Transport and the economy - Transport Committee Contents


Examination of Witnesses (Questions 208-243)

Q208 <Chair: Welcome to this session of the Transport Select Committee. We've come to Birmingham today to hear directly from you about what's happening here and how you see priorities. Could I ask first for you please to identify yourselves for our record? If you would give your name and the organisation you're representing.

John Morris: My name's John Morris, I'm from Birmingham International Airport Ltd.

Lindsay Durham: Lindsay Durham from Freightliner.

Martin Dyer: Martin Dyer. I work for WSP, but I'm here representing the Birmingham Chamber of Commerce.

Richard Winfield: Richard Winfield and I represent Birmingham Forward.

Q209 <Chair: What's the most important transport investment needed to support the economy in this area?

John Morris: Well, I would say this wouldn't I? Birmingham Airport.

Q210 <Chair: Why is it so important?

John Morris: Because of the job and economic generation that I believe it will bring and because it is not just a regional asset; it's a strategic national asset. If we understand what's happening in the South-East with aviation constraints, Birmingham gives you a solution to aviation capacity now. We have an airport infrastructure in place today that can take 18 million passengers a year. At the moment we're only taking 9 million. If we could divert some of that demand from the South-East to Birmingham, for every million passengers that we got through Birmingham Airport, we would create up to 1,000 jobs in the region, and that's just for starters.

Richard Winfield: I would support what John says. We had three priorities: the airport runway extension, New Street Station and London Rail. At least they are knocking New Street Station down if they are not building it, so that we assume it is going ahead. The potential for the runway extension seems to be getting gradually closer. We have had several questions, I am pleased to hear, about what would happen without High Speed 2. Our third priority is really serious, because the others are to do with economic generation; London Rail is almost the opposite. If we don't have High Speed 2, we will have to have Low Speed 3 because the London to Birmingham rail system is desperately crowded and is soon to run out of capacity. I've been lobbying, even before High Speed 2 was on the horizon, that we do need another railway, in fact. So, effectively, our highest priority is to protect London-to-Birmingham rail services, and I think you can only do that by building a third railway.

Lindsay Durham: In terms of moving more freight on the railway, it's really about connectivity with our ports as more and more goods are being imported and exported. It's not so much about local investment; it's about investment from those core routes from the ports, particularly out of Felixstowe. The upgrade of the Felixstowe to Nuneaton route has started and is made up of three phases. The first two phases are funded, but the final phase, which is to increase capacity, is yet to be funded. Also, there are schemes to enable a diversionary route from the major port in Southampton so trains can run reliably, seven days a week, and schemes to increase train lengths so we can make the best use of our rail network.

Q211 <Chair: Mr Dyer, what's the most important transport improvement?

Martin Dyer: The Chamber, like a lot of good business people, has adopted a balanced portfolio. We've been strong advocates and supporters of the airport extension and have lobbied hard on that, as we have with Gateway. They have been very important for us. However, we could essentially say that they are now ticks in the box because the progress is such that we are nearly there. We've also been keen to increase the capacity on the Midlands motorway system, as a part of the national network but also as a fundamental part of the local network. Many of our members are totally reliant upon good road networks for their operations. In addition, we've supported a balanced approach to cars and freight in conjunction with the rail system. Then at a very local level, we worked hard with Centro on quick wins to deliver small, localised, good value schemes to deliver local improvements. So we don't have one big prize that we've been after; we've been after this balanced portfolio.

Q212 <Chair: So you look at a number of different things?

Martin Dyer: Absolutely. Now, in terms of progress, a lot of those are done and at our next meeting next week we are going to revisit where we need to be going.

Q213 <Kwasi Kwarteng: I'm very interested in what you said about HS2. I'm going to ask you a question that was asked earlier. If HS2 didn't happen, what would your main source of growth be? HS2 has only been on the table for the last three years, what were you thinking three years ago? What did you think the problems were?

Richard Winfield: If you go back five years, I was going to meetings and saying, "We need the equivalent of a motorway system." When I was young we had roads and I used to go to London following lorries with 20 mile an hour signs and big trees hanging over. We were poor in the 1950s and 1960s and we are wealthy now, and we built a complete network of motorways in 30 years. What I was saying then, and what I think applies now, is that we need to do the same thing for railways. We've been rescued by Adrian Shooter and Chiltern Trains, and they're about to rescue us again next year by adding some more capacity. However, I've been to Network Rail presentations—because they consult with us—at least two years running, where they've shown us graphs of their forecasts: low, medium, high and outturn. They were unable to see that they were incapable of forecasting the rate of growth and that's without the legal requirements we will have in the future to reduce carbon.

We have two problems with the railways, I think. One is that we have an inability to plan properly 30 years ahead and that's in the context of the Treasury; but the second is that we have an institutional problem in the railway industry in that they don't actually believe in railways. We need to change that. Hopefully it's changing, and I think High Speed 2 might have helped to change that. But the evidence of the number of people on the trains has been beyond the ability of the railway industry to forecast. It's desperate. They were talking about running out of capacity in 2020; it's looking more like 2014.

Q214 <Kwasi Kwarteng: Eddington is mode neutral; what's your view about that? It seems like you're going very hard for rail.

Richard Winfield: I represent the business people and the professional people and clearly, we move people; we don't move freight. We have a very strong relationship with London and also places like Brussels and so on. To a certain extent we can claim to be a back office of London, so for us, that relationship with London is really important in terms of moving professionals back and forth.

Q215 <Kwasi Kwarteng: But in terms of mode neutrality, are you backing rail?

Richard Winfield: Rail. It is rail plus Wi-Fi; that seems to be the big issue. That is significant because you can't deal with computer work while you are driving a car. So rail is the chosen mode.

Q216 <Paul Maynard: Our previous witnesses clearly had great confidence in the Local Enterprise Partnerships to act as the forge for transport investment and structural change. Do you share their confidence in the Local Enterprise Partnerships to adequately fulfil that role?

Lindsay Durham: I think, as a transport company that moves goods nationally around the company, we have quite a lot of concerns about localism. In terms of developing new rail terminals, which are essential to allow growth in rail freight, there has already been a major terminal at Radlett that has been turned down, subject to appeal. This was because of a lot of local opposition. I think that when the decisions are made locally, it's very difficult for local politicians and Councils to make decisions when there is a lot of local opposition, even though there may be a lot of regional and national benefit. I think we're very concerned that national benefits and regional benefits won't be properly taken into account in terms of things like building new rail freight terminals and also in terms of investment. We have had a lot of support from Advantage West Midlands and SEEDA in getting the gauge clearance work from Southampton to the West Midlands, which is now under way and due to be finished in the Spring. We're concerned that there won't be the understanding of freight. People tend to understand passenger transport because everyone uses it, but most people don't understand freight transport. Therefore, because there's a lot of understanding, it will mean that there aren't the investment recommendations coming forward.

Richard Winfield: If I may apologise, we're sitting on the fence. The feedback we have is that the business community is not convinced either that the LEPs will really do anything, or that this LEP will really do anything. What I would like to say though, is that through the Business Improvement Districts, we've proved how business can invest. You heard earlier about the bus rapid transit, which is entirely a Business Improvement District and business-led initiative, which is now integrated with the local authorities and so on. So, business can deliver, but we're not yet sufficiently convinced that the LEPs will work.

Q217 <Paul Maynard: Perhaps specifically, therefore, to Mr Winfield and/or Mr Dyer, what involvement have you had, if any, in economic development planning which has been specifically linked to the arrival of High Speed 2?

Martin Dyer: In my former role, I worked very closely with the airport to make the case for High Speed 2, in particular the case at the airport and NEC. We relied heavily on a piece of work that was commissioned with AWM on the M42 growth corridor. Now, the M42 is just a geographical location rather than a transport entitlement, but that was a very heavily predicated piece of economic planning which we used to support the case that was made by the airport and by the NEC at the time.

Q218 <Paul Maynard: That was to argue the case, but since you have known it's coming, has there been anything?

Martin Dyer: No.

Q219 <Iain Stewart: A question to Mr Morris, if I may, regarding your comments about the expansion of the airport and adding to the airport capacity in the South-East. To what extent would you be working in partnership with airports in the South-East to accommodate future growth in air travel? Or is it a more competitive bid to take away traffic that currently goes to Heathrow or the other South-East airports?

John Morris: We work in a competitive environment so we're obviously willing to work in partnership with anyone, but you can understand that there are certain commercial issues between airports. I think it is a fact of life that airports in the South-East are going to fill up, and where are you going to put that traffic? With HS2 coming along, that puts you within 31 minutes of London to Birmingham Airport and puts you in the equivalent of zone four of the Underground map. While I will sit here and make the case for Birmingham, there are other regional airports that can help satisfy that demand. Certainly, we've been talking to other regional airports because, as you might imagine, there's a bit of a lobby in the South-East. We've been talking to other regional airports to discuss whether or not they're of like mind. Obviously, they'll speak for themselves, but I'm not speaking alone in this matter.

Q220 <Iain Stewart: I'm presuming that HS2 is critical to the plan. Are you concerned that it may not connect directly with Heathrow?

John Morris: I think that it's not right to say that HS2 is critical to the plan. As I outlined, we have spare capacity now. Now, if we say it's going to be 10 or 15 years until High Speed 2 comes along, I think Mr Winfield's already pointed out some of the issues there are on the London to Birmingham railway and there are some strong issues over capacity. There are also some strong issues over journey time. If the journey time between London and Birmingham Airport can be reduced to a slightly more acceptable level, say, just under an hour—59 minutes—rather than an hour and 10 minutes, we believe that starts to break psychological barriers in terms of putting Birmingham into people's mindset, for want of a better description. The challenge we believe within the next franchise period, which starts in 2012, is to improve the journey times. While the current franchise can tick the box for improving journey times, journey times are only five to eight minutes faster between London and Birmingham than they were in 1968. There have been some tremendous journey time improvements between London and the North-West, but Birmingham has really sat by the wayside for a number of reasons that you may have heard about earlier. We have an anomalous situation now where you can get from London to Warrington 10 minutes faster than you can get from London to Wolverhampton.

So we believe that there is a lot that can be done between now and High Speed 2, but looking further out, we are making preparations for High Speed 2. During the last Parliament, Lord Adonis came to see us, and we did actually say that we were quite interested in siting a future third terminal over the High Speed Rail Station. This is because we believe that public transport should be integrated and we do believe that aviation is public transport, even though it receives no subsidy from the taxpayer. So, we don't want to paint this picture where everything in predicated on HS2, but actually HS2 will bring about a sea change in the way things are done. The fact that the first part of HS2 comes from London to Birmingham is excellent, but as you start to build up a network that possibly links other airports, you start to get the true network affect that we saw with the creation of the motorways.

Q221 <Kelvin Hopkins: First of all, I very much welcome what Richard Winfield said about looking at railways the way that we looked at motorways in the last 30 or 40 years, and investing seriously in railways. He talked about having a new railway line, but is it not as important to have new, dedicated freight railway lines as well as passenger railway lines?

Richard Winfield: It's all part of the same thing, isn't it? There's a lot of argument about High Speed 2, but the great thing that people tend to forget is that the London to Birmingham line will still be there. It currently has lots of constraints in terms of passengers and in terms of places where it can stop. I assume that exactly the same applies to freight: if we can take some people off the traditional railway line, we can release space, and it's the same with roads. If you can take people out of cars then it releases space for lorries.

Kelvin Hopkins:> Lindsay and I have known each other many years and we've had these conversations many times in private before. Would it not make life much easier for the freight industry if there were dedicated freight lines which were of a gauge to take full-sized containers wherever you want to go, and also, not for your company in particular, but for others, to take lorry trailers on trains with roll on/roll off systems between the conurbations in Britain, notably Birmingham and the West Midlands, but also through the Channel Tunnel to Europe?

Q222 <Chair: I will just add on to the end of Mr Hopkins' question there, which is about new freight lines. How do you see the current situation in terms of supporting more rail on freight if we didn't get those new lines?

Lindsay Durham: Starting with Kelvin's questions, we certainly support a rail network that has gauge clearance that allows us to move transport. I know in Europe there have been trials of moving lorries by rail, but the key issue for rail is that you must be able to compete on price with road. I think we are concerned that if you were able to take lorries on trains in the UK, you've got the whole lorry sitting there and not actually earning any money. I'm not sure that that would be economically viable. However, we know that there is a lot of opportunity for unaccompanied boxes and freight. The key really is capacity. I think it's not actually about a freight-only network; it's about a network with the right capability that allows us to take the standard containers by rail, enables us to run long trains and enables us to get good journey times that compete with road. Overall, it really is about the overall economics to compete with road.

Q223 <Chair: You've expressed a concern about the Modal Shift Revenue Support grant?

Lindsay Durham: Yes we have. A budget was set by the previous Government for three years starting from next April, and we know that next year's funding is confirmed. We're still waiting for confirmation for the following two years. I think it's particularly important in the West Midlands area where there's £12 million worth of funding that funds about 400,000 containers that currently move by rail into the West Midlands that would otherwise move by road. So, it's critical, particularly for this region. Ironically, it's where you have the shorter journeys from the ports and the Channel Tunnel to Birmingham that you most need the grant. However, the environmental benefits that calculate the grant are lower because the road journeys are shorter than the North-West or Scotland, for example. It is critical. In the long term we would like to be free of any such revenue support. Overall, we see it as being about the long-term economics of road and rail. Things like Lorry Road Charging, for example, could make the difference between the economics of rail versus road that would enable us in the future to be grant free.

Q224 <Kelvin Hopkins: As Richard Winfield has said, the pressure on our existing railway networks is going to be higher and higher and is going to be filled up with fast passenger trains which don't mix very well with slower freight trains. Indeed, the existing rail networks have tunnels that cannot be gauge-modified as it would just be prohibitively expensive. A cheap, economical, dedicated rail freight network, capable of taking lorry trailers, not lorries, on trains long distances as operates in American and Canada is desirable so that Birmingham could export its products to Dortmund overnight by a lorry trailer on a train, or indeed by a full-sized trailer or a Double Stack Container, which can get through the Channel Tunnel. Isn't that bold approach much more sensible?

Q225 <Chair: Ms Durham, would you like a bold approach?

Lindsay Durham: Yes, build our own network. Ideally it is, but I think we're concerned about the affordability of it. Is it realistic to expect such a network? I think we think there is a lot that can be done to the existing network to upgrade it. If there are lines with four tracks then freight and the stopping passenger services actually mix very well in terms of capacity. I think if there was a dedicated rail line, we are just concerned about the affordability; not just of building it, but also of running it. Who pays for it long term?

Q226 <Chair: So you're for improvements without building a completely new line?

Lindsay Durham: Yes.

Q227 <Kwasi Kwarteng: We are the Transport Select Committee and obviously in issues of transport we get into the habit of drawing up a wish-list in terms of things we want and the amount of money we want. However, in terms of getting a feel for how the locality works, I'd like to ask, what are you happy with now? What do you think are the great successes in terms of transport in Birmingham and the surrounding area? What are you happy with? What works for you?

Q228 <Chair: What's good about what there is?

Richard Winfield: What is good is what the Victorians did.

Q229 <Chair: Nothing since then?

Richard Winfield: We have got to undo some of what's been done since then. It was mentioned by the previous speakers, but we are fortunate that we have actually got a very good local railway system. We would definitely support what they were saying earlier in terms of the campaign calls to bring some of the other lines back. So what is good is that we have a good passenger railway system, and as they were mentioning earlier, that is heavily used. Again, as was mentioned earlier, in fact it is public transport use that is driving the modal shift, rather than the restriction on car usage, but that is something that we inherited. The other thing that is good is the proposal for our bus rapid transit system, which is a short-term or medium-term proposal that came from the business community.

John Morris: I think that there is willingness for people to work together. I think perhaps planning is more joined up than it was even five or 10 years ago. We have these redundant railways that can be brought back into use; at least they haven't been built over. There is now a willingness to look at all modes of transport and not just look at them in isolation, in order to see what the best solution is.

Richard Winfield: The three males among us all work together on the same Committee, which comes out of the business community.

Q230 <Chair: Well, in that case I'm going to ask Ms Durham what she wants to say.

Richard Winfield: It proves that we are prepared to cooperate.

Q231 <Chair: Well, it might prove a number of things but we won't go into that just now.

Lindsay Durham: I think the upgrade of the West Coast Mainline has resulted in a very good, reliable line.

Q232 <Kwasi Kwarteng: It is excellent.

Lindsay Durham: There is a lot of capacity that has been built for both freight and for passengers. I think there are three passenger trains an hour from London, which is excellent service. I think although there was a lot of pain during the building—and it is very hard to upgrade a line while you're still trying to run people and freight on it—I think now the result is very good. We do need to start looking forward though, because it's estimated that by about 2020 the capacity will all be used up. I think we are concerned about the gap between 2020 and HS2.

Q233 <Kwasi Kwarteng: You like this West Coast Line, then?

Lindsay Durham: Yes. It's the core route for freight. It connects our major ports and the Channel Tunnel to the conurbations. The West Midlands is the key area for distribution in the country.

Martin Dyer: I'd like to add that. The West Coast Mainline upgrade has been a significant improvement with the additional capacity. We should also be quite proud of the work the Chilterns have done in the West Midlands, and particularly with the amount of investment that they put in. The long franchise has been very, very beneficial, and with the work they are doing now, I think that is quite exceptional. To specifically answer the question, I think we have a few gems. We have a lot of okay transport infrastructure and a lot of it that's creaking on the edge. I think the worry and the concern is the lack of a plan going forward and the lack of a long-term plan and the funding that goes with it in some areas. To pick up on that with one very brief example, we had a question earlier about, "What do you do if HS2 doesn't happen?" We have a problem if HS2 does happen. We have a problem with rail capacity from 2020 until the time that the first High Speed 2 train runs. So, in the Chamber we are worried about that gap.

Q234 <Chair: So you're looking at rail capacity as the key problem?

Martin Dyer: It's one area.

Q235 <Chair: How important is tourism to the regional economy?

Richard Winfield: It's very important, but not to us. You're speaking to the wrong person, in my case.

Q236 <Chair: Well, what about Mr Morris. Is tourism important?

John Morris: Yes, it's part of the mix we have through the airport. I think perhaps when we talk to colleagues from tourism one of the things that galls us more than anything is that you have your stereotypical American that flies into London, stays in London, but actually goes to visit Chester, York and Stratford. They are all coming in through Heathrow. Our argument is actually that we want to try to rebalance the regional economy. We want to fly them in to Birmingham, base them in Birmingham and then it's hopefully an hour to London and an hour or so to York and Chester. This is again one of the ways that the economy can be rebalanced by taking those blinkers off.

Q237 <Chair: It's interesting to hear you say that. Most of our witnesses talk about London connections exclusively, but there is another part of the world as well.

Richard Winfield: Can I reframe the question to say "conferences"? Because in that case, conferences are the equivalent of tourism and they are very important for the business they bring, which is huge, and also for the public relations and the profile that they build for us.

Q238 <Chair: So, the conference trade is important, Mr Dyer?

Richard Winfield: That's for our main city centre business.

Martin Dyer: Yes, as a former employee of the NEC group, I would say that. I guess most of you have either been to the city centre in your conference sojourns, or will be coming. It is a major part of our economy that we ignore at our peril. Manufacturing is key; but tourism and business tourism is fundamental to that. I also talk as a resident of Stratford­upon­Avon, so I would say that, wouldn't I?

Q239 <Paul Maynard: To Mr Morris, the most frequent criticism I read of your airport is what they call the "tourism deficit", whereby you have so many more passengers leaving the West Midlands and taking their money out than you have arriving in the West Midlands bringing their foreign currency in. How do you defend that criticism?

John Morris: I think that you have to look at these things in the round, and Aviation produced something called the Oxera Report[3], which you may or may not have studied, which goes into some of the economic benefits of aviation. I can certainly reference that to you later. I think that the point that I'd make is that aviation is but one part of the economy; we'd love to have more visitors here. One of the things that we're trying to do with our runway extension is have those global links that will attract more people, more business and more business tourism in through Birmingham Airport, because we want to be another global gateway. That will benefit things such as tourism and business tourism in the Midlands; room nights, bed nights and that kind of thing. Again, it's another reason why the service to London, even before High Speed 2, needs to be so much better. Yes, it's a good service, but frankly, it's not good enough. The journey time between Birmingham and London as I say, is only between five and eight minutes faster than it was in the 1960s. What has been done on other parts of the West Coast Mainline is absolutely phenomenally good. Birmingham must try harder. What we want to do is give people the option of coming in through Birmingham, go to London by rail in one seamless journey and vice versa. There will be some rub-off there, because it means that people will spend one or two nights in Birmingham, and this will start to benefit the tourism economy.

Q240 <Gavin Shuker: Obviously, we've touched on the localism agenda so far. It seems to me that many of you are talking about national benefits as well as local benefits, but it occurs to me that there may be some local opposition to some of the things that you're talking about. Could you perhaps talk about how the localism agenda conflicts with your own agenda in some ways?

John Morris: Clearly not everyone wants an airport in their back garden. We went through a process of planning and planning application to extend that runway and we have that permission. We are the only airport with significant permission to expand. We do hold our CSR and our community values very closely. You might say, "He would say that wouldn't he?" But the way in which I can demonstrate that is that we actually got the planning consent for that development without a public inquiry, which I think is quite a credit to those that made the planning decision; that on balance we were going to be for the good and not the bad. We never underestimate the relationships that we have with our local people. We recognise that there are some very positive things in terms of the importance to the economy, but we have to mitigate the negative affects. Certainly when you talk about HS2, we are very strong supporters of HS2, but we are clear on the fact that we expect the mitigation for HS2 to be as good and as thorough as the mitigation we went through with our airport process.

Q241 <Chair: Any other examples of potential clashes between local interests and regional or national need?

Richard Winfield: Not specifically, but part of our responsibility is to lobby, and on the back of that is our responsibility to educate. Very often, you find that opposition is actually based on prejudice and ignorance. So, part of our active role is to constantly have speeches from various people who are involved in things like HS2, the railway station, the airport and so on, so that the business community that we represent actually understands what the issues are. I think when people understand the issues, very often a lot of objection disappears.

Q242 <Chair: Are there any strong views about the current appraisal process for deciding major schemes and whether the criteria are right or wrong?

Lindsay Durham: I think we have some concerns. I understand from Norman Baker there is likely to be a review out for consultation fairly soon. I think we are concerned that the value of carbon is rather outdated and not based on future predictions of fuel prices or the future likely traded value of carbon, so that's one thing. One key area that particularly impacts on rail schemes is that currently, if you create modal shift by your investment, the lost fuel duty income is actually knocked off the benefits of the investment scheme. That actually rather encourages carbon positive schemes which use more fuel than carbon negative schemes. If we're serious about reducing carbon, I do think that's very important.

  I think the other key thing is how you actually value congestion, which has a big knock-on effect on the economy and is a very vital part of creating value.

Martin Dyer: The community I represent are very concerned about the extended planning cycles that one goes through when one's running through the appraisal process. It puts unacceptable costs into schemes. We've seen it significantly in this area with the widening of the M6 up to Manchester, the numerous appraisals that it went through, the massive costs associated with that and at the end of the day, it's not going ahead within the foreseeable future. So, it is the unacceptable costs that come from those planning cycles, and I actually just precluded altogether the uncertainty and the delays that go along with this. Those are the concerns we have that affect our national competitiveness.

Richard Winfield: One addition. Throughout the 40 years I've been involved in transport, there's been this problem about land value capture and how to deal with it. The City Council was pushing for ADZs and now we have the concept of the TIFs. That does seem to be a way that we can actually get the private sector to contribute to public sector investments, and we would be very much in favour of bringing those in actively.

Q243 <Chair: Thank you very much for coming in and answering so many questions. Thank you very much.




3   What is the contribution of aviation to the UK economy? Final report prepared for the Airport Operators Association/November 2009. Back


 
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