UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 458-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

TRANSPORT COMMITTEE

 

 

THE EDDINGTON TRANSPORT STUDY

 

 

Monday 16 April 2007

SIR ROD EDDINGTON

Evidence heard in Public Questions 1 - 146

 

 

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Oral Evidence

Taken before the Transport Committee

on Monday 16 April 2007

Members present

Mrs Gwyneth Dunwoody, in the Chair

Mr David Clelland

Clive Efford

Mrs Louise Ellman

Mr Eric Martlew

Mr Lee Scott

Graham Stringer

________________

Witness: Sir Rod Eddington, Government Specialist Transport Adviser, gave evidence.

 

Chairman: Sir Rod, you know some of the ground rules, I do not need to tell you to speak up. Would you forgive us one little bit of business, members having an interest, please declare them.

Mr Clelland: I am a member of Amicus.

Mr Martlew: I am a member of the Transport and General Workers' Union, and General and Municipal Workers' Union.

Graham Stringer: Amicus.

Chairman: Gywneth Dunwoody, ASLEF.

Mrs Ellman: I am a member of the Transport and General Workers' Union.

Clive Efford: I am a member of the Transport and General Workers' Union.

Q1 Chairman: Sir Rod, you are most warmly welcome. We did think that you were trying to give us the cold shoulder, so we are delighted to see you in person. Tell me, did you want to say something first or may we go straight to questions?

Sir Rod Eddington: Just a couple of initial comments. Chairman, thank you for that welcome. I do not have the courage to give you the cold shoulder. I was always keen to come back and appear before this Committee once my work had been presented and I am grateful to you for accommodating my long-distance travel schedule. Just a few brief comments, if I could, and then the all-important questions from the Committee. I tried hard through this piece of work to look at the links between transport and the economy, particularly as it relates to productivity and growth, recognising that governments, when they take decisions around transport, also reflect on the environment and social inclusion. As good fortune would have it, at the beginning of my journey I was very keen to tap into the thinking that experienced transport economists in this country have to bring to bear on the subject and I got Professor Sir Nicholas Stern to chair that group, as you know, and that ensured for me that I was right up to speed with his thinking, particularly in terms of the sustainability issues as they relate to transport. That, for me, was an important part of this journey. I tried through my piece of work to be modally agnostic, by that I meant I was looking at the links between transport and the economy through the broad lens of the economy rather than through the lens of a particular mode. Modes are critical to delivery, but that was not the starting point for me. I presented my work, as you know, and I am keen that it finds substance with the key stakeholders, and I will do all I can to support that. Over to you, Chairman, I am happy to take questions.

Q2 Chairman: I must say, Sir Rod, if you will forgive me for saying so, being modally agnostic sounds astonishingly uncomfortable, but I am sure that you survived this. I would like to ask you some general questions really. Are you proud of this study?

Sir Rod Eddington: I am happy with it. It was a substantial piece of work and I was very keen that it was strongly evidentially led, that I spent as much time around the UK talking to as many of the key stakeholders as possible - freight and passenger associations, NGOs, local and regional governments, passengers, freight operators, business chambers - and I feel, for me, the report reflects their substantial input into the work.

Q3 Chairman: Did it hit all the objectives that you set yourself?

Sir Rod Eddington: Yes, it did indeed.

Q4 Chairman: Why have you given the subtitle, The Case for Action, to your executive summary? There is really little in the way of direct proposals, you have not given any timetables for implementation.

Sir Rod Eddington: Chairman, I am clear that advisers advise and governments act and decide, but I guess I have chosen that as a subtitle because it is clear to me that transport is critical to the economy, it is also clear to me that if we do not make the right investments in transport that the economy will suffer, to say nothing of the frustration that individuals face every day as they go about their daily lives. This is a call for action and, in a sense, that is one of the reasons why I took a bit longer on this than I had originally anticipated. Section 4 of my report talked to some of the key issues on delivery because I felt if I did not address some of the delivery issues that ideas would not necessarily be turned into activity.

Q5 Chairman: That addresses a point which concerns me. You have talked about the broad lens of an economic view but, frankly, what concerns me is that it looks as though - and I hope you are going to give me your view on this - you started off writing a report which was about economics in transport and then halfway through you decided it ought to be on the economics and environment in transport. Is that wrong?

Sir Rod Eddington: I had always taken the view, Chairman, that the environmental piece was critical. I wrote a public piece in January 2005, when I was still at British Airways, saying that aviation absolutely had to take the environmental challenge seriously and proposed that, on balance, I supported an emissions trading scheme and aviation's participation in that. That was at the beginning of 2005 and, as you can imagine, it did not necessarily meet with universal acclaim amongst my opposite numbers in other parts of the world, but I have always taken the view that the environmental dimension is important. Having said that, the links between transport and the environment is a big issue and I could not do it justice in the context of the time and resources I had, so I recognised that the environment was important and having Sir Nick Stern as chairman of my academic friends group helped me weave that in.

Q6 Chairman: Could I ask you about that, sorry to interrupt, but when did your friends of the academic world appear, at what point? How long had you been working on the report?

Sir Rod Eddington: I started ----

Q7 Chairman: But you did not mention him yourself?

Sir Rod Eddington: I started this journey when I was asked to do this piece of work by the Chancellor of the Exchequer and the then Secretary of State for Transport, Alistair Darling, in March 2005 and I used the next few months to prepare the ground, so that when I retired from BA I could be on it full‑time for several months, which I was. One of the things I did as background for myself through that was to look at some of the history, as it were, to the debate. One of the things I looked at was the presentations made to this Committee in January 2005 on road pricing and listening to people like Peter Mackie, Stephen Glaister and people like that talking about road pricing which convinced me that not just on the issue of road pricing but across a much broader church it was important to try and get a group of senior transport economists together to pressure-test some of my own thinking. I got them together pretty much at the beginning of this journey and asked Nick Stern to chair that long before he was asked to lead the work on climate change.

Q8 Chairman: That brings me pretty well to the next bit. Your conclusions are entirely dependent on the robustness of your assumptions and your cost‑benefit models.

Sir Rod Eddington: Yes.

Q9 Chairman: Are you, in fact, sure these are robust enough?

Sir Rod Eddington: I am absolutely confident that they are based on the best data available to me at the point at which the work was done, Chairman. There are some issues in there, for example what price of carbon do we assume in the context of this piece of work. I used the best thinking from Defra available at the time. I recognise that you can challenge the number I have used and put forward other numbers, but I was very clear about what assumptions I had made on which to base that work and I recognise that some of these things will evolve as we move forward, but I hope the paper trail is clear.

Q10 Chairman: Does "evolve" mean "change"?

Sir Rod Eddington: Yes, I think for some of these issues we are only just beginning to understand them and their force. Some of them are well established.

Q11 Chairman: Forgive me, you have given welfare and environmental factors, in effect, a monetary value.

Sir Rod Eddington: Yes.

Q12 Chairman: That is the way you have done it. How did you work out what was the monetary value of welfare?

Sir Rod Eddington: Again, I used the best information available to me.

Q13 Chairman: From?

Sir Rod Eddington: From the Government, and I recognise that in doing so I made assumptions which may well change in the fullness of time.

Q14 Chairman: Would those be, in effect, political, with a small "p", rather than economic?

Sir Rod Eddington: I hope not. In looking to quantify things I think you need to try and do just that. Clearly, quantifying some of these things is a challenge but, nevertheless, it is a challenge we have to meet.

Q15 Chairman: Forgive me, but if your figures and models are not correct, if they are not toughly balanced and checked against what you know from other sources, then most of your work becomes nonsense, it becomes highfaluting nonsense.

Sir Rod Eddington: I think there are some things which you can be very certain about because we understand them from a long period of time. For instance, let us take the congestion debate. We know the number of cars on the road today and the distance they drive, and we can track that back every year for the last 40 years; similarly, we can track back how much road capacity there has been in the UK over the last 50 years, so some of this stuff has a robustness.

Q16 Chairman: But welfare?

Sir Rod Eddington: Other things are more difficult to quantify, but not to try and quantify them is to base decisions on anecdote rather than on facts. I am happy to have those numbers challenged and they may well evolve, and I have been quite open about where the data comes from, not just in the written report but in the many pages of on‑line data which support it.

Q17 Chairman: You do not think your economic remit was too limited?

Sir Rod Eddington: I think it is important to understand the links between transport and the economy, and I do not think historically we have done that very well. I recognise that there are other things that governments take into consideration when they take decisions on transport, and welfare, social inclusion and the environment are uppermost amongst them, but they are major issues in their own right. As I said in the context of the work I did, I could not do a thorough job of including those issues.

Q18 Mrs Ellman: Sir Rod, your report has been criticised for being unimaginative. Is that because you were warned off advocating any proposals that would cost a lot of money?

Sir Rod Eddington: I do not think it is unimaginative. I think in focusing on things like the importance of cities and their surrounding areas, regions, the importance of intercity links and our international gateways, I have provided a focus which we have not seen in the past. If some people find my conclusions unimaginative, that is a matter for them but it raises a whole series of issues, including on the all-important delivery side. By getting into issues like planning national and sub-national governance I think I have taken the transport debate to areas where it has not traditionally been based.

Q19 Mrs Ellman: You seem to dismiss the possibility of a high speed north‑south rail link very easily. Was it suggested to you that proposal would not be welcomed by Government?

Sir Rod Eddington: My decision to talk about projects which have very limited economic backup was nothing to do with any discussions with Government. As a businessman, I looked hard for the evidence which supported particular corridors and I was particularly keen not to embrace solutions looking for problems. Rail is a very important part of the infrastructure in this country, and if you think of the three major priorities I have set, heavy rail is an important piece of all of them. That does not mean to say any particular solution which is put forward without a strong business case to back it up is something I would embrace. As I say, I tried to be modally agnostic.

Q20 Mrs Ellman: I did not ask you if you had discussions with Government, I said had it indicated that certain things were not acceptable.

Sir Rod Eddington: Absolutely, not at all.

Q21 Mrs Ellman: At all stages you felt entirely free to come forward with any proposals?

Sir Rod Eddington: I absolutely did. One of the great advantages of not being paid for this piece of work was that I felt it liberated me to say what I thought.

Q22 Mrs Ellman: Do you think that if people in the past had adopted your approach there would never have been railways built nationally?

Sir Rod Eddington: I have no doubt, because in our most densely-packed corridors heavy rail is, without doubt, the best solution.

Q23 Mrs Ellman: Would this ever have happened in the past if people had adopted your way of thinking and not wanted to have any imagination?

Sir Rod Eddington: No, I would absolutely reject the view that I have no imagination. The rail network in this country was built by private enterprise, by people who had a vision for improving the lot of national folk, and I support that entirely.

Q24 Mrs Ellman: Would you say your report shows vision or rather a very cautious, piecemeal look at the situation?

Sir Rod Eddington: Vision without sound backup, in my experience, is not worth very much. Vision that does not stand the test of time and challenge is no more than a vision. I am very interested in vision, but vision that can be supported, and I am particularly keen not to pursue solutions looking for a problem.

Q25 Mrs Ellman: You seem to be very strongly committed to road pricing as the major solution, if not a major solution, but you seem to be dismissive of the problems that stand in the way of going forward with that. Why have you taken that forward?

Sir Rod Eddington: Again, I do not accept that. There are a couple of paragraphs in my piece of work that talk about the challenges which come with the implementation of road pricing, in particular the way in which a road pricing regime needs to be understood against the context of the other charges that motorists face, so I recognise it is a challenging issue and my report is about a lot more than road pricing. Road pricing is but a small piece of it. It might be one of the more newsworthy pieces but it is only a small piece.

Q26 Mrs Ellman: Let me stop you at that point. What I want to focus on is the way you have worded statements about road pricing and in your report you repeatedly come back to that as the major way forward. You refer to problems that have to be dealt with as though you have not taken the problems very seriously?

Sir Rod Eddington: I do not regard it as a major way forward, the major way forward for this country is to make the right investment in the key transport links. Road pricing is a small piece of the big picture. It may well be the bit that is most interesting in the general debate but the major priority in my work is not road pricing, it is focusing on the key transport links and their importance to the economy of this country.

Q27 Mrs Ellman: You refer in your report a lot to dealing immediately with areas where there is congestion and where land and other values are handled. Does that mean that you are not looking forward and concentrating solely on the present, you do not have an imagination that takes you forward?

Sir Rod Eddington: In any environment in which resources are limited the question becomes where do we best spend the money we intend to invest. My response to that question is very simple, start by looking at the centres of the economy which generate growth today and where congestion is a significant problem, because that is of the first order, a good guide to where the greatest challenges lie. That was one of the things in the service economy that led me to a view about cities and their catchment areas, intercity links and international gateways. That is where the vast majority of people create economic wealth in this country and, therefore, that is the piece of the economic jigsaw that is most important.

Q28 Mrs Ellman: You also referred to surface access to ports when you were talking about port development. Does that mean, again, you would be looking solely at where there are congestion issues at this moment and would you be looking at port development as part of regional economic growth?

Sir Rod Eddington: My work looks at 2015 and beyond, 2015-2030, and by definition you have to make some assumptions about economic growth, about key parts of our transport infrastructure, where there is congestion today and where we anticipate congestion tomorrow. In looking at the issue of port capacity I have tried to look forward in that way, but I have also looked at the all-important surface access to ports, the road and rail issues which were raised with me as I went around the country looking at the ports. It was one of the first issues that was raised, whether it was at Bristol, Liverpool or Teesside, these are issues which most port operators raised with me.

Q29 Mr Scott: Sir Rod, you suggest major changes to governance and decision-making in the transport area. Could you provide an overview of the structure you propose?

Sir Rod Eddington: My starter on this is that we need a transport strategy and, having got a transport strategy, we can then think about how the individual modes deliver to that transport strategy. Clearly, in the context of the work I have done I have recognised that in developing a transport strategy governments must be minded of more than the economics and I have talked about some of the other things that matter, so it seems to me it is for Government to create a framework in which its transport strategy can be delivered. For that transport strategy there are people in this room who will contribute to the thinking which sits behind it and, clearly, the Department for Transport would be a significant party to that as well. We need a transport strategy and Government needs to make sure that it is consistent with other major issues, including our concerns about climate change.

Q30 Mr Scott: What do you think are the major flaws at the moment of the present system?

Sir Rod Eddington: I think there are a number of things that should concern us. The first is that we have historically taken a modal view of transport. We have thought about transport in its modal silos and not started with, "What is our transport strategy?". One of the reasons I would argue that we do not have great surface access to our ports or our airports is because we have thought about our airport strategy and not about an integrated transport strategy. There has been a lot of talk about integrated transport in the past but my observations are that we have not done much about it. Secondly, my concern about the current system is that I think some of the delivery issues get in the way of sensible decision-making and its implementation. The issues of national and sub-national governance I think are critical issues. What say do local authorities or regional authorities have in their own transport needs? Does the planning process today give us some certainty as to whether it is a yes or a no as we go into delivering transport infrastructure? There is a range of challenges from where we sit today.

Q31 Mr Scott: Is it not possible that a proposed future structure could be more complicated than the structure we already have?

Sir Rod Eddington: In some ways it is bound to be more complicated, if only because when we talked about transport infrastructure in the past we did not have to reflect on climate change. We talked about delivering transport infrastructure so we could create wealth so people could go about their lives. We now recognise that transport contributes globally something like 15 per cent of emissions and in the UK 25 per cent of emissions, so when we think about transport today we need to think about the environment. We have no choice but to embrace that. The trick is, I think, to think through a strategy that works for transport and takes the right account of these other issues.

Q32 Mr Scott: You suggest that large-scale investment projects should be funded through a separate mechanism. Why is that?

Sir Rod Eddington: The question of how we fund large-scale projects is one that will be familiar to many of you, the question of what is the role of Government and taxpayer-provided funds and what is the role of the private sector. Historically much of our transport infrastructure has been funded by government and I am clear that there is a strong role for government in the future funding of transport infrastructure, but I am also clear that in some areas now the private sector makes an important contribution. Ports are a good example. Many of our ports in the UK are in private hands and it is for government to decide what role it wants private sector capital to play in our transport infrastructure. It is government that provides the guidelines for public private partnerships. My point would be simply this, that in a world in which government spending is constrained will we get better transport infrastructure if we are able to have a significant contribution from the private sector, or in some cases if it can be done by the private sector alone, but again only government can decide what role it wants a partnership to play and when.

Q33 Mr Scott: Can you give us some views on London particularly and how we can get London moving, how we can keep London working?

Sir Rod Eddington: Eighty per cent plus of the UK GDP is services. Eighty per cent plus of employment in this country is services. That is not to underestimate the importance of agriculture or precision engineering, but the UK has a very strong competitive services sector and London today, I would argue, is unquestionably the global financial centre. That was a battle it had with New York and my American friends tell me that thanks to Sarbanes-Oxley London has now comfortably won that battle. I would argue that London has substantial strengths beyond the challenges that Sarbanes-Oxley delivered to New York but the bottom line is that London is the global financial centre and that is of great benefit to the UK. I was very keen that my report not be about the south east of England and ignore the rest of the country. The three priority links I talk about are as true in Newcastle as they are in London but the bottom line is that London is the greatest creator of economic wealth in the United Kingdom and we diminish it at our peril. It has the worst congestion problems. There are bad congestion problems in other parts of the UK but London has the greatest congestion challenges.

Q34 Chairman: So that is where we are but he asked you where we are going.

Sir Rod Eddington: I do not know whether you are asking me with a mind to a discussion on Crossrail and that is an issue that is regularly raised with me, as you would expect. I did not look at Crossrail; I was not asked to look at Crossrail. That is about here and now and I am looking at 2015 and beyond. Having given you that health warning let me give you my view about Crossrail. Crossrail is an extremely expensive piece of transport infrastructure but there is a business case for it and it addresses some major congestion challenges in the economic capital of the nation. There is no get-out-of-jail-free card. If Crossrail does not go ahead London will continue to have enormous congestion challenges and they will need to be met in some shape or form. There is a strong case for significant investment in transport infrastructure in London but we know it is extremely expensive to retrofit, particularly heavy rail transport infrastructure in London. That does not mean to say that it should not be done and if we do not go ahead with Crossrail we still have to do some substantial things to address London's congestion challenges.

Q35 Mr Clelland: Sir Rod, when you talk about the UK's economic success and the importance of transport infrastructure to that, did you also take into account the importance of transport infrastructure to the regions outside of London or is it sufficient just to have a successful national economy regardless of what might happen to the regions?

Sir Rod Eddington: No. Through my journey I and my team visited all the regions and the devolved areas of the UK. I personally went to Birmingham, Manchester, Newcastle, Bristol, Cardiff, Newport, Warrington, Liverpool, Southampton, Edinburgh, Glasgow -----

Q36 Chairman: You missed out Crewe.

Sir Rod Eddington: I thought you would brief me on that, Chairman. I got around the country in a substantial way, speaking to key stakeholders in all places, and I take the view that the conclusions I have drawn are as valid in the north of the UK as they are in the south.

Q37 Mr Clelland: Did you carry out a full-scale assessment of the costs and benefits of a high-speed rail connection between London and Edinburgh?

Sir Rod Eddington: I am regularly asked for a full-scale review. I have to say that "high-speed" means different things to different people. To some people it means Maglev; to some people it means TGV; to some people it means conventional rail at 140 miles an hour; to some people it means 125 miles an hour. I had presentations from a number of entities on the question of high-speed rail, yes.

Q38 Mr Clelland: But they are not calculations that are publicly available which could prove the case?

Sir Rod Eddington: No, they are not. If you take Maglev, for instance, the fact is that Maglev technology, although it operates from Pudong Airport in Shanghai to downtown Pudong, and I have travelled on it a number of times, this is not a technology that is in use anywhere else to any substantial degree and I would always be cautious about embracing technology that is unproven on the sort of scale that is being suggested in this instance.

Q39 Mr Clelland: But does that not come back to the point made by Mrs Ellman before that the report is not particularly aspirational?

Sir Rod Eddington: I do not think there is anything aspirational about spending 40 billion on leading edge technology that may or may not work. I do not regard that as aspirational. If you are going to spend 40 billion on the British Rail network is that the best place to spend it or would you not be better off spending a big chunk on Crossrail and a substantial chunk improving the commuter networks around our major cities in the UK?

Q40 Mr Clelland: We were rather hoping your report might answer these questions but it does not appear that it has. It has just raised more questions.

Sir Rod Eddington: I think it has. My position is quite clear, that high-speed rail with unproven technology and with dubious economic benefits is not something we should be spending 30-40 billion on. I was quite clear on that.

Q41 Mr Clelland: Can I just draw attention to another point in your report which I thought rather curious? In talking about road pricing you talked about the effects of road pricing and how that might affect urban rail services, and your solution to the problem that would arise in terms of congestion on the railways as a result of road pricing, that is, people leaving their cars and getting on the trains, would be to manage demand on the trains by putting the prices up on urban trains. Is that a sensible way forward?

Sir Rod Eddington: As my report makes clear, there is a demand for substantial investment in transport infrastructure. Given the three priority areas for investment, clearly heavy rail has a critical role to play in all three. There are many projects and schemes out there for investment in the rail network, which makes very strong economic sense, the first of which is making best use of what we have at the moment. As you go round the country there are many examples of parts of the current rail network where additional investment would give us very strong returns, so I see rail as a critical part of the solution going forward; there is no doubt about that.

Q42 Mr Clelland: Yes, but you seem to be saying that we introduced road pricing in order to try and resolve congestion on the roads, thereby forcing people out of their cars onto some other form of public transport. That then makes that form of public transport more congested and therefore, in order to resolve that problem, you put the price sup on public transport.

Sir Rod Eddington: One of the problems with this debate, I think, is that it assumes that the only solution to public transport is rail. In section four I spent a lot of time talking about the way in which we use buses in the UK because in many parts of the UK the traffic densities would make it very difficult to justify building a heavy rail network and buses are a critical part of the solution. It is not just about rail although I see a strong case for investment in the rail network as well. Saying I do not support speculative investment in a high-speed rail network that may or may not work does not mean that I do not support investment in rail in the United Kingdom; quite the opposite.

Q43 Mr Clelland: Absolutely. The point I am trying to make is that you seem to be saying that we should force people out of their cars by introducing road pricing in order to resolve congestion, and that may be a way forward that we cannot evaluate, but then they turn to public transport, like for instance the urban rail networks. You then suggest that that would put such pressure on those networks that the only way to deal with that would be to put the prices up on the trains so that not so many people used the trains. Where is that going to leave the commuter?

Sir Rod Eddington: If the only form of public transport is rail, but there are many forms of public transport, in particular buses. I would argue that whether we invest in more rail infrastructure or in buses is something that should be taken on a case-by-case basis.

Q44 Chairman: Did you actually ask for a cost-benefit model or some very accurate figures about high-speed rail from either the Treasury or the DfT?

Sir Rod Eddington: I asked everybody, Chairman.

Q45 Chairman: What did they say?

Sir Rod Eddington: Including the people who came to me with the suggestion that we should build Maglev from one end of the country to the other.

Q46 Chairman: And?

Sir Rod Eddington: I think it is fair to say that the economic benefits are fuzzy.

Q47 Chairman: That is a very nice adjective; the world is full of fuzzy things. You had got very precise models that you could judge were not economically viable - is that what you are saying?

Sir Rod Eddington: All the data that I got led me to the conclusion that there is no business case for the speculative end of high-speed rail.

Q48 Chairman: But that was specifically as long as it was Maglev, or not so?

Sir Rod Eddington: Yes, Maglev.

Q49 Chairman: So you are tied to the Maglev scheme and the figures for that and you did not look at any alternative for a high-speed line?

Sir Rod Eddington: I did not but my mechanism suggests that any high-speed line proposal that was put forward should be measured against the criteria I am suggesting.

Q50 Chairman: And you are suggesting that that would mean that they were fuzzy?

Sir Rod Eddington: No. The Maglev piece was fuzzy.

Q51 Chairman: The Maglev bit was fuzzy?

Sir Rod Eddington: Correct.

Q52 Chairman: So you dismissed the whole business case but only on the basis that the Maglev bit was fuzzy?

Sir Rod Eddington: That is what I dismissed. I dismissed Maglev.

Q53 Mr Clelland: But you have no definitive evidence to dismiss Maglev? It is just a feeling, a fuzzy feeling?

Sir Rod Eddington: I have got plenty of evidence. The most powerful evidence to dismiss Maglev is that it does not work anywhere in the world. The bottom line is that it works from Pudong Airport to Pudong. That is a relatively small stretch. It is not even to downtown Shanghai; it is to Pudong.

Q54 Chairman: The Japanese are spending a very great deal of money and this Committee actually rode on their experimental service. Do they strike you as being a wildly speculative nation?

Sir Rod Eddington: I think the Shinkansen, which was introduced into service in 1964 in Tokyo, is a very good form of train in the corridors where it makes good sense, and when I lived in Japan for four years I was a regular user of the Shinkansen. I also know that the economic case for the Shinkansen is strongest in the Tokyo/Nagoya/Osaka/Fukuoka corridor but makes no sense to Niigata where it was built by the then Prime Minister Tanaka to make a political goal.

Q55 Chairman: That is a very interesting parallel argument. I was asking you something else. The Japanese are consistently spending a very great deal of their very considerable research budget on a specific Maglev development which has also enabled them to run a test mileage. It is only 21 miles but this Committee have actually ridden on it, apart from the fact that it put the fear of God into me. What I am asking you is, did you look very closely at those other sources and why do you think the Japanese are doing that if it is so manifestly unworkable?

Sir Rod Eddington: I think if the Japanese manufacturers can produce a Maglev-type train that makes good sense and it is right for the UK we should embrace it. However, if the Japanese - and not having been with you, with respect, Chairman, I cannot comment on this - are suggesting to you that they are going to build this network across the country before the technology is proven, that in my experience is most unlike the Japanese.

Chairman: I do not think I said that.

Q56 Mr Martlew: Obviously, the Japanese have this operating but the fact is that they are not putting it in from Shanghai to Beijing, are they? They have turned that down and I accept the argument, but you seem to view Maglev as a red herring virtually, and that was not in the majority of serious politicians' discussions about high-speed rail in this country. You seem to have brushed high-speed away on that particular criterion of the Maglev and that worries me.

Sir Rod Eddington: No.

Q57 Mr Martlew: Are you saying that you have not brushed high-speed away?

Sir Rod Eddington: No, I have not.

Q58 Mr Martlew: Oh, that is good.

Sir Rod Eddington: What I have brushed aside is speculative technology like Maglev from one end of the country to the other. In providing a set of criteria against which I think investment decisions should be made I have been generally modally agnostic and my observation is that in the densest corridors high-speed rail is a critical part of transport infrastructure.

Q59 Mr Martlew: I accept, and I have read your report, that you were misquoted by the media to some extent - we all are. My concern is this. You are talking about 2014 and beyond. I know the West Coast Main Line probably as well as any politician and they talk about longer trains, longer platforms, perhaps better signalling so you can get more on. They should all be done by 2014, should they not?

Sir Rod Eddington: Absolutely.

Q60 Mr Martlew: But you have not given us anything for the future beyond that, have you?

Sir Rod Eddington: What I have not done is give you a list of projects. I tried to build a transport strategy and talk about what the priorities are because to give you a list of projects would have taken a lot more time than I had. What I tried to do was provide a set of criteria against what future projects could be based on. I made the observation, given the timescales (and you are right to talk about them), that making best use of existing infrastructure is essential to getting us where we need to go but by itself it is not enough, that we will need to make what I describe as some substantial investments to ensure that we can meet the transport needs of the country beyond 2015. I was quite clear about that.

Q61 Mr Martlew: So you accept that the things that we have both been talking about should be done by 2015?

Sir Rod Eddington: Yes.

Q62 Chairman: I think the National Audit Commission said that by that time the West Coast Main Line would be full to capacity.

Sir Rod Eddington: Yes.

Q63 Mr Martlew: If we are talking about a high-speed rail of any sort, whether it is from north to south, whether it goes to Glasgow, Edinburgh or just Manchester or Newcastle, then the planning has to start now, has it not?

Sir Rod Eddington: I agree. We are looking at very long lead times. If you agree a transport strategy, and that needs to be pressure-tested, advisers advise and governments decide, so the Government should decide whether it accepts my findings or not, and if it can therefore deliver a transport strategy we then need to think about what it means in the most congested corridors and what is the best modal solution.

Q64 Mr Martlew: Really what you are saying is that high-speed rail fits that particular bill. You may not be in favour of Maglev but high-speed rail will fit that bill in those corridors that you have referred to?

Sir Rod Eddington: There is no doubt to me that in the most congested corridors - and you have spoken of them and, as you said, is it London/Birmingham/Manchester or is it London/Birmingham/Manchester and beyond - there should be a strong business case for trains in those corridors. That business case will live or die based on its strength in my judgment, and when I talk about investing in success I am talking about investing in places where the congestion charges are greatest, whether it is road or rail or port or airport.

Q65 Mr Martlew: Can I just change back to something that Mrs Ellman said before, and I think you answered it, but we are always looking for conspiracy theories as politicians? Did ministers or senior civil servants who were not in your immediate team propose major changes to your report at any stage?

Sir Rod Eddington: No, they did not.

Q66 Mr Martlew: They did not?

Sir Rod Eddington: No.

Q67 Mr Martlew: How many major drafts of the report did you have?

Sir Rod Eddington: I began the evidence gathering in earnest in late September/early October. I did some of it before that but I was full time on it in October, November, December, and I began to assemble my thoughts early in the New Year. I guess I had two or three drafts in the way in which you do when you do a piece of work like this, and they were not really drafts; they were collections of thoughts in different areas. I did not really do a draft report and then a second draft report and a third draft report. The document evolved as we went along.

Q68 Mr Martlew: And there were no major changes in that, nothing that was cut out that we would be interested in?

Sir Rod Eddington: Nothing that was cut out. One of the things I tried very hard to do was not to jump to conclusions too early in the piece because I think once you reach a conclusion you cease to sift the evidence. I was taking evidence and going back to some of the people who presented it to me and, as it were, asking them to contribute more thinking to the particular piece I was interested in well into spring and early summer last year, so the thinking evolved. In particular, as it became clear that issues like planning and sub-national governance were important, I did quite a bit of work on those issues in the middle of last year, so parts of the document really only came together late in the day; other parts earlier in the day.

Q69 Mr Martlew: And there was no particular significance in the fact that your report was delayed about six months? It was not ministers asking you to hold it back?

Sir Rod Eddington: No. In fact, that is a good point. I asked for more time and I asked for more time because I wished to complete section four of the report, which was to look at planning. We spent quite a bit of time thinking about the planning process and how it relates to major transport infrastructure projects, national and sub-national governance, buses, in particular what are the different models for bus ownership and operation, what works best. Those sorts of things really only came together for me through the summer of last year. When I went into this report I did not think, to be frank, that I was going to be tackling those issues in the detail I did but the longer I went into it the more I thought the delivery issues were a critical part of the report and to ignore the delivery issues would have been to short-change the report. I asked for more time.

Q70 Graham Stringer: I take it you are being intellectually rigorous when you say you did not have any preconceived ideas. You have been in transport all your life. You must be full of conceptions, preconceived and current.

Sir Rod Eddington: Yes.

Q71 Graham Stringer: Which preconceived ideas did you change most during this process? On what did you go in thinking, "Oh, yes, that is what I think would be better for the UK economy in transport terms", and come out thinking, "No, that is rubbish"?

Sir Rod Eddington: I guess one of the things that changed as I was going in, which began late in my time at BA, was this realisation that the environmental and sustainability challenges were going to be substantial for transport as a whole, not just for aviation. I was conscious that they were challenges for aviation, hence the piece I wrote in early 2005, but it became clear to me that for all those the issue of carbon intensity was going to be an increasingly important part of the discussion and that my view was that coming out with a report (in part helped by Nick Stern, who was terrific and whose mind was in very much the same place as mine) which recommended that all transport modes should pay their environmental costs, in fact all their external costs, was important. What that does is that if you are looking at particular corridors and particular modes that will ultimately skew the outcome. If you take into account the environment as well as other economic issues it may well mean that you embrace different solutions than the solutions you would embrace in a world in which carbon had no cost, so I think my thinking on that issue changed as I was going into this report, but as I went through it became increasingly clear that it was an issue. When you talk to the Japanese car makers about the research they are doing on the motor car of the future, when you talk about the way in which people look at ships or trains or planes, the carbon issue has become a big issue. I think the other big surprise I had going in, and you could say that I should not have been surprised, I should have known, was the degree to which we thought modally about transport and never thought about the coming together of the different transport links at ports and airports particularly. That for me was a very big issue.

Q72 Graham Stringer: That is interesting. Economists generally cannot tell us what is going to happen in the next quarter, can they? Stern is an economist telling us what will happen in 50 years' time. Why should we take it seriously?

Sir Rod Eddington: I think if Nick Stern was here himself he would basically agree that it is very difficult to see that far out into the future in detail and I think he has tried to cover that in his report by giving us a range of options - what impact will greenhouse gases have on global temperatures, what impact will increases in global temperatures have on the global climate and therefore the global economy. I think what he has done is begin the debate about the links between the climate and the economy, which is a critical document. As we discover more about the global climate and its impact on the economy I am sure we will be able to refine (as we can with any report) some of our thinking as we go along, but I think Nick's work is terrific because it says there is a link, we do have to take it seriously and importantly. There are two main takeaways from his work. One is that the price of acting soon is lower than the price of acting late, but the first is that if we are smart we can be pro-growth and pro-the environment at the same time, and I take those two things as very important contributions.

Q73 Graham Stringer: In terms of the overall report, if you look at what has happened in transport in this country, there have been no new runways in the south east for 70 years, motorway densities are 50 per cent of most of our European competitors, deep sea ports are not linked up to the main motorway systems transport very well, are in the wrong places in many cases and beginning to lack capacity, and our rail passengers on main routes are going at half the speed that they go in France, Germany, Korea, Japan and other parts of the world. Your solution to this under-investment is to make what we have got work a bit better. I am slightly disappointed. I found the report interesting but I expected a bit more than just going with the grain of government policy that we have to make what we have got work better. Is that unfair?

Sir Rod Eddington: I have made the point, and I make it again, that I recognise, given the timescales I am looking at, that making what we have work better is by itself not enough. I make the point several times in the report that we will need to look for significant investments in major projects, and making the right decisions on what those projects are will be critical to the British economy, and how many projects we are able to do in part will be dependent upon the extent to which public funds are available on the one hand and the Government is prepared to embrace private capital in some of these sectors on the other because you know much better than I do that the claims on the public purse are substantial. My point is simply this, that there is no silver bullet to meet the under-investment that you have spoken about in our transport network. It would be great if there was a silver bullet. There is not. We need to invest on a whole range of fronts to make the best use of what we do and then we need to look at what major infrastructure projects beyond that we embrace to make sure our transport network works better.

Q74 Graham Stringer: I suppose that is what I think is a cop-out. I think it is relatively easy to say we need to make the system work better, and the Treasury and the Department for Transport would welcome that recommendation, but then you rely on saying, "We do not want to really go for aspirational projects. We want to have good-cost benefit analysis, and of course we do not want to waste money". Louise gave the example before of the railways. Two cases I know very well. The Manchester Ship Canal, which changed the economy of the north west dramatically, would never have been built if you had done a cost-benefit analysis. Manchester Airport would never have been built if you had done a cost-benefit analysis. It did not make a profit for its first 40 years of operation. There is nothing in your report that really understands that. It is very static. It does not say how we are can change the shape of the economy, which demands more and more investment, where we have got people at the present time.

Sir Rod Eddington: I would argue that that is not right, but that by saying we need to look at cities and their catchment areas, the inner city mix and international gateways, we will be focusing our spending on the very areas that make a real difference, and that one of the challenges we have is that historically transport spend has been spread across the country so we have invested not enough in some areas and we may well have over-invested in others.

Q75 Graham Stringer: I accept that, but if you look at the most disadvantaged region in terms of transport spend, which is around Bolton and Grimsby when you look at the spend per capita, there is nothing in your report that I have found that says, "Yes, we have got a problem here. We will increase capacity where the problems are, but if we can move economic activity to Hull or to Newcastle or wherever else we will solve two problems". I suppose it fits in with the Treasury analysis: it is anti a regional policy at the bottom of your report.

Sir Rod Eddington: I do not believe it is because if you talk to people in the Northern Way or you go to places like Nottingham and Leicester and Derby and talk to them about their challenges, they have regional challenges and transport is a critical piece of that jigsaw but it is not the right solution in every place. I spent some time in the Black Country where the solution is not necessarily a transport solution; it may be a schools solution. There are parts of the UK where transport spend is the best thing we can do to promote economic growth. There are other parts of the UK where transport spend has very little impact on the economy, and, by the way, if you are looking for transformation of the economy there have been periods in our history where transport spend has delivered economic transformation, and you have talked about the building of the canal network. Nick Crafts, who was part of my academic friends group, had some very interesting things to say about that: the building of the railway networks in the 19th century, the building of the road and airport networks in the 20th century. These were all fundamental to the recalibration of the British economy but that does not mean to say that the next transformation in this country is going to be transport driven. It might be national investment in broadband, it might be something other than transport, so my view is that transport is a key enabler and it is sometimes the most important piece of the jigsaw but it is not always the most important piece of the jigsaw. I admire the transformational impacts of previous transport innovations but not all our innovations in transport have been transformational. Some of them have been, to be frank, a waste of taxpayers' money, so I would be keen that where we invest we invest in the right areas. You only need to look at the business case returns to see that there are a substantial number of projects which are crying out for investment and enablers.

Q76 Graham Stringer: I agree with that; nobody wants to waste money, but there are never foolproof methods of making decisions either in the business world or in the public sector. Who then should take those decisions? The other thing that worried me about the report was that it did not seem to be dynamic enough in changing the economy, but, recognising that there are inefficiencies in the planning process, which you do, and I agree with that, it seems to me that you are writing local elected politicians out of that process and maybe even central politicians. You seem to be saying that if there is a business case to be made some independent panel should make those decisions. I am not sure that people independent of the political process are better than people who are elected to make those decisions.

Sir Rod Eddington: I am very clear that that is not what I am saying. Let me make a number of observations. The first is that the current planning process in my view, as many people told me as I went on this journey, is too uncertain, too long, too long-winded and far too expensive. What I am suggesting is that we make some fundamental changes to the planning process. I know in making those recommendations that I am going to create a vigorous debate; I have no doubt about that, and that is why, when people say to me, "You are not really presenting much in the way of change", I would argue that I am. I think it is very important that you put the input of local, regional and national entities in at the right point in the journey. I feel very strongly that a change from an adversarial to an inquisitorial system would basically give people the ability to contribute, whether it is verbally or in writing, without the need to rely on very expensive legal advice, for example. I am also clear that by putting the political process at the beginning of this that there must be the right consultation. There is a legal requirement to consult both domestically and in the context of EU law through Europe, so nobody, least of all I, would try and write out of the planning process the ability of people at a local and national level to contribute to whether or not a particular project should go ahead. A project should only be put in front of the Independent Planning Commission when it has been through a rigorous period of consultation.

Q77 Mrs Ellman: Sir Rod, on this point, what you are saying is not actually what your report says. Mr Stringer's question to you is not about enabling people to make a contribution to a discussion. It is about who takes the decisions. In your report (and listed in your recommendations it states this clearly) you talk about the need for reforms of the planning process for major infrastructure projects, and the need for "introducing an Independent Planning Commission to take the final decision on specific applications". That is giving the power of decision-taking to people who are not elected. You can argue the case for that but you cannot say you did not say it because you did.

Sir Rod Eddington: No, I did not say that. I said something would only go forward to the Independent Planning Commission when it had passed through the consultative and the ministerial processes.

Mrs Ellman: What does that mean?

Q78 Graham Stringer: Is that not putting a quango, a non-elected body, above the elective process and does it not break the lines of accountability? If I am the Secretary of State earning whatever it is, should I not have to take a final decision on something that is important for this country, or if I am the leader of a major council should people not have the right if I get the decision wrong to vote me in or out?

Sir Rod Eddington: But something would only go forward to the Independent Planning Commission if the Secretary of State was comfortable with it going forward.

Q79 Graham Stringer: But if it is an Independent Planning Commission it might come to a different view, and if I as an elector want to change that I cannot vote in or out that independent person. Democracy has got bad consequences if you think about runways in the south east, but at the end of the day it is better to have democracy than runways. What you seem to be saying is, "Have the runways; we will get rid of democracy", which I do not agree with.

Sir Rod Eddington: No, I think democracy is critical to this. All I am saying is that I believe a better system would be where the Government (and clearly this is going to be a matter of national debate in Parliament), having satisfied itself that a particular project is in the national or the local interest, then puts it forward to the Independent Planning Commission, in other words, having had an opportunity itself to review a particular project - I am talking about major transport infrastructure projects here - it then gives the Independent Planning Commission the opportunity to hear the detail and make a decision on that basis. Governments do that in other areas. They ask bodies to take decisions on their behalf and the sort of people I have in mind who would be independent commissioners, senior legal people, for example, are the sort of people whom governments would be prepared to trust with that authority.

Graham Stringer: That is very clear and that is what I thought. I just disagree.

Q80 Clive Efford: Can I clarify something you said on Maglev? The technology is there. It has been there for years. We used to have Maglev in this country. Is the problem economic or is there something else?

Sir Rod Eddington: There used to be a Maglev to Birmingham Airport, I believe. It no longer operates. Why?

Q81 Clive Efford: That is what I am asking you.

Sir Rod Eddington: Because the technology is expensive for the task at hand. If you speak to the people of Shanghai about Maglev they are terrific pieces of technology but does it make sense to build a rail network over hundreds of miles based on that technology? That is the question.

Q82 Clive Efford: Is it an engineering problem or is it an economic problem or is it a bit of both?

Sir Rod Eddington: It is both.

Q83 Clive Efford: There are problems about the practical application of Maglev high-speed rail. I have been in that building in Japan as Maglev has gone past and the building nearly falls over. It must be equivalent to standing next to a plane that goes through Mach 1. Going through a built-up area at that pace Maglev would cause enormous problems.

Sir Rod Eddington: The technology has been around for a very long time, you are absolutely right, but it is not in widespread use. In fact, it is in extremely limited use and in some instances where it has been put into use it has been withdrawn. My point would be a more a general one, coming back to the question here, that you have to look at each country's geography and economic geography and decide what advantage speed brings to the table, and what are the costs of increased speed. Increased speed does not come for free. That is true of aeroplanes as well as trains, so what is the right combination of speed and efficiency for a particular rail network? You can make some judgments about that. That is why I made the observation early on that a high-speed train means things different things to different people. To some people it means Maglev but there are many different examples of what the public would call high-speed rail networks which do not involve Maglev technology.

Q84 Clive Efford: If we were in a position where the Government was saying, "At any cost we are going to have Maglev", do you think we would still have it?

Sir Rod Eddington: I do not think so. There is usually great enthusiasm around these projects in their initial stage. There is then the cold, hard reality of building them and making them work day in, day out. We know there are some real challenges. Let me give you another, more measured example. You talk about the West Coast Main Line and how important that is. Look at the challenges associated with the upgrade to the West Coast Main Line, basically moving to moving block signals, a technology which existed, if you like, but never existed in that context. Look at the time taken to implement that, look at the costs -----

Q85 Chairman: Sir Rod, I do not want to go down that line now. I will be quite brutal with you and I will tell you exactly why, because the decision on that was influenced largely by decisions taken outside this country. It was an implementation of a policy which was decided at European high level and, frankly, if we are going to go into that one we will be here all day, so forgive me. Another example please.

Sir Rod Eddington: Aviation is a good example.

Q86 Chairman: Better, better.

Sir Rod Eddington: I have worked for British Airways and, like everyone who works for British Airways, I loved Concorde.

Q87 Chairman: Yes, you are a rotter.

Sir Rod Eddington: Flying at twice the speed of sound is infinitely more fuel inefficient than flying at 80 per cent of the speed of sound and requires an entirely different maintenance regime to do it day in, day out. Speed does not come for free. My response would be that if you are going to make huge investments, you have to have some confidence that the technology is workable and robust, because if we build a substantial piece of transport infrastructure in this country it has to work day in, day out, every day, 365 days of the year. It has got to be easy to operate, easy to maintain, easy to use. My plea is that if we are going to be spending tens of millions of pounds let us do it in areas where we have some confidence in the technology, whether it is on trains or another part of our network.

Q88 Clive Efford: Do you have any feeling for how your report has moved on government thinking on transport policies? Could you give us some examples of how it has changed their approach?

Sir Rod Eddington: As I said, advisers advise and governments decide and I know that the Secretary of State for Transport will be formally telling us how he intends to move it forward. Certainly within the Department for Transport I think the report has been taken seriously and they are looking at the way in which they are organised internally to try and help with the delivery of some of the key elements.

Clive Efford: That is very precise. On the issue of -----

Q89 Chairman: Before you leave that, Sir Rod, what do you mean? Frankly, to say they are looking at reorganisation, this grows out of some gnomic remarks made by Sir David, I believe. In the Treasury are they also interested? The Permanent Secretary said that his successor may wish to consider the structure and organisation implications arising from your review "before taking up the post formally". What do you think those implications are?

Sir Rod Eddington: The way in which the department takes decisions, the things it looks at, its focus, so I would hope all of those things would be reflected in a response to my report.

Q90 Chairman: That is fairly general. What does it mean exactly? In what way would they alter? I am sorry but this is important. Interestingly enough to this Committee, you are talking in perhaps a 30-year cycle and one of the assumptions in everything you said to Mr Stringer was that there would be political input at the beginning, those decisions would be agreed and we would then move on to the technocrats. It is a bit sort of upper upped but I suppose we cannot win them all. What is interesting to me is why you assume that that is something that governments are going to accept when governments work in five-year cycles and you are talking in 30-year cycles. Do you really assume that if Mrs Thatcher had agreed to cut down two-thirds of the railway industry ten years later the new Secretary of State would have said, "Fine, we are committed to that. We have handed it over to the bureaucrats"?

Sir Rod Eddington: Just one point. First, I do not see the Independent Planning Commission and the commissioners as technocrats.

Q91 Chairman: They are not going to be politicians, they are not going to be technocrats?

Sir Rod Eddington: Well, some of them may be technocrats but I see them as being eminent people who can take account of all these issues in a balanced way, high court judges as an example rather than technocrats.

Q92 Chairman: High Court judges! Well known for their broad approach.

Sir Rod Eddington: That is an interesting thought. Clearly we need the right sort of people on that Commission.

Q93 Chairman: I think we have missed something about this.

Sir Rod Eddington: Coming back to the issue of timescales, you have put your finger on a major problem. Your point earlier was that if there are going to be infrastructure constraints on the West Coast Main Line in ten years' time we need to be thinking about them now and planning the solution, beginning that process now. I would agree with that; I think it is very important, but that is the problem, and it is the problem also for transport and power generation and water, because when I went round the country and spoke to the key stakeholders on these issues at local and national level they said, "It is interesting that you should be talking about these issues in the context of transport, Mr Eddington. We have also been thinking about them in the context of other things". For a lot of these areas the planning cycle is a very long one, the investment cycle requires -----

Q94 Chairman: But are you not saying that your scheme will do away with that? Is the whole point of your scheme not that you will do away with the long time? The whole point of what you are suggesting is that it must be speeded up.

Sir Rod Eddington: I think a revised planning process would deliver greater certainty at lower cost. Hopefully it would also be significantly quicker and you and I both know of programmes and projects which were for ever in the planning review stage, Terminal 5 at Heathrow being a classic example. There are others - Thames Gateway and whatever. I think that even with a streamlined planning process the period between first discussions and the cutting of the ribbon to open major transport infrastructure projects will be a very long one, as it will be for power and other major projects in this country, and how we square that circle with a five-year political cycle I think is a real challenge.

Chairman: Now I am totally confused.

Q95 Clive Efford: You said that not going ahead with road pricing was a no-brainer. How much do you take into account the petition that was signed by more than a million people?

Sir Rod Eddington: I said that it was an economic no-brainer. Road pricing for me is an economic no-brainer. What do I mean by that? Basically I agree with the evidence presented to this Committee in early 2005 and this Committee's conclusions from that presentation, which were these as I saw them, first, that the number of motor cars on the road and the way in which those cars are used has grown much more quickly than the stock of new road available and that we cannot build our way out of trouble in a road sense; that the cost of congestion is significant today and will continue to grow; that clearly the petition tells me that people are concerned about two things on road pricing, both of which are perfectly understandable. One is the cost to the motorist that road pricing applies and the second is this question of what will be done with the data, privacy issues. They are perfectly understandable concerns. My points would be these, that to successfully introduce widespread road pricing you will need to tackle both those concerns, that is absolutely clear, but that the cost of not tackling congestion on the roads will be a mounting cost to the economy, that road pricing as a mechanism to manage demand on the road brings real benefits as well as real challenges, and that we need to think about road pricing in the context of public transport. I go back to the earlier observation. If you are going to deliver a road pricing scheme, demand management on the roads, then you need to think about the public transport dimension. I know that road pricing is contentious. You did not need my report to tell you that. The idea of road pricing as a form of demand management has been around for decades. It has gathered momentum in the last few years and, as I said, this Committee saw fit to hold a series of hearings in January 2005 on this very subject, and I basically agree with the evidence that was presented by the experts and your conclusions on that issue.

Q96 Clive Efford: In terms of the impact on public transport what assessment have you made of the likely impacts if we were to go for a national road pricing scheme?

Sir Rod Eddington: I guess I would measure it in a number of ways. Clearly there are some questions about the all-important detail of a road pricing scheme. That is why I think you need to run some pilots and that is why I think it is going to take ten years. You could argue that ten years is not very ambitious. I would argue that it is pretty ambitious in terms of not only deciding what technology you are going to use and how it is going to work but also getting people to accept that it is the best way forward. I think they are critical issues but let me give you an example. I think that even with widespread road pricing there will still be a case for additions and extensions to the road network. I am not saying deliver road pricing and do not build any new roads, but I believe that with a sensible road pricing scheme the new road build would be reduced by 80 per cent over what it would be without a road pricing scheme and there would be a significant saving to the national economy by reducing congestion.

Q97 Clive Efford: Which do you put more value on, a localised road pricing scheme, say, in the city, or on the strategic road network?

Sir Rod Eddington: I see road pricing as a way to tackle the issue of congestion and I think the most important place to start is where the congestion challenges are greatest and they are around our major urban areas in this country. London is the city which has the greatest congestion challenges but there are major congestion challenges in Birmingham, Manchester and in other parts of this country, and I see road pricing as a mechanism to tackle congestion and give us the economic benefits that come with that.

Q98 Clive Efford: And how do you square the circle of increased reliability in terms of journey times but also in terms of reducing congestion?

Sir Rod Eddington: I guess the freight forwarders put it best to me when they said, "We go from this logistic centre in Birmingham to the supermarket and that is a journey that normally takes us an hour but one in four journeys take two hours, so we always have to budget for two hours of truck time for that journey", and therefore there are huge inefficiencies which come into their lives as a result of the lack of predictability that congestion delivers to our road network.

Q99 Graham Stringer: In all the academic advice you have had in doing your report did you find a piece of academic work which could correlate economic impact with congestion, and, if so, can you tell the Committee which it is?

Sir Rod Eddington: I think we are fortunate in the sense that there are people like Stephen Glaister and Peter Mackie in this country who have thought more about this issue than anybody else. I believe we can measure the cost of congestion to the nation in terms of time lost and the economic inefficiencies that brings. My work contains some quite detailed analysis on that point. You can look at the analysis, you can find out how I got to where I got and if you wish to challenge it you can.

Q100 Graham Stringer: I am genuinely interested in the problem because I think Stephen Glaister and the other 45 professors of transport that we are blessed with in this country regularly start from the position that loss of time going somewhere has immediate economic impact and I do not believe that. When we have challenged them at this Committee they say, "No, it is a way of measuring it", but if you look at that loss in time and try and correlate it with loss of production or loss in the economy it is not necessarily a straightforward equation.

Sir Rod Eddington: I would agree with that. Some of the journeys that take place on our roads where time is lost have precious little impact on the economy. Others are very important.

Q101 Graham Stringer: What I am trying to get to is some real measure of that rather than something that is a consistent model, which leads me to my next question on this issue which I think is at the heart of this debate. Congestion is worse in cities because you cannot expand the road network because there is just a limit to the capacity in cities. Do you believe when you say that there should be pilots on congestion charging that the experience in cities is useful in looking at congestion on the inter-urban motorway network, because the experience is so different?

Sir Rod Eddington: I think that is right. I think you start with areas where the congestion is greatest, which is in the cities and their urban catchment areas, but you ultimately have to tackle congestion across the network and that includes on the motorways, and in your part of the world particularly we are already beginning to see real congestion in some of these areas, as you know, so it is not just about the urban centres, although that is where the problem is greatest; it is also about the broader network.

Q102 Graham Stringer: But it might be that in cities, where, for the reasons you have said, sometimes loss of journey time does not have an economic impact, it has the least economic impact even though there is more of it, and you may get more economic impact on the motorways.

Sir Rod Eddington: I think that is right. That is why you will ultimately need to trial more broadly than the urban centre although that is where I would start.

Q103 Graham Stringer: Why is it not sensible then to trial on a linear bit of motorway going between Birmingham and Manchester or the M25, some coherent part of the motorway, relatively simple to understand, rather than a very complicated economy like Birmingham or Manchester or London?

Sir Rod Eddington: I would make a couple of observations. The first, as again I am sure you know, is that the Highways Agency are trying very hard to resolve congestion on the motorways in other ways, for example, hard shoulder running. I have spent some time in one of the Highways Agency vehicles going around that particular part of the motorway, looking at the things they were doing, bringing information and real time to motorists to help them make decisions about they did and how they did it. The worst congestion is in the urban centres but my observation would be that we will quite quickly need to understand the impact of congestion on the motorway network as well and I would hope that in the fullness of time we can run some trials in an appropriate area there as well. As I say, I know the Highways Agency are trying other mechanisms in the first instance to try and resolve some of the congestion challenges on the motorway.

Q104 Graham Stringer: I do not want to put words in your mouth. You are saying we start in the cities where congestion is worse, which one can accept, and move on to the motorways, but without knowing whether the congestion in the cities has the worst economic impact.

Sir Rod Eddington: In a sense the journeys that I was particularly interested in were the journeys that impact the economy, passenger and freight, some of which are people going to and from work every day, a critical economic journey, obviously. I think you can tease out the difference between congestion which diminishes the economy and congestion which is a hassle but does not necessarily diminish the economy. You are right, you find that in all parts of our network - not just our road network, by the way; there are parts of our rail network and our shipping network and our airport network where congestion has an economic cost to the country as well. On our road network I would start with cities but look at some of the other pieces of the jigsaw as well, and particularly in the middle of the country, in the Birmingham and Manchester area where the motorway network is under real pressure, it would be interesting to see what you could do in congestion charging in that network as well.

Q105 Mr Clelland: Sir Rod, when you came before the Committee on 30 November I drew your attention to the catch-22 situation we found ourselves in in the north east particularly and presumably in other parts of the country -----

Sir Rod Eddington: I remember that.

Q106 Mr Clelland: ----- where the economic growth in the region is generating more traffic and therefore the Highways Agency were concerned about congestion and the Highways Agency were then coming forward with what were called Article 14 orders and putting a curb on the investment that we desperately need in the area because of the congestion. Given the fact that the Highways Agency under successive governments over the last 20 years have not made any major improvements to the road structure at all, we are in this catch-22 situation where as we improve the economy we cause congestion, therefore the Highways Agency will put a block on development. You said you would speak to the Highways Agency about this issue. Did you do that and if so what conclusions did you draw?

Sir Rod Eddington: I think that issue probably resonates most in some of the delivery issues in my report, in particular the role of national and sub-national governance, who decides what, what revenues are raised and how they are applied. As I said early on, I believe the work I have done is as important in the north of the UK as it is in the south and many of the challenges I have spoken to are just as important in the north as they are in the south. In some instances the scale might be a bit different, partly because London is the biggest city in the nation and it is based in the south, but there are challenges in the Midlands, in the north of England, up into Scotland and across to Wales. It seems to me that the challenge for local and regional entities is that they often have control over some of the variables in the decision making process and not others. Buses are a good example. A local authority may wish to introduce a bus franchising operation to improve public transport in that area because in their particular patch a bus may prove to be a better solution, but they do not have control of the roads and therefore they cannot designate a bus lane. There is a series of what I call governance issues which, unless they are resolved, will lead to impasse.

Q107 Mr Clelland: What proposals do you have for governance issues?

Sir Rod Eddington: This is clearly a much bigger issue than just transport. It is true for other areas and in the Lyons Report Michael Lyons' work on governance resonates with me. I looked narrowly at governance in the context of major transport projects and I looked at planning in the context of major transport projects, recognising that there are other issues which will bring those same two points to the table and you need a solution that works not just for transport but also for a broader church. Planning as I understand it is being examined right now and I would hope that Sir Michael Lyons' report will similarly forward the debate on the role of local and regional entities as opposed to the national entity. If you do not resolve those issues you will not change that reality.

Q108 Mr Clelland: Do you think the Transport Innovation Fund process will shed any light on all this?

Sir Rod Eddington: Personally I am a strong supporter of the Transport Innovation Fund. I would be, would I not? What do I mean by that? Because it looks first at trying to promote transport interventions that are pro-the economy and pro-growth, and, secondly, because one of the things it is looking to do is trying to help move the road pricing debate forward in a sensible and meaningful way, so I am a supporter of it but I do not think any piece of the jigsaw in isolation is going to get us where we need to go.

Q109 Mr Clelland: What role do you envisage for PTAs and local authorities?

Sir Rod Eddington: I think they are both important pieces of the jigsaw but I would draw back from those and say we have got to get it right not just for transport but for other things as well. PTAs and PTEs have a significant role but I would not start there. I would start with the challenges that you have raised about how we unblock the logjam and how we move it forward.

Q110 Mr Martlew: You have tried to answer it once or twice but we have never really let you off the leash. What do you believe the role of the bus is in the future, this low cost, low technology vehicle that we have?

Sir Rod Eddington: You asked me earlier if I was surprised about anything going in. One of the things that surprised me was the low regard in which the bus is held in the United Kingdom. I find that quite strange, having at different periods of my life caught the bus to and from school and to and from work. I think the bus, particularly in the less dense corridors, and there are many of them outside the major cities, is a terrific opportunity. They have to work, customers have to have confidence in the reliability of the bus, they have to have real-time information in front of them, the buses have to be clean, well run and comfortable. Buses are a terrific opportunity, in part because they are very flexible. If you look at bus ridership in the UK over the last 50 years it has been a straight line down. That has bottomed out but I think, particularly in the context of a world in which road pricing is widespread across the country, we have to address the public transport challenges that go with that. Some of that is about the train but I think the bus has a real role to play and we need to decide how we are going to set up the governance model around buses and that is about our local authorities and the bus operators working together. I spent quite a bit of time addressing that issue in my report. I think buses are very important. They are part of the jigsaw but they are very important.

Q111 Mrs Ellman: How did you select the 200 business cases and policies from the department's database?

Sir Rod Eddington: Things that have been put in front of DfT, and as I went round the country, if it seemed to me that something was raised with me as being really important on which there had been no activity, I would go back and check it against that list.

Q112 Mrs Ellman: How many were rail schemes?

Sir Rod Eddington: I do not have the exact number in my head but there are a significant number of rail schemes in there. Some of the rail schemes, by the way, are issues raised in terms of station development, lengthening platforms, longer trains, some of them are better use opportunities, some of them are bigger schemes than that.

Q113 Mrs Ellman: Are you sure that they were representative? How do you know that the schemes that were presented to you were representative in any way?

Sir Rod Eddington: That is a fair question. I do not have the exact number in my head but people regularly talk to me about those issues - station development, upgrades to existing infrastructure, and some of the very biggest things were rail schemes.

Q114 Mrs Ellman: But you do not know if they were representative?

Sir Rod Eddington: I do not have the number in my head. They were representative in the sense that they were raised with me regularly and I know a number of them are dots in that chain. I cannot tell you how many of the 200 dots you are asking about but I can find out for you and let you know.

Q115 Mrs Ellman: In your general analysis you talk a lot about the benefit of transport to the economy. What about the benefit of transport to people in getting about their lives, having access to facilities? What kind of weighting does that have?

Sir Rod Eddington: That is why I said at the beginning that I recognised that when governments take decisions around transport they also reflect on the environment and social inclusion. I recognise that is important. A major role that transport plays is by and large getting people to and from work every day, so the economy works and delivers benefit to the people, but I recognise there are other issues in there which governments reflect on when they take transport decisions.

Q116 Mrs Ellman: But do these other issues get any weighting in the assessment?

Sir Rod Eddington: I made the point that I could not do justice to you on those two things. There are some social welfare issues built into the evaluation, yes, but I could not do justice to a full review of the social benefits of transport.

Q117 Mrs Ellman: You were talking about aviation emissions and a lot of faith has been put in technological advancement to control emissions. Do you think you have been over-ambitious in that field?

Sir Rod Eddington: I think we have to see aviation emissions in context. Aviation is responsible globally for about two per cent of emissions and that number is true in the UK as well, and domestic aviation is responsible for about half a percent, as I understand it, of UK emissions. Clearly there are issues around emissions for aviation but I do not think solving the emissions problem for aviation is going to solve the sustainability transport issue. I recognise from my time in aviation that aviation has some real challenges in this area and needs to reflect on them.

Q118 Chairman: You are talking about doubling aviation. We are not talking about a small incremental increase.

Sir Rod Eddington: I agree.

Q119 Chairman: You are also talking about doubling in terms of freight.

Sir Rod Eddington: In a carbon constrained world one of the things the nation will need to decide is where its carbon is going to be spent, as it were. Nick Stern in his report makes the point that there are some parts of the carbon jigsaw which can be addressed much more quickly than others.

Q120 Chairman: Forgive me if I have some problems with that because, you see, one of the other things you say is that expanding airport capacity in the south east would reduce business costs by 6 billion over the period to 2060.

Sir Rod Eddington: Yes.

Q121 Chairman: If you are saying aviation use is going to double, both in freight and in passengers, but nevertheless we should have another airport in the south east ----- or at least you did not say that

Sir Rod Eddington: I did not say that.

Q122 Chairman: But you talked about expanding airport capacity, which assumes at least a quarter increase.

Sir Rod Eddington: I think the critical point is that the White Paper on Aviation said that you can only build a third runway at Heathrow if the environmental conditions that surround that are met. I would simply say that I agree with that and I recognise that aviation has some substantial challenges on this front.

Chairman: I think we can agree with that.

Q123 Mrs Ellman: On the planning proposals you have put forward, how much time do you think they will take?

Sir Rod Eddington: I can only talk to what I would describe as major transport infrastructure projects. I am more concerned with cost and certainty of process than I am with just time. I think for some of these major projects the planning process, quite rightly, will take a significant amount of time. If you are going to consult properly, if you are going to meet the laws of this country and the EU through the consultation process, some of these planning processes will go on for some time, but the bottom line is that the T5 planning process took four years to build a new terminal on an existing airport. I think that is far too long. I am interested in cost and certainty as well as time.

Q124 Mrs Ellman: How can you want to be sure of certainty if there is going to be a fair assessment on capacity?

Sir Rod Eddington: People who have put forward projects have said, "We would rather a yes than a no, Mr Eddington, but if it is going to be a no do not make us wait ten years and charge us 15 million in the process".

Q125 Mrs Ellman: So time does matter?

Sir Rod Eddington: Time matters but so does cost, and so does certainty of process.

Q126 Mr Scott: In November 2005 I asked you a question about whether local authorities would still be involved in the planning process and you said they would.

Sir Rod Eddington: Yes.

Q127 Mr Scott: Has your opinion on that changed?

Sir Rod Eddington: No, it has not. I think the role of local authorities is critical not only to the planning process but also to some of the key transport initiatives in their area.

Q128 Clive Efford: When do you think we should move to stabilise emissions in the transport sector in the light of the Stern Report?

Sir Rod Eddington: The Government has said that they wish to see a 60 per cent reduction in emissions by 2050. Having set that target we need to work out what that means for power generation, for industry and for transport. I do not think you can take one piece of the jigsaw, transport, in isolation. I think you need to look across that piste. However, it is clear that we will move towards a carbon constrained world for transport and whatever transport does will have to be consistent with the national guidelines. The challenge is how governments go about delivering that. You will know more than I about that. My sense is that it will involve a combination of things: how we treat carbon, cap and trade or tax or a combination of the two, what regulations governments choose to introduce to assist in the process of carbon reduction, and finally the extent to which governments will encourage innovation and investment to deliver outcomes. That is something that only an elected government can decide.

Q129 Clive Efford: In the light of the growth that we have seen in emissions in transport, road transport has increased CO2 emissions, and the Chairman has already highlighted the forecast growth in demand for air transport, how much have you taken the economic case of transport or looked at other sectors and their ability to pick up the excess if there is growth in emissions in the transport sector?

Sir Rod Eddington: Ninety per cent of the carbon emissions from transport come from ground transport, in other words, ten per cent comes from what happens in the air and 90 per cent comes from what happens on the ground. As part of my journey one of the things I did was speak to the carbon manufacturers about how they saw the motor car opportunity in a carbon constrained world. There are a lot of pieces to this jigsaw and I cannot tell you what governments will decide transport should contribute in the context of power, manufacturing and the rest. All I know is that transport modes should pay their full environmental costs.

Q130 Chairman: I want to ask you one or two things about that, if I may, just to wind up. How much did your entire study cost, even if you were cheap labour?

Sir Rod Eddington: I was cheap labour, Chairman. Well south of one and a half million all up.

Q131 Chairman: "Well south of one and a half million"?

Sir Rod Eddington: Sorry, Chairman. That is an Australianism. Less than one and a half million. As I understand it, once the purdah has passed then the details can be put before you but let me say well under one and a half million. The two major cost items, which covered the vast majority of the costs, were the cost of my team who worked on this programme with me for 18 months and the cost of some modelling work we commissioned with independent experts to help us with our understanding of some of the economics of these issues.

Q132 Chairman: Do you think your team being all civil servants in any way coloured their judgment? Did they come in with a perceived view of what they ought to come out with? Most civil servants know what the answer to the question is before they put it.

Sir Rod Eddington: I found them remarkably open-minded on that and one of the questions that Mr Stringer asked me was to what extent my preconceptions were confirmed or denied. When you spend as much time as we did talking to independent stakeholders around the country, when you spend as much time as we did having our thinking pressure-tested by groups like the academic friends, you have to keep an open mind, and we did.

Q133 Chairman: One of the things that you are very insistent upon is geographic clustering. You do not think that is a policy that would lead to more polarisation?

Sir Rod Eddington: No, because I think the modes that matter, including cities and their supporting regions, are found across the UK.

Q134 Chairman: But you have been very specific, saying that it must be a very robust business case before transport or anything else, in the answers you have given to Mr Clelland and Mr Stringer. You have made it very clear that you would regard a strong business case really as being the decisive factor and that local input would be at a very early stage and the decision would be taken by someone who was not elected.

Sir Rod Eddington: I do not know if it answers your question but I find strong business cases across the modes across the country.

Q135 Chairman: I think it would be helpful to know whether really when you talk about that you are saying that you support journeys that matter to the economy. Is that where you are coming from?

Sir Rod Eddington: Correct, absolutely right.

Q136 Chairman: And that takes precedence over other things?

Sir Rod Eddington: I recognise that when governments take decisions about transport they reflect on other things. An even stronger point, based on the work I have done, is that there are lots of transport investments, big and small, that have strong economic benefits. You do not have to look very far to find strong business cases for investment in transport in this country, whether it is on the road, whether it is on rail, or whether it is in ports or airports.

Q137 Chairman: Do you think, Sir Rod, that if there was a change in government over the next few years your programme would be followed by another political party?

Sir Rod Eddington: I would hope that the thinking that sits behind it would be embraced by another political party but, of course, that is all very much for them to decide. I would hope that the thinking that sits behind it would be embraced.

Q138 Chairman: How long do you think it would take to implement some of the recommendations in your report?

Sir Rod Eddington: You could implement the way in which I have looked at the economy and the transport pieces that fit to it. You could use that as a mechanism for analysis now if you wished.

Q139 Chairman: For analysis. What about delivery because it is delivery I am asking you about?

Sir Rod Eddington: Spot on, and that means you have to resolve issues like the planning process and the role of local government, ie, national and sub-national decision-making.

Q140 Chairman: Are you going to have an involvement with the review from now on?

Sir Rod Eddington: I guess I am here in part to champion its thinking to you as a group. I spent some time through last week talking to key groups, whether it was key groups of transport professionals or people like Transport 2000, so I am doing what I can to support the process.

Q141 Graham Stringer: Do you have to resolve the functioning of the Department for Transport? Is it part of the problem? Is it fit for purpose?

Sir Rod Eddington: I mentioned earlier that I think we need to think about the way in which the department is organised to address the transport challenges of the nation, and I believe that is happening right now.

Q142 Graham Stringer: Last time you were here I asked you whether you thought, as many green groups and commercial groups do, that the Department for Transport was part of the problem. Can we imply from the fact that you want to restructure it that you at least accept part of that as being the case, that it has been part of the problem?

Sir Rod Eddington: Structures, whether they are department structures or business structures, evolve. They change. I have a very clear model in my head: strategy, structure, people. What is the game plan? What is the strategy? Do we have the right structure in place to deliver the strategy and do we then have the right people in the structure to deliver the strategy? I think if you accept the strategy I have for transport then you need to ask yourself the question, does the DfT have the right structure to deliver that strategy?

Q143 Chairman: Do you think the system of public service agreements entirely has worked?

Sir Rod Eddington: I think the public service works very hard to try and deliver the right outcomes. You know as well as I do -----

Q144 Chairman: No, no, I am not talking about the public service; I am talking about PSA targets, because that is what you said, that they should be amended, the department's objective should be changed, so are you really saying that the general system of public service agreements and targets works or not?

Sir Rod Eddington: I think you have to have targets. You have to have agreements. If you do not put some firm measures in place then nobody knows what they are shooting for inside or outside. All I am saying is they have to be the right targets and they have to be focused on the right interventions.

Q145 Chairman: Are they going to take any notice of you, Sir Rod?

Sir Rod Eddington: I believe so. I hope so, and I will do all I can to make it so.

Q146 Chairman: On that happy note we will allow you to contribute to the carbon emissions. Thank you very much for all your work. You have been very open. You will not be surprised if I say that if you continue to have a voice in this field we shall continue to take a great interest in what you do.

Sir Rod Eddington: Thank you, and if I continue to have a voice I look forward to coming back.

Chairman: Do not worry; you will be asked. Thank you very much indeed.