Examination of Witnesses (Questions 266-308)
Q266 <Chair:
Good morning, gentlemen, and welcome to this meeting of the
Transport Select Committee. I would like to declare that I am
a member of Unite and I would ask any other members if there is
anything they wish to declare in relation to this meeting.
Julie Hilling:>
Chair, I am also a member of Unite.
Q267 <Chair:
Thank you very much. I ask our witnesses, please, could you
give your name and the organisation you represent? That is for
our records. I will start at the end here.
Matthew Farrow: Matthew Farrow from the CBI.
Matthew Jaffa: Matthew Jaffa from the Federation of Small Businesses.
David Bishop: David Bishop from VisitBritain.
Graham Stevenson: Graham Stevenson from Unite the Union.
Q268 <Chair:
Thank you. Would you like to tell us what you think the Government's
spending priorities in transport should be to give the maximum
economic benefit? Who would like to start the ball rolling then?
Graham Stevenson: Obviously we do not sympathise with the idea of cutting anyway but, if there must be an element of cuts, we would at least plead for a consideration of the needs of both infrastructure and operations in public transport. One of the problems about Governments is that they have very shortterm memories and our constant criticism for decades now has been that transport is so integral to the economy. What is integral to transport is infrastructure; it needs good effective infrastructure in all its modes. There is really only the state—yes, certainly, working in partnership with the private sector, but the state has an enormous ability to be able to influence this, as we have constantly pointed out in reference to other countries of a similar character and size to Britain.
Q269 <Chair:
So it is infrastructure that you want to see investment in?
Graham Stevenson: I was about to say that the second side of the coin is also investment in keeping the infrastructure moving. The most important thing, from our perspective, is passenger transport. That means, certainly as far as rail is concerned, not pressing the passenger to fund the costs of what is, after all, a very environmentally friendly form of transport and, in buses, ensuring that there is a wide range of availability. But reliability and availability are uppermost. I am afraid that the present privately dominated regime with a Government subsidy in buses has shown it just doesn't work; it's just not functioning. At a time when we hope to get the economy moving, how crazy is it that subsidies are going to companies whilst unemployed workers find it difficult to chase jobs across the big cities of this country? It is just not right, and rural communities are losing their services all the time. It is getting the right balance that, I think, is our appeal.
Q270 <Chair:
Can I have any other contributions, please? What do you
see as the most important areas for transport at the moment? Mr
Farrow?
Matthew Farrow: I think transport as a whole is a core priority for the economy. Certainly, in our surveys of our members, things like infrastructure and access to markets are key factors for making the UK a good place to invest and do business in. Within transport, the messages of the Eddington review are still highly relevant: that is the focus on strategic corridors and addressing bottlenecks in those corridors; urban congestion, areas like London and so on particularly; and, I think, projects with a good benefit cost ratio. Those I would see as some of the core priorities.
Q271 <Chair:
Do you think that the current way of appraising benefits is
correct?
Matthew Farrow: I would not want to knock the current system unduly. I think it is a pretty sophisticated model of its type. There is an ongoing debate, as I am sure members are aware, about whether there can be an approach to bring in some of the wider impacts of transport. We are quite interested in the work which KPMG has done in Manchester where they feel they have a good model which looks at the impacts of transport investment on land use, change in economy—economic change, as opposed to simply time savings—and benefits to passengers. We think it is worth exploring that model and perhaps seeing if it can be used alongside traditional models. But what I would not want, I think, is a complete hiatus in decision making, with people saying, "The current appraisal system has no value. We should wait until we have got a new system in place."
David Bishop: While it is obviously hugely important to make sure that we invest properly in our domestic transport infrastructure, we absolutely should not overlook our international gateways and our international connectivity. The tourism industry is worth £115 billion to the UK economy and provides 2.3 million jobs, so it is about 10% of the economy on either account. We are at the centre of a hugely important international network. We currently have 1,435 international connections to and from the UK. That is a hugely important asset, as it were, to the country. It enables us to look and predict something like 3.5% growth of tourism in the next years to 2020. We are in a hugely fortunate position where a lot of that infrastructure is actually privately provided. What that means for Government investment is that very small investments are potentially needed in things like immigration controls at UK airports in order to make sure we remove some of those bottlenecks, make it easier for people to travel to and through those kind of gateways and help us realise some of those benefits.
Q272 <Chair:
In your written evidence you stress very heavily the importance
of aviation and access by air and, particularly, a hub airport.
Is that what you think is most important in terms of tourism,
or are there other types of infrastructure investment you would
like to see?
David Bishop: Absolutely, other types of infrastructure investment are important. The reason we stress aviation is quite simple: 74% of international visitors to the UK arrive by air, a further 14% by sea and 11% by Channel Tunnel. So airports and aviation are clearly very important. A hub airport in the UK is a huge asset in terms of our ability to market ourselves as a successful tourism destination internationally.
Q273 <Chair:
What about regional airports?
David Bishop: Regional airports are absolutely an important part of that as well, particularly, as we see it, as the Heathrow hub is becoming more and more focused on international longhaul destinations. The ability of regional airports to provide shorthaul pointtopoint connections, particularly with key markets for inbound tourism such as Western Europe—France and Germany being two of the major sources of tourism to the UK—is hugely important in doing that. To summarise, though, domestic transport is again a hugely important area for investment simply because we need to encourage people to get beyond the south-east, get beyond London and actually see more of what this country has to offer.
Q274 <Chair:
Mr Jaffa, where do you think the priorities should be at the
moment?
Matthew Jaffa: From the small business community perspective—about 99% of all businesses across the UK are defined as small, with less than 50 employees—the overwhelming call is for the road network to be invested in. Basically, the majority of actual travel journeys are taken by road, within 20 miles of the base of the workforce or up to 50 miles. Small businesses are keen to see investment in the road network. It is not to say they want that at the expense of things like rail and high speed rail, but an actual argument between rail and road needs to be fairly balanced. I would agree with Matthew's point regarding the Eddington review and there is a need to consider pinch points, particularly in urban areas. But the road network is vital to the rural communities as well, which is why the investment, we feel, needs to be prioritised mainly on the roads but also of course to rail users at the same time.
Q275 <Chair:
Do you think the decision making on major schemes is correct?
Matthew Jaffa: From our members' perspective it is slightly complex. We thought that there is probably gearing a bit too much to the issue of high speed rail. We are in the midst of doing mapping of our members, and from our 33 regions not one particular region stressed that high speed rail was a critical concern to them. Rail was in parts of the country, but the road network is predominantly the area. A balancing act needs to be done, particularly when we are looking at how, for instance, LEPs are going to be used across the country and how much power they are going to get at the same time.
Q276 <Chair:
Does anyone else have a view on decision making on major projects
and if you think it is done correctly or not? Mr Farrow?
Matthew Farrow: We have to recognise transport and big transport projects are always going to be political decisions to some extent. There is a history in the UK of big decisions on transport being taken, or being delayed, for political reasons. I guess what business would like to see is as much openness and transparency as possible in terms of the analysis, the cost benefit figures and so forth, and then an explicit recognition that if a political judgment is being made that adds in extra factors. I don't think it's possible to get away from the political dimensions of some big transport projects.
Q277 <Chair:
How important are exports and tourism to revitalising the
economy? What is the CBI view?
Matthew Farrow: Again, if I might kick off, I think both are extremely important. There is a lot of talk at the moment about the need to focus on an exportled recovery, given that consumer spending is going to come back slowly and public spending, of course, is being cut. Our feeling, based on our surveys and analysis, is that exports are an important part of the recovery. A lot of UK manufacturers are in a pretty strong position in terms of productivity and efficiency and certainly non-EU export markets are growing quite strongly. So we see that as a big part of economic recovery. Of course, transport and access to ports and airports is a big part of that.
Matthew Jaffa: It is vital for small businesses to be a part of the export-driven recovery, but it is also vital that network links at port level are good enough to be able to see the actual growth in the BRIC economies—Brazil, Russia, India and China— because we are going to see an influx of exports going to those but also coming inward as well. We do need to make sure that the networks coming from there are of good enough use and also, at the same time, with us hopefully winning a potential World Cup bid this week, with the London Olympics and also things like the nuptials of William and Kate, we do need to have the network available to deal with the fact that we are a country that people want to visit.
David Bishop: Just to jump on the export bandwagon, it is worth pointing out that tourism is an export. We are the third biggest foreign exchange earner for the UK economy, currently. Absolutely, growth of the tourism industry is, we would argue, hugely significant in terms of our economic recovery: one, because we are already predicting above trend growth in the year to 2020, so 3.5% versus about 2.5% through the wider economy, and secondly, because it is growth that can be realised relatively quickly due to the nature of the tourism industry. To illustrate that, a 0.5% increase in our share of Chinese tourists would result in £2.5 billion more for the UK economy and about 50,000 more jobs. There are some quite significant gains that can be got there. That means it's important to make sure that, one, we hold down the cost of getting to and from the UK—that means visa costs and things like air passenger duty, which make the UK a relatively expensive destination—and secondly, that it is possible for people to get access to the UK, that we have the international air routes and the transport network to and within the UK that enables tourists to get here and realise and spend their money here.
Q278 <Chair:
Mr Stevenson, did you want to comment on our exports and tourism?
Graham Stevenson: Yes. From the experience of our members who are dockers, it would seem the most important export from Britain is empty containers, because the vast majority of goods that we enjoy are imported into this country. I am old enough to remember the great crises that used to exist where we had dock strikes and people moaned about exports. Of course, the key feature here is the way in which business has changed in the last 25 years, with the development of socalled logistics, which people very often think means just putting things in lorries. It doesn't. In fact, such a thing as a dock worker, a road haulage worker or whatever, is increasingly out of date. Increasingly, transport workers are logistics workers. They are a part of a long chain of transport and this chain of transport is outwith anyone's control. It seems to me that the whole point of reports such as Eddington and many, many, many others is that there is a general drift towards that kind of logistics operation dominating our lives, and there is a need for us to get a handle on it.
Q279 <Chair:
What should be done? What specific sort of investment is required
to facilitate that?
Graham Stevenson: I think the problem here is that the individual logistics operator offering a service to a manufacturer is most interested to maximise, as they would be, their profit situation. They create the fastest, cheapest and easiest possible route, which is not necessarily that which is most beneficial to society, good for communities or good for the environment.
Q280 <Chair:
In terms of supporting business and the economy, what kind
of investment is required to facilitate it? What are the logistics
needed?
Graham Stevenson: It really does need to be good quality investment; as we have heard, High Speed 2—
Q281 <Chair:
In which areas?
Graham Stevenson: All over. The problem that we have heard from my colleague for the small businesses is all the regions are dominated by activity.
Chair:> So
it is not one specific thing. It is general.
Q282 <Kwasi
Kwarteng: I think we have had had a very
general discussion, ranging from the royal wedding and how we
should be spending all sorts of money on all sorts of things,
but I think we really ought to button things down. Let me put
the question another way. What are the big risks—specific
projects—that you think are being undertaken now that should
not be undertaken? Are there one or two things that you can point
to and say, "This is the wrong way", or, "Maybe
we should be looking at something else"? I am just very keen
to get something specific because we have had a general discussion.
Graham Stevenson: "Well, I can't see how closing the M4 adds to boosting our economy".
Q283 <Kwasi
Kwarteng: That is at least a specific project
that you feel is going to militate against our prospects. I was
just wondering what the panel specifically had in mind in terms
of things that we could be doing or should be doing and are not
at the moment.
Chair:> Does
anyone have any specific proposals? Mr Farrow?
Matthew Farrow: Just one. Overall, I feel the transport settlement did pick out most of the right projects. I mentioned strategic corridors and bottlenecks, and I think the Highways Agency motorways schemes that have gone forward are, broadly speaking, the right ones. A lot of our members in the east of England were disappointed that the A14 did not get through. I think it is noticeable that, although rail is very important, rail seems to do perhaps a little bit better out of the spending review than roads. So the HSR settlement was pretty much unscathed, and we are pleased about that, whereas the Highways Agency budget has been cut. The A14 I would give as a specific example.
Matthew Jaffa: I would agree with that. We have not done a full mapping yet, but we are seeing that there are parts of the country that want to see active traffic management, as shown by the M42, which has worked well and should be extended, particularly in the West Midlands. But in the east of England there is still concern regarding the A14 and the dualling of certain roads. I cannot necessarily give you actual roads blow by blow.
Kwasi Kwarteng:>
In terms of a general—
Matthew Jaffa: From our perspective, before a sign-off completely of high speed rail is undertaken we need to have conviction and certainties that the actual need for that counterweighs the need for investment in the road network in certain pinch points. That is our main stance.
Q284 <Kwasi
Kwarteng: You are both saying that you feel
the CSR and the settlement has privileged rail above road?
Matthew Jaffa: From the FSB point of view, yes.
Q285 <Paul
Maynard: Clearly, Mr Bishop, you have already
done a very good job of communicating VisitBritain's priorities
policy-wise. Do you feel that the Department for Transport considers
the needs of tourism specifically when it is formulating policy?
For example, were you involved in the South East Airports Task
Force—just as one example?
David Bishop: No, we are not involved in the South East Airports Task Force, although people from VisitBritain, people from the Department of Culture Media and Sport, our parent department, have had meetings with DfT officials on that subject.
We are hugely fortunate that the new Government is currently taking forward work in a tourism strategy which is expected to be published in January, according to the departmental business plan. That is something that we are working very closely with DCMS on, because we are effectively the national tourism agency and thus their expert adviser on what is good for tourism. Transport features very heavily in that, and we are fairly hopeful that what emerges in January will be a good document and will help DfT take into account the needs of the tourism industry when they move forward in terms of planning transport priorities.
Q286 <Paul
Maynard: But does the DfT consult with you
directly at all or do you have any direct involvement with the
DfT?
David Bishop: Only on an informal level. As you will appreciate, we are a nondepartmental public body and there are very clear limits in terms of the kind of contacts that we can and it is appropriate for us to have across Government.
Q287 <Paul
Maynard: I also noted from your briefing,
and you raised it yourself, the issue of potential for tourism
from China improving our economic situation. This is an inquiry
into transport and the economy. Clearly, one of the rate limiting
steps will be the seat capacity on flights to and from China.
If we were looking at increasing seat capacity, is that something
you think the market should be leading on or the Government should
be leading on and, if it is Government, what should they be doing?
David Bishop: I think it is difficult to unpack those two things. In terms of seat capacity, I don't have the specific figures to hand, off the top of my head, for China, unfortunately, but for the UK as a whole, between 2006 and 2010, seat capacity—the availability of airline seats to come here—has increased by 2.9%. For France, for argument's sake, it has increased by 6.3%; and Germany has gone up by 5%. We are clearly falling behind in terms of increasing the capacity, the ability, of people to travel here by air.
Does Government lead or does the private sector lead? Effectively, it is a little bit more complicated than that. Clearly, both organisations play a role. Airports are, by and large, privately owned. Airlines are private entities and it is for them to do the things that make commercial sense for them. That does not get us away from the fact that we need to make sure that we are stimulating as much demand as possible, particularly from China, given the potential for growth in that market.
Q288 <Paul
Maynard: How, therefore?
David Bishop: How, therefore? I think there are a couple of things to bear in mind. One, which is outwith the issue of transport, is the cost of a visa. It currently costs £68 for a UK visa versus £50 for a Schengen visa, but that is a cost on top of air passenger duty, which has increased at the start of this month to something like £85 for a band D journey from the UK. Effectively, we are already charging somebody who is travelling from China and back again about £140 just to come to this country, before they have even paid for their airline ticket, for their hotel stay, for everything else they are going to be doing when they are here. It is supply and demand. We are imposing a cost already, and that is potentially where the Government has a role.
Q289 <Paul
Maynard: My final question is this. If the
Department for Transport can't speak to you because you are DCMS's
baby, as it were, how do we get tourism heard within the Department
for Transport better? Who should they be talking to? Are they
talking to anyone at all?
David Bishop: This is where it is hugely welcome that John Penrose, the Tourism Minister, is taking forward work in this strategy. Clearly, it is still under discussion across Whitehall. We have fed into the draft and we look forward to what is going to be emerging in January. But, very properly, we have a Tourism Minister who is able to champion the needs of the tourism sector with other Government Departments and I think that is the appropriate mechanism.
Q290 <Chair:
You feel that your needs are being championed; you have got
someone to talk to?
David Bishop: Absolutely.
Q291 <Iain
Stewart: This is also a question for Mr
Bishop. Have you as VisitBritain done any studies or are you aware
of studies conducted by other organisations into how Britain's
transport links are viewed by overseas tourists? What I am trying
to get at is, is our transport system a barrier to tourists potentially
coming here or making repeat visits?
David Bishop: In terms of the research that we have carried out, there is an interesting bit of work by something called the World Economic Forum. I know that it is referenced in CBI's evidence. The World Economic Forum believe that we are currently 11th in terms of the global competitiveness of our tourism industry. That is down from sixth in 2008. One of the things that has changed is, to an extent, perceptions of the transport sector. It is not actually so much perceptions of the infrastructure itself; it is actually much more the perception of the experience of travelling through that infrastructure.
One thing that is a particular concern for tourists is the quality of welcome, which is a fairly nebulous term but effectively means the experience of applying for a visa when you are overseas, getting through an airport once you arrive in the UK, and then getting from that airport to your destination and having a good time while you are there. We currently run something called the Welcome to Britain Project. It oversees those three areas—incountry, at the airport, and overseas. As far as we are concerned, the key stumbling block is people's perceptions when they arrive at a UK airport. If you arrive at Heathrow Terminal 3 or any other airport and you experience a wait of up to 45 minutes or an hour—and that is your first taste of actually being in this country—you are probably going to go away with a slightly jaded opinion of Britain. It's going to colour those opinions. That isn't necessarily a perception of the infrastructure; it's more the way that that infrastructure is operated. It's an operational question. That is overwhelmingly what the consumer research that we have carried out, other research that we dip into and use, is pointing us towards. That is why we have this standalone project focused on that particular area of concern.
Q292 <Iain
Stewart: Is there anything specifically,
once they have arrived in the United Kingdom, on the perceptions
of wanting to travel onwards to other destinations?
David Bishop: I think the only other thing in that area is just making it easier for people to do that. At VisitBritain we have an online presence which allows us to sell Oyster cards and something called a BritRail pass, which is effectively a travel card for the entire UK rail network, effectively to make it easier for people to travel around the country. We need to encourage more things like throughticketing: the ability for somebody who is buying an airline ticket to pay for and buy their onward travel, as it were, from the airport to their destination, to make it easier for people to understand how to get around the UK once they arrive here. We all know that it's quite difficult ourselves for us to understand how to navigate the UK rail network and buy the cheapest ticket and do all those things. It is much more difficult for a tourist to be able to do that. We need to make sure that we understand those needs, we communicate those needs and we make it easier for people to use the infrastructure that we have in place rather than necessarily just providing new infrastructure for them.
Q293 <Julian
Sturdy: We have skirted around HS2 already
in the opening remarks from everyone on the panel. How do you
think it will affect the national economy—but also, do you
think it will have an impact on the north-south divide and the
regional economies? We went to Birmingham a few weeks ago and
they were very enthused by it and they emphasised how much of
an impact they feel it would have on their local economy and the
creation of jobs. I just wondered what your views were on this
and, as I say, more on the north-south divide of the country as
well.
Chair:> Mr
Farrow, could you tell us what the CBI's views are on this?
Matthew Farrow: I am happy to
do that, Chairman. I think the CBI members are fairly pragmatic
when it comes to the value of HS2. I think the most important
reason why we are supportive of it is to overcome the constraints
on the West Coast Main Line. It seems pretty clear, based on the
projections that HS2 Ltd have done—and that is a strategic
artery both for rail freight and for the economy as a whole—that
that is going to become pretty overcrowded. We think we need to
address that. That is very much in line with Eddington, talking
about overcoming bottlenecks. The figures to say that doing a
classic extension or extra capacity would not cost much less than
the high speed extra capacity are pretty convincing. I think that
is the main reason why we are supportive of it.
I think, as you say, if you then extend the network particularly further north, you should get some pretty important connectivity benefits—the sort of north-south divide. The modelling of all that is difficult and subject to lots of technical variations. I am not an expert on that sort of modelling but I think our members as a whole do recognise those benefits. When we do surveys of our members on their transport priorities, HS2 scores pretty well. I think the caveats I would add, though, are two. One is that it is important, if HS2 goes forward, that it doesn't suck up the vast majority of the transport budget. It is important we have a transport programme, which is something we have all alluded to, which is picking up a number of priorities and a number of modes. I think if HS2 became all the DfT could afford in five to 10 years' time that would be a major concern.
The second caveat I would have is the impact on rail freight. HS2 has been sold very much in terms of the value to the passenger, the citizen. It should help rail freight, because it should free up some capacity on the London to Birmingham rail freight route, but I think there is an issue, if it is a phased project, as I guess it would be, which will have high speed trains coming back on to the classic network north of Birmingham, and the rail freight industry would say they feel they always tend to get pushed out to make sure that the passenger trains can get through. I don't think that is an insuperable problem, but I think it's important that issues like that are addressed when HS2 goes forward.
Q294 <Chair:
Does anyone else on the panel want to add anything?
Graham Stevenson: I would quite like to make a very brief comment, not so much in my capacity as an expert from a trade union but in my capacity as an expert as a commuter for the last 25 years from Birmingham to London.
When I first became a national official I used to find the travel service really quite good. In fact, I would like to think I am wearing a badge, "Bring back British Rail". We really do have quite severe problems in terms of here is the second city currently with a major problem with employment and the connectivity with the capital is really quite poor. As far as reliability is concerned, when it's good, it's good "but there have been big problems".
We are very much, as a union I should say, in favour of HS2 but with some caveats, in particular about the beginning and end bits. I am still not entirely convinced about the interconnectivity that would arise from the new interchange posited for Solihull into Curzon Street in the centre and how that would connect with onward travel north. There are some unanswered questions and perhaps some savings that might even be made, but, in general, I would echo the comments about the importance of such a project for the economy.
Chair:> I
would like to keep, for the moment, to HS2 questions. Mr Baker,
is yours on that or was it on something else?
Q295 <Steve
Baker: It was not on HS2 as it happens,
but I can soon find one, though. One of the points that has been
put to me by campaigners, particularly in Buckinghamshire, is
that conventional economic theory suggests that, if you improve
a transportation link between a higher productivity centre and
one which has lower productivity, it usually benefits the more
productive centre. Do we believe that this regenerative effect
will actually work with high speed rail or do we think it will
disproportionately benefit London?
Matthew Farrow: Yes, certainly at the CBI we do believe that. There are a couple of reasons, I suppose, behind that. One is that the economic or business communities in the northern part of the country that would receive HS2 in due course do tend to be very supportive and see the benefits as twoway. I think the Eddington report, which is to my mind still the most detailed search through all the evidence around how transport and economy does interact, again felt that the agglomeration and the connectivity benefits tended to work both ways. We would feel that, on balance, there would be benefits to both parts.
Q296 <Mr
Leech: I think we would all accept that
the benefits of HS2 are very medium to long-term, rather than
short to medium-term, and we are talking about £30 billion
worth of investment. If you were asked how you would spend £30
billion on improving the transport network, would HS2 be your
first call on that money, or what big infrastructure projects
would you choose instead of an HS2 project?
Matthew Jaffa: I would just like to go on my first point, which was that High Speed Rail 2 would not be the first choice for small businesses, which is 99% of businesses, due to the fact that from our survey work, of journeys carried out over 200 miles, 54% are carried out by the car and 31% by rail. You are going to see journeys move to rail, but not enough in terms of magnitude to influence small businesses and journeys to be taken away from their car journeys.
Q297 <Chair:
Are you saying that you would be looking to road investment?
Matthew Jaffa: Exactly, from the £30 billion pot. When you consider the fact of the £46 billion that is going to the Exchequer through road users, only approximately £94 billion goes back to the road network. That is quite an incredible disproportion. In effect, we would be saying that that actual £30 billion does need to reflect the road compared to other modes of transport.
Q298 <Mr
Leech: How much of that is more a short
to mediumterm benefit rather than a medium to longterm
benefit though, as far as the Federation of Small Businesses is
concerned?
Matthew Jaffa: From the FSB perspective, investment in the road network is the medium to long-term investment that is needed in this country. It needs to be a clear strategy, because small businesses are constantly talking about the cost of using the road in terms of fuel duty and the cost of burdens on them regarding employment legislation. Transport is another critical area that they are being burdened by. It is unfortunate to say it, but many may not be in business come five to 10 years down the line. Transport and the road network does need to be a priority for this Government.
Q299 <Mr
Leech: But has not significant road building
in the last 20 years just caused more congestion and more problems
for your members?
Matthew Jaffa: I don't think so. When you consider the London congestion charge scheme, that was brought in to curb congestion, but in fact we are now up to the congestion levels that we started with before that scheme came into operation. We do need to see a much more targeted strategy for businesses and what they need in terms of their pinch points. I know the Chambers of Commerce have put together their infrastructure plan, and we will be doing so shortly, but I suppose it is bringing the argument back from the rail to the roads, basically. It is having that equal argument.
Q300 <Mr
Leech: Is there any dissent on the rest
of the panel? I expect there would to be from Mr Stevenson.
Graham Stevenson: We represent a huge number of road transport workers, but our argument is that you can't just tinker with one little bit. If push comes to shove and somebody said, "Look, you've got £x million. What would you do with it?", I would probably say rail infrastructure. That would probably be the most immediate, beneficial and useful thing to do, but you can't tinker with the rail without looking at what there is on the roads, and the problem is we use the roads wrongly. You can't look at road transport, motorway transport, without looking at the ludicrous position where lorry drivers are pressed to work up to 13 hours a day. This is ludicrous. The lack of control over the drivers' hours rules is out of kilter. We just imagine we can continue to fill the roads until they get bigger and bigger and bigger, and then what do we do? Oh, we just widen them. That's not the answer. What we need to do is to look at the entire moving Britain scenario and find resources and regulatory approaches that affect all of the integrated approaches, because, as I said, now it is all about integrated logistics, just in time.
Matthew Farrow: The question was about HS2 and is the money to be spent in that the priority? In the short to medium term, no it isn't, and of course the HS2 spending wouldn't occur for some years. Upgrading a strategic road network, the bottlenecks and the Managed Motorway projects are more important in the short term. I think completion of Crossrail is also more important.
To go back to what I picked up earlier, in the medium to long term I think we are persuaded of the view that, if the West Coast Main Line does become completely clogged up and there is a major capacity problem on that, that is so significant for both rail freight and for the economy as a whole that that would have to be addressed, so that would become a priority.
As I say, we are persuaded of the HS2 argument that, if you are going to put in new rail capacity on the West Coast Main Line, high speed rail, you don't get much of a price increment for that and therefore that is probably the right way to do it. At the moment, no, the priority is road upgrades and Crossrail, and perhaps Thameslink as well. But, as I say, in the medium to long term I think one can see the West Coast Main Line becoming such a problem for the economy that the HS2 solution to it becomes the right choice for the country.
Q301 <Iain
Stewart: This is a very simple question.
How significant do you think it is for High Speed 2 to connect
directly with High Speed 1 to allow direct services, say from
Birmingham to Paris?
Matthew Farrow: Pretty important, I would say. When I talk to members about this, not surprisingly, they think it is very counterintuitive to have these two high speed lines getting very close to each other but not connecting. There is a strong business wish to see them connect. Having said that, we have not looked into the technical detail. I know the HS2 report and the Mawhinney report looked at this and there are a lot of technical engineering issues about the cost of the final half mile or whatever it is. I guess one would have to make a fairly careful judgment based on the cost of that connection, but certainly in principle, CBI members would see that connection as particularly important, for all the obvious reasons.
Q302 <Gavin
Shuker: My apologies for joining the proceedings
late. We are talking about high speed rail and there was nothing
high speed about my journey this morning. Just to declare an interest,
I am a member of Unite the Union.
On High Speed 2, one of the advantages that are talked about is the reputational one in terms of international business. What credence do you give to that argument, as the panel?
Matthew Farrow: I think it is a factor. When we do surveys of companies asking them what they see as important in terms of making the UK a good place to invest, infrastructure in general tends to score fairly highly; access to markets tends to score fairly highly. As one of the other witnesses said, the UK has scored pretty poorly in infrastructure. Our spending has been pretty low in recent years. If you look at the World Economic Forum analysis, which is very much in that field of international business people and what they think, the UK is always being marked down on its infrastructure. Infrastructure in general in the UK needs an upgrade and is fundamental to attracting overseas business. I am not sure that HS2 is the silver bullet or is the key part of that equation, but it would improve the attractiveness of the UK as one of many factors that influence international businesses.
Just a very brief point to finish. David was talking about international connectivity and tourism and how Heathrow and other airports and so on are also very important for business travellers. I hear anecdotal evidence of Chinese companies looking for European headquarters—you would think they would naturally come to the UK for the various other reasons that we have advantages in—and choosing Frankfurt, because Frankfurt has better connections to China than Heathrow does. That is anecdotal but it does concern us.
David Bishop: To add to that very quickly, we are supportive of High Speed 2. We think there is a very strong case for it going further north, all the way to Scotland. We think that will provide benefits in terms of helping tourists get beyond the south-east, which is something they don't particularly do. We don't want to overstate the fact that, absolutely, aviation is still the key way that people get to and from this country. France gets eight times more visitors from China than the UK does. Germany gets six times more visitors. France also attracts 50% more visitors from India, somewhere with which we have a very strong historical relationship, which is a surprising statistic. So High Speed 2 is absolutely important and other areas of infrastructure are equally important, if not more so.
Q303 <Paul
Maynard: Mr Farrow and Mr Jaffa, do you
have any evidence, statistical or indeed anecdotal, from your
members in the north of England over their views on the relative
importance and problems of connectivity with London and, separately,
connectivity within the north of England? How do they view the
two, and which concerns them more at the moment?
Matthew Farrow: Statistical evidence—I am not sure we do. I can certainly check and see if we have done any surveys around that. I think connectivity is an issue for them. This will sound a bit like fudging the question, but I think that both elements of it are important to them: the connectivity to the south and the south-east and London, but also across the north. There are the Northern Way proposals in the Northern Hub and so on, which are trying to address some of those issues.
Matthew Jaffa: Unfortunately, I don't have any statistical analysis to hand. What our members do say, particularly in the north area, is that regional airports, and in particular Durham and Tees Valley, are concerned about BMI pulling out of that area. From anecdotal information, members have told us that they want to see a much greater emphasis on regional airports and maybe not so much of a hub at Heathrow. That is the only statistical stuff from the north that I can give you.
Chair:> Mr
Sturdy, was it on this?
Julian Sturdy:>
It was actually. It was following on.
Chair:> Can
it be a quick one on this, so that we can move on to other topics?
Q304 <Julian
Sturdy: It is following on from what Mr Jaffa
has just said, actually. The question is to Mr Bishop. Do
you not feel that the opportunities with HS2 will open up greater
connectivity for regional airports to potentially take some of
the pressure away from the south-east problems that we are seeing,
like Birmingham and potentially Manchester and maybe Leeds and
Yorkshire?
David Bishop: I think these opportunities are absolutely there, but we need to be honest and say it is not a zerosum game. Just because we are improving the connectivity of regional airports, allowing them to take some pressure off the south-east doesn't mean that the south-east reduces in any kind of relative importance or that the importance of having a hub airport in the UK goes away. The huge advantage of a hub airport is that, effectively, it is serving a global hinterland, with much larger passenger numbers going through it. Consequently, it has critical mass to sustain a much larger route network. The vast bulk of the 1,435 international routes that the UK has—more than most other countries across the globe—stem from the fact that we have the Heathrow hub. That number of routes is dwindling and has been doing so for the last 10 years. It is a major asset for the UK as a tourism destination because it enables people to get here relatively quickly, easily, and more costeffectively than they would do if they were hubbing via another airport. So both things are desirable. It is not a question of either/or.
Q305 <Julie
Hilling: I would like to ask a question
about perhaps the less glamorous end of transport: buses. It seems
to me that we waste millions each year with people stuck in traffic
jams, stuck in those bottlenecks. How do you see buses as part
of the transport infrastructure and what do you think you should
do, because people are using buses to make short journeys to work,
to school, or to go and catch their train? What do we need to
do about bus transport?
Graham Stevenson: This is my main area of interest, so I would like to comment on it. We very much favour Government intervention in assisting the passenger with regard to fares rather than the operator. We also very much favour local state involvement in the form of the quality contracts legislation that was passed in the last stages of the previous Government. We very much would like to see local authorities take this up since we are convinced that the operation of a bus network in any given community is effectively a natural monopoly, and that the cross-subsidy that exists from one route to another within that network enables maximum efficiency if the operator has control over the entire area. Of course, the problem is, if you allow that natural monopoly to take place without any democratic control, you have abuse. That is why we are very much in favour of the quality contracts system. The plain truth is that a huge number of journeys are taken by bus every day.
We had expected that the recession would have a really serious impact upon jobs in the industry since there would be less people travelling, but that has not yet come about; that has not yet been the case. We wait with bated breath to see whether the effect of slashing BSOG or, probably more significantly, reducing local authority expenditure on socially necessary bus networks, is going to have an impact, because it's going to be hidden. Local authorities will trim their budgets and some will view buses as an unimportant part of the work that they do. It's quite likely that those estates and communities that are serviced on Sundays, evenings and weekends are going to find their services much, much reduced. So it's an ailing sector anyway, and the last thing it needs are further severe cuts, as may well be the case.
Matthew Farrow: I have two specific points on that. As a parent who spends a lot of their time stuck in traffic doing the school run, I think the work which the Yellow Bus Commission has done is particularly interesting in this area, looking at whether we could have a more nationwide programme of school buses based on the American model which has a lot of safety and security and therefore is more attractive to parents to use. I think about 20% of car journeys during term time in the rush hour, in the morning peak, are the school run. I think that is worth exploring.
Also, I am conscious that we touched a couple of times on the longterm issues about road traffic congestion and whether more roads create more traffic. It is probably too big a topic to get into today, but I think we in the CBI feel that road pricing in some form is almost certainly part of the longterm solution to that. I understand the political challenges around that, but as I say, we think in the long term it doesn't mean you don't need road investment: you do. You need to invest in bottlenecks, you need lane widening, etcetera, etcetera. But some form of road pricing on part of the network, at least, I think, is going to play a role in the future.
Q306 <Steve
Baker: I would just like to check that I have
understood Mr Stevenson's criticism of logistics correctly.
If I understand you properly, you have said that the logistics
chain is too free and as a result there is a drive to logistics
being easier, cheaper and faster. Are you saying that what we
should have in the logistics chain is more intervention because
it would be better for society if logistics was more difficult,
more expensive and slower?
Graham Stevenson: If you will forgive me, it sounds very much like a propaganda line, almost like a Daily Mail headline, what you have just quoted back at me. My recollection of what I said was that—
Q307 <Chair:
Can you perhaps tell us what it is that you said?
Graham Stevenson: What I said was that I thought there was a need for society's interests to be taken into account. That may or may not collide with some of those epithets which you threw back at me. Sometimes they are good; sometimes they are not. But what is needed is judgment.
Chair:> I
don't want to have another debate with—
Q308 <Steve
Baker: I am genuinely very interested to
know how you would identify and qualify those social goods, because
we are all in this game because we want to improve society. So
what are those social goods?
Graham Stevenson: I think you have a responsibility.
Chair:> Mr
Stevenson, is there anything you can say very quickly, because
I don't want to start a very long running debate?
Graham Stevenson: No, I've just said it.
Chair:> We
have people waiting, but I am sure there will another time.
Graham Stevenson: It is the function of democracy.
Chair:> Okay.
I think that is the answer for today, Mr Baker. Thank you
very much for coming, everybody, and answering our questions.
Thank you.
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