Examination of Witnesses (Questions 40-59)
RT HON.
RUTH KELLY
MP AND MR
ROBERT DEVEREUX
24 OCTOBER 2007
Q40 Mrs Ellman: This Committee has
looked at light rail before and we felt there was some hostility
to light rail schemes coming from within the department.
Ruth Kelly: I do not think that
is true. I have thought about this myself in the last few weeks,
as I am sure you are aware. We very clearly look at each scheme
on its merits. For instance, it is the case that certain schemes
have been incredibly successful and I just point to Nottingham
as an example of that, where patronage has been good, where it
has clearly been successful in its own terms, where it has provided
very good value for money. There are other tram schemes. Part
of the issue with this is how accurate initial projections of
the cost of the tram schemes prove to be, where enough work has
not been done at the beginning of the process to illustrate that
they do provide good value for money and a good benefit:cost ratio
to convince the department that it will be worth investing in
them; or indeed, schemes that have not come top of their own regional
funding priorities. In that case, obviously we would look sceptically
at the figures and make sure that the evidence base is there to
support the scheme before the department backs it, but in theory
light rail schemes can be incredibly good.
Mr Devereux: It does depend critically
on what it is that the light rail thing is delivering. I think
I remember a CfIT study recently in the last year or so that acknowledged
that. When you have very large flows of people down a particular
corridor, light rail can be an extremely effective solution. It
is not the solution of choice in all cases just because you have
people moving down a corridor. You are paying more for it and
you therefore need to have a much larger flow of people to make
that stand up relative to alternatives. That is essentially the
choice we are trying to make and there are clearly situations
in which the tram would be the right answer.
Q41 Mrs Ellman: Do you have a specific
target on increasing the usage of light rail?
Ruth Kelly: No. Our target is
set as a bus and light rail target. We want to meet that target
in the most effective way possible.
Q42 Mr Clelland: Are you familiar
with the Tyne and Wear metro system, Secretary of State?
Ruth Kelly: I have never travelled
on it but I am familiar with it in a different sense.
Q43 Mr Clelland: That is a light
rail system which is extremely popular and extremely efficient
but it is now coming up to 26 years old. Your department was given
a plan for improving the metro system some time ago now over the
next 20 years. I am pleased to say—thank you very much—the
department has approved the first stage of that but that is only
ticket machines and barriers. Obviously, because it is 26 years
old, the rolling stock is 26 years old and all of the infrastructure
is 26 years old. When can we expect a favourable reply from the
department on the rest of the programme?
Ruth Kelly: I am not quite sure
whether this is something that should be considered within the
regional funding allocation, but I understand that it is. Clearly,
if it were prioritised within the regional funding allocation,
it would secure the resources to do more of the work.
Q44 Graham Stringer: You may not
have thought of this but I would be interested in your answer.
The Chancellor in his statement said that he was going to shift
the taxation of airlines from passengers onto aircraft which seems
sensible in one sense to increase the loading factor and therefore
decrease the problem of pollution. Have you thought of what impact
that might have on the regions, where you have intercontinental
air services from Birmingham and Manchester which are always going
to have lower load factors than aircraft out of London?
Ruth Kelly: That is an excellent
question. It is one reason why there is the ability under EU law
to have public service obligation flights for example. Where a
flight does not make commercial sense, it is still possible to
subsidise a regional—
Q45 Graham Stringer: I understand
that and I do not think the Manchester to New York or Chicago
or the equivalent Birmingham flights are ever going to get public
service support. Within the commercial world, if you change the
taxation system like that, you are going to disadvantage successful
regional airports. If you have not thought about it, I would be
grateful if you would think about it and talk to the Chancellor
about that impact.
Ruth Kelly: Certainly that is
one of the issues that would need to be taken into consideration.
The Chancellor has promised a full consultation on this proposal
before any implementation, not next year but the year after. It
is clearly a consideration that will need to be taken into account.
Q46 Graham Stringer: I would be grateful
if you would take that over as Secretary of State for Transport.
As well in the same statement the Chancellor announced that he
was going to tax planes and not passengers. That will mean that
the UK air freight industry will be the only air freight industry
I think in the world that is taxed. I do not know if you have
considered that but again as Secretary of State for Transport
I would like you to take that up with the Chancellor or tell me
that it is a good idea if you think it is.
Ruth Kelly: There are clearly
potential benefits to be had by moving to a per plane tax. Part
of the benefits might be by extending the coverage of the tax
to previously uncovered areas such as for example general aviation,
so small planes that individual, wealthy business people fly around
the place. One of the things that the Chancellor will be and is
thinking about in the run up to the consultation—presumably
he should answer this rather than me—is precisely the nature
of what it covers, what the economic impact will be and what the
environmental gain will be.
Q47 Graham Stringer: I am just asking
you to look at it and if not now, because these are technical
questions, give us answer from a transport perspective, because
I think they are regionally damaging and damaging to the air freight
industry which already has a disadvantage because the major hubs
are in Brussels and Paris. To follow up Mrs Ellman's and Mr Clelland's
question, I was slightly open mouthed at your answer to the question
of regional disparities. There is something year zero about those
answers, saying that there would be a feasibility study on the
high level outputs in the rail system. Anybody over the last 25/30
years could have told you, Secretary of State, that there needs
to be a platform 15 and 16 at Manchester Piccadilly. It frees
up a lot of the northern rail system. What we got at the same
time Crossrail was announced was a feasibility study, so there
is 16 billion plus, whatever it is, on Crossrail, 3.5 billion
on Thameslink, almost as much as the tram system costs in Manchester
on setting up the PPP contracts for the tube and a feasibility
study on rail for the north of England and a new tax to pay for
the trams. As my children would say, is that fair?
Ruth Kelly: I do not recognise
that characterisation at all. If you look at the Rail White Paper
and think about what we are buying with the funding over the five
years from 2005 to 2014, what we are buying, yes, is additional
capacity across the rail network; but what we will see with the
money is very significant reductions in overcrowding at stations
like Manchester, Leeds and Sheffield and indeed Cardiff. In fact,
it could easily be argued that people who live in those areas
are the main beneficiaries of the Rail White Paper. It happens
to be the case that it is much cheaper to buy those reductions
in overcrowding in Manchester, Leeds and Sheffield than it is
in London for a variety of reasons. The fact is that what we try
and do is spend the money where there is evidence of a problem,
the problem being congestion, overcrowding, in such a way as to
deliver similar outcomes across the nation. In London it is very
expensive to deliver those outcomes but it is very important for
the regional economy. In other areas we are clearly adding capacity
by buying additional railway carriages. We are investing in platform
lengthening and incidentally making very significant progress
on overcrowding at those major stations. If you look again at
what is happening in Birmingham, you will see huge investment
committed in the Rail White Paper to delivering changes at Birmingham
New Street Station.
Q48 Graham Stringer: I know what
is in the programme. What I am looking at is the absolute figures
which show some interesting things on page 219 of the annual report,
where Eddington has also done some very interesting analysis.
They show, as you would expect in almost any country, higher levels
of public expenditure in transport in the capital cities. What
is unusual about the figures, Secretary of State, which I think
is more easily illustrated by looking at Thameslink and Crossrail
against the Manchester hub scheme, is that that difference has
been increasing. That is unusual if you compare it to any other
European country and it is unusual if you compare it to the other
big expenditures in education and health, where there is a bit
more spent in London than the rest of the country but the gap
remains the same. Why is the gap changing so dramatically against
the English regions?
Ruth Kelly: I think first of all
we should get this in proportion. Of an annual budget from the
Department for Transport of the order of £16 billion, I think
2.5 billion goes to London. That is a significant amount of money
but it should be seen in that context. What we have done and what
we do as a department is, as I said earlier, follow the numbers.
Eddington's analysis was that we should invest in those parts
of the country where lack of transport infrastructure is holding
back economic growth and it is not clear that that is the same
in each part of the country. Secondly, where there is real evidence
of a problem. For instance, overcrowding and congestion. Thirdly,
we have to spend the amount of money to achieve a particular outcome
and it is much more expensive to do so in London. I would argue
that the regions have done pretty well out of the Rail White Paper.
Clearly, the Manchester feasibility study about a potential Manchester
hub was to enable the evidence base to be built so that could
be considered as a future priority. That was something that the
Northern Way itself welcomed because the evidence has not yet
been produced which will enable the government to make a decision
on that basis, but I thought it was a very important piece of
work to do.
Q49 Graham Stringer: I find that
breathtaking, if you say the regions are doing well. I can give
you the detailed figures if you want about the change in expenditure
per capita and there are economic problems. It really is saying
black is white. The regions are not doing well, Secretary of State.
If the gap is increasing on a per capita basis with London and
it is not increasing in other countries and you say the regions
are doing well, it is an extraordinary statement and repeating
it will not help. The basis of your statement that there will
now be a feasibility study—the evidence of what is wrong
with the northern rail system; what is wrong with inner urban
transport has been presented to your department over 20 and 30
years.
Ruth Kelly: I am very sorry that
you do not welcome the feasibility study into the Manchester hub
because personally I thought it was a great thing to do and could
help inform future priorities in the rail network. One of the
reasons why the disparity has been increasing, as you rightly
say, is because of land prices. Land prices have, as you know,
been soaring in many parts of the country but particularly in
the London area. What we have done is try to identify those areas
where it is transport that is holding back economic growth. It
is not always the case that transport is the bit of the economy
that the government needs to invest in to unlock that economic
growth. One of the reasons why I like the work that the Northern
Way has done is because it focuses precisely on that. Where can
transport investment most make a difference to outcomes? That
work has informed the priorities that led to the investment committed
in the Rail White Paper but will also inform our investment decisions
going forward.
Mr Devereux: I know we are characterising
this a little bit but in answer to the earlier question, what
would be different, the proximity of the spending on the transport
innovation fund and Manchester, to my knowledge, has put a bid
into the department for several billion pounds' worth of spending
designed on their part to accommodate growth in their city.
Q50 Chairman: I do not think the
problem is with the regions putting in a bid. They have been putting
in bids with increasing desperation for some considerable time.
Nor is it the fact that we have in the past ten years had more
money than in the previous 20 because we did not get anything
in the previous 20 so it was not too much of a problem. If you
look at 2.18 and you look at the identifiable expenditure on services
by country and region per head, you see that what Mr Stringer
is saying is correct. This Committee better than any other, because
we have already done studies on the London underground and Crossrail
and a number of things, has a pretty good idea of what it is that
the south east needs and the south east will get. That does not
answer the point that Mr Stringer and Mr Clelland raise.
Ruth Kelly: You make a very good
point. There was not any before. In the last six years, local
transport funding to every region has doubled. We are committing
very significant sums of money.
Chairman: We are not arguing with you,
Secretary of State. Indeed, we are highly delighted and we are
very happy to tell everybody in the world that we have been getting
more money than we got when we did not get any money. That is
not actually, I think, the point at issue.
Q51 Graham Stringer: You say you
will have these feasibility studies. If you look at the reports
this Committee has produced on trams, you will find that they
are at odds with the statement you made previously. We found—I
think the National Audit Office did as well—that the department
itself was part of the problem in putting the costs of trams up.
If you want to read the report, it is there. It is partly because
they did not have the expertise and partly because of the way
they asked for the procurement of the trams. People in Liverpool,
Leeds, Manchester and Southampton wanted those trams. The department
hindered them and then stopped the investment when those cities
believed it would help their economic growth. Why are you so sure
that you were in a better place than the people who run Leeds
to know what Leeds wants?
Ruth Kelly: I am not sure because
I was not there at the time, just to make a very straightforward
point. I do not know the whole history.
Q52 Graham Stringer: I mean you collectively
as a department.
Ruth Kelly: As a department, I
think and accept that we have not been very good at engaging early
and properly enough with particular areas about what they do locally,
getting the assurances we need and making sure the work has been
done to the quality we need early enough, thinking about the nature
of the problem and the best way of solving that problem at an
early enough stage. As I said in my opening remarks, we will shortly
be publishing a transport framework document which will set out
a new way of looking at these issues which will take some years
to implement because it is a very big change in the way that we
do things, but one thing that I am very sure of is that there
has to be much more robust appraisal at the beginning of any major
project, which thinks not just about one particular solution but
across the range of potential solutions to the problem identified,
and then either locally or nationally we should back the one that
best delivers for the people in that area.
Mr Devereux: You characterised
the tram problem as being essentially one to do with the department.
In every single case, the expected cost of these investments was
much, much larger than the number ministers had previously approved.
Q53 Graham Stringer: That was precisely
the point, was it not? The report showed that the way the department
had asked for the procurement and the delays they put into it
had pushed the costs up.
Mr Devereux: I am not sure that
is precisely what the report says so we may have to differ on
that.
Q54 Mr Wilshire: I have a series
of factual questions. One or two may be better answered in writing.
We will see. I would be content with that. If I can start with
the appendices, page 216, you list staff numbers. A great deal
has been made of the fact—and I applaud it rather than criticise
it—that numbers of staff are to be reduced and have been
reduced. If you look at the Department for Transport at the top
of page 216, you will find that between 2000/1 and 2006/7 the
number at the centre has gone down from 5,001 to 1,853. We would
applaud that. It is very tempting to say that that shows compliance
with determination to drive down numbers. If however you look
at the total between 2000 and 2001, you will find that the total
was 17,479 and 2006/7 it was up to 18,400. How do you account
for that change? You have reduced it in the centre. Have you pushed
it out somewhere else and disguised it or is this a real reduction?
Mr Devereux: Can I start with
the Department for Transport sector? If you can read the extraordinarily
small print, footnote one, it says that the figures for 2000/1
and 2001/2 are figures for the DETR and it proved impossible to
the statisticians to disentangle from that large department the
transport element of it. They are simply the figures that go with
that department. There is a break in the series between the 4,430
in 2001/2 and the 2,000 in 2002/3 which is what the footnote says.
Q55 Mr Wilshire: Could I then take
you to page 209, table A2, where my attention was drawn to an
interesting column: "Logistics and Maritime". I would
be interested to know what logistics and maritime is and, secondly,
when I look at 2004/5 I notice that you spent 15 million on it.
If you look at the last figure for 2006/7, you see it has jumped
to 46 million. That is trebling. What is that item and why has
it trebled?
Mr Devereux: From memory, it is
the increase that we put into the sustainable distribution resources.
In other words, money to support transferring stuff from lorries
onto rail, for example, and support for other sustainable ways
of getting distribution around. We consciously put more of our
money into that basket and I think that is where it shows up.
I will check it for you.
Q56 Chairman: That covers the Maritime
Agency presumably?
Mr Devereux: I think the Maritime
Agency is on page 210.
Q57 Chairman: The sums of money there
are very considerable. There is a very big peak which then comes
down to 34. We would like a detailed explanation from you. We
will not take it right this minute but we would be very interested
to know what that means, whether it covers the Maritime Agency
and I would also like to ask you at some point about Irish Lights,
but we will come to that in a minute.
Mr Devereux: It does not cover
the Maritime Agency.
Q58 Chairman: We need from you a
very clear indication of what that is.
Mr Devereux: It is on the following
page. The Maritime Coastguard Agency is five lines down on page
210.
Q59 Chairman: I understand that but
I want to know how much of this logistics and maritime is involved
in the work of the Maritime Agency.
Mr Devereux: I will check. Zero
I think is the answer.
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