent of commissioning legal advice on the eve of the end of the decision-making process, which in effect blew the whole scheme out of the water. I do not know why those senior officers set out to do that. Nor do I know why they defied the wishes of their elected Labour and Liberal Democrat members.

I am sorry to say that that shows yet again that Merseyside is politically dysfunctional compared with Greater Manchester. I am not blaming any one political party, because no one political party was pitted against another. Without being offensive to Conservative representatives in the Chamber, there are no Conservative representatives on Merseyside, so they did not figure in the decision-making process.

I conclude by making two criticisms. First, the Government should have accepted the case, which was a strong one, and the assurances that they were given. Secondly, Merseyside should have united to back the scheme, as Manchester did in the case of the Metrolink, instead of doing everything that they could in some quarters to undermine it.

10.15 am

Greg Mulholland (Leeds, North-West) (LD): I congratulate my hon. Friend the Member for Rochdale (Paul Rowen) on securing this debate, on an occasion that is more timely than he could have possibly known when he requested it. That leads me to offer my condolences to the people of Liverpool and south Hampshire for the very bad news that they received yesterday about their two schemes. We in Leeds can empathise, after the decision to turn down the supertram a few weeks ago. One of the only positive things to have come out of that very disappointing process in the past few months—a process that was probably very similar to the experiences of the people of Liverpool and south Hampshire—is that it led to my    first appearance in Private Eye as a result. Unfortunately, however, it was in "Colemanballs".

My parents live in Altrincham, which is at one end of the Metrolink. In 1992 I saw commuters start to take shiny new trams into Manchester, as they never would have taken buses. Since I have been in Leeds, I have been a proponent of the Leeds supertram scheme, first as a member of the West Yorkshire passenger transport authority, Metro, and more recently as an MP. The decision itself has been a bitter blow, as has the way in which the city and its people have been treated. The decision was delayed and delayed, until finally it was made.

One of the top 10 most congested roads in the country, the A660, is in my constituency. In fact, there was much ironic hilarity when speed cameras were put
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in on a section of the road in Headingley where, even outside the rush hour, people are lucky to do more than 5 mph. There is a pressing and urgent need for a light rail system to deal with the ever worsening congestion problems in Leeds. Such a system has the support of the council, the local business community, the local trade unions, the public sector, the hospitals trust and the general public. More significantly for Government finance, its cost-benefit analysis ratio was 2.5:1. According to Department for Transport guidance, that means that the scheme should probably have been granted approval, as the guidance says that at that level,

The hon. Member for Manchester, Blackley (Graham Stringer) touched on the divide that we in the north of England perceive. I share his view that there is something of a north-south divide. However, we as northerners must be careful to point out that in fact, the divide is between Greater London and the regions. I tabled a question yesterday to ask the Secretary of State if he could give categorical assurances that the granting of the Olympics to London had not and would not impact on transport and other infrastructure systems in the rest of the country. Perhaps we will get the answer a little earlier than I had expected, but the fact that the Government would not grant £355 million to Leeds, the fastest growing city in this country, but are prepared to invest £11 billion in Crossrail, speaks for itself.

I need to pick up some of the issues surrounding the supertram bid, as the Government's arguments and figures simply do not add up. It was decided in 2001 that the supertram scheme would be a private finance initiative scheme. A public allocation of £355 million was approved but, because of the complexity of the scheme and the length of the contract—in this case, 32 years—and the complex concept of net present value, revised costs of £348 million were presented on the same basis as for the original funding. The Department said, entirely inaccurately, that the costs had risen by nearly 40 per cent. The reality is that the call on central Government funding was not above the original sum approved in 2001, yet the scheme was turned down.

Notably, the promoters, the PTA and the local authority offered to provide £30 million. The idea was that that would delay the call on central Government funding for another few years, but the offer was not even acknowledged in the announcement telling us that we would not get our tram.

The Department for Transport said that the supertram figures were seriously misleading. There was much that was seriously misleading, but it was in the Department's conclusions. I am concerned that the Government are seriously failing on transport.

The 10-year transport plan announced in 2000 boldly proclaimed that we would have 25 new light rail schemes in this country. At the recent CBI conference, the Secretary of State said:

That is exactly what we have been saying in Leeds, and I am sure that people have said it in Manchester, Liverpool, south Hampshire and the other areas where congestion is being ignored by the Government. In Leeds, developments are already under threat since the
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decision to turn down the supertram was made. There is a feeling that that decision makes a mockery of regional economic policy.

My hon. Friend the Member for Rochdale touched on the crucial point: we are talking about how we do things in this country. I have to explain to people in Leeds why we did not get the supertram. They say, "I believe it was too expensive." I ask them, "What do you think was too expensive?" They reply, "The tracks and digging up the road, and the vehicles." I have to explain to them that those things were not too expensive; the expense was the fact that the Government are forcing 30 years of risk into the cost. People find that very hard to understand, and I find it very hard to understand, too.

In Lyon, which was mentioned by the hon. Member for Manchester, Blackley, two light rail systems were provided in less than four years. In this country it took 15 and a half years to get one in Sheffield, and in Manchester, after 28 years, we still do not have a line to Oldham and Rochdale—18 years after parliamentary approval was given for it. There is clearly something wrong in the way we do things. Our system does not allow local people and local authorities to borrow or to take risks in their cities. We have split responsibilities: PTAs are asked to come up with money, but if schemes do go ahead, they lose all control over them.

Under this Government, Isambard Kingdom Brunel and George Stephenson would probably have given up and taken jobs in the City. In this country we have lost sight of what public transport is for. It is there to provide the best possible transport for local people to get around their areas as cost-effectively as possible. We need integration, re-regulation and vision.

In conclusion, the transport policy of this Government has been probably the biggest area of failure. We have seen road building but little in the way of integrated, modern, 21st-century public transport systems. Policy has been categorised by short-termism, over-centralisation and timidity; we need long-term vision, local control and accountability, and courage. We need those qualities before our regional cities clog up. I am pleased to be taking part in this debate, and I am sure that the House, including MPs from all parties, will not stand by waiting for transport improvements that will not happen. Otherwise, the economic cost will be too dear for the Government to bear.

Mr. Edward O'Hara (in the Chair): With a reminder about the time, I call Mr. Betts.

10.25 am

Mr. Clive Betts (Sheffield, Attercliffe) (Lab): I shall be brief, Mr. O'Hara. I am a complete enthusiast for light rail, because of the experience of Sheffield. Before the Liberal Democrats get too critical of the Government, I remind them that it was the Lib Dems in Sheffield who petitioned Parliament against the Sheffield Supertram, and they opposed it for a number of years. At least the Labour party in South Yorkshire has been consistent on the matter.

Greg Mulholland : Will the hon. Gentleman give way?

Mr. Betts : No. I am sorry, but I will not give way, in view of the time.
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On funding, the Supertram in Sheffield covers its costs in terms of revenue, but it will never cover its capital costs. I agree with the comments of my hon. Friend the Member for Manchester, Blackley (Graham Stringer): we should see those capital costs as permanent long-term investments in the infrastructure of our cities, facilitating the economic and social life of those cities. Unlike other forms of subsidy, at least that brings a long-term benefit.

If the Department for Transport believes that the costs of some schemes are over the top, perhaps it should take the lead in doing an analysis, with transport authorities, of the comparisons between costs in the United Kingdom and costs on the continent. Some of the transfers of requirements from heavy to light rail may be forcing our costs up, and we should take a look at that.

As for the benefits of the Sheffield Supertram, people regard it as a quality form of transport. Passenger numbers are going up on the tram, as they have dropped by 30 per cent. on buses during the past 10 years. There is regeneration; one can see it happening. There is even a major landowner who wants to pay to reroute the tram and increase regeneration benefits. The tram is environmentally friendly, too.

In South Yorkshire we are considering extensions to Rotherham, the Royal Hallamshire hospital and Broomhill. One benefit of extension is that it opens up the tram not merely to other areas and other potential passengers, but to existing areas and passengers, who have more routes and more areas to access. It is important to bear in mind the fact that capacity and passenger use goes up on those routes.

I understand the Government's concerns about the cost. They have to bear down on costs and be vigilant about them, but one gets a sense that the mood music in the Department for Transport has changed—that it was pro-tram and willing to consider schemes favourably, but it is now resistant to the idea. Given the likelihood that there will always be long lead-in times for the development of tram schemes—although I hope that future lead-in times will be shorter—we need a certainty and consistency in Government policy that has been lacking in recent years.

I have two final points to make. The Supertram was built for an integrated system with buses linked to it. We ended up with a tram that was built in a deregulated environment in which bus routes changed to compete with the tram. Because First runs the buses and Stagecoach runs the trams, there is not even any proper through-ticketing policy in South Yorkshire, 15 years on. If the Government are saying that there will be no bus regulation and no tram extension, what public transport policy are the Government offering cities such as Sheffield?

Mr. Edward O'Hara (in the Chair): There is just time for a cameo from Tony Lloyd.

10.27 am

Tony Lloyd (Manchester, Central) (Lab): Thank you, Mr. O'Hara, I shall be watchful of the time. May I also congratulate the hon. Member for Rochdale (Paul Rowen)? This is an important debate, as we have
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heard from today's contributions, and this is an important matter throughout England and the large conurbations.

Manchester has demonstrated that its own Metrolink is a success, and I want to refer to the remarks that my hon. Friend the Member for Manchester, Blackley (Graham Stringer) made about the regeneration impact. I am bound to find this frustrating, representing as I do the inner-city constituency in Manchester, where regeneration, inspired by this Government—frankly, it would not have taken place without the efforts of this Government—has been frustrated by the slowness and delays in bringing forward the Metrolink scheme.

Metrolink is a vital part of that regeneration. It brings to bear part of the infrastructure that is necessary to deliver the high-quality transport links that that regeneration needs. We have seen in Greater Manchester how existing Metrolink schemes have impacted on places that would have traditionally been seen as less than fashionable. Those places are now economically and socially successful, and Metrolink has played an important part.

My question to the Minister is whether we can break through the "departmentalitis" on this matter. I share the concern expressed by my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) that the mood seems to have changed—and changed perversely and paradoxically. The benefits of Metrolink, even relative to other transport systems, seem to be fairly obvious—at least to a lay person such as myself. Because of the inability to compare like with like in terms of the total spending, we have come to the illogical conclusion that Metrolink is too expensive.

I am at one with the Minister about wanting to bear down on the costs of the Metrolink scheme. It is in the interests of the taxpayer and the council tax payer. However, when the greater benefits of the Metrolink scheme's wider impact are added, the case for tram schemes in Greater Manchester and elsewhere is proven. I hope that we can grapple with that idea both in Manchester and in general, so that we can force through the rapid development of light trams. I have tried to keep within your time frame, Mr. O'Hara.

10.30 am

Dr. John Pugh (Southport) (LD): I congratulate my hon. Friend the Member for Rochdale (Paul Rowen) on securing a timely and important debate. I shall begin with a slight declaration of interest, because my grandfather was an inspector when Liverpool had trams, and my great-grandfather played a part in building them.

We are all aware that the period from the 1950s to the 1990s was a bad one for such transport. We seem to be on the cusp of a new dawn, however, because people have realised the benefits in terms of a modal shift: getting the business man out of his car, the reduction in pollution, the regeneration, and the reduction in congestion. But to many of us, that new dawn is turning out to be a false dawn. The Leeds scheme has gone belly up, the Hampshire and Liverpool schemes are not to proceed, and Metrolink is still in some doubt. The supposition is that that is all a response to escalating
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costs and a new tough Treasury stance, which, as my hon. Friend the Member for Rochdale pointed out, does not apply to road transport schemes.

On average, the costs of local transport plan schemes are 42 per cent. more than what was predicted. Only one recent Highways Agency scheme has come in under cost. None the less, it must be acknowledged that some newer schemes are more expensive than some of the initial ones. The estimated cost per kilometre was about £10.2 million for completed schemes and it is about £13.2 million for those that are projected. That is a real difference. However, it is not a linear difference—an obvious, continuous escalation. For example, there is a significant difference between the cost per kilometre for Sheffield and Manchester. There is no clear pattern at the moment.

The Minister is on record as saying something to the effect that we must find out why it costs twice as much to build trams—

Kelvin Hopkins : I am interested in the parallel with the railways in this context; Railtrack's cost per mile has risen by four times since privatisation. The costs are not to do with problems inherent to tramways, but are something to do with the way we build things.

Dr. Pugh : Yes, there is a genuine reason to drill down into the costs and find out why they are as they are. My hon. Friend the Member for Rochdale wants the Department to go down that route. However, perhaps we should consider simple continental comparisons for capital costs. I mentioned the figure of £13.2 million per kilometre for projected costs in the UK. The Bordeaux tram scheme is coming in at about £18 million per kilometre. The Paris scheme, the T3, is coming in at about £15.4 million per kilometre. Even quite modest schemes in Portugal and Barcelona are coming in at between £8 million and £10 million per kilometre.

Across the board tram schemes are pretty expensive, and the British ones do not necessarily compare as unfavourably as we might think with those on the continent. The Merseytram scheme was to be 19 km in length and the projected Paris scheme is much shorter. Were it to be extended to the same length as the Mersey scheme would have been, it would come in at about £400 million. That will give hon. Members an idea of the comparative costs—even with the high consultancy costs and utility costs for British schemes, and the significant local subsidies that go into continental schemes in addition to Government subsidies.

Some of the schemes that we are developing have, none the less, unique features. I want to dwell briefly on an aspect of the Merseyside scheme that died the death yesterday. It was unique in some ways compared with many of the continental models, because it would have joined a series of wards and constituencies where there are large numbers of people who might be described as socially excluded in many ways. It was advanced primarily as a regeneration scheme. Many of the continental schemes do not do that, but tend to link together areas of high economic activity.

While we are going through the blame-laying exercise for the Merseyside scheme we may ponder what the Department's take on that would be. The right hon. Member for Knowsley, North and Sefton, East
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(Mr. Howarth) put forward the view that the local authorities in Liverpool were not united. I have been present at some meetings at which they were very united, but had slightly different takes on the matter. Authorities such as Knowsley and Liverpool city council, which stood wholly to benefit, would obviously be, on balance, more enthusiastic than those such as Wirral, which needed to worry about the repercussions such as the cost of tolls and so on.

I reject what the right hon. Member for Knowsley, North and Sefton, East said about Merseyside political culture being dysfunctional, because that is not true across the board in relation to all kinds of schemes.

Mr. George Howarth : The hon. Gentleman should be more accurate about what I said. My comparison was specifically with Greater Manchester, where each section 151 officer gave the assurances necessary. That did not happen on Merseyside, although there may be good reasons why it did not.

Dr. Pugh : There were extra expectations of the Merseyside political community that did not exist in Manchester, but I will come to that later.

There is another view of the Merseytram scheme: that the Government are looking for a way out of a scheme that they are not convinced provides value for money. The Northwest Development Agency would have preferred the projected route to Liverpool John Lennon airport to be the first route, because that would have guaranteed obvious regional benefits, but it would also have lost some of the equally obvious social exclusion benefits. Such a scheme might have been more broadly supported across the political community. I simply do not know.

I would like to know what advice the Government offered at the early stage about how to proceed. The Government's tone throughout the scheme has been largely that of a bank manager rather than a partner. They have not taken a proper partnership approach. The supposition that local authorities, which are, after all, capped, can take on board whatever liabilities come their way, and that the Government are just stuck at the figure of £170 million does not reflect, for example, the experience in Edinburgh with the Scottish Executive.

The experience on Merseyside has been traumatic, wearing and deeply discouraging. People on Merseyside want to know where the £170 million is actually going to go, because at the moment Merseyside is a net loser in real terms. Significant amounts of money have already been spent on the scheme, with no result so far.

Many Members, including the hon. Member for Manchester, Blackley (Graham Stringer), have said that there is a north-south split in the debate, and there genuinely is. Most Members present are from the north. Looking ahead, do we really think that schemes such as Crossrail, and the billions that will be spent on them, will be subject to the same rigour as schemes that are far less expensive in real terms? Why, for example, did the Government change their attitude in the negotiation with the Merseyside passenger transport authority and the Merseyside political community and insist that the local authority, not the PTA, underwrite the scheme? Was that advice given right at the start, and if not, should it have been?
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That leads us to the big question: are the Government trying to give up on trams, full stop? What will they do to make tram schemes proceed better in the future? What will they do to reduce the costs of such schemes—the cost associated with the utilities and so on? What will they do to respond to the criticism made of them in April 2005 by the Public Accounts Committee? Why are they taking such a non-negotiable stance on tram schemes? That stance is not applied to road schemes, and it is not found in Scotland, where the Scottish Executive consider light rail and other schemes. How will the Government evaluate and weight subsequent schemes? What advice will they offer? Why does it take them so long to give a clear steer to local authorities that are progressing the schemes? That refrain has been repeated many times during the debate. There are appreciable transactional and contractual costs involved.

What do the Government expect of future schemes? How do they think that they will be progressed? Will they all be progressed as part of a regional priority list? I saw a speculative list for regional transport for the north-west quite recently, and £825 million—of an overall figure of about £1.4 billion, I think—was allocated for future transport schemes. Will transport schemes in the future require the assent of the region rather than being progressed through PTAs? For example, what is the future for major projects not in the Minister's in-tray, such as the Blackpool tram scheme? What of future schemes? What about alternatives to our big-scale schemes? Is there any future, for example, for trolleybuses and the like?

With so much confusion and uncertainty around, we need specific answers from the Minister. At the moment, there is collective unhappiness across the north-west region—and the north region in general—which I hope that the Minister can do something to assuage.

10.41 am

Mr. John Hayes (South Holland and The Deepings) (Con): Trams were once used extensively in the UK, and at the peak there were 300 systems, but by the modern age the number had reduced and eventually only the one in Blackpool survived. I congratulate the hon. Member for Rochdale (Paul Rowen) on bringing this matter to the attention of the Chamber, and I congratulate all hon. Members who have contributed to this important debate.

Seven new systems have opened in England since 1980, with an average of 138 million passenger journeys being made each year on approximately 235 km of track. However, there has been a degree of pathos about this debate—frustrated hopes, faded dreams, disillusioned communities and disappointed representatives—because there is doubt about the Government's commitment to light railways, and about their understanding of how such systems can play a vital part in regenerating communities. We heard about that from hon. Members from all parties.

The six new systems outside London are the Tyne and Wear Metro, Manchester Metrolink, Sheffield's Supertram, Midland Metro, Croydon Tramlink and the Nottingham Express Transit. In April 1991, the Select Committee on Transport pointed to six main advantages of light rail: it reduces traffic congestion, has positive environmental impacts, conserves energy, assists urban regeneration, generally provides a high-quality service, is often conducive to better access for disabled people, and has a prestige value for a host city.
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Light rail schemes should be encouraged where they will be of particular benefit—that is, in busy city centres. The great advantage of light rail is, as the Transport Committee said, that


According to the Committee, light rail and tram systems could carry more than 3,000 passengers per hour in vehicles containing up to 350 people. Trams are more environmentally friendly than buses and cars and they are safer, as well.

There are also regeneration benefits. The docklands light railway and Manchester Metrolink have boosted the prestige of their cities and are attractive to visitors. The experience of the Nottingham Express Transit in its first year of operation, with 8.5 million passenger journeys above target  and a £23,000 operating profit, shows the potential of good light rail schemes. The Nottingham scheme has applied to the Government to be able to construct an additional line. No doubt the Minister will give us some information on that application when he winds up.

The main barriers to light rail schemes are affordability, and the potential of the system to integrate with the rest of the local transport network. The only reservation that I have about tramways is the question of their beauty. I wonder why, in the modern age, we cannot build more beautiful things. One thinks of the Routemaster bus and trains from ages past. Why can we not make trams look better? We should not strip life of all its elegance and style, should we, Mr. O'Hara? I offer this small caveat in relation to my general support for these schemes.

Cost is the most significant factor discouraging further development of light rail, but as the hon. Member for Manchester, Blackley (Graham Stringer) said, when cost comparisons are measured in terms of passenger journeys, they are more positive than might generally be suggested. The emphasis is often on the construction cost—the infrastructural up-front capital cost—but when one takes into account costs over time, which the hon. Member for Rochdale mentioned, those considerations can be seen in a different light.

More could be done to overcome that barrier. For example, there are no Government grants available to develop innovative, energy-saving light railway technologies, because that tends to cost less than £5 million, which is the qualifying threshold for a scheme to receive financial support.

There are other issues that the Government must address, and I hope that the Minister will touch on them: the poor financial performance of some existing light railway systems, which is discouraging interest in future schemes, and how the Government can assist in respect of that; local authority funding for schemes; the issue of time, and uncertainty over the granting of powers to local authorities; and insufficient in-house expertise.

Above all, as the Public Accounts Committee recommended in March:

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As a Transport Committee report this year stated:

In 2000, Labour pledged to double light rail use in England by 2010, measured by the number of passenger journeys. In 2000–01 there were 124 million journeys, and in 2003–04 there were 147 million journeys—an increase of 18.5 per cent. It seems unlikely that the Government will achieve their target. Since 1997, only one new system has commenced outside London—the Nottingham Express Transit Scheme. I know that scheme well. As the Minister is aware, like the Sunderland extension to the Tyne and Wear Metro and other lines that have opened since 1997, the Nottingham scheme was a proposal whose funding and planning were inherited from the Conservative Government.

Only yesterday we learned from the Government that they have cancelled funding for two light rail schemes—Merseytram and the south Hampshire rapid transit scheme. My hon. Friend the Member for Gosport (Peter Viggers) made a strong and bold case for that scheme; he is a great champion for local people in that respect, as in many others.

The Government have now spent £284 million developing rail projects that have come to nothing. That was revealed by a question asked by my hon. Friend the Member for Rutland and Melton (Mr. Duncan). I will mention each of those schemes, because they have been repeatedly defended in this Chamber by the right hon. Member for Knowsley, North and Sefton, East (Mr.   Howarth), the hon. Members for Manchester, Central (Tony Lloyd), for Leeds, North-West (Greg Mulholland) and for Manchester, Blackley, and by my hon. Friend the Member for Gosport. The following sums were spent on them: £199 million on Manchester Metrolink phase 3; £36 million on Merseytram; £39 million on the Leeds supertram; and £10 million on the south Hampshire rapid transit scheme. All that money was invested in schemes that will not now go ahead; hence the pathos, disappointment and disillusionment that I described earlier.

I have several questions for the Minister. Does the extension to the Nottingham Express Transit have Government approval? If so, when will we know? Will local authorities be entitled to money from the transport innovation fund for light rail schemes if they are not accompanied by road charging proposals? There was something about that in the national press yesterday; the Government's enthusiasm for congestion charging is clear. I make no point about that, except to ask how it would be integrated with applications for light rail schemes. What guarantees can the Government give that light rail remains a priority, and that they will meet their target of passenger numbers doubling by 2010? What proportion of the transport innovation fund does the Minister envisage offering to light rail schemes, given the other priorities that the Government have announced?
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What is the Government's response to the recent urban task force report? It argued:

There are competing public priorities, which often obscure the holistic benefits of this kind of innovation. The Government need to engage in joined-up thinking; the only thing that is joined-up at present is the traffic on congested roads. They have created a debilitating culture of encouraging schemes into the development and planning stage and putting in taxpayers' money, then pulling the plug before construction begins. The Minister needs to make it clear where the Government stand on future projects, and how committed they are to light rail. I described the pathos that has characterised this debate; the Minister now has an opportunity to prove that neither he, his Department nor the Government are pathetic.

10.51 am

The Parliamentary Under-Secretary of State for Transport (Derek Twigg) : I congratulate the hon. Member for Rochdale (Paul Rowen) on securing this important debate. It is not possible to deal with all the points that have been raised in the short time available, so I will try to deal with as many as possible in my speech. I ask hon. Members to be patient.

From what one or two Members have said, one would think that we had done nothing for transport, but we have seen record investment in public transport after years of neglect, major regeneration of our main cities, and major success stories in transport generally.

I shall use the short time available to deal with the issues before us, and I welcome the opportunity to debate this matter and set out the Government's position. As we all know, and as hon. Members have said, we have had a difficult time in the past few weeks in terms of taking decisions. I want to make it clear that light rail has a future in Britain in the right places and as part of the right overall package, but that we will not support schemes at any cost. The success of light rail has been partly due to the Government's contribution of about £700 million to light rail schemes since 1997. Six such schemes have opened across the country.

Light rail journeys have increased by 130 per cent. in the past 10 years. In 2005, journeys increased by 8.4 per cent. compared with the previous year—more than on national rail and London Underground. In all, 155 million journeys were made on light rail systems in England last year. Light rail is a small contributor, given the increasing use of public transport, but its share is increasing.

Obviously, lessons can be learned from past experiences. Too many light rail schemes have seen their costs increase substantially after we have approved them. With the Manchester Metrolink phase 3 extensions, the public sector funding requirement almost tripled between our first approval in 2000 and the end of 2004. For the scheme in south Hampshire there was a 50 per cent. increase, and for the Leeds supertram and Merseytram, the public sector cost increased by 40 per cent. We need to have full confidence in a
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scheme's cost, viability and cost-effectiveness before giving it the go-ahead, and we must be satisfied that the procurement approach proposed is appropriate and offers the best value for money.

If light rail is to be successful, it needs to be part of an integrated approach. As my hon. Friend the Member for Manchester, Blackley (Graham Stringer) and others have said, last year light rail came under the scrutiny of the National Audit Office. Recent reports by the Select Committee on Public Accounts and the Select Committee on Transport have made several valid suggestions about how the Government's role in light rail might be strengthened.

Under the new approach, we will be more rigorous, and will not give final approval until final prices have been received through a competitive procurement process. That will mean that schemes' promoters will need to develop more robust proposals, and provide evidence of their certainty regarding the risks and estimated costs and of the fact that the scheme is deliverable on time and on budget. They will also have to demonstrate that it is a high priority for the region.

The Department has been considering how success can be built upon and best practice shared. It has been working closely with promoters through a programme of work streams and with the passenger transport executive light rail group. We are working to ensure that better specific guidance about developing a light rail scheme is available to promoters and local authorities, and have recognised the importance of working with industry. We are also working closely with UKTram, which has set up working groups to take forward streams of work, which include the development of technical, operational and safety management standards and best practice guidelines. We will continue to support UKTram in that work.

We also want to improve project delivery. We will make sure that, where necessary, major transport schemes go through the formal gateway process run by the Office of Government Commerce, to ensure that projects at critical stages are in a fit state to move forward.

I reiterate the fact that light rail does have a future in the UK. In areas of heavy traffic it might be the best solution to transport problems, as it can be the most effective way of getting people out of their cars.

Mr. John Leech (Manchester, Withington) (LD): In my constituency, a major benefit would be the resulting modal shift from car to tram. A local developer developing a site in the constituency has been heavily promoting the fact that people will be able to use the tram to get to and from the city centre—but now, given the uncertain future of Metrolink, the same developer is offering people cars as an incentive to buy flats in that development. Surely the fact that Metrolink has been delayed in south Manchester is increasing congestion in the area.

Derek Twigg : I will come on to Metrolink in a bit more detail later, but it is clearly an attractive way to get people out of their cars. That is part of the strong case that Members of Parliament for Manchester have made to me.

Given its high cost, light rail will not be the right solution in every location. We expect scheme promoters to explore all the options for meeting their transport
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problems, especially the possibility of delivering better bus services, before they approach us for funding for a light rail scheme. For instance, work that we did with Leeds suggested that high-quality buses could deliver most of the benefits, and at a lower cost. We look forward to working with Leeds to develop a showcase high-quality bus system that may well provide a model for other cities.

Where light rail is the best solution, it will need to be developed as part of an integrated approach to tackling an area's problems. Light rail schemes will need to be supported by commitments to complementary measures that will deliver the benefits of increased public transport usage and reduced congestion, and that will support the viability of the light rail system.

Mr. Hayes : Will the Minister give way?

Derek Twigg : I will not, if the hon. Gentleman does not mind, as time is limited.

Through the transport innovation fund, we have undertaken to provide support for such innovative packages of measure. Those packages should combine demand management and better public transport, which might include light rail in some cases. The funding will be available from 2008–09, and on Monday my right hon. Friend the Secretary of State announced seven areas that have been successful in securing pump-priming funding to help with the development of schemes. They include Greater Manchester, which will assess the potential for demand management measures to complement its tram extension proposals.

The existing Manchester Metrolink has been a success. The first phase opened in 1992, and the second in 2000. Today it carries more than 19 million passengers a year, and there are times when it suffers from overcrowding. I am in no doubt that the system has helped in Manchester's economic success, and that improvements to the system are worth making. The
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plans for extensions to the system were dogged by cost increases, as I said earlier. Last year, the Department worked closely with the Manchester authorities to understand what the proposals would now cost. In December 2004, the Secretary of State announced that he was committing more than £500 million—the sum previously agreed for funding phase 3—to Manchester's transport network.

Manchester could also bid for additional funds from the new transport innovation fund. In June, I went to Manchester and announced that the Government were committing £58 million to enhancing capacity and refurbishing parts of the existing system. We are continuing to work with the Greater Manchester passenger transport executive to finalise details of the scheme. As my hon. Friend the Member for Manchester, Blackley, said, we are still discussing those proposals with it. We will be in a position to say something about that when those discussions are completed.

The Department is also in discussion with the PTE about its strategy for extensions to the system as part of an integrated transport package for the area. That includes the extension to Oldham and Rochdale. The GMPTE has given us an integrated transport strategy document as a basis for dialogue on a transport innovation fund bid that would incorporate the extensions and other measures. Discussions are at an early stage, and we are working closely with the PTE to take them forward.

We will continue to support tram schemes if they are the right solution for a particular area, and if their costs can be justified by bringing wider benefits. Certainly, we expect to fund some light rail schemes in future, but only as part of an integrated approach, to maximise the benefits.

Mr. Hayes : Will the Minister give way on that point?

Mr. Edward O'Hara (in the Chair): Order. There is no time left.
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