Appendix
Introduction
In June 2005, the Department for Transport published
its Departmental Annual Report covering the period 2004-05. The
Transport Committee held an evidence session on 16 November 2005
at which the Secretary of State, Rt Hon Alistair Darling MP, and
the Permanent Secretary, Sir David Rowlands, gave oral evidence
about the Department's Annual Report 2005.
The Government acknowledges the Transport Committee's
report on the Departmental Annual Report and the recommendations
made by the Committee. This document responds to the recommendations
and represents the Government's formal response to the Committee's
report.
Recommendations and Responses
1. Baseline data should always be published with
targets. In the absence of data, targets cannot be measured and
are consequently useless. Baseline data for the strategic roads
indicator were set late and after the publication of targets.
This is evidence of poor Departmental administration. Data from
some strategic routes has been excluded from the new congestion
target because of quality problems. The Department needs to ensure
this data is made available as soon as possible, and to apply
the congestion target to the excluded routes quickly. (Paragraph
7)
The Government does not accept that it is poor administration
to announce targets before baseline data is in place. The target
for strategic roads was agreed in Spending Review 2004 and announced
in the Public Service Agreement flowing from that Spending Review
to come into effect in July 2005. It takes time to generate the
high quality data against which performance against the target
can be robustly assessed, but the existence of the target and
the fact that the baseline year relates to the period August 2004
to July 2005 means that there was an immediate incentive on the
Highways Agency to put in place measures to improve reliability.
There will often be a tension between the desire to introduce
improved and more relevant targets, and the difficulties of measuring
the baseline and subsequent performance. In this case, the Department
believes it has adopted a balanced course between announcing the
target early enough to make a difference and taking the time necessary
to ensure that the baseline data and measurement system is sufficiently
robust.
The baseline now developed is based upon significantly
improved data sources, covering every stretch of the Highways
Agency network for every 15 minute period of the day. This database,
combining information from several sources, contains millions
of records and required new processing methods to be developed
to turn the data into journey times. The creation of this new
database is a significant achievement and will be invaluable not
just for the purpose of assessing the target, but also to allow
improved understanding of congestion and management of the network.
Some routes have been excluded from the initial release
of the baseline for data quality reasons. As the target publication
explains, where possible these routes will be brought into the
target when data allow. Since the target relies on a full year's
worth of data to calculate a distribution of journey times, in
some cases it will not be possible to incorporate additional routes
until a full year's worth of data are available. In the meantime,
the Highways Agency is using other indicators to look at the performance
on routes that are currently excluded, since some simpler indicators
will not require a full year's worth of data.
The first performance data against the baseline will
be published shortly. Subsequent performance data will be published
twice yearly, in the Autumn Performance Report and the Departmental
Annual Report.
2. The next series of Local Transport Plans have
been submitted. The targets for congestion on urban roads will
not however be set in time for the new LTPs. Given that it is
the intention that the LTPs will contain the urban road targets,
this represents particularly poor internal planning by the Department.
In the meantime we expect the Department to give local authorities
clear and consistent guidance on congestion strategies. This must
be coordinated properly with the targets when these are set finally
in July 2006. The Department should include urban congestion performance
information in all subsequent Annual Reports. (Paragraph 10)
As with the target for strategic roads, the Department
has had to generate significantly improved data to underpin the
new urban congestion target. These data again amount to millions
of records, are derived from new and sophisticated algorithms
which needed to be developed and tested, and potentially offer
journey times for most A-roads in the country. The programme to
deliver these improved data, which was originally scheduled for
March 2006 to coincide with the publication of Local Transport
Plans (LTPs) was ambitious and problems with the innovative data
processing methods applied meant that target setting had to be
delayed from March 2006 to July 2006. Nevertheless, the Department
provided comprehensive guidance (in December 2004) on how authorities
should write their transport plans and Local Authorities have
published their strategies to tackle congestion in their LTPs.
The Department is now working with Local Authorities to ensure
that the specific congestion targets that are set in July 2006
are consistent with these strategies.
The Department will include performance updates against
the urban congestion target in future Annual Reports.
3. By ignoring the 'person delay' aspect of congestion
measurement on the strategic road network, the Department may
risk losing the impact of other significant policy initiatives,
for example, car share lanes. (Paragraph 12)
The strategic roads target is directed at journey
time reliability, not just vehicle delay, since the Government
views unreliability as the most significant problem caused by
congestion. Vehicle occupancy and hence person delay is a less
important factor on strategic roads than urban roads, where bus
usage is more significant, and in considering how to develop measures
for strategic roads it was concluded that the benefits of measuring
vehicle occupancy would be outweighed by the high costs of collecting
such data on roads with high traffic flows.
High Occupancy Vehicle (HOV) lanes are being trialled
by the Department to investigate how they may be used to lock
in the benefits gained by adding new capacity. The purpose of
these new lanes is to encourage car sharing to help reduce the
number of vehicles on the road and consequently improve journey
time reliability and benefit the environment. Where HOV lanes
work well we may expect the reliability target to improve since
the shared lane is likely to be more free-flowing than other lanes
and so less susceptible to flow breakdown.
4. Traffic Officers in the West Midlands have
been given targets for attending and clearing incidents. This
is welcome. Targets for Traffic Officers in other areas must be
published as soon as possible. We also expect the Department to
explain how it will measure the overall impact of the new Traffic
Officers on road congestion and safety. (Paragraph 14)
The West Midlands is currently the only region with
all Traffic Officer resources in place and operating at full service.
Targets will be set for the other six regions in autumn 2006,
when all resources for these regions are in place. Performance
against the targets will be measured as the Highways Agency gradually
takes over responsibility for all of the functions from the Police.
This process is expected to be completed by early 2007.
The Traffic Officer Service will make an important
contribution to the journey time reliability target and work is
underway to disaggregate the reliability target on a regional
basis to reflect varying levels of congestion and to enable each
region's specific contribution to achieving the target to be assessed.
These regional targets will be refined further as we develop a
better understanding of the data.
5. The Government is not pursuing the fuel duty
escalator as part of its strategy to constrain traffic growth.
Yet it admits that traffic growth would have been slower over
the last 6 years had the escalator still been operating. The Department
should publish its estimate of the quantity of traffic which would
have been removed from roads in England and Wales over the past
6 years had the Fuel Duty Escalator been applied. (Paragraph 16)
Whilst we recognise that higher fuel prices can contribute
to constraining traffic growth, in setting fuel duty the Government
also has to take into account the economic impact. The fuel duty
escalator finished more than 5 years ago and we have not therefore
made any estimate of what traffic growth would have been had it
remained in place.
6. The Department abandoned its intention to launch
Lorry Road User Charging when it decided to consider a national
road user pricing strategy. This has been an embarrassing muddle
which might have been avoided with appropriate foresight. Any
full road pricing scheme is perhaps 10 years away, but we expect
the Department to give priority to ensure that a viable scheme
is developed without undue delay. The Department must pursue a
practical plan to ensure that foreign lorries make a financial
contribution to UK road damage costs. (Paragraph 20)
The decision to abandon Lorry Road User Charging
was taken against the background of the intention to explore the
potential for a system of national road pricing, including lorries
and other vehicles. The Government believes this was a sensible
and pragmatic decision to take account of developing policy. The
Department nevertheless recognises the concerns of the road haulage
industry about foreign competition. The Department is actively
working with local authorities with a view to piloting road pricing
on a local/regional basis. We are also determined to clamp down
on practices that give an unfair competitive advantage, and ensure
fairer and more effective enforcement on lorries of all nationalities.
Overloaded lorries cause expensive damage to our roads and foreign
lorries are frequent offenders. We are investing in weigh-in-motion
sensors to help us catch offenders, and provisions in the Road
Safety Bill will allow much more effective enforcement.
7. The Department's road casualty reduction target
is insufficiently challenging and needs to be strengthened. Where
local safety targets are not being met, the Department must press
local authorities to introduce 20 mph zones where appropriate
and monitor the results carefully. There is an alarming upturn
in 'drink drive' casualties. We expect to see an effective publicity
campaign reaffirming the message that 'drink driving' kills. This
should be supported by a specific enforcement effort by the police.
(Paragraph 24)
The Government believes that Public Service Agreement
targets need to be both stretching and realistic. The road casualty
reduction target is founded in rigorous analysis of underlying
casualty trends and reflects a considerable, but achievable challenge
based on the introduction of both new road safety policy measures
and a high level of continued activity in delivering existing
measures.
The Department regularly monitors and reviews progress
in delivering the strategy commitments and casualty trends. The
first three-yearly review of the road safety strategy, published
in April 2004, concluded that we are on track to deliver the challenging
casualty reduction targets. The second review of the road safety
strategy is just getting underway. It will assess prospects for
achieving the targets and what more needs to be done, identifying
problem areas which require renewed focus. A report is expected
to be with Ministers by the end of the year.
Many Traffic Authorities are now implementing 20mph
zones and this is encouraged and supported by the Department.
Traffic Advisory Leaflet 9/99 gives advice on how and where to
implement both 20mph zones and 20mph limits. Their use is also
further encouraged in the Department's new guidance on setting
local speed limits to be published shortly.
However, 20mph zones are just one of a wide range
of measures proven to reduce casualties, and local authorities
are best placed to determine and implement a local strategy which
draws upon the mix of measures that best meets local needs and
considerations. Local authorities are equally best placed to decide
upon the most suitable approach at a particular location, and
this would depend upon the nature of the problem, current vehicle
speeds, and whether the road is in an urban or rural area. 20mph
zones are predominantly used in urban areas and can require extensive
use of traffic calming.
Each local highway authority in England is required
to set their own local casualty reduction targets as part of their
Local Transport Plan. The Department has successfully negotiated
Local Public Service Agreements for road safety with over two
thirds of all English local highway authorities. Authorities will
receive reward grant in return for stretched performance in terms
of either more demanding targets, or meeting existing targets
early.
The Department supports authorities in delivering
their local targets in a number of ways. Guidance is issued on
both the strategic management of road safety within an authority,
and on the use of individual road safety measures. The sharing
of best practice is encouraged through periodic meetings of local
authority road safety practitioners in each Government Office
region. Additionally, road safety has been selected as a Beacon
Council theme for the coming year, which will offer the opportunity
for the selected Beacon Councils to disseminate their excellent
practices to a wider audience.
The Department has found that a simple message 'drink
driving kills' is not of itself effective, particularly with young
men. This is partly because they believe they know the limit at
which they can drink and still drive safely. The strategy has
therefore been to try to persuade young drivers that they are
not able to judge a safe level of alcohol so should not risk making
an error. Tracking research shows that those strongly disagreeing
with the statement "Having one or two drinks does not make
drivers more likely to have an accident", has increased from
47 per cent in January 2005 to 52 per cent in December 2005 which
suggests that this strategy is having an impact.
The Department has worked with the police to ensure
that they coordinate their enforcement campaign with our drink
drive publicity. We have done this because we know that young
drivers in particular are more concerned about the consequences
of getting caught drink driving than having an accident. This
cooperation will continue over our summer World Cup and Christmas
publicity campaigns.
8. The punctuality and reliability of the UK rail
network is not yet good enough for a major Western country. The
Government must set a tough new target that provides a genuine
challenge for the industry to improve its performance. Where apparent
improvements in punctuality and reliability arise merely from
slackening the timetable, targets must be toughened still further
if real improvements are to be produced. Clear interim milestones
should be set to help measure progress towards achieving targets.
(Paragraph 27)
The Department's target of 85 per cent punctuality
by March 2006 was achieved. The target was originally set against
a background of actual achievement running at below 81 per cent
for most of 2003. To raise rail industry performance by 4 percentage
points demanded co-ordinated planning and significant action by
the different parts of the industry. Following achievement of
this target, the industry has committed to raising PPM to 88 per
cent at March 2008, with regular checks against progress being
made en route to this date.
The most successful rail timetable reviews have been
achieved where the whole timetable and all its component parts
have been reviewed from base. Such reviews ensure that the time
allowances for each part of a journey are matched to what is shown
to be actually needed in order to operate punctually. This ensures
the best balance between what time is actually required for sections
of a journey, and the need to offer the shortest reliable end-to-end
journey times.
9. We see no inconsistency between the Secretary
of State's wider responsibilities and encouraging passenger 'take-up'
on the railways, and we do not therefore accept the Department's
rationale for abandoning a heavy rail growth target. We hope that
the Government's position does not mask plans to reduce sensible
spending on the railway. While a reduction in subsidy payments
to train operators would be welcome; and making the operations
of Network Rail more efficient would save money; controlling financial
resources for the railway must not mean abandonment of the policy
of encouraging rail use. The Department's approach also appears
at odds with the aggressive approach to increasing passenger numbers
being promoted by recent rail franchise winners. (Paragraph 30)
The Department agrees with the Committee that the
Secretary of State's responsibilities are fully consistent with
encouraging passenger take-up on the railways. Indeed, virtually
all of the Department's rail policies are aimed, directly or indirectly,
at just that outcome. That is a sensible element in a coherent
transport strategy. Under the Railways Act 2005, however, the
Secretary of State did not inherit the Strategic Rail Authority's
duty to promote the use of the rail network. It would not be appropriate
for the Secretary of State to have a duty of that sort when he
has no corresponding duty to promote, for example, civil aviation,
shipping or cycling. Transport policies need to be considered
in the round.
10. We invite the Secretary of State to reconsider
this issue. He should look in particular at identifying a growth
target for rail which encourages patronage in the regions where
passenger numbers are often low and road congestion is severe.
(Paragraph 31)
The Department has considered the case for rail growth
targets in the light of the Committee's comments. Its view remains,
however, that an across-the-board target would not be appropriate
when both existing levels of use and the amount of spare capacity
vary so widely from region to region and line to line. Providing
the capacity to meet future demand and respond to the expectations
of passengers for increased service quality will be one of the
key challenges for the strategy which the Department expects to
publish next year.
11. We are concerned that 10 per cent of rail
posts in the Department remain unfilled. We expect the Department
to tell us what steps it is taking to make up this shortfall.
(Paragraph 32)
The Department's Rail Group has continued filling
vacant posts as planned. The vacancy rate now stands at below
5 per cent. A few posts are being reconsidered; the remaining
vacancies are being advertised now.
12. Lessons from the success of London's bus strategy
must be identified and, where appropriate, applied throughout
England and Wales. The Secretary of State has now acknowledged
that the bus Quality Contract scheme has failed. It must be discontinued.
We recommend that the Department grants the additional powers
to local authorities to enable them to have more effective control
over local public transport, and buses in particular. (Paragraph
37)
The previous Secretary of State acknowledged that
there were shortcomings in the new provisions in the Transport
Act 2000 that made them unattractive to local transport authorities,
but he did not say that quality contracts schemes had failed.
To date, no quality contracts schemes have been applied for, but
if implemented, they would be very similar in nature to the franchising
system that exists in London.
We understand that all six English passenger transport
executives are working up detailed proposals for quality contracts
schemes. Two of them (Tyne & Wear and South Yorkshire) advertised
in the Official Journal of the European Union in January this
year, seeking expressions of interest in participating in a quality
contracts scheme, should one be approved, and they have been developing
their plans in consultation with the parties who responded. There
will need to be public local consultation before schemes are submitted
to the Secretary of State for approval.
Following recent discussions with the Office of Fair
Trading, the Department is working up further guidance on what
local authorities and operators can agree with regard to network
co-ordination without breaching competition law. We are considering
the case for further legislation to underpin these arrangements
and strengthen the hand of local authorities in other respects.
13. The Public Private Partnership contracts do
not appear to be delivering the promised improvements to the London
Underground. The travelling public deserves much better. We are
aware that the Underground is now the direct responsibility of
Transport for London. But, despite the small print, the Department
cannot escape ultimate responsibility for so significant a part
of London's transport infrastructure. It is a truism that London
could not function on a daily basis without the Underground; but
we have also pointed to its importance to the success of the London
Olympics in a separate report. (Paragraph 41)
Improvements being delivered by the Public Private
Partnership (PPP) on the Underground so far include:
- A 7th car added to all Jubilee
line trains and four new trains added to the fleet which provides
a 17 per cent increase in capacity and allows an extra 6,000 passengers
to travel at peak periods.
- Refurbished District line trains are being returned
to service with the entire fleet due to be completed by 2009.
- 18 stations have been enhanced and modernised
with improvements including upgraded CCTV, information displays,
public address systems, emergency help points, platform seating
and better signing and lighting. Work is substantially complete
at 14 more stations and 66 stations are due to be completed by
March 2007.
- Wembley Park Station has been substantially rebuilt
to cater for visitors to the new national stadium. A 70 per cent
increase in capacity enables the station to handle 37,500 passengers
an hour.
- Waterloo & City line has been closed for
five months until September 2006 to allow for major refurbishment.
The entire track and all electrical, mechanical, communication
and fire protection equipment will be renewed. Trains will also
be refurbished and platform improvements undertaken.
In 2004-05 London Underground (LU) carried the highest
number of passenger journeys ever at 976 million. Customer satisfaction
was at an all time high, while train delays were at their lowest
level since 1998-99 reflecting improvements in the reliability
of the network. LU's train schedule is now its largest ever and
in 2004-05 it operated over 95 per cent of it, the highest level
for seven years. This enabled LU to set a record of nearly 70
million train kilometres operated. Performance in 2005-06, when
adjusted to remove the impact of the July terrorist attacks, showed
that it was likely that LU would have carried even more passengers,
run more trains and with fewer delays than the previous year had
the attacks not occurred.
The PPP will enable two substantial improvements
to the Underground to be delivered before the 2012 London Olympic
and Paralympic Games. Signalling on both the Jubilee and Northern
lines will be upgraded by December 2009 and January 2012 respectively.
These projects will enable increases in capacity for the Jubilee
line of over 40 per cent and the Northern line of 21 per cent.
Both projects are currently on schedule and being delivered within
their budgets.
14. The Government must continue to take a very
close interest in the performance of the London Underground. In
order to force up standards of passenger satisfaction on the Underground:
regular and stringent reviews of the PPP contracts should be undertaken
by Transport for London; changes which may improve performance
should be identified clearly; and Transport for London should
be able to count on the Government's strong and continuing support
to build momentum for major improvements. Having set up the PPP
contracts, the Department cannot wash its hands of the London
Underground. (Paragraph 42)
The Government will continue to monitor regularly
the performance of London Underground against the six performance
indicators agreed with the Mayor until 2010-11. Performance information
against these targets has been included in the Department's Autumn
Report for 2005 and Annual Report for 2006, and we will continue
to report this information while it is relevant.
LU also publishes performance information on its
website which is updated, where possible, on a monthly basis and
they issue a detailed annual review of the PPP each summer.
The PPP contracts themselves include the requirement
for periodic reviews of the contracts every 7½ years, the
first of which will be completed in 2010. This provides an opportunity
for LU to review its outcome requirements under the contract and
much of the contract provisions, but not the structure of the
PPP itself.
15. The Department's inability to enforce compliance
by local authorities may be delaying the achievement of some air
quality targets. We are alarmed by the Department's complacency
towards the very serious health risk posed by transport generated
pollutants. (Paragraph 44)
The Government is not complacent about the risk posed
by transport generated pollutants and is working actively with
local authorities to tackle the issue. For example Departmental
guidance to local authorities on the completion of Local Transport
Plans, the most recent of which were submitted in March, included
the recommendation to incorporate Air Quality Management Plans
in LTPs. The Department has a joint SR2004 Public Service Agreement
target with the Department for the Environment, Food and Rural
Affairs (Defra) to improve air quality by meeting the Air Quality
Strategy targets for emissions from all sources of carbon monoxide,
lead, nitrogen dioxide (NO2), particles (PM10) sulphur dioxide
(SO2), benzene and 1,3-butadiene.
Where air quality targets have been exceeded at specific
locations, the local authorities have a statutory duty, under
the Environment Act 1995, to declare Air Quality Management Areas
and develop plans to tackle the problems identified. This includes
assessing air quality and preparing action plans to remedy any
local hotspots. Local authorities are also responsible for land-use
planning polices, such as the location of new developments, which
can have a significant impact on air quality. Upper-tier local
authorities in England (outside London) are responsible for developing
and implementing integrated transport policies for their areas
and submitting these as a Local Transport Plan (LTP).
Between 1990 and 2001 there has been a marked reduction
in concentrations of air pollutants, despite increases in traffic,
and an estimated commensurate reduction of more than 4,200 premature
deaths and 3,500 hospital admissions per annum.
16. The Department is failing to display dynamic
leadership in tackling air quality and is taking too long to address
underperformance in reducing pollutants. We recommend that it
sets a firm deadline in the near future for producing and implementing
a strategy which deals effectively with air pollutants from the
transport sector. These local pollutants have a negative impact
on public health. We expect the Department to use all available
tools to ensure the best possible standard of air quality. (Paragraph
46)
The Department is already working with Defra on the
revision of the Air Quality Strategy Review (AQSR). A consultation
document, issued on 5 April, suggests several policy measures,
including transport options, to help the UK meet its air quality
objectives. Measures which appear promising include early implementation
of European emission standards for light vehicles, introduction
of road pricing, and reducing emissions from international shipping,
working through the International Maritime Organisation.
The consultation document includes cost benefit appraisals
of each of the proposed measures including monetised impacts on
health as a result of changes to air quality policy. The consultation
period closes on 11 July 2006. Stakeholders' views will be reflected
in the final Strategy Document, due to be published by the end
of the year.
The DfT has been working closely with Defra in the
EU Environment Council on a proposal for revision of the Air Quality
Directive. If agreed the Directive would clarify existing air
quality legislation, provide further protection for human health
and introduce a new target for fine particulate matter (PM2.5).
The Department also leads in negotiations in the
Environment Council on the proposed new European Vehicle Standards
Directive (Euro 5). This would tighten limits for particulates
and require further reductions in nitrogen oxide emissions from
light diesel vehicles. Although these changes would take some
time to be fully incorporated into the fleet, modeling shows that
the impact on local air quality would be significant. Agreement
is possible by the end of the year.
17. We were disappointed that the Secretary of
State's oral evidence failed to catch fire with the sense of conviction
and urgency we had expected him to demonstrate on this issue.
Measures are available to influence transport behavioural changes
in the short term, for example those set out in the Department's
own report Smarter Choices - Changing the way we travel, need
to be given a much higher profile. (Paragraph 51)
18. We see no reason to delay the rapid and widespread
introduction of these inexpensive, yet highly effective, measures.
(Paragraph 51)
The Department recognises the contribution that smarter
choice measures such as workplace, school and personalised travel
planning, improving public transport information and marketing,
car sharing, car clubs, increased walking and cycling can make,
not just in reducing congestion but also in cutting carbon emissions.
We have been working extensively with local authorities to ensure
that these measures are incorporated in their new Local Transport
Plans. We are now focusing on greater engagement with the business
community to promote increased uptake of travel planning, particularly
on a voluntary basis. As part of this, we will be co-ordinating
closely with other Government departments, with an interest in
business and sustainable travel.
19. Transport is a major contributor to the problem
of climate change. The Department for Transport must take a lead
in mitigating its destructive effect. We recommend that the Departmental
Annual Report for 2006 sets out clearly the Department's commitments,
the action plan to achieve reductions in destructive emissions,
and appropriate milestones. The Department will receive the support
of this committee in whatever reasonable and practical measures
it proposes. It must not be deterred from implementing strategies
that may prove unpopular in the short-term if these are likely
to prove the most effective solutions. (Paragraph 53)
This recommendation was made too late for it to be
taken into account in preparing the Department's Annual Report
2006 which was published only a few days after the Transport Committee's
report on the Departmental Annual Report for 2005. However, the
Annual Report 2006 includes a substantial chapter on the Department's
objectives and plans for both Climate Change and Air Quality.
As set out there and in 'Climate Change: The UK Programme
2006', we are promoting practical and cost-effective policies
to:
- Reduce the fossil carbon content
of transport fuel
- Increase the fuel efficiency of vehicles
- Encourage a move towards more environmentally
friendly forms of transport
- Work towards including transport in emissions
trading schemes.
Through the Climate Change Programme, the transport
sector will contribute 6.8 million tonnes of carbon (MtC) savings
in 2010 - around a quarter of overall Climate Change Programme
savings. Without these 6.8 MtC savings, transport emissions in
2010 would be 13 per cent higher.
We are also constantly working to develop and deliver
new carbon saving policies. For example, we are making good progress
on including aviation in the European Emissions Trading Scheme
by 2008 or as soon as possible thereafter.
20. We would like the Department for Transport
to explain exactly what interdepartmental arrangements it has
with the Department for the Environment, Food, and Rural Affairs
(DEFRA) and the Department of Trade and Industry (DTI) for delivering
joint targets for greenhouse gas emissions; and whether these
follow recent guidelines set by the National Audit Office. (Paragraph
56)
We have shared ownership of this PSA target with
Defra and DTI since April 2005. An outline draft delivery plan
was agreed in May 2005, pending the conclusions of the Climate
Change Programme review and is now due to be completed this summer.
This will be a joint plan. We are also working to develop joint
reporting procedures and with Treasury to ensure our processes
take account of latest guidance.
In the meantime, delivery of policy on climate change
was and continues to be monitored by the inter-departmental Sustainable
Energy Policy Network and Climate Change Programme Project Board,
through joint reporting to Treasury and in Departmental planning.
The issue of climate change also forms part of the remit of the
Cabinet Committee on Energy and the Environment (EE).
21. The Department needs to adopt imaginative
and effective strategies for increasing representation by women
and staff with disabilities in the Senior Civil Service. It has
failed to meet targets in these areas for 2004-05. Targets for
2005-06 have been toughened. We wish to know what specific measures
the Department will adopt to meet these. Setting more difficult
targets is laudable. But there needs to be a sound, underpinning
delivery strategy. If there is not, the exercise will be cosmetic
and the Department will fail again. (Paragraph 59)
In 2005, the Department took over the Strategic Rail
Authority (SRA). Due to the extremely low representation of women
within senior management positions in the SRA, this has had a
negative impact on the Departments overall percentage and representation
within the Senior Civil Service (SCS).
The Department recognises that we have further work
to do in order to be representative of the community that we serve.
To support this aim, David Rowlands and Waqar Azmi, chief diversity
adviser to the civil service, formally launched DfT's Diversity
Delivery Plan on 2 May 2006. It sets out five objectives around
culture, leadership, development, recruitment and communication,
along with specific actions that we will take in order to achieve
our diversity targets and the commitments within the Civil Service
10 Point Plan.
DfT(C) and its executive agencies have also set internal
targets for feeder grade positions as it is recognised that in
order to make a difference within the Senior Civil Service, there
needs to be a diverse pool of candidates available to promote
from.
To further support our commitment to diversity, the
achievement of our Delivery Plan and also our responsibilities
under the current and forthcoming Public Duties, DfT board members
have taken on the role of gender, ethnicity and disability champions.
In addition, the Department has implemented a number
of initiatives on gender and disability over the last 12 months.
For example, running career development workshops for women across
all pay bands and promoting the Department and advertising all
external jobs on the Aurora: Where Women Want to Work website.
We have also implemented a disability strategy and action plan.
The Department was recognised externally for our achievements
last year by gaining a Silver award in Opportunity Now and also
83 per cent in the Disability Standard by the Employers Forum
on Disability.
22. The Department is to be congratulated for
meeting the target for recruiting staff from ethnic minorities.
We invite it to set the pace in Whitehall by adopting a further,
and yet more challenging, target for improving future ethnic minority
representation. (Paragraph 60)
Although the Department has made progress in terms
of increasing ethnic representation amongst staff, this is predominantly
at junior grades and the Department recognises that it still has
work to do in order to increase representation across all grades.
The Department has set a 4 per cent internal ethnicity
target within the SCS to be achieved by 2008, which is in line
with the Cabinet Office target. DfT(C) has also set a feeder grade
target of 6 per cent, and executive agencies have been required
by the Centre to set their own feeder grade targets in order to
support the Department's SCS target. These targets are also underpinned
by the objectives and actions contained within the Diversity Delivery
Plan.
In addition to the Delivery Plan, the Department
currently runs 'Green Light' a Positive Action Development Programme
for ethnic minority members of staff. This has already delivered
significant results with several members achieving promotion.
To support our commitments and responsibilities within the Public
Duty on Race, we also have an Employment/HR Race Action Plan.
The Department was recognised for its achievements by not only
winning an Award at the British Diversity Awards for Green Light
in 2004, but we were also awarded Silver in 2005 by Race For Opportunity,
which was an improvement on our Bronze Award in 2004.
23. We are alarmed and perplexed at the Government's
proposal to reduce the penalties for breaking speed limits in
urban areas. This flies in the face of evidence that this will
cause casualties to increase. We recommend that the Government
reverses its position. (Paragraph 63)
The principle of graduated penalties for speeding
has generally been well supported. A graduated penalty system
will allow more careful consideration to be given to drivers who
may through lapses breach the speed limit by a relatively small
amount. And it will also hit harder those who continuously and
deliberately exceed the speed limit by excessive amounts.
The Department has made clear that it recognises
the concerns that have been raised about the possibility of awarding
2 penalty points for speeding offences on roads subject to a 30mph
speed limit. We have also given assurances that these concerns
will be fully taken into account when the final graduated fixed
penalty points structure is considered. That final structure is
also subject to statutory consultation and affirmative resolution.
24. There was a 50 to 1 response on the part of
the public to extending the M6 Toll road north of Birmingham to
Manchester but further feasibility studies have been ordered by
the Department. The Department should explain the point of consulting
the public when it simply ignores the result. (Paragraph 64)
The response was divided into those who did not want
any extra road capacity on this section of the M6, those who were
prepared to consider that either the Expressway or widening were
the solutions, and those who were ambivalent on the form of the
capacity but felt that it should be delivered as soon as possible.
Including petitions, almost half of those who opposed the Expressway
also opposed any form of extra capacity.
This response has to be contrasted to the conclusion
of the wide-ranging Midman multi-modal study which found that
on balance it would be appropriate to provide some extra capacity,
though not as much as would be justified purely to meet unconstrained
traffic growth.
Taking the two sets of findings together, the Department
did not think it sensible to disregard the Expressway option until
further feasibility work had established whether an off-line toll
road could be delivered more quickly, at a lower cost, and with
less disruption to traffic than a widening alternative, and what
the overall environmental impact of the two approaches would be.
The Highways Agency was accordingly asked to do further
development work on both options so that the benefits and impacts
of both schemes could be compared on an equal footing. The Agency
has been engaging with a wide range of representative stakeholder
bodies during the development work in order to clarify views on
the alternative options. This will allow a more detailed evaluation
of the widening and Expressway concepts to be presented to Ministers
to inform their decision on the way forward.
25. The Government rejected the Civil Aviation
Report's advice on financial protection for air passengers. This
was a well researched proposal, as the Government itself admitted,
which would have provided universal protection for UK passengers
from air carrier insolvency at a modest price.(Paragraph 65)
The Secretary of State wrote to the Committee on
8 March 2006 with the Government response on the Committee's report
of 4 February 2006. The Committee published the Government response
on 11 April 2006.
26. We expect the Department to base policy on
sound evidence and not to develop proposals that conflict with
known evidence. Where the Department sets aside expensive consultation
and research, public money may be wasted. Where this happens it
is of particular importance that a full and convincing explanation
should be provided. (Paragraph 66)
To inform policy decision-making, the Department
seeks sound evidence through its own activities and from the broader
evidence base. The Department funds significant research programmes
and works with other research sponsors, academia, stakeholders
and the private sector. This evidence is complemented by a wide
range of statistical and analytical activity to deliver advice
to decision-makers.
However, some of that evidence and analysis includes
a range of uncertainties and Departmental decision-making must
therefore recognise these uncertainties and balance the robustness
of the available evidence. Increasingly, the evidence is made
available at the time of policy announcements.
27. We expect to see Sir Rod Eddington's study
of transport and economic development based on sound evidence
and thorough analysis. We shall watch with interest to see how
his findings inform a post-2015 transport strategy which dovetails
with the Department's short and medium term transport policies,
targets, and spending commitments. (Paragraph 67)
Sir Rod has been asked to provide advice to Ministers
around the time of PBR. The study will be evidence-based, and
will look at all modes, including options for new infrastructure,
demand management, and other policy interventions.
28. It is absurd that in the twenty-first century
the financial operations of a central UK Government department
cannot be described as completely effective. The Department must
publish a firm timetable for improving its financial management;
it should tell us when the appropriate systems will be in place
to ensure sound financial governance throughout the Department;
and should provide us with an update of progress made since the
2005 Review. (Paragraph 69)
Appropriate financial systems are already in place,
and their effectiveness has been evidenced by the Department's
successful management of its budgets against its Departmental
Expenditure Limit and Administration Cost Limit, and its ability
to meet the requirements for faster closing of accounts. This
has been the result of the successful implementation of many initiatives
to improve the financial management capability of the Department
since its creation in 2002. Completion of the actions arising
from the 2005 Treasury Review will further strengthen an already
good financial operation.
The timetable for completion of the actions identified
in the Treasury review, is shown below. Current and future initiatives
to improve financial management focus on the changes arising from
the planned introduction of shared financial services across the
Department and its agencies. Implementation of the new services
will involve changes to financial systems and procedures in all
parts of the organisation, and further refinement of governance
arrangements. The issues raised in the 2005 Treasury Review will
be pursued as part of this programme. There are detailed plans
and timetables for the completion of this work. A key date will
be 1 April 2007, when DfT(C) moves to the new Shared Services
systems, but the work will not be wholly complete until the Highways
Agency finance functions transfer in 2008-09.
Progress made on the recommendations of the 2005
Treasury Review is as follows:
i. An enhanced "group" focus by
the DfT Board on overall management of the department's plans,
budget and financial risks, including regular reporting to the
Board on all major projects.
A number of measures have been successfully implemented
to improve the "group" focus of the Board. A group-wide
Investment Appraisal Framework, requiring key investment projects
to be scrutinised by the Board, was introduced in autumn 2005;
reporting on the progress of major projects began in January 2006;
and a group-wide risk reporting process, incorporating bi-monthly
reports on financial risks to the Board, is now in place. The
Board receives monthly finance reports covering the whole Department.
The format and content of these reports are being reviewed as
part of the Shared Services implementation plans. A DfT Group
Finance Committee, which comprises all Agency Finance Directors,
was established in December 2005. It is chaired by the DfT Finance
Director, who reports on its activities to the DfT Board.
ii. A clear definition of the respective roles
and responsibilities of the central finance function and of the
finance teams of agencies.
The DfT Group Finance Committee has worked on developing
the respective roles and responsibilities for central finance
and the agency finance teams. The Committee has, for example,
agreed a common assurance framework to apply across DfT. Further
work on shaping Group Finance roles is continuing in 2006-07 in
the context of Shared Services implementation.
iii. Appointment of a professional group finance
director at Director General level.
The deadline for this recommendation is still some
way off. The existing DfT Finance Director (who has been in post
since March 2003) is professionally qualified and attends all
DfT Board meetings, where he contributes equally with the other
Board members.
iv. A continuing drive to improve the Department's
financial planning process, in terms of both the longer-term forecasting
necessary to underpin the Department's major capital infrastructure
planning and identification of the resource inputs driving agreed
outcome targets. This process should also focus on enhanced integration
of the risk management and financial planning and monitoring processes.
To be reviewed in autumn 2005.
Continued improvements to the financial planning
processes in terms of longer term forecasting have been made,
with the commencement of reporting to the Board on the medium
to long term horizon in November 2005, and regularly on major
project from January 2006. The enhanced integration of risk management
and financial planning and monitoring processes will be completed
through the creation of Resource Management and Planning Teams
for each Director General Group.
v. Clarification of budget management responsibilities
of the senior management (Director General) team and enhancement
of the finance capability supporting budget holders.
From April 2005, changes to the Corporate Governance
framework were implemented and the main delegation of budgets
was made to Directors General. For 2006-07, delegations have again
been made to DGs, and the guidance for sub-delegating has been
strengthened. Further enhancement of the finance capability supporting
budget holders will come through the setting up of Resource Management
and Planning Teams (by October 2006) and the move to the Shared
Service Centre SAP platform.
vi. Developing a centre of expertise on managing
interactions with the private sector.
The Department has developed specialist teams in
a number of areas to support its relationships with the private
sector. These include major projects teams focusing on the larger
projects both at the Departmental and local authority level. In
addition, a central team (Corporate Finance Directorate) has been
established, drawing senior staff from across the public and private
sectors to provide support to departmental priorities, where complex
relationships with the private sector are involved. The team comprises
individuals with banking, private finance, consulting, procurement
and contracting experience. It works with relevant policy teams
across the department to provide specialist expertise on complex
transactions, complementing the skills of the relevant policy
team.
vii. Developing an overall strategy to identify
specialist finance and project management capability gaps across
DfT(C) and the agencies, and taking action to build the relevant
capability.
Work on a strategy to identify gaps in specialist
finance and project management capability was completed in December
2005, with a report going to the Department's Efficiency Board
in January 2006. Further action to address any remaining gaps
will be taken forward with work on embedding Professional Skills
for Government (PSG) within DfT, with finance and project and
programme management (PPM) skills both included as core requirements.
viii. Progressing plans to develop a shared
services function for transaction processing across the Department
and the agencies, in order to enhance the effectiveness (and efficiency)
of group information flows.
The Shared Services Programme will centralise transaction
processing for DfT(C) and the agencies at the Shared Services
Centre being set up in Swansea. Implementation projects have been
established in each part of the organisation to ensure successful
preparation and transition.
The timetable for completion of the improvements
that are still being implemented is:
October 2006 - Enhanced integration of risk management,
financial planning and monitoring processes will be fully in place
through the creation of Resource Management and Planning Teams
(RMPTs) for each Director General led group in DfT(c).
October 2006 and April 2007 - The final enhancement
of the finance capability supporting budget holders will be fully
accomplished in two steps. Firstly, the creation of the RMPTs
will provide a higher level of support for budget holders working
with the existing SAP system, but this will be further enhanced
from April 2007 with the move to Shared Services and the provision
of a new SAP platform. That will provide budget managers with
the opportunity to engage with the system in a self-service environment.
29. The Department has agreed a project plan aimed
at enabling its 2005-06 Resource Accounts to be laid in Parliament
before the Parliamentary Summer Recess. We invite it to inform
us without delay of any significant variation to that timetable.
(Paragraph 71)
We will inform the Select Committee of any variations
to our timetable for the Resource Accounts.
30. We recommend that the Department seeks independent
validation of its efficiency savings and provides clear details
of how and when validation will take place. We recommend that
the Department publishes the result of future validations in its
Annual Reports and Autumn Performance Reports. (Paragraph 76)
The Department will carry out validation of its efficiency
gains in response to recently updated guidance from the Office
of Government Commerce. The Department has also been subject to
considerable scrutiny from the National Audit Office. As the Efficiency
Programme is continuously receiving new data, validation takes
place on an ongoing basis throughout the financial year. Our practice
has been to publish efficiency gains to date in the Department's
Annual Report and Autumn Performance Report and we shall continue
to take this approach.
31. The Department is relying upon local authorities
to make £122 million worth of efficiency savings. These savings
will contribute to the Department's overall saving. But it has
no powers to guarantee that the local authority savings will be
made. This is quixotic. The Department should identify another,
guaranteed, £122 million savings over which it does have
full control. We would like the Department to say what proposals
it has to solve this administrative anomaly. (Paragraph 78)
The Gershon Efficiency Review covered the public
sector as a whole, including local authorities and was not confined
to central government departments. Therefore, most departments'
efficiency programmes involve an element of local authority generated
savings. We have sought to mitigate delivery risks for the local
authority savings by working to establish suitable contingency
in other areas of the Department's Efficiency Programme.
32. We doubt that the validation provided by the
Audit Commission of efficiency savings by local authority transport
departments and Transport for London is sufficiently rigorous.
We recommend that the Department assesses whether, in its view,
the degree of validation achieved by the Audit Commission in these
areas is providing a clear and verifiable picture of savings that
are required. We wish to be informed of the result. Savings must
represent genuine efficiencies, and must not lead to unwarranted
cuts in local transport services. (Paragraph 80)
Local authority efficiency gains (excluding TfL)
are verified through the Annual Efficiency Statement (AES), which
is used to account for all local authority efficiency gains, not
just those related to transport. The AES is validated by the Audit
Commission and submitted to the Department for Communities and
Local Government (DCLG). Guidance to local authorities clearly
states that they must report genuine efficiencies and maintain
their quality of service. Councils whose AESs do not meet required
levels of robustness will be required to re-evaluate their Statements
in a process that will be overseen by independent consultants
commissioned by DCLG.
TfL's efficiency gains are subject to review by the
Audit Commission. In 2005, TfL also commissioned an external audit
of its Efficiency Programme from KPMG, which assessed the systems
and processes in place to identify, monitor and report cashable
efficiency gains relating to the 2004-05 financial year. TfL's
Efficiency Programme will be subject to further external scrutiny
in the future.
33. The Department has told us that it cannot
"directly relate expenditure on consultants to efficiency
gains". This is outrageous and needs to be rectified. The
simplest financial transaction has at its core an understanding
on the part of the purchaser about what he is purchasing and what
benefit will accrue to him as a result of the purchase. It seems
however that this is beyond the capacity of the Department's financial
managers. (Paragraph 82)
The context of the Department's comment was that
it was not possible to present a formula which converted the consultancy
expenditure associated with the efficiency programme directly
to a precise output in terms of efficiency gains. Since the original
response was given, a business case for the shared services programme
has been developed which covers the majority of the Department's
efficiency programme expenditure on consultancy and includes the
associated projected efficiency gains.
The Department is using external consultants to provide
expertise and experience in support of its shared services programme
only where this is not available in-house. They are involved in
the design and establishment of a shared service centre for HR,
payroll and finance support services, and supporting IT systems.
This is a strategic investment which will transform the way the
Department operates some of its support services and provide a
platform for significant and sustainable efficiency gains.
Consultants are only employed in the remainder of
the Department's efficiency programme where the skills are not
available in-house. Spending on external consultancy support here
is on a much smaller scale than for the shared services programme
and the amount spent on consultants is minimal when compared to
the projected gains to be delivered by the efficiency programme.
34. The Department should provide us with a detailed
explanation of the expenditure of the £10 million spent on
consulting fees to implement the Department's Efficiency Programme.
If this explanation proves unsatisfactory it is likely that we
shall hold a further hearing specifically on the Department's
consultancy expenditure. It is absolutely essential that the Department
should be able to identify clearly and concretely the benefits
to the Efficiency Programme which have been purchased by the considerable
expenditure made on external consultants. (Paragraph 83)
The expenditure recorded from April 2005 to date
on consultants for the shared services programme, one aspect of
the Department's efficiency programme, is £7,751,582. The
support services review, which preceded the shared services programme,
also engaged a team of consultants. The expenditure against consultancy
support received by the programme and preceding review breaks
down as follows:
| Consultants engaged by the DfT shared services programme
|
| IBM to January 2006 |
Supporting DfT staff in the detailed analysis and design of the HR, payroll and finance processes that will be used by the DfT shared service centre and Agencies. Provision of expert support for process design workshops across all DfT business units to develop an agreed base design for a common finance and HR system
| £5,321,530 |
| SAP to January 2006 |
The shared service will be based on an integrated SAP platform for the HR, payroll and finance processes within its scope. SAP consultants were engaged to assist in the design of those processes to ensure that SAP software, SAP business workflow and reporting would support these processes while requiring the minimum of configuration or bespoke coding
| £271,531 |
| Square One to January 2006
| Engaged in support and development of technology including application development, technical design and data.
| £358,368 |
| Mantix to April 2006 |
An experienced consultant to lead the Business Change and Transition Management workstream within the shared services programme.
| £171,557 |
| Anite to April 2006 |
An experienced project manager to assist with the development and running of a programme support office.
| £79,210 |
| HEDRA in January 2006 |
Conducted third party review, challenge and validation of costs, benefits and assumptions for the shared services programme and its interim business case.
| £50,000 |
| Deloitte to April 2006 |
Support DfT Internal Audit in providing quality assurance to the shared services programme board and programme SRO on the design and development of common HR, payroll and finance processes with supporting technology.
| £1,499,386 |
| Total |
| £7,751,582 |
| Deloitte in 2004-05 |
Consultancy engaged by the DfT support services review team to develop a Departmental shared services baseline, proposals and supporting preliminary business case for realising efficiencies and increasing effectiveness within support functions across the Department and its Agencies.
| £1,820,844 |
Spending on consultants in the other nine workstreams
which comprise the Department's Efficiency Programme is on a much
smaller scale than in the Shared Services Programme and is minimal
when compared to the efficiency gains expected to be delivered.
35. We were told about the commitment to a stronger
group identity and improved financial governance for the executive
agencies of the Department. This is all very well. But what we
wish to know is what direct and demonstrable benefits a strong
group identity has brought for those using the Agencies' services
and the wider travelling public. The Department should explain
what these are in the Government's reply to this report. (Paragraph
87)
DfT greatly values the Agency approach, which over
many years has enabled much closer focus on the specific needs
of the particular customers served by each Agency and functions
they specialise in.
We also recognise that Agencies don't work in isolation.
They need to work closely with colleagues both in the centre of
the Department (to ensure that there is proper alignment between
policy development and service delivery, as well as with overarching
Departmental goals and obligations) and with other Agencies where
necessary and appropriate.
This joined-up working is achieved in a number of
ways, including close bilateral relations between policy divisions
and the Agency or Agencies responsible for delivery; increasingly
close co-operation between functional heads (finance, HR, communications
etc) on issues which cross Agency or DfT (C) boundaries; bilateral
joint working between Agencies on shared projects or activities
(for instance, Highways Agency and VOSA are working together on
improved targeting of non-compliant HGV operators on key parts
of the network); and the shared services programme, which covers
the whole DfT family and will enable both more efficient support
services across the Department and easier co-operation through
more shared data and processes.
In the DVO Group, the connections relating to customers,
business processes and data between the Agencies are particularly
significant, which is why the DVO Group structure, explained below,
has been established.
The primary purpose of the DVO Group working more
closely together is to allow for greater co-ordination of the
operations and development of public services. The management
arrangements now in place help the Agencies to operate in a more
joined-up manner. This is having clear benefits for customers.
A central thrust of the DVO Group is to provide customers
with a single, "one stop", access point to a growing
range of services, using Directgov for private customers and Transport
Office for commercial customers. For example, customers taking
their driving test are now able to research any information needed
on direct.gov.uk/motoring. Here customers are able to learn about
the procedures of a driving test (the work of DSA), but also how
to obtain a new full licence once one has passed (the work of
DVLA). Furthermore, the Automatic Driving Licence Issue (ADLI)
system allows DSA to automatically notify DVLA that candidates
have passed, significantly simplifying the process for new drivers
and illustrating the benefits to the customer of DVO working together.
Similarly, the successful computerisation of MOT, and the links
between VOSA's MOT database and DVLA's database, has enabled the
full roll-out of electronic vehicle licensing - a major service
improvement for millions of drivers.
Co-operation is not limited to the DVO Group. VOSA
and Highways Agency are working together to ensure that more 'at
risk' vehicles are targeted in the South East. This will tackle
a range of concerns and illustrates the benefits of DVO Agencies
working with other Agencies.
The Highways Agency is also a major service providing
Agency of the Department and needs to ensure that it delivers
value for money and good customer service. In part this is achieved
through identifying and exploiting opportunities offered by collaborative
working with the other Agencies. The Agency is contributing to
the Department's PSA targets for improving reliability and reducing
congestion, improving safety across all modes of transport and
improving air quality.
In addition to the Agency's work with VOSA, other
collaborative working includes joining up with the DVLA on enforcement
projects and with DSA on revisions to the Highways Code. The Agency
also works closely with the central department. This work includes
making best use of research and development programmes to support
the "Think" and other safety campaigns. The provision
of reliable and up to date travel information to support Transport
Direct and the development of a retrieval and reporting system
of road information for use by the Department and local authorities.
All of these activities are aimed at developing policies and services
that benefit the wider travelling public.
Agency status gives dedicated responsibilities but
within a departmental structure that ensures a very strong integration
between the Highways Agency, the DVO Group and other Agencies.
The position of the Highways Agency's Chief Executive on the DfT
Board supports this collaborative working.
36. We expect the Department to minimise staff
concerns about changes to working practices in the Executive Agencies
arising from the 'shared services' agenda and the introduction
of 'self-serving'. We would like the measures taken to ameliorate
staff concerns itemised in the Government's reply to this report.
(Paragraph 89)
Those staff who have access to personal computers
and their organisation's intranet will be able to perform certain
support functions themselves: this is known as employee self service.
These will typically be functions such as maintaining personal
information including changes to bank details, updating address
details, applying for leave, claiming overtime and expenses, and
recording periods of sickness. Many such activities are currently
paper-based and involve a degree of "double-keying"
by third parties, with consequential impacts on accuracy and timeliness.
Manager self service will similarly allow managers
with easy access to personal computers, ready and timely access
to information on their staff, organisation and budgets which
would otherwise have to be requested from third parties.
The electronic interfaces are being designed to be
intuitive and to require minimal training, as is the case for
most modern web-based applications, where users follow a simple
set of steps and choices. Appropriate education and training will
be provided for all managers and employees. There will also be
e-learning packages to assist with familiarisation and support
will be available should staff encounter any technical or user
difficulties.
Approximately 7,500 staff in the DfT family do not
have easy access to personal computers. These are mainly in roles
which are not office based, such as driving examiners or traffic
officers, or work at locations where access to IT is limited.
The Shared Service Centre will provide for email, telephone or
paper-based channels so that employees may continue to use existing
channels where viable alternatives are unavailable. The design
of the system will allow for both electronic and manual transactions
and will continue to do so whilst staff do not have access to
personal computers or are not able to make use of the electronic
channels.
37. We have become increasingly concerned by regular
cost increases on the Highways Agency's road construction projects.
This is a poor record which we shall be considering in more detail
in our forthcoming report into the Executive Agencies. (Paragraph
90)
The Targeted Programme of Improvements is subject
to external cost pressures; including rising energy prices, that
have driven cost inflation above the retail price index in the
road construction industry. The Highways Agency is taking urgent
measures to drive down costs and improve estimating and budgeting,
including working closely with the supply chain. It is also taking
a more realistic view of the likely final costs of projects.
This is being driven forward in a cost management
action plan, which also includes a more detailed analysis of programme
cost pressures, which the Agency expects to complete shortly.
This work has already demonstrated that, if the latest
approach to estimating had been applied to schemes that have completed,
generally more realistic forecasts for the likely outturn costs
would have occurred. It also endorses the policy to adopt the
Early Contractor Involvement (ECI) form of contract in preference
to earlier Design and Build and re-measure forms of contract.
38. During our evidence session with the Secretary
of State he made a commitment to act with increasing rigour on
costs, including road projects. We shall hold him to his word
and expect him to act on this, including "pulling the plug"
on road projects where necessary. We understand the complexity
of many road schemes. But this is no excuse for the production
of grossly inaccurate financial forecasts. The Department must
work closely with the Highways Agency to ensure realistic early
assessments of project costs. We want the Department to spell
out what measures it is taking to correct this unacceptable failure
on the part of the Highways Agency. (Paragraph 92)
The use of ECI, coupled with better estimates based
on optimism bias and rigorous risk management, places the Secretary
of State in a far stronger position as investment decision maker.
The new approach allows him to decide to commit, or otherwise,
to the scheme based on a robust forecast of the likely outturn
cost. The previous methodology, based on lowest tender price,
inevitably ran the risk of significant cost over-runs because
of "extras" charged by the contractor.
39. We welcome the move to increase the electronic
'delivery' of the Department's services. But Government's overall
success in managing computerisation projects is notorious; frequently
promise is oversold, 'delivery' proves disappointing, and schedules
for completion are often not worth the paper they are written
on. The MOT computerisation project has had its timetable revised.
It is likely that we shall wish to look in more detail at this
aspect of the Department's activities in the future. (Paragraph
94)
The DVO Group has successfully delivered a wide range
of major IT-based projects, and has attracted growing recognition
for its contribution to the e-government agenda. There are always
risks and difficulties with major and innovative projects. The
Group recognises this and seeks to manage them effectively. If
trade-offs are essential the Group normally puts the highest priority
on ensuring a service is robust, even if this requires additional
time for testing etc.
40. The Permanent Secretary appeared not to be
aware that almost £25 million had been paid to Atos Origin
IT Services Ltd for the Department's 'Transport Direct' electronic
information system designed to offer the public a wide range of
travel information. We were very concerned that the Department
seemed not to know the details of so large a payment We would
like the Government's reply to this report to provide full details
of the procurement of 'Transport Direct'. (Paragraph 96)
The Department keeps close control of all its contracts
and expenditure on the contract with Atos Origin IT Services Ltd
- which covers the specialist work of software design and system
build, and the day to day operation of the Transport Direct portal
- is routinely reported through the Department's financial systems
and subject to regular scrutiny.
The Design, Build and Operate (DBO) contract for
Transport Direct was advertised through an OJEU notice and the
contracting process was subject to normal government rules. The
contract was awarded in 2002 to a consortium led by Atos Origin.
The initial award was for three years from January 2003, with
an option to extend up to ten years in total. The contract has
since been formally extended until 31 March 2007, and further
extensions will be considered. Any such extensions would be dependent
upon re-evaluation of the commercial merits and value for money
provided by the contract.
The DBO contract was set up on the basis that work
would be approved by the DfT Transport Direct Team one stage at
a time. The initial prices have been renegotiated stage-by-stage
as the work has progressed. This has enabled DfT to ensure that
the product delivered by Atos Origin has continued to sit in line
with our changing requirements. Additional pieces of work are
let under "Contract Change Notes" (CCN) - a managed
process that enables extra tasks to be added to the original contract.
Within the structure outlined above, the Atos Origin
consortium designed the functionality and the 'look-and-feel'
of the portal, and wrote the new software required. They completed
the build of the first version in November 2003, and were subsequently
engaged in enhancing and developing the functionality and adding
new services. The major development phase ended in March 2006.
Atos Origin continues to be responsible for managing
the day-to-day running of the Transport Direct Portal. This includes
the main operational service; introduction of new hardware and
software; management of data feeds; loading of data updates; investigation
of any incidents affecting the performance of the service; and
handling feedback.
The amounts paid to Atos Origin are as follows:
| Period | Amount
|
| 2002-03 | £ 1.3 million
|
| 2003-04 | £ 9.3 million
|
| 2004-05 | £ 9.6 million
|
| 2005-06 | £ 10.3 million
|
The above figures include all of the work undertaken
by Atos Origin - that which was originally envisaged when the
contract was let and subsequent additional work let under a CCN.
The overall Capital spend for the Transport Direct Programme,
which covers more than just the Portal Service, has reduced from
the original £51 million budget to under £40 million.
41. The Department is falling short of the high
standards of coherence and transparency we expect to see in its
Annual Report. The Report must be structured directly around Departmental
strategic objectives. Progress against Public Service Agreement
and other Departmental targets, and resources allocated to each
target need to be highlighted clearly. The Department should explain
clearly in its Annual Report why any changes to targets have been
made. Reporting the Department's Investment Strategy by objective
would enhance clarity. (Paragraph 105)
The structure chosen for the Annual Report 2005 (and
that of the Annual Report 2006 which was already in the course
of publication when the Committee published its report on the
Annual Report 2005) follows that adopted for The Future of
Transport: a network for 2030 White Paper published in July
2004. We believe this offers the easiest way for readers to follow
progress being made against the strategy set out then. There are
inevitably challenges in presenting progress against specific
Public Service Agreement targets within such a structure and especially
at the point when we are moving from one set of targets to another.
We are however pleased that the Committee felt that this was clearly
set out in the Appendix to the Annual Report. We will consider
whether we can further improve the presentation of performance
against PSA targets in future reports without weakening the link
to strategic objectives.
The expenditure tables in Annual Report 2006 clearly
set out resources against PSA objectives. The Department does
not believe that allocating resources against specific PSA targets
would be meaningful as many departmental programmes of work serve
a number of targets.
Departmental Investment Strategies (DIS) have been
produced to coincide with the cycle of spending reviews, rather
than being updated annually, so the Investment Strategy has not
been reprinted in Annual Report 2006. As the Committee will be
aware, the Budget Report announced that in future, departments
will be producing "asset management strategies", along
the lines envisaged in the Lyons Review. These will replace the
current structure of the DIS.
42. The editorial control of this year's Annual
Report is relatively weak. Improvements are likely to follow where
the writing style is made more vigorous, straightforward and consistent
in tone; where the presentation and design of the report uses
a full range of imaginative graphic aids; and where the requirements
of the general reader are kept firmly in mind throughout. We do
not underestimate the problems of editing the output of a large
central Department. But it is neither an unusual task, nor one
in which officials and Ministers are unpractised. Production of
the Departmental Annual Report is not a chore but an opportunity;
and it must be done better. (Paragraph 111)
In producing the Annual Report, the Department has
tried to keep a balance between including a wide variety of information
for a number of purposes while producing a straightforward and
readable document for the general reader. The 2005 Annual Report
itself contains many more graphs and tables than previous reports
to facilitate the presentation of data. We will continue to look
for ways to improve future reports and reflect upon the points
made by the Select Committee and other interested parties.
43. It may be that the flow of information from
the various parts of the Department to the Report's editorial
team is too slow. We recommend therefore that the Permanent Secretary
reviews the resources put into the production of the Annual Report
to ensure that sufficient time is allowed for imaginative editorial
interventions which will ensure a top class production. We hope
that action taken to address our constructive criticisms of the
way in which the Annual Report 2005 has been presented will result
in livelier reports in 2006 and beyond. (Paragraph 112)
We are currently reviewing how the production of
the Annual Report will be resourced in future years.
44. Our overall impression is of a well intentioned
but sluggish and sometimes muddled Department which needs to 'raise
its game' if it is to meet the considerable challenge of leading
clear improvements to UK transport infrastructure and services
while doing its bit to safeguard the quality of life in Britain.
Inspirational leadership is needed at official level, but appears
lacking. This needs to change. (Paragraph 113)
The Government does not recognise the impression
of the Department presented by the Committee. The strong and active
leadership provided by the Department across the transport community
is amply evidenced by the considerable achievements outlined in
Annual Report 2005 and in the progress made in the 12 months since
publication of that report. The Department will continue to build
on the successes already achieved, while recognising and managing
the many challenges that exist to the achievement of its overall
aim of transport that works for everyone.
45. We shall invite the Secretary of State and
the Permanent Secretary to give evidence about the Department's
Annual Report 2006 after its publication later this year. By then,
we expect the Department's potential for focused and energetic
leadership in pursuing its aim of 'better transport for all' to
be more clearly realised; and for that aim to be articulated with
much more clarity and panache in the next Report. The Department
can and must do better. (Paragraph 114)
The Department looks forward to providing evidence
to the Committee on the Annual Report 2006 and is disappointed
that it did not receive the Committee's comments on Annual Report
2005 until a few days before the publication of the 2006 Report.
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