Examination of Witnesses (Questions 320-339)
7 JUNE 2006
DR STEPHEN
LADYMAN MP AND
MR BOB
LINNARD
Q320 Chairman: There were a lot of
double negatives there. Can we start again?
Dr Ladyman: There were, but I
think they worked out on the right side of the ledger. I am very
happy that the excellent authorities have chosen not to exercise
that freedom because it tells me that we were going in the right
direction when we introduced Local Transport Plans. They are actually
not only beneficial from the point of view of the Department and
national transport policy, but clearly they are beneficial from
the point of view of the local authorities as well. It is a great
comfort to me that the excellent authorities have still chosen
to produce them.
Q321 Mr Leech: So why should they
have that freedom not to?
Dr Ladyman: Because the Local
Government Association and others have argued that there has to
be a range of freedoms available to those authorities that have
proved themselves capable of exercising good judgment and the
Government's position is that we shall provide them with those
freedoms. Whether they choose to use them or not is a matter for
them.
Q322 Mr Leech: The Department had
five years to produce a revised guidance for the second round
of Local Transport Plans, yet only published it nine months before
the local authorities then had to put in their draft plans. Do
you think that is fair?
Dr Ladyman: I do not think that
is true. We published draft guidance 20 months before and the
final guidance 16 months before, did we not? Mr Linnard might
recollect better. Even if it were nine months, I would not argue
that that was unreasonable because Local Transport Plans are not
supposed to be something that you write today and then you do
not come back to for five years. The whole point of Local Transport
Plans is to get local authorities thinking continuously about
the moving target of developing transport in their area, so it
should be something that they are working on constantly and at
any particular time, they ought to be capable of producing another
five-year programme and nine months is not unreasonable.
Q323 Chairman: Forgive me Minister
but we are pushing our luck a bit here. If you are going to say
to local authorities that it is very important that they do not
commit themselves to schemes that they cannot afford to pay for,
which we all understand, and if you are going to start saying
to them that you agreed that on this business case but unfortunately
their suppliers are now being good private enterprise characters
and asking for five times more for the same thing than they did
in the first instance, therefore they are not going to get the
cash, it seems to me that you are in danger of misleading local
authorities. They are going to need exactly a clear indication,
very early on, of your criteria. It is the point that was made
earlier on. If you make your criteria crystal clear to local authorities,
then you have some hope of them complying with the set of circumstances
that you have laid out, but if you produce it, even 16 months
before they expect to put in a plan to you, it is a very remarkable
authority that moves with the speed of light that can produce
a very detailed scheme within that period. Is that not so?
Dr Ladyman: First of all, the
four shared priorities were negotiated with the Local Government
Association in 2002, so they have had significant notice of what
those shared priorities were going to be. If we produce our guidance
for consultation 20 months in advance and then publish it finally
16 months in advance, I think that is adequate time. You are mixing
up, with the greatest of respect, a number of factors in your
recent comments. You talk about the way schemes increase in price.
Certainly for major schemes there is a programme which allows
for a scheme to be submitted and a certain amount of work has
to be done to work out what the value for money is. There is then
a process, if we indicate that we are interested, that we are
minded to approve a particular scheme, where much more detailed
work has to be done; design work has to be done, public inquiries
have to be carried out and a final price identified and that final
price is when we fully commit to providing the funding. The reason
why schemes increase in price during that initial approval and
that final approval is sometimes due to construction inflation,
but we all have the figures about what construction industry inflation
is like so that can be taken into account in advance. Usually
it is design changes and other changes which cause the dramatic
increase in price. One of the things we are saying to local authorities
under these circumstances in future is that first of all we are
going to expect them to pay some of the money for major schemes
out of their own resources; 10% is what we are currently suggesting
that they should pay out of their own resources so they will be
much more realistic about the possibility of gold plating schemes
when they know that they are going have to provide some of the
money. Secondly, once we have given approval to a sum, we shall
actually tell them what the cap is going to be, so if it goes
above that particular cap, we shall expect them to pay all of
the money above that particular cap themselves, and between the
approved price and the capped price, we shall expect them to meet
50% of the increase in price. That is simply so that the local
authorities, when they are coming up with these schemes and developing
these schemes, will confront the costs head on with their local
communities and not gold plate the schemes. As I am sure all of
us as members of parliament know, in that initial development
phase there is always a temptation for local communities to come
and say that this scheme will be acceptable to them if you do
this with it or you provide this feature with it and the local
authority sometimes, because it has not reached the final funding
stage and it thinks that the Government are going to step in and
provide all of this extra money, is tempted just to put all of
these things in like decorations on a Christmas tree.
Q324 Chairman: There are several
subjunctive clauses in that Minister. It is a good job we do not
apply that criterion to IT schemes in Whitehall for a start. If
we said that in future, if a scheme goes up two or three times
and that is a design change, we are not going to pay for it, there
are some Whitehall departments who might find themselves without
an IT system at all.
Dr Ladyman: As somebody who used
to manage IT projects before he came into this House, mine were
always on time and on budget.
Chairman: I knew you were a rich man.
Mrs Ellman would like to come in on this because I am not alone
in my views.
Q325 Mrs Ellman: In relation to the
Merseyside light rail scheme, you did not do what you are just
saying you do, did you? At the last minute you demanded not that
the PTA but that individual local authorities gave an unconditional
open-ended guarantee for any additional funding over the life
of the scheme. That is what you did after all the other issues
that had been raised had actually been dealt with. That is not
what you have just said to this Committee.
Dr Ladyman: That is what I have
just said. I said that we are going to give a cap to major schemes
and say that beyond this price you are on your own. That was exactly
what we said. I was not directly involved in that particular scheme
so I may be speaking out of turn, but that was exactly what we
said to those authorities, that this is the money that they told
us it was going to cost in the first place, we have this money
and we still have it available, they can do it for this price.
If they go beyond that price they must guarantee it themselves
because we are not going to pay for it. Mr Linnard might have
been directly involved and he can help.
Q326 Mrs Ellman: Is that money then
still available for travel schemes in Merseyside?
Dr Ladyman: I should have to check
that.
Q327 Mrs Ellman: You just said the
money is still there.
Mr Linnard: The point you raise
about the PTA versus the district councils was really at the heart
of the High Court hearing, the judicial review case on Merseytram.
This has been gone over in as much detail as it possibly could
be and the judgment essentially was that the Department was quite
entitled to ask for assurances from the constituent district councils
as ultimate funders.
Q328 Chairman: However, the point
that Mrs Ellman was making was that that is the very opposite
of the set of criteria that has just been laid out. You may or
may not be right and who doubts, if the judicial review finds
you are, as always that you are absolutely infallible.
Dr Ladyman: I am not going to
let you get away with that Mrs Dunwoody. That is exactly what
I just set out. I said quite clearly that what we are going to
do is say that there is a cap on the cost of major projects and
that is as far as the DfT believes we can go in funding a particular
project and we are going to seek, from local authorities who want
to pursue major projects, that they are going to cover the additional
cost over and above that cap and that was simply the guarantee
that was sought for the Merseyside tram scheme. We had to ask
for it from the district councils because the district councils
were the bodies that were going to fund the passenger transport
executive. That is what the High Court ruling explored and said
we were within our rights to do. Essentially the philosophical
position that we are prepared to put so much money into a project
and no more is exactly the situation I have just set out for you.
Q329 Graham Stringer: I just think
that what you have said over the last three years is at odds with
the facts. When you said the scheme just overran, would you accept
what the National Audit Office say and what this Committee said
in its report in March 2005 that the Department had some responsibility
for the increased expenditure on the light rail schemes?
Dr Ladyman: I confess that I have
not read your report of March 2005, but I will go and do it. I
was not a transport minister in March 2005, so that is my only
excuse.
Q330 Graham Stringer: But you are,
Minister. Whether you read the report or not, you have been waxing
lyrical about these schemes being overrun by local decisions.
If you had bothered to read the report before coming before this
Committee, you would have found both from that report, the Committee
of Public Accounts' report, National Audit Office reports, that
part of the responsibility was firmly in the Department's court.
We found and the National Audit Office found that the Department
did not have very much expertise in these matters, but it had
delayed the schemes and increased the costs.
Dr Ladyman: If you say that is
what those reports said, I shall accept your view of it.
Q331 Graham Stringer: It is at odds
with what you are saying.
Dr Ladyman: It depends what you
are accusing the Department of doing. If you are saying that schemes
must be delivered to within certain standards and that the Department
insists on those standards of delivery, then that might well be
the case. The simple fact of the matter is that certain schemes,
and I am not pointing the finger at Manchester or anybody else's,
certain schemes were floated to the Department as providing certain
benefits at a certain price and when the design work was then
done, it turned out they could not provide those benefits at that
price. They could provide those benefits, or in some cases partial
benefits, at a much higher price. When you assess those partial
benefits and that higher price, the scheme was no longer value
for money and at that point the DfT says that is as far as we
can go, we are not going to fund at that higher price. In all
of those cases we have engaged in active negotiations with the
authorities concerned to see whether there is a solution to the
problem, we have made it clear that the money is available, if
guarantees can be provided to us that we are not going to be expected
to provide greater commitments, and we have done our best to try
to find ways to resolve the problem. I accept you might not agree
with that view of the situation, but it is my view.
Mr Linnard: One of the things
we have done in the last year, in the light of some of these cost
increases, is to change the rules for major schemes so that now
we no longer give final approval to a scheme until we know, with
almost complete certainty what the cost is going to be.
Q332 Graham Stringer: I am glad that
there has been some improvement in the Department's processes.
I just wanted to clarify some of the facts before I moved on to
the real question I wanted to ask. What is the difference between
a tram scheme and a highway? George Howarth put in a whole series
of questions, after we heard some responses from previous ministers
of the kind you have given us today Minister that these schemes
are overrunning by a considerable amount and therefore should
be stopped. George Howarth showed in a series of Parliamentary
Questions that the Department did not apply that to its own highway
schemes.
Dr Ladyman: That is completely
untrue. We do and have.
Q333 Graham Stringer: What? That
they did not have large overruns and they were not elicited in
Parliamentary Answers?
Dr Ladyman: They certainly did
have large overruns, but any scheme that falls out of the value
for money criteria is subject to the same ability to cancel as
any other type of scheme.
Q334 Graham Stringer: So the Department
went ahead with schemes which cost considerably more than the
initial estimate.
Dr Ladyman: I can only think of
one where the value for money rating went down from high to medium
as a result of that increase and we still went ahead with it because
it was still considered to be appropriate to go ahead. If the
scheme remains at the increased cost in our high value for money
or an appropriate level of value for money measurements then we
shall still go ahead with it and that is the same of tram schemes,
of any other scheme that is put to us. We do not discriminate
in any way.
Q335 Graham Stringer: What I am left
with at the end of listening to you for just over an hour is really
a philosophical question. You have said that you want to make
local authorities do things, that you want them to focus in this
way, that you do not believe that they are taking transport seriously
enough. You have told councillors to get off their political butts
at a conference. What is the philosophical basis for you substituting
your judgment and the Department's judgment over locally elected
people?
Dr Ladyman: If we are providing
the money, then we owe it to Parliament and to the people to exercise
our judgment. What I said was, and I made it quite clear over
the last hour, that under the old TPP arrangements we did not
believe that local authorities were prioritising transport as
they ought to have done. Throughout the 1980s and the early 1990s
we do not believe they prioritised transport as they ought to
have done and we do not believe that they had a strategic view
of transport in their areas. We had a system that was requiring
Government to make minute detailed decisions about relatively
small schemes and that is why we changed from the TPP system to
the LTP system precisely to provide local authorities with the
role that you have identified to make local decisions and move
forward Local Transport Plans. What I thought I had acknowledged
right at the start of this discussion was that local authorities
have responded to that, that there were some deficiencies that
we now recognise in the LTP1 process where we were perhaps still
being too restrictive and we have improved those in LTP2, but
there has been a step change in the performance of the delivery
of local transport projects. We have to have shared priorities.
They are shared priorities, not government priorities; they are
shared priorities negotiated with local government. We have set
out a criterion that we use for determining whether a scheme is
value for money when a local authority is seeking funding from
us for a particular project. Beyond those things, we do not substitute
our judgment for local authority judgment.
Q336 Graham Stringer: But we heard
a fortnight ago from local authorities that were telling us that
the Department was interfering in the detailed design of Puffin
crossings, which I should have thought was a matter completely
for local judgment. You yourself acknowledged earlier that your
priorities are nothing to do with value for money, the priorities
that you are encouraging, and it is an interesting concept that
you say local authorities do this. They are told they will not
get the money, if they do not follow those schemes. You provide
money for bus schemes and say if they do not do this then they
do not get the money. They provide bus priority routes and yet
the local network is wrecked. So you are substituting your judgment
in detail, not just saying this scheme is not value for money;
you are actually substituting your judgment over the judgment
of local authority elected local councillors.
Dr Ladyman: I entirely reject
that. One of the things your Committee always does, after I have
appeared before it, is write me a long list of questions where
you say "You said this, prove it and give me the evidence".
I should like to see from your witness who said that we were interfering
in a design of a Puffin crossing the evidence for that because
I do not believe the DfT central interferes in the design of Puffin
crossings or any other birdlike crossings. We certainly have design
standards for our road network which we expect to be followed.
If it is a crossing on a Highways Agency road, then the Highways
Agency will certainly have a view of what is appropriate and what
is not appropriate, but I should be absolutely amazed if any of
my officials were engaged in nitty gritty discussions over Puffin
crossings in some local authority area and if they are, then I
should like to know about it.
Q337 Graham Stringer: It is in our
oral evidence of the last session, so I advise you to read that.
Dr Ladyman: I can say anything
in oral evidence. You always write to me and make me prove it
when I do it.
Q338 Chairman: You always tell us
the truth.
Dr Ladyman: So if people come
to you and they make anecdotal comments like that, I want to see
the evidence of it. I certainly want to see the evidence of it
before you base your conclusions on it.
Q339 Graham Stringer: I can give
you the evidence directly on the point that by encouraging generally
bus priority measures where they lead to the wrecking of bus networks
you are imposing your judgment on local people. Local people were
not asking for those things.
Dr Ladyman: Back an hour ago,
I acknowledged there are deficiencies in the way we are encouraging
bus patronages. It is one of the issues that we are looking at
to try to find out how we can resolve that.
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