Memorandum submitted by the Greater Manchester
Passenger Transport Executive
INTRODUCTION
This submission by GMPTE is made in response
to the invitation from the Transport Committee to submit written
evidence on issues relating to local transport funding.
A separate written submission is being made
on behalf of the 10 district councils of Greater Manchester and
GMPTA by the Association of Greater Manchester Authorities (AGMA)
on the whole range of Local Transport Planning and Funding issues
to be considered at the inquiry. In addition a submission by PTEG
is being made behalf of all six English PTEs, Transport for London
and Strathclyde Partnership for Transport which again deals with
all the issues raised for consideration in the Inquiry.
This specific GMPTE submission is complementary
to the ones from AGMA and PTEG and will focus on the following
issue:
How efficient is the bidding and scheme preparation
stage? What could be done to avoid local authorities wasting significant
resources on preparing and designing transport schemes that do
not get approval?
The evidence will include current examples of
schemes being promoted by GMPTE.
EVIDENCE
Since the introduction of the Local Transport
Plan (LTP) process under the 1998 Transport White Paper and 2000
Transport Act the funding mechanism for local transport capital
projects has worked to encourage local authorities to try and
secure resources for major schemes for a number of reasons. These
are listed below:
— The LTP funding changes which include
guidance on future year indicative settlement levels is welcomed
as this enables greater certainty in planning the use of those
resources made available for minor works, through block allocation.
— This national bidding approach has
encouraged local authorities to "travel hopefully" and
bid for major schemes, particularly ones which represent good
value for money in BCR terms, because in any one year competition
around the country for nationally available DfT resources might
be low or other bid schemes not represent such good value for
money. Thus undertaking the expenditure necessary to submit an
Annex E, required to enable a scheme to be considered for first
stage progression, has often been considered a risk worth taking.
Typically GMPTE would need to spend £150,000 to £200,000
in the development of a bus station/interchange scheme to the
level of detail necessary for an Annex E submission (eg Rochdale
Interchange Annex E—July 2004).
— The recent move towards seeking views
from regions on their transport priorities within a given level
of Regional Funding Allocation has been helpful in that it has
necessitated Regional Assemblies to only bring forward a recommended
list of schemes that can be afforded within the region.
However, despite the welcome strategic intentions
of the LTP process discussed above, the bidding process for major
schemes has continued to be an annual lottery as local authorities
bid to secure resources nationally from DfT. Moreover, the lack
of clarity regarding the extent to which the advice of the region
will be a determining factor in which schemes the DfT will be
recommending for Ministerial approval continues to encourage local
authorities to submit additional major scheme bids to those being
recommended by the region.
GMPTE also has concerns regarding the level
of expenditure needed to progress major scheme bids through to
full approval status. These relate to both the degree of certainty
that full approval can be expected for schemes that secure provisional
approval, or as it is now known, programme entry status and the
level of costs the promoting authority must incur in order to
develop schemes through to full approval stage. In more detail
the issues are:
— In our view once a scheme has achieved
programme entry status there should be a presumption it will be
funded unless cost escalation causes this to be reviewed. Currently
securing programme entry status is seen as just the first hurdle
to be overcome. The recent DfT consultation document on "Changes
to the Policy on Funding Major Projects" is seen as helpful
here in that it starts to address concerns regarding the process
of scheme development once programme entry status has been achieved.
— From our experience there is still
a sense of the promoting authority being on a "sales pitch"
when discussing schemes with the DfT until full approval status
is awarded. GMPTE feels it would be advantageous to develop a
greater sense of partnership working and shared ownership between
promoting authorities and DfT once major bid schemes have secured
programme entry status. In this way it is likely that a culture
of "no surprises" will emerge to the benefit of both
the DfT and the promoting authority. One option might be for DfT
to have individual officers nominated as project sponsors for
specific schemes. Whilst it is recognised that such a move could
have staff resource implications for DfT we believe there would
be efficiency benefits arising from the speedier delivery of major
schemes.
— It is accepted that it is in both
the DfT and the promoting authority's interest to secure more
reliable cost estimates at programme entry stage. It is not clear
whether, to achieve this greater cost certainty, DfT will require
that detailed design be undertaken before conditional approval
is sought. If so, such expenditure would represent both a cost
to be met by the promoting authority and, in the absence of any
certainty of achieving programme entry, be a significant risk
to the promoting authority.
— By way of a local example, to undertake
the detailed design for the Rochdale Interchange scheme (full
scheme cost estimated at £11.5 million) to a level needed
for contract documents would, in our view, involve expenditure
in the order of £700,000. The alternative would be for GMPTE
to limit design work to a detailed specification and then procure
the scheme as a design and build contract. However, we feel that
this approach would not be as advantageous for either GMPTE or
DfT for two reasons. Firstly, we believe that such an approach
would give us less control over all design matters, This would
weaken our ability to safeguard the high quality of passenger
facilities to be provided as it is likely that the appointed design
and build contractor would seek to dilute such aspirations in
an attempt to minimise expenditure. Secondly, it is likely that
additional costs, in respect of risk, would be included by the
appointed contractor for the undertaking of a design and build
contract.
Delays in progressing schemes can also occur
for reasons not within the control of the promoting authority.
In the example of the Leigh-Salford-Manchester busway, see below,
these delays have primarily arisen from the legal powers process.
The impact on the cost of the scheme has been significant and
GMPTE consider that the DfT should fully recognise such cost escalations
caused by inflationary effects.
— The Leigh—Salford—Manchester
busway scheme secured provisional approval in December 2000. The
scheme costs were estimated to be in the order of £26 million
at 1998 prices. Provisional approval was needed before the scheme
could be progressed through a Transport and Works Act powers application.
At that time a 1998 price base enabled an economic appraisal to
be undertaken (also valuing benefits in 1998 prices) sufficient
to show the scheme represented good value for money.
— Following that provisional approval
in December 2000 the scheme was developed in more detail for public
inquiry procedures. Despite our best endeavours to simplify the
powers process and hold a single public inquiry to deal with all
the powers (Transport and Works Act, Road Traffic Regulation Act,
Planning permissions) this approach was not accepted and separate
inquiries had to be held. GMPTE submitted a Transport and Works
Act application in January 2002 and a public inquiry was held
in September 2002. An interim decision letter was issued by the
Secretary of State in October 2003 which required some additional
evidence to be submitted, this included further Great Crested
Newt surveys that, given the newts were then in hibernation, could
not then be undertaken until early June 2004. The additional evidence
was submitted in Autumn 2004 and a decision letter from the Secretary
of State granting TWA powers was issued in August 2005. An updated
Annex E was submitted to the DfT in July 2004. At this stage the
scheme cost had risen to £42.3 million (at 2004 prices) in
part reflecting six years of construction industry price inflation
but also reflecting changes in design from the July 2000 submission
arising from the TWA public inquiry.
— The DfT have confirmed that the scheme
still retains a provisional approval but for £26 million
as approved in December 2000. During this time GMPTE have had
to fund all development and legal costs from block allocation
resources in order to progress the scheme to a stage whereby a
bid for conditional funding approval could be made. To date some
£4.3 million has been spent on the scheme but with no certainty
that it will progress to conditional approval. However, without
incurring that level of expenditure it would not have been possible
for any progress to be made on the scheme.
There is a concern that the DfT evaluation of
major scheme bids has historically been too focused on the transport
benefits of the scheme and places insufficient emphasis on regeneration
or social inclusion agendas. This is of particular concern in
major metropolitan areas, which are the economic engines charged
with leading the regeneration of our regions. It is our contention
that a lack of recognition of the impact that major infrastructure
investment can have in this regard could risk jeopardising the
sustainability of the economic renaissance that the Greater Manchester
city region has achieved over recent years. It is therefore, welcome
that DfT has begun to address this shortcoming through the introduction
of a productivity strand to the Transport Innovation Fund. However,
we would assert that a similar discipline should be maintained
across all major transport scheme funding streams.
— The linkage with regeneration is
particularly important as in a number of cases transport infrastructure
is seen as a catalyst to other inward investment. This can place
constraints on the timing of such schemes that may not be totally
within the control of the promoting authority but can be unfortunate
if delays in securing the transport scheme frustrate the delivery
of other regeneration initiatives. In addition the re-use and/or
clearance of urban brownfield sites can add to scheme costs. Such
additional costs might not be recoverable from any development
gain and unless other sources of funding from, for example ERDF
or SRB sources, can be utilised these additional costs would serve
to reduce the overall benefit: cost ratio of the scheme. For example
in the case of the proposed Rochdale Interchange scheme demolition,
site clearance and other site remediation works are estimated
to cost £2.3 million for which SRB support of £1.5 million
is being sought.
— The GMPTE major scheme bid for funding
Yellow School Buses is based on achieving both traditional transport
benefits, through modal shift from car to bus for home to school
trips thereby assisting in reducing congestion and minimising
environmental damage. However, it is also intended to address
wider education objectives by making journeys to and from school
safer and more secure, reducing social exclusion and anti-social
behaviour and delivering improved education by providing a quality
service to deliver students to school ready to take full advantage
of learning opportunities.
SUMMARY AND
CONCLUSION
This evidence deals with the issue regarding
the efficiency in the bidding and scheme preparation stage of
major schemes.
The key points it raises are:
The Local Transport Plan funding mechanism for
major schemes has encouraged promoting authorities to submit bids
given that these schemes were subject to central DfT annual resource
allocation and decision making. This has tended to promote a sense
of major schemes being an annual national competition which you
have to be part of in order to "win". There is a lack
of clarity over how the Regional Funding Allocation process will
change this.
There needs to be greater certainty that once
major schemes secure programme entry status then the presumption
should be that those schemes progress to full funding approval
unless there is a significant change of scheme attributes or cost.
A greater sense of partnership and shared ownership of schemes
once programme entry has been secured is proposed.
The DfT should work with promoting authorities
to reduce delays to scheme progress that arise through reasons
not within the control of the promoting authority. The particular
case of the delays arising from the Transport and Works Act procedures
for the Leigh-Salford-Manchester busway scheme was used to illustrate
this.
Finally, concerns are raised that the DfT evaluation
of major scheme bids has historically been too focused on the
transport benefits of the scheme and places insufficient emphasis
on regeneration or social inclusion agendas. This must be addressed
if transport investment is not to become an "end" in
itself, and so as to ensure that the recent regional economic
growth is to be sustained.
25 April 2006
|
