Examination of Witnesses (Questions 380-399)
MR TONY
TRAVERS, PROFESSOR
STEPHEN POTTER
AND MR
DAVID LOCKE
14 JUNE 2006
Q380 Graham Stringer: But no extra
involvement of the electorate in this process?
Mr Travers: To be absolutely honest,
and you will appreciate this, we were trying to go for a relatively
modest and evolutionary proposal. As I am sure you are aware,
there are others, including, it is alleged in Government, who
would like to go for city regional mayors or other much more revolutionary
proposals. I think we took the view that that would be taking
on too many dragons or too many fights in one go and we would
stop with the modest proposal of a more powerful group of metropolitan
district leaders.
Q381 Graham Stringer: Can I ask about
TIF (Transport Innovation Fund)? Does TIF fit in easily with the
local transport plans because its objectives are fundamentally
about the national economy and the local transport plans? Their
main objectives are: accessibility, congestion, reducing pollution.
The economy and regeneration are excluded from that. Do any of
you think TIF funding will lead to contradictory results from
the local transport plans?
Mr Travers: The Transport Innovation
Fund is, without doubt, a nationally originated pot of resource,
which inevitably carries national expectations with it. However,
one would hope that if it was possible to strengthen local transport
governance and powers, then possibly a government would be willing
to skew the use of TIF in order to encourage that local decision-making
and use of resources in a way that, to put it bluntly, when Transport
for London was created in London, it was given very substantial
resources in its early years. Can I say that whatever the original
purpose is for TIF, a good use for it might be to encourage this
kind of local responsibility for transport, whatever the original
objectives were. Forgive me if that is not a proper answer to
your question.
Q382 Graham Stringer: You said previously,
and I understand this, that you could not sum the abortive costs
on the different tram schemes. I think we might almost be able
to do that in this committee; we have had the various witnesses
before us. Can I approach a similar question: do you have any
way of assessing or is there any word on the assessment of the
costs of Central Government involvement in all these relatively
small transport schemes? If you took Central Government out, would
there be more money left to put into putting in crossings or guided
bus-ways, or whatever? Is there a real cost and can we quantify
it?
Mr Travers: At the risk of an
unhelpful answer, there must be a cost at the centre. I have no
doubt Central Government would say that if it is very modest and
tightly drawn, it is millions rather than hundreds of millions
of pounds. The honest answer is that I do not know what the cost
would be in central resources. The greater cost would be borne
back in the cities concerned, which I know is not the question
you are asking, not only in terms of the costs that they and the
consultants invest and companies involved in these schemes, but
also in terms of damaging the potential for growth of the cities
concerned and (I do not need to make this point) the disappointment
that comes with these things never getting off the ground.
Q383 Chairman: There are several
major conurbations in northern Germany that touch on one another
rather more extensively than there are in northern England, but
they collaborate in developing networks of suburban rail and tram
schemes, which run across administrative boundaries. Is that a
model for us, do you think? Is it sufficiently democratic? Do
we know about the tarifbunden?
Professor Potter: I will just
improvise on this one. I have not come particularly prepared for
this. The thought that comes into my mind is that Germany has
a formal federal system, as does the United States. In fact, the
problem that we have in the United Kingdom is that we do not have
a federal system and we do not aspire really to a federal system.
Thus, we have a multitude of institutions that are very often
overlapping in responsibilities, overlapping in geographical areas.
To some extent, I think it does work better in northern Germany.
I think that is because there is this formal federal system where
there are clearly devolved responsibilities. Perhaps that is the
key to the way it does work and provides a clear role for those
local authorities and a clear devolved role where they do have
devolved responsibilities, without too much federal checking up
on them all the time. We are a bit stuck between those two models.
Q384 Mr Leech: Local authorities
tell us that one of the main barriers to improving local transport
is that we do not have control of rail services and buses. Would
you go along with that?
Professor Potter: The one local
authority that does is of course London, which has control certainly
over the bus services and over the tube in a somewhat restricted
manner. That is where you can introduce very much more integrated
ticketing products, and you can have greater control over the
quality of services. For the rest of the UK of course, talking
about the buses in the first instance, you have the deregulated
bus system, excluding London and Northern Ireland. Certainly from
the work that I have done, I can see there have been some difficulties
of getting enough of an improvement out of quality bus partnerships
when you cannot have much control over the fares and over the
services that the private operators provide. There are two levels
of this, one of which is about where you enter into partnership
agreements with private bus operators. They are often very worried
about free-loaders and you very often get other operators not
joining in, not committing resources, because they feel they can
use the infrastructure and free-load. At one level you could incrementally
improve the current system, assuming private operators. There
is then quite a large jump to when you move towards a more franchised
type system.
Chairman: I am going to stop you there
and be tougher with you. I need sharper answers from our witnesses
and sharper questions, too.
Q385 Clive Efford: Can I ask Mr Locke:
why do you think there is £700 million of private finance
initiative money unallocated? Do you think that indicates that
PFI has its limitations in public transport?
Mr Locke: Certainly not; I think
PFI in transport has been very successful. If you look at the
highways managements scheme in Portsmouth, at the Nottingham tram,
the street lighting schemes that have been delivered, those are
big success stories. We get very good feedback from the individual
local authorities that have delivered those. Obviously there is
a decision-making process that people have to go through and certainly,
if we could start to spend the money as quickly and smoothly as
possible, we could get more out of the PFI funding that is available,
if the right schemes are chosen. It is important for transport
and transport authorities that that money is spent, because that
will have an impact on Spending Review 2007 and the allocations
that are made by the Chancellor through that process. It is important
that the allocations sought by the Department on behalf of local
government are spent on a timely basis and are then fed into future
Spending Review decisions.
Q386 Clive Efford: There are currently
three areas into which the Government allocates resources for
PFI: major schemes, street lighting and highways management. Would
you advocate that there should be more areas where PFI could be
applied?
Mr Locke: I think the major schemes
cover a whole multitude of schemes. That includes new road schemes,
things like the Doncaster Interchange, integrated transport projects
and light rail schemes like Nottingham and potentially it includes
guided bus schemes. We are working with various guided bus schemes
that may ultimately develop into more of a PFI approach where
you have very much a performance-related payment. I think that
does include not quite all of the rest but a large chunk of other
types of projects. Then you have highways management projects
and street lighting projects, which sit as individual programmes
within the total PFI programme in the Department for Transport.
Q387 Clive Efford: The Nottingham
Express Scheme is the only PFI that currently is in existence.
Why are there not more?
Mr Locke: I do not really know.
Obviously other local authorities have chosen to develop their
schemes and procure their schemes in other ways. We have not had
any other light rail schemes completed since Nottingham. Nottingham
is extremely successful; it is doing really well and they have
two years of operations now. The passenger numbers are very good;
they are in line if not exceeding expectations. One of the big
advantages of using PFI, so long as you can get a sensible risk
allocation as part of the process, is that you tie in the operator
to deliver the service, and the local authority has that tie-in,
that obligation, from the service provider to provide things outside
the pure fare box. This probably goes back to the earlier question
from one of your colleagues, in that many large infrastructure
projects will always require some form of public subsidy, whether
you pay that through a PFI arrangement or through staged grant
payments. By doing it through PFI, you can pay for performance;
in Nottingham, you pay for punctuality, reliability and safety,
CCTV and cleanliness of the stations, and you pay for the wider
benefits. Nottingham City Council and Nottinghamshire County Council
have that ability to encourage that all the way through the 25-year
life of the contract.
Q388 Clive Efford: You have said
PFI has brought benefits that normal conventional procurement
processes could not. What exactly do you mean by that?
Mr Locke: The major benefit of
PFI in light rail is the payment for performance, so that you
have that ability to continue to pay for things that are outside
of the fare box, like cleanliness of the trams and of the stations,
which may not purely be a commercial decision. So long as the
fare box is there, then Nottingham has those wider benefits. You
also have the whole service approach and the due diligence that
comes from somebody taking that risk for 25 years, because they
really do have to do their work on making sure that the passenger
numbers are sustainable through that term of the contract.
Q389 Clive Efford: Do PFIs go through
the same value-for-money tests that are carried out by the Department
for Transport?
Mr Locke: Yes, every single transport
scheme that is procured through PFI has to complete an appraisal
summary table and secure a suitable benefit/cost ratio, whether
that is a street lighting scheme, a highways management scheme
or a major scheme. Certainly, Nottingham Tram had to go through
the same appraisal process as any other transport scheme.
Q390 Mr Leech: I think I remember
you saying that PFI schemes are good if you pick the right schemes.
Could you elaborate on what you would consider to be a right scheme
and what would be a wrong scheme for PFI?
Mr Locke: Transport schemes appear
to have done extremely well compared to many other sectors. Obviously
the Treasury has moved the limit to £20 million for smaller
schemes. I was probably alluding to those schemes in other sectors
that are relatively small. In transport, street lighting has been
extremely successful. The highways management scheme in Portsmouth
is doing extremely well. It probably is a case of looking at individual
schemes that are outside the norm on a scheme-by-scheme basis.
Q391 Mrs Ellman: Is there a problem
about the supply of well-trained transport planners? Is that an
area where the Department should be doing more to encourage more
people or encourage training? Is there an issue there?
Professor Potter: I am aware of
this. I think this is the changing nature of the transport planning
profession because we are moving more from a profession based
around spreading concrete on the ground to one which is linked
to, say, marketing skills and persuasion skills and exalting people
to green their travel behaviour. You are now moving to embrace
social science type skills. I think that is the crucial element
that is occurring about the new skills being required.
Q392 Chairman: It would be helpful
if we could we see that in some of the train operating companies?
Professor Potter: That is very
true. I am involved with the Transport Planning Society and with
Transport for London in developing new training courses. There
is a skills gap, but there is also a training gap. New qualifications
are beginning to emerge but they are just starting to follow the
shift in the transport planning profession.
Q393 Mrs Ellman: Do you have any
views on the current workings by regional government officers
in relation to transport issues, for example, in assessing priorities,
giving advice and making recommendations?
Mr Travers: This was probably
implied by what I was saying earlier. The Government, has, for
good reasons, created a number of different levels of operation
for transport—district, in the case of the metropolitan
areas; county; then the region; and then the supra-region. On
a number of occasions, there is a sense in local government, and
not only there, that perhaps government regional offices might
be not exactly surplus to requirement but at the far edge of requirement
and that very often, and not only in transport to be fair to them,
there is a lot of double-checking of things that could either
be done by Whitehall or do not need double-checking, or there
are regulators, or whatever. As a generality, I think the regional
offices are here to stay. I come back to the point I made earlier
that perhaps we have slightly too much government, too many layers,
too many levels and institutions, particularly in the regions.
Q394 Mrs Ellman: Do you think that
they should relate more closely to the existing regional assemblies?
Mr Travers: Certainly, having
regional assemblies and RDAs (regional development agencies) and
government regional offices operating with modest budgets within
each region and then the Northern Way as well is too much. It
is just too much clutter and difficult to understand.
Q395 Chairman: You told us that earlier,
and we agree with you, but we need to know what the alternatives
are?
Mr Travers: The alternative would
be to fuse the roles of the assembly and the government regional
office where that can be done. Presumably if there are resources
allocated by the regional office, it is difficult to see why that
could not be done by the assembly if the assembly is going to
continue to exist. If not, the powers could go the other way.
Why have both?
Q396 Mrs Ellman: Which of the current
ideas on local taxation do you think are most likely to be taken
up and be effective here?
Mr Travers: It is difficult to
second-guess Sir Michael Lyons. Yesterday it was a tax on litter,
according to the press. It is unlikely, given the constraints
under which we all operate, that a major reform of local government
finance is going to occur. I might be wrong. Therefore, the opportunities
for the creation of smaller revenues of the kind that have been
discussed earlier today to do with congestion charging, tourist
taxes, green taxes, add-ons to the business rate, therefore become
slightly more likely. From transport's point of view, and certainly
from transport infrastructure funding's point of view, may be
an accidental benefit of the difficulty because those taxes could
be seen as a way of underpinning revenue flows to underpin capital
projects, which would be more appealing to the Treasury perhaps
than general funding for local government.
Q397 Chairman: Is not the problem
that regional offices are regarded as gatekeepers rather than
facilitators?
Mr Travers: Regional offices try
to be seen in two ways. They like to be seen as Government's voice
downwards, but also the region's voice.
Q398 Chairman: You are saying that
you should fuse these two bodies. That is the point we are making.
I think the difficulty is that instead of being a facilitator
for what the local authorities want in terms of transport schemes
and looking at it on a different basis, is it not true that they
are regarded as the representatives of the departments in the
regions with a responsibility to make sure not too much goes astray?
Mr Travers: The difficulty is
that any big decision will always go back to headquarters. In
the end, any major decision will always go to London or to the
Treasury.
Q399 Chairman: The other thing that
worries a lot of us, frankly, if we have these city states, is
whether the emphasis, because they must after all have a representative
involvement, will be on equal distribution, or will there be a
degree of enlightened dictatorship? For example, a city state
that encompasses Manchester at the top end and Crewe at the bottom
end—I am not an imaginative woman—does seem to me
might be mildly unequal.
Mr Locke: That certainly is the
concern of some authorities outside the main cities: will they
get their fair share of any allocation that is made within a city
region? You could argue that the city region may have a greater
need than some of the other authorities within the wider region,
but it is important that there is equal distribution.
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