Session 2010-11
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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 473-iv

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Transport CoMMITTEE

Transport and the economy

Tuesday 30 November 2010

Matthew Farrow, Matthew Jaffa, David Bishop and Graham Stevenson

Steve Allen, John Jarvis, Sir Robin Wales and ALison Munro

Stephen Joseph OBE, Keith Buchan, Dr Adrian Davis and Joe Rukin

Evidence heard in Public Questions 266 - 398

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Oral Evidence

Taken before the Transport Committee

on Tuesday 30 November 2010

Members present:

Mrs Louise Ellman (Chair)

Steve Baker

Julie Hilling

Kwasi Kwarteng

Mr John Leech

Paul Maynard

Gavin Shuker

Iain Stewart

Julian Sturdy

________________

Examination of Witnesses

Witnesses: Matthew Farrow, Head of Energy, Transport and Planning, CBI, Matthew Jaffa, Deputy Head of Policy, Federation of Small Businesses, David Bishop, Head of Tourism Affairs, VisitBritain, and Mr Graham Stevenson, National Organiser for Transport, Unite the Union, gave evidence.

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: I cannot see why you are closing the M4 bus lane.

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.

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 £45 billion or £46 billion that is going to the Exchequer through road users, only approximately £9 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.

Examination of Witnesses

Witnesses: Steve Allen, Managing Director, Finance, Transport for London, John Jarvis, Transport Director, The Northern Way, Sir Robin Wales, Mayor, London Borough of Newham, and Alison Munro, Chief Executive, HS2 Ltd, gave evidence.

Q309 Chair: Good morning. Would our witnesses please give their names and the organisations they represent, for our records? I will start at this end, please.

Steve Allen: Steve Allen from Transport for London.

Sir Robin Wales: Robin Wales, Mayor of Newham.

Alison Munro: Alison Munro, High Speed 2 Ltd.

John Jarvis: John Jarvis, Northern Way.

Q310 Chair: Thank you. Mr Allen, in the written evidence that we have from you, at paragraph 3.5 you quote London First as saying that the capital’s infrastructure schemes generate four times as many wider benefits for a given level of investment than schemes elsewhere. That sounds to me a bit like a recommendation to shut the rest of the country down. Am I misunderstanding that?

Steve Allen: It is very much a theme consistent with the Eddington report, as some previous witnesses were saying. What we are saying is that, if you look at the productivity of London and big urban centres, they are more productive than the rest of the country. If we are going to focus on how transport can help economic growth, then one of the things is to help those more productive centres grow, because lack of transport capacity is currently going to be a constraint on the growth of those highly productive centres.

Q311 Chair: Mr Jarvis, do you agree with that statement-that investment should be presumably all in London or similar areas because it has more benefit than anywhere else?

John Jarvis: We have taken close account of the work that London First undertook and we have reviewed that ourselves. While we would agree that large productive centres generate strong benefits from transport investment, our findings in relation to the London First work is that there are some issues that we would dispute in there in terms of the benefits that they suggest are generated. Our review of the work suggests that benefits outside London, on a poundperpound invested basis, are equally strong outside London, in the north, as in London. As part of that work we have also reviewed the emerging work on GBA benefits. This is work by Professor Peter Mackie in Leeds University. That, again, suggests that, in terms of GBA benefits, benefits per pound invested outside London in terms of GBA were as strong if not better than in London and the south-east. We think that the London First work needs closely looking at. The work that we have produced is on our website.

Q312 Chair: What type of transport investment should we encourage for economic success?

John Jarvis: We agree with the prescription that Eddington produced-that it is about links within and between city regions, links with international gateways and, also, links with London. That is because those links produce a range of benefits. Links within city regions are about growing the functional economies of those city regions. Links between city regions are about businesstobusiness connectivity and movement of goods; links to London are about links with the world city functions; and links to international gateways are about international trade, as we heard in the previous session.

Q313 Chair: Outside the south-east, should priorities be to invest in more connectivity to London or more connectivity with other areas outside of London?

John Jarvis: I think, again, it is about getting the right balance and planning over short, medium and long terms. We know what the shortterm plans are of Government; we are less clear about the medium and longer term. But over the medium and longer term we are certainly looking for more attention to Managed Motorways, the Northern Hub, further electrification in the north and, as part of that process, longterm planning for high speed rail and getting an investment plan that meshes those priorities together.

Q314 Chair: Would any other members of the panel like to suggest what priority investment should be?

Sir Robin Wales: Naturally, I would want to talk about investment in Newham, having come here from Newham.

I can solve your problem between the north and the south; I really can. If you join High Speed 2 to High Speed 1 and put a station at Stratford, it will do two things: it will generate more wealth in the south-east and more jobs in the poorest area of the country, but it will also connect to the north. I sometimes love listening to the numbers that people give, but I thought Lord Heseltine summed it up when he came to a meeting we had, which was that he doesn’t believe a word of the numbers; he just thinks, if you build a railway and put a station in, things will happen-it’s what the Victorians did.

Now, we have managed to put a station at Stratford which we are not going to stop trains at, which is kind of daft-£210m on a station at Stratford-but if you join that up with High Speed 1 and High Speed 2 and bring it through, you will benefit the north. Of course we should invest in transport in the north. It is madness to have a country that is all based on London, but equally, London is an economic powerhouse so you are trying to balance the two things up. For me, the solution is one small step, which the whole of business in the east of London supports. It is to stop international trains at Stratford and then linking High Speed 2 to High Speed 1. It’s just obvious then that you stop at Stratford on the way.

The one thing I am really keen to get across is that Stratford is not in the east of London. Stratford is slapbang in the centre of London now, because London is rapidly moving to the north. Having spent £9 billion on the Olympics, it would be madness not to stop international trains at a station on which we have already spent £200m. At least, that’s how we see it in Newham.

Chair: So you’ve got a solution for us. Mr Maynard?

Q315 Paul Maynard: Sir Robin, it is a pleasure to question you because I tried three times to get elected to Newham Council and failed, so-

Sir Robin Wales: Not for Labour, I take it then.

Paul Maynard: No, not for Labour. We spent £210 million on Stratford International. Clearly, that is an awful lot of public money. Do you regard it therefore as an example of transport policy failure that we have built a station? We have built it, and nobody has come.

Sir Robin Wales: No, no, no, no; no, no, no, no. People are coming; no, no.

Q316 Paul Maynard: Not the people you built it for.

Sir Robin Wales: The issue is, do you stop at the station? Interestingly, the difference between the French and the British was that the French said, "You are going to stop your train there. That is what you are going to do. You are going to stop your train there." We said, "We’ll let the market decide." That was a mistake. If you build it and stop a train, they will come. It may be a few years since you were in Newham, but we have the largest urban shopping mall in Europe being built in Stratford. London is marching eastwards rapidly. The Mayor of London said Newham is where the regeneration will be for the next 20 years, and of course now there is the Thames Gateway, which is a massive development. It is obvious that that is where people are coming. It is obvious what will happen. If you stop a train there, it will take 51,000 passengers on the service and it will relieve some of the pressure in central London. So I would argue not that it was a mistake to build it but that we really need to use it. We need to stop trains there.

Q317 Paul Maynard: So the policy failure was the planning of what to do with the asset once we had it?

Sir Robin Wales: I would support the principle that we should say, "We built the thing so we are going to stop the trains there." I struggle in this. I am not a transport expert; I am really not. I have to-

Q318 Chair: Can we have quite short answers that get straight to the point, please, because we’ve got lots of things to talk about?

Sir Robin Wales: You obviously don’t know me, then. I’ll do my best.

Chair: Not that you are not doing that, but it might be helpful.

Sir Robin Wales: I will do my very best. We built it; we should use it. If we use it, people will come. International business will be attracted there. That will be really good for development, it will be good for international trade and it will link to the north. Building transport networks to the north has got to be something this country does. I say that as somebody who lives in London.

Q319 Steve Baker: I have a question on high speed rail, if I may, and the entrepreneurial risk associated with it. Are there uncertainties around the business case for high speed rail? It seems to me there probably are. If so, who will actually bear the entrepreneurial risk of going ahead with the project and finally carrying either the benefits or the costs of whether or not it works and regenerates the north?

Alison Munro: Clearly, the business case for high speed rail depends on, for example, how future demand will grow. It will depend on what the actual costs of delivering the scheme will be. There are some uncertainties there, undoubtedly. In terms of how those will be shared in the future, that is something that has not been decided at this stage. We have done some preliminary work on how the scheme might be funded, but that really will be a decision for the future on just how those risks should be shared out and borne.

Q320 Steve Baker: So it does seem to me then, in your answer, that there is substantial scope for the taxpayer to bear the entrepreneurial risk of high speed rail failing?

Alison Munro: We did some initial work on how the scheme could be funded and our conclusion was, in terms of the construction, that it would be best if that was largely funded by the public sector. That would be the best way of dealing with the risks. Certainly, the public sector would bear some of the risks. That is not to say there would not be scope to get some risks transferred to the private sector but, as I say, those details have not been decided at this stage.

Q321 Steve Baker: But the starting point is that the taxpayer bears the risk?

Alison Munro: Not necessarily. The taxpayer would bear a large proportion of the cost. Through a public sector procurement you can still transfer some of the risk to the private sector, but, as I say, those details are yet to be decided.

Q322 Iain Stewart: On High Speed 2 and the benefits to the economy generally, we have been given a figure of a cost benefit ratio of 2.4 for High Speed 2, and specifically the London to Birmingham line. But my concern is that we look at that as an isolated project without considering the potential other benefits, one of which is potentially linking up to High Speed 1 and, also, the knockon benefits from freeing up capacity on the classic rail network for rail freight and fast services for intermediate stations. To what extent are you looking at these other possible models so that they can compare different options-just London to Birmingham, London to Manchester and Leeds-against having High Speed 2 as part of a broader economic plan?

Alison Munro: The benefit costs ratio you quote is the figure that we produced for the London to Birmingham stage, which was our initial remit.

Q323 Iain Stewart: Is that , specifically on that line, the knock-on benefits?

Alison Munro: That was specifically for the benefits of providing a high speed line between London and the West Midlands, but it did include the benefits of releasing capacity on the West Coast Main Line; so those were already incorporated. We tried to capture as much in terms of the benefit cost ratio of the actual benefits that would occur. The current appraisal does not allow you to capture absolutely everything, but we tried to do as full a job as possible. Obviously, since we did that work, the Government has announced that it does intend to take the network, in the second phase, to Leeds and Manchester. We are currently working on that. We would expect the business case for that to be higher than just the London to West Midlands stage.

Q324 Iain Stewart: Adding connecting to High Speed 1, Stratford International?

Alison Munro: We have done an additional piece of work that the current Secretary of State asked us to do on the options for linking to High Speed 1. Some of those benefits are rather difficult to quantify in money terms. There are more strategic arguments about the links to High Speed 1 which I would expect to affect the final decision on that, but we have looked at what the quantified benefits of that would be as well.

Q325 Iain Stewart: Is that a published review yet, or is it still in progress?

Alison Munro: No. We have provided that advice to the Secretary of State and he has said that he will announce his decision by the end of the year on what to do about that.

Q326 Julian Sturdy: Just following on from the points just raised, this is really a question to Ms Munro and Mr Jarvis. What do you think the impact to the midlands and the northern economies might be if HS2 weren’t to go ahead and do you feel that potential improvements in the West Coast Main Line could go any way to offset that at all?

Alison Munro: This is if High Speed 2 were not built?

Julian Sturdy: Yes, just hypothetically.

Alison Munro: If you look at the longer-term projections of what demand is likely to be, over the long term there is expected to be a very significant increase in demand. Although in the short term there may be other improvements that you could make to the West Coast Main Line, it does not look as though those sorts of improvements will be sufficient to provide the additional capacity that is needed in the longer term. Without High Speed 2, the expectation of the longer term would be that there would a constraint on intercity travel in that corridor and that would have an impact on the economies.

Q327 Julian Sturdy: You feel that would have a constraint on economic growth in cities like Birmingham, Manchester and Leeds, and places like that?

Alison Munro: Yes, I would expect that. That would be consistent with Eddington’s conclusions-that transport constraints can constrain economies, yes.

John Jarvis: We undertook some early work looking at the wider economic impacts of a high speed network serving both sides of the Pennines, using the Department's methodology for calculating wider impacts including agglomeration benefits. That indicated that a high speed rail network could generate £13 billion of wider economic impacts nationally, of which about £5 billion would be in the north of England. On a per capita basis, or in relation to the size of the north of England economy, the impact would be greater than in the rest of the country. We see that as very important evidence in terms of indicating how the north can take benefit out of high speed rail.

Other areas, clearly, where further work needs to be demonstrated is how the north takes benefit by throughrunning, both in terms of a route to Birmingham and then onwards throughrunning to Manchester and potentially on the east side, if there were a link to the Midland Mainline in the north so you could access Sheffield or the north-east via HS2, and then, also, throughrunning once you have got the Yshaped network to the north-east again; and, also, how it can be better demonstrated what the benefits are of releasing the capacity for freight and more local and regional services on the existing main lines. I think that work needs to be further demonstrated in support of the case for high speed rail.

Q328 Mr Leech: I didn’t quite catch part of what Mr Jarvis said there. You said that there would be £5 billion of benefit to the north, out of £13 billion?

John Jarvis: Yes.

Q329 Mr Leech: Where do you see the other £8 billion of benefit?

John Jarvis: A significant amount in London and significant parts in the rest of the country, into Scotland. I think the point to note in there is that, in terms of the £5 billion, as I recall, our figures are about £5 billion in the north, roughly a similar sort of proportion in the London and a similar amount in the rest of the country; so it is slightly more in the north.

Q330 Mr Leech: I think you have answered my followon question about whether or not it was actually the north or London that was going to be the biggest beneficiary.

John Jarvis: There would be significant benefits for London, but I think the point we are making in terms of the £5 billion is that it is a bigger figure in relation to the size of the north’s economy; so it has greater impact in terms of the relative size of the economy. High speed rail is certainly the most transformational investment that we have found in seeking to attack the north-south productivity gap.

Q331 Mr Leech: Are there any other transport projects that could create the same level of benefit to the north as HS2?

John Jarvis: There are significant benefits from Northern Hub. Northern Hub is appraised at the moment as generating £4 billion of benefit for a £5 billion capital investment. That is four to one, once you include operating costs. I think this is where you need to get to a longterm plan that has short, medium and longterm components, because if you are saying, "What is our next priority?", the key one is Northern Hub for the next control period, but that is not to say that the country should not be planning for high speed rail delivery over a 20-year or so time frame.

Q332 Mr Leech: But would you agree that HS2 is absolutely vital for the longterm benefit of the northern economy?

John Jarvis: High speed rail is vital in terms of the increasing capacity constraints of the West Coast, East Coast, and also Midland Mainline. We need that capacity relief. Once you are into relieving capacity you are into new lines and high speed lines.

Q333 Mr Leech: To other members of the panel, how vital is HS2 to the economy of London, and would there be a better way of spending £30 billion?

Chair: Sir Robin, do you have a view on that?

Sir Robin Wales: I have a view on most things, but yes on that one. If the productivity of Thames Gateway went up to the same as London and the south-east, it would be £13 billion to the economy. Opening up high speed rail, opening up the rail network, opening up the opportunities for international trade and all the rest of it clearly will help to drive up the economic benefits in the south-east of England, particularly in areas that are very depressed and very poor. As long as it’s linked and it will stop at Stratford, it takes the pressure off central London; it allows a straight run through. I come back again to the point that it will benefit the north enormously, but it will also benefit that area. All the numbers add up to some very substantial benefits for everybody. For me, if you are doing High Speed 2, linking it up and stopping at Stratford makes extraordinary economic sense, and the sooner the better.

Steve Allen: Clearly, I would agree that high speed rail will bring benefits to London as well. I wouldn’t necessarily say it would be our top priority if you were to spend £30 billion across the country.

Q334 Chair: What would your top priority be?

Steve Allen: I think the top priority would be to spend money on congested networks within cities, so not just London but Manchester, Leeds, Birmingham and so forth. I think you would get more bangs for your buck if you did that than the inter-urban networks. The other thing about High Speed 2 that we are particularly concerned about is how you manage the passengers who arrive in London on an already congested transport network. You’ve got to plan for where it’s coming in. Coming to Stratford is a very good answer to that, but that needs to be considered as part of the planning of the route where the passengers are going to distribute once they arrive in London.

Q335 Kwasi Kwarteng: I wanted to ask a question about high speed rail. It seems to me that some people are saying-certainly the last witnesses we had-that money would be better spent on other projects. You are suggesting the same thing, I think, Mr Allen. I just wanted to ask Ms Munro and Mr Jarvis what you would say to critics who say, actually, it is a complete waste of money and we should be trying to look at roads.

Alison Munro: As I have indicated to the Committee, I can’t comment on the relative priorities, but certainly the work that we have done suggests there is a good business case for high speed rail and there are wider benefits to the economy through the connectivity and the additional capacity that it will provide. That is what I would say to the critics.

Q336 Kwasi Kwarteng: What I want to tease out is this whole idea of mode neutrality to which Eddington referred. I want to test that as a proposition, because it seems to me that some people are saying it makes more sense to invest in roads, whereas you are saying to the Committee that you don’t have a view.

Alison Munro: I am saying I can’t comment on high speed rail versus other transport. What I can say is that, clearly, Eddington identified that intercity travel is one of the priorities for supporting the economy. In terms of intercity travel, road isn’t the main alternative for city centre to city centre travel. High speed rail is a very effective way of addressing that market.

John Jarvis: Connectivity is fundamental to the future economic wellbeing, in the short, medium and long term. But there is not a silver bullet solution. It is about betting the right balance between modes and between long distance and shorter distance travel. That is the issue that we need to resolve. High speed rail has to be a fundamental part of that, but so has improved connectivity within the north-

Q337 Kwasi Kwarteng: You are sticking to this idea of mode neutrality. You are saying that both are important-

John Jarvis: There needs to be a balance. We agree and welcome the priority that the Government has given to Managed Motorways in the immediate future. There has been a significant set of Managed Motorways projects in the north of England, and we recognise motorway congestion as one of the biggest threats to the north’s economy. We have some of the most congested sections of motorway in the country. At the same time, rail is growing the economies of places like Manchester and Leeds more strongly than road. It has been rail that has taken the growth in terms of labour supply into Manchester and Leeds. Those rail services are now overcrowded and we need investment in rolling stock and that capital investment to unlock the Northern Hub. It is getting to that balance of investment and prioritising transport in recognition of its importance to the future economic growth.

Q338 Kwasi Kwarteng: So it is both, you are saying?

John Jarvis: There has got to be that balance, yes. I come back to that point: there is not a silver bullet. You can’t say you will solve the north’s problems by sorting out the motorways, or you’ll sort the north’s problems by sorting out Northern Hub. You have got to get the balance between those investment priorities.

Q339 Chair: The Northern Way has called for a national plan. Is that the same as a national infrastructure plan?

John Jarvis: We agree very strongly that there needs to be a longterm plan that has short, medium and long-term components and there is clarity about how investments are brought forward. One point we would make very strongly is that the Committee needs to consider why a project with such a value as the Northern Hub has not been brought forward earlier. The reason around that is it is only since The Northern Way came into existence that we began to look at the impacts beyond the immediate impacts of Manchester and the north-west and recognised how the rail network in and around Manchester impacts across the north. You need that input in to actually bring some crucial projects forward. We have strong appraisal processes but the issues of how things have been brought forward is an important consideration.

Q340 Paul Maynard: Clearly, Mr Jarvis, The Northern Way has managed so far to develop the short, medium and longterm plans you just referred to, working with the three northern RDAs. The Government has now announced the abolition of the RDAs. They are replaced by a patchwork of Local Economic Partnerships. How confident are you that the LEPs will be able to replicate the role of the RDAs in supporting the development of transport strategy that you have been overseeing?

John Jarvis: I think it is a very relevant question at this current time. The funding from the RDAs for The Northern Way runs out at the end of this financial year and there is no certainty about how that will be carried forward. I think the Secretary of State is right in remarks that he has made that LEPs aren’t fully in place actually to have that conversation with them at this point of time. We are discussing how The Northern Way might be taken forward with the major cities in the north, pending the establishment of LEPs, but those discussions are not fully concluded yet.

Q341 Chair: At the moment what is your view about the likelihood of being able to continue as successfully as-

John Jarvis: There is a likelihood at a low level we may be able to continue, but to continue at the level of investment in considering how transport impacts on the economy of the north is going to be difficult to sustain. Our costs of evidencebased work have been averaging about £650,000 a year. That includes staffing and business case development. We have been expending that over about the last five years. In terms of the benefits that we have achieved through that expenditure, there is independent evaluation that suggests we have brought forward Northern Hub investment by around five to 10 years. In terms of the value to the economy, that is worth around £600 million to £1.6 billion. In terms of the small scale of investment that we have been making, we have been achieving strong value for money. But it is going to be difficult to replicate investment of £500,000 to £650,000 a year on this work in future, given the abolition of the RDAs and the reductions on local authority budgets that are anticipated. But, like I say, we are in discussion about how we might take it forward.

Q342 Gavin Shuker: Just picking up on capacity, which is an issue that a number of the witnesses mentioned before, to what extent do you believe that the Department for Transport’s current plans for capacity on rail and on road go far enough to address the concerns of growth in your own individual regions? Perhaps we could start with Mr Allen.

Steve Allen: We were obviously pleased in the recent spending review that our plans for continuing to invest in the capacity of, particularly, the tube network and Crossrail, were protected through the spending review, and the important place that developing the transport infrastructure has for economic growth was recognised. Broadly speaking, over the next four years, yes, I think the plans are there for London. Obviously we need to see that they are sustained over the longer term.

Q343 Gavin Shuker: Just on that, Thameslink obviously has slipped by a couple of years now. Will that have a significant knockon effect to, say, the Northern Line overcapacity?

John Jarvis: Yes. The thing about transport is that it’s all about networks. You can’t look at any project individually; you have to see how it fits in with the networks. Clearly, delays in delivering any part of the upgrade to the capacity will have a consequent strain on the rest of the network. But, again, I think the main point is that Thameslink is going ahead and that is good, even if it is on a slightly longer time scale than is ideal.

Sir Robin Wales: I have a real concern now in the east of London. Crossrail is coming; that will be very important. If we get a station at Stratford then it completes quite a powerful transport hub in Stratford, in the west of my borough, but the reality is that London is the critically important driver for economic success in the country, and I would question whether we have it right at the Thames Gateway and whether we have the right transport infrastructure there to enable us to expand into areas that everybody recognises we need to expand to. So I would have a real concern.

One of the difficulties is always, in London, trying to explain the significance of the east, the developments in the east and the expansion in the east which is available, against sometimes the perceptions in the west and centre and so on. I think, yes, in the next few years, if we get these things right, we will be able to see some expansion, but I do question the Thames Gateway and whether or not we have really got our heads around the transport infrastructure that we need down there in order to continue development in, say, 10 or 15 years’ time. We got the Olympics because we have an international station and we have developed Stratford over 20 years. Who is doing the 20-year thinking out of the rest of east London? I have a real concern about that.

John Jarvis: We welcome the focus on rail investment but I think, as has just been indicated, there is a strong prioritisation at the moment in rail in the south-east. Nonetheless, I think that the electrification in the north-west, the line speed improvements between Liverpool and Leeds, and tucked away in Network Rail’s plans some investment on rail gauge as well, which would benefit northern ports, are all important issues for the north. But in terms of one major investment, it is coming on to Northern Hub and actually ensuring that project is agreed as part of the 2012 HLOS. On the previous conversation about the uncertainty about forward planning and Northern Way, I suppose there is a risk of hiatus in terms of what is happening and getting rid of regional apparatus.

Q344 Gavin Shuker: You would say there is a real emphasis on capacity over, maybe, the longer term planning of where the economy and transport needs to be in the next 20 or 30 years?

John Jarvis: That is a big issue for the north of England rail network in terms of the medium and longterm plans, getting that right and getting that investment into rail. It is going to be rail that will support the growth of the big cities in the north of England.

Q345 Chair: There has been a lot of criticism from certain groups about the appraisal on High Speed 2 and it has been alleged that passenger demand forecasts are inflated and the estimate of benefits is unrealistic. Just how sensitive is the case that has been put forward to changes in, say, the rate of growth of journeys in the scheme?

Alison Munro: The business case is clearly sensitive to future demand. In forecasting future demand, we have followed guidance from the Department for Transport and methods that are used by the industry which are based on past evidence of growth and relationships between GDP and transport growth, and we projected those into the future. We consider that those are reasonable estimates of future demand, but there obviously is uncertainty when you are looking into the future. We did some sensitivity tests when we did our work last year. We have talked about the fact that we found a benefit cost ratio of 2.4 in that work for the London to West Midlands route. We did tests for sensitivity if demand were 20% lower. That reduced the BCR to 1.5, so clearly it is sensitive. What we are projecting for the future is comparable with what has been seen in the past in terms of rail demand growth. We have assumed that there is a point in the future where demand doesn’t continue to grow, so we haven’t taken the most optimistic possible assumptions.

Q346 Chair: Is it comparable to previous assessments looking at similar time scales, because this is a big time scale, is it not, a long time scale?

Alison Munro: We are looking further ahead than most other schemes. Clearly, because of the nature of this, it will take a long time to develop and to build. So we are looking further ahead than most other schemes have done in the past, but the general methodology that we are using is the standard methodology.

Q347 Julie Hilling: I want to ask a similar question to the one that I asked the last witnesses, about other forms of transport-buses in particular, but also other forms of transport and their importance in terms of economic wellbeing. I wonder if you could talk to me about what the Government should be doing in terms of investment into those sectors.

Steve Allen: The bus system in London is very different from the bus system outside London and I think has benefited hugely as a result. It is worth remembering that the bus carries more than six million people a day in London, more than twice the number of people who travel on the tube. It is a huge proportion of transport within London by bus. The system that we have of the transport authority setting the routes and the Mayor setting the fares and the service levels, and then having the private sector operate those under franchise, has been an extremely successful one, and the reason for the continued success of the bus and the importance of those journeys to the London economy.

John Jarvis: We haven’t focused only on bus because we have largely focused on the links between the north rather than the links within individual cities in the north; that is more the territory of the PTEs. But the comment I would make is that we don’t benefit from a similar system as in London and the whole issue of how more effective relationships can be developed between the local authority sector and the bus operators becomes much more important in the north, whether that is by way of effective quality partnerships or quality contracts.

Q348 Mr Leech: I just wanted to ask Mr Allen what he thought the economic impact of a London style bus system would be on other major conurbations in the rest of the country.

Steve Allen: I clearly think it would be beneficial if other cities were able to plan their bus network in the way that London can. You can have better use of capacity so that you are not having inefficient competition, which I think you get in some bus routes outside London, and you can have the competition through bidding for the franchises once the level of service has been specified.

Q349 Mr Leech: With regard to the additional cost, because everyone accepts the London bus system costs a lot more than it does outside of London, would it be costeffective in terms of the economic growth that it would bring?

Steve Allen: I think you can separate out those two questions. You can run a system of the city determining what bus services it wants and asking people to pay for that, separate from the question of how much subsidy you want to put into it. There are benefits in the system that are not necessarily reliant on the subsidy.

Q350 Iain Stewart: I wonder if I might return to the question on estimating passenger usage of HS2. One of the criticisms that is made by the group opposing High Speed 2 is that High Speed 1 had a much higher estimate of passenger numbers than has actually turned out to be the case. The initial forecast was 25 million, and the reality is 9.2 million. To what extent have you revised the methodology for forecasting passenger usage in light of the experience of HS1?

Alison Munro: HS1 was clearly predicting a different market to the one that we are predicting, in that it was predicting international rail travel. In the field that we are looking at, domestic rail travel, there is more to go on in terms of past experience. The forecasts that we are using are based on past data of actual usage in terms of the rail network in the UK. In that sense, they are based on an existing pattern of travel and existing relationships. I would say that we are not facing the same problem as there was with forecasting the demand for High Speed 1.

Q351 Iain Stewart: I have one additional question, if I may. If I am correct, your report ruled out the option of intermediate stops at certain points on the line. With the experience of the TGV system in France, where they have modelled in intermediate stops, should you not revisit that in terms of boosting the overall usage of the system?

Alison Munro: Our general approach is that you need to look at it on a case-by-case basis. We did look at whether there should be an intermediate station between London and the West Midlands, and we concluded that there was not a strong case for it for that part of the line. That is not to say that there might not be a case for an intermediate station when we are going northwards to Manchester and to Leeds. We will look at that again on a case-by-case basis to see whether there is a case. We have not ruled it out.

Chair: Dr Kwarteng, is it on this issue?

Kwasi Kwarteng: It is on a general issue about HS2.

Chair: I will take Mr Baker and then I will come back to you.

Q352 Steve Baker: Following up Mr Stewart’s question about forecasting passenger numbers, I am afraid I have in mind the old adage about economists. The only purpose of economic forecasting is to make astrologers look good. I am just nervous and sceptical about these models. I hear what you are saying about having much more historical data, but could I just ask you to comment on the validity of historical data in respect of forward projections, and also to come back to the issue you raised about sensitivity? With all of that in mind, how have you quantified the risks?

Alison Munro: I think there are two questions there. Dealing, first, with the historical data, we have looked at the historical data but you can also look at the variation in rail travel between different income groups. For example, the top quintile travel twice as much by rail as the average person. It is not just historical trends. There does seem to be a lot of scope, as incomes grow, for people to travel more by rail. Rail is also a relatively small market. It is only about 2% of trips. So, again, there potentially is scope for rail to increase quite significantly.

In terms of the risks, we have not tried to attach probabilities to different outcomes. As I said, what we have tried to do is to look at sensitivity testing. If demand were so much lower or so much higher, what would the impact be on the business case? That is the way we have approached it.

Q353 Steve Baker: You mentioned the top quintile being-sorry, how many times more likely?

Alison Munro: Twice.

Steve Baker: I bear in mind the nation’s income distribution and it just seems to me immediately that means that poorer people will end up subsidising the rail travel of better-off people. I just wonder if you could comment on the social justice of that.

Alison Munro: I think that is outside my remit.

Q354 Kwasi Kwarteng: I would like to ask a simple question to each member of our panel here. It refers to what has been discussed about HS2 and the road network. You are not allowed to fudge the answer. It has to be one thing or the other. What is more important? Is it more important to have connectivity between our cities or to improve the actual local transport systems within the cities themselves? A lot of this HS2 debate seems to revolve around which stance you take on this question, and I wanted to ask you all individually which is more important: connectivity between cities or improving regional transport in those cities?

John Jarvis: I am very happy to try to answer that, and I hope this won’t be seen as trying to fudge it. We have looked very carefully at the issue of connectivity within and between city regions in the north of England. There have been a number of pieces of work around this that all come to the same conclusion. If you improve connectivity within two city regions but don’t improve the connectivity between those regions, the strongest economy will improve at the expense of the weaker. If you improve the links between the city regions without improving the links within the city regions, it helps to spread the benefit and you get a better overall return. That is not to say that, again, you do one or the other, but it is getting to the balance of the two. Our experience of improving links between city regions is that the evidence suggests it helps to spread the benefits by connecting weaker economies to the stronger economies. We have looked at that in relation to both a Leeds and Sheffield pairing and a Leeds and Manchester pairing. If you look at Leeds and Sheffield, improving links within the Leeds city region and within the Sheffield city region, it benefits the Leeds city region. It helps to spread Sheffield. If you do Leeds and Manchester, as Manchester is the stronger economy, improving links within Manchester and within Leeds, it benefits Manchester rather than Leeds. If you improve the links between, it helps Leeds rather more and helps to spread the benefits.

Alison Munro: We have not addressed the question of which is better, but I would say that high speed rail is not just about one or the other. Although a high speed rail line would benefit intercity travel, the capacity it would release on the West Coast Main Line or the other lines with a larger network, the Midland Mainline or the East Coast Main Line, would allow better local services, commuter services.

Q355 Kwasi Kwarteng: So, again, you are not taking a view as to which.

Alison Munro: You need both. Obviously, it is about endtoend journeys. You need the supporting network in the cities as well so that you can distribute people.

Sir Robin Wales: I take a broader view. I think there is a real concern that, if I look round the country, the reality of the current economic situation is that in London there are jobs, people can access them, it is quite difficult and we need to invest in people, whereas outside in other parts it is much more difficult. If we are going to spread economic benefit across the country, the first thing we have to have is good infrastructure and that means transport infrastructure. I look around Europe and other people seem to think high speed trains are quite a good idea. Certainly, from where I sit, high speed rail is very important. Once we have done high speed rail I would like to improve links within Newham of course, but do high speed rail first.

Q356 Kwasi Kwarteng: You are saying connectivity is the important thing?

Sir Robin Wales: I think connectivity is absolutely essential for the north if we are going to try to stop the movement of people down into London and spreading London out. But, equally, London is a powerhouse and we need to make sure the economics of London are developing as well; so I think that is important. I then think about issues like bus. If you are talking about social justice, buses-

Chair: Can you just answer the question, please? Social justice is very important, but that wasn’t the question.

Sir Robin Wales: If you are looking at internal movement, bus is extremely important in London and you wouldn’t just talk about rail; you’d look at bus as well. They are all important, but I have to say that I think if I was taking a view nationally I would say, without those links to the north and without those things working, we will put the north under more pressure, and that makes no sense.

Q357 Kwasi Kwarteng: In terms of Britain in 2010, at the end of November-

Sir Robin Wales: And Newham 2010-they come together.

Kwasi Kwarteng: - the connectivity is important to you?

Sir Robin Wales: I think that is right.

Steve Allen: If you look purely at the question of where you get the most economic growth for your investment-recognising that transport infrastructure is not purely about delivering economic growth-you get the most growth by enabling the highly productive industries to grow into larger clusters. All the evidence is that these industries work better in clusters in particular places, and that means that improving the investment and the infrastructure within the city is going to give more economic growth.

Kwasi Kwarteng: As opposed to the connectivity. So it is a different answer to the other three.

Chair: But you are speaking from a London base. Thank you very much for answering all our questions and coming here today. Thank you.

Examination of Witnesses

Witnesses: Stephen Joseph OBE, Chief Executive Officer, Campaign for Better Transport, Keith Buchan, Board Member – Policy Matters Lead, Transport Planning Society, Dr Adrian Davis, Public Health support to City Development Bristol City Council, Directors of Public Health for the West of England Partnership, and Joe Rukin, Convenor, Stop HS2, gave evidence.

Q358 Chair: Good morning, gentlemen. Can I ask you, please, to give your name and organisation for our records? I will start at the end here.

Stephen Joseph: Stephen Joseph from the Campaign for Better Transport.

Joe Rukin: Joe Rukin from Stop HS2.

Keith Buchan: Keith Buchan from the Transport Planning Society.

Dr Davis: Adrian Davis representing four Directors of Public Health in the West of England.

Q359 Chair: Thank you. How should spending on transport be prioritised to bring the greatest economic benefits? Who would like to try? Mr Joseph?

Keith Buchan: I will start by identifying the problems, I suppose, first, which you are trying to tackle because you won’t have economic efficiency unless you have got good problem definition. Returning to Eddington, I suppose that takes us straight back to congestion and city regional networks, which, for us, in terms of major investment, would be the priority area that the Society certainly, when we surveyed our members, looked for. So it links back to the end of the last session. We would see the movement within the great city regions outside London as being a key priority or investment.

On investment, you can get a tremendous amount by investing in management, and hitech techniques and approaches. It is surprising how much money you can save by doing proper tele-presence video conferencing, for example, as many companies are already doing, so "Don’t overlook the small investments when you’re looking at the big ones" would be my summary.

Stephen Joseph: I would very much agree with that. I think there is a danger of "big projectitis" taking over generally in transport and that the small scale and local investments tend to get overlooked, as do nontransport investments. I noticed that the members of the Federation of Small Businesses, whose representative earlier suggested that the big priority would be roads rather than rail, were not asked whether they would prioritise those over, say, high speed broadband, but there is good evidence that high speed broadband would have the biggest impact, particularly for some more rural areas and regions like the south-west in terms of actually producing economic development.

Q360 Chair: There are a large number of carbon reduction schemes. Do you think those have any economic benefits as well as being important in their own right?

Stephen Joseph: I think there is a fatal tendency to try and put carbon reduction and climate change issues in a separate box from the economy. Ultimately, we have to move, as the present Government and indeed the previous one talked about, towards a low carbon economy. That means, as Nicholas Stern’s report said-which came out at the same time as Eddington-we have to prioritise investment in low carbon transport infrastructure and in measures that will reduce dependence on cars, motor vehicles and aviation rather than on infrastructure that will entrench that dependence.

Q361 Chair: What kind of investments would you like to see in transport at the moment, given the current financial situation? What would you like to see happen?

Stephen Joseph: At the moment? We have been supportive of some of the priorities that the spending review has produced for transport, particularly the local sustainable transport plan, which we argued for in the past and which we think will be very helpful in giving priority to local, small scale, and indeed low carbon investment. But we can’t just look at transport in isolation. We need to look at transport combined with planning of land use and development, to invest in developments that will overall make it less necessary for people to have to use cars and to rely on road transport.

Dr Davis: From a public health perspective I hope we would all agree that we want prosperity and we want health, combined with the good health of the population. Picking up on Mr Joseph’s point, I think we are concerned about this "big projectitis" effect, when there is strong evidence for very high benefit to cost ratios from small scale schemes. That, of course, was picked up in the Eddington report, but it seems to be underplayed. When I talk about small scale schemes, I am particularly talking about those incity, intown schemes.

Q362 Chair: Which types of things? Could you give us some examples?

Dr Davis: Yes, I am talking particularly about walking and cycling interventions that help people to lead more physically active lives. It is extremely important because most of the population do not achieve a minimum amount of physical activity to achieve a health benefit and that has a negative effect on the economy in terms of cost to the National Health Service. So we can achieve a number of major benefits by enabling people to meet their access needs, which is after all what transport is about, while helping them to maintain their health and not be a burden on the economy.

Q363 Chair: Are you satisfied with the way appraisals are made for major transport schemes?

Keith Buchan: Shall I start by saying, simply, no? There is a difficulty because appraisal is only part of the decisionmaking process and possibly the first formal part, and that has been changed and developed over many years to the extent that it has perhaps lost sight of the overall objectives of an appraisal system, which is how we can best spend the money we have to address the problems we have identified. I think that cost-effectiveness is a very important weapon here. In transport, we have tended to get involved in some very, very elaborate modelling, forecasting and cost benefit analysis in which we have to monetise all sorts of things that we don’t really know the true value of, to import a lot of assumptions that are quite difficult to justify, in an attempt to make a robust process. Of course, at the end of the day, the decision is influenced by a lot more than that.

Stephen Joseph: In our written evidence to the Committee we drew attention to a number of problems with current appraisal techniques that are used by the Department. I think we can summarise these as saying that they give rather too much emphasis to small time savings over 60 years and rather too little to other factors such as the importance of reducing carbon emissions, and, as the Transport for London written evidence suggested as well, the importance of helping promote public transport based development on brownfield sites.

Q364 Chair: Is High Speed 2 a good investment for transport? Would it be? There’s an easy question.

Joe Rukin: Where do I start with answering that question? Just tagging on from the appraisal process, I think Alison Munro actually highlighted one of the major problems with the appraisal process from the DfT in that the DfT figures for increasing rail usage for 2030 come up with 73%, but when you put these figures into the appraisal process you come up with a figure of 267%. Obviously, from our point of view, we don’t think HS2 is value for money whatsoever. It is exceptionally sensitive as, again, was just demonstrated. The fact of the matter is that, if your starting point is these passenger figures, then it is very much a situation of garbage in, garbage out. It seems very much like the value of time has been overegged; wider economic benefits have as well; there is a greater optimism used than normally; finance costs have been left out; and operator profits have been left out as well.

Adding all this together, you find that HS2 has a great benefit, but, when you look at the figures more rationally, you find that this benefit doesn’t really exist. The problem is that it is a massive gamble and, basically, what we are here to say in terms of how things have moved on from Eddington is that everything Eddington predicted regarding HS2, or high speed rail, as he called it, has come to pass in that it has not been properly assessed against other items that could have been taken forward and it is potentially a costly mistake. It represents a massive gamble-a £34 billion gamble. Obviously, that is not taking in the finance costs, but it is £34 billion on paper, which, upgrading the current infrastructure, is not such a gamble in that respect.

Q365 Chair: You have made some very, very major statements there without very much to back it up, haven’t you? We have just taken evidence from the High Speed 2 company, who have told us that they have made a number of appraisals, it has been based on existing patterns, it is sensitive and that they have looked at different options. How closely have you really looked at that?

Joe Rukin: Very closely over the last few months. I suppose the most significant way of demonstrating that they are not satisfied about the business case is that a revised business case will be presented to the consultation, which I think is a clear admission that they realise that the business case is not sound and doesn’t stand up to scrutiny at this point.

Q366 Chair: But wouldn’t you expect a business case to be considerably revised in a project of this scale and over such a time scale? Would it not be a weakness if there was never a reappraisal?

Joe Rukin: I would say it was potentially a greater weakness to be presenting a business case in two months’ time that has not been completed at this point, to go out to public consultation on which people will have the chance to respond to a business case which has not been thoroughly tested at that point.

Q367 Chair: You said finance costs were not taken into account. What does that mean?

Joe Rukin: Basically, all the costings for HS2 are based on 2009 figures.

Q368 Chair: They are based on 2009 figures without any assessment of what those costs might be in future years?

Joe Rukin: When they are actually paid, yes.

Q369 Chair: You are absolutely sure of that?

Joe Rukin: Yes.

Q370 Kwasi Kwarteng: I have a question for Mr Rukin in terms of the Stop HS2 campaign. You say it is a national campaign, but do you find that a lot of your supporters are concentrated presumably along the routes of the railway?

Joe Rukin: Obviously, you find that to start off with. Our core message is that there is no business case, that there is no environmental case and, of course, that there is no money to pay for it. We work on behalf of approaching now 60 action groups around the country, but we have found that that support has widened out in the country at large. Obviously, opposition is focused where people have taken an interest in something that is going through their areas, taking on from the big society, I suppose, in that respect, but it means that we have spent more time paying attention to the plans as they stand.

Q371 Kwasi Kwarteng: You are saying that you are getting increased support. What is your main objection to the proposal? Is it that it will destroy nice countryside or is it that it is a waste of money? What is your top line sell on this?

Joe Rukin: As I said, our core message is that there is no business case, no environmental case and no money to pay for it. Obviously, people are concerned about the local environment as well. There are a whole raft of concerns. That is the thing. We find that the more we find out about HS2 the worse it seems to get on all aspects.

Q372 Kwasi Kwarteng: I asked a question about this in the earlier session. What do you think about the argument about connectivity between different cities? Is that something that your campaign is interested in?

Joe Rukin: Yes. The thing that we found is that there is evidence and research going back all the way to the 1960s, and it has been highlighted again, in that if you join a stronger economy to a weaker economy, the weaker economy is disbenefited and the stronger economy benefits. The most recent study on that was a Barcelona report looking into high speed rail in Spain, which found that the stronger economies benefited. This will be exacerbated in a country like the UK where London is so much of a primate city. You will just suck more things towards the capital. Also, in terms of-

Q373 Chair: Mr Rukin, can I just stop you? That actually is not what we have heard in evidence this morning. We have heard evidence this morning about a number of studies done in the north of England which don’t show that at all. There is always a proviso about having proper links and infrastructure in local areas and across regions as well. What you are saying in fact has not been shown to be the case in the UK.

Joe Rukin: If you look at studies that have taken place like the Barcelona report-

Q374 Chair: But not in the UK. The evidence we had this morning did not show that at all.

Joe Rukin: Fair enough.

Q375 Kwasi Kwarteng: Clearly, there is a massive range of opinion. In point of fact, what you are saying is exactly the opposite of what some of our witnesses said earlier. It is not my job to say who is right, but it is interesting that what you are saying is completely opposite to the case that was made in which it was said that connectivity between cities is a better way of raising the standard of both cities than an improved network within two different cities without connecting them. That was what was said.

Joe Rukin: I would say that the academic studies that have been produced back up the case that I am putting. Where the studies have been put forward by groups like in Birmingham, for example, Centro, who have a vested interest and would go with that statement-

Kwasi Kwarteng: I just wanted to make sure that’s on the record. I am not making any comment about that.

Q376 Julian Sturdy: I would like to follow on from what Dr Kwarteng has been talking about, about the connectivity, which we have heard a lot about in the debate so far. This is a question to all the panel, if I could. What do you see as the key transport investments across the board to achieve the connectivity if you believe that that’s the way we should be going to balance the regional economies and bridge the north-south divide?

I have a more specific question to Mr Rukin. Regarding HS2, if that does not go ahead, where would you see the alternative in transport investment, specifically to try and bridge the link between Birmingham, Manchester and Leeds, if we don’t go with HS2?

Joe Rukin: In that respect we are looking at Rail Package 2 and other rail packages which would free up capacity. There are also things that can be done immediately. For example, there are practices in place which restrict capacity due to the effects of privatisation and the franchises. For example, Wrexham and Shropshire currently run five trains a day to Marylebone, which go through Wolverhampton, Birmingham and Coventry. They are not allowed to stop there because of the franchise agreement with Virgin. As Kelvin Hopkins asked Philip Hammond about on Wednesday last, there are carriages that are sat in sidings from the upgrade of the West Coast Main Line which could be taken into service today. These are things that need to be looked at as well.

Stephen Joseph: First, I do think that we do need to give a lot more priority to local transport, to answer Dr Kwarteng's question earlier, particularly outside London and the south-east. That has not been a feature of the recent spending review where, for example, rail spending has been very south-east based. You have already heard from The Northern Way about the importance of the Manchester Hub, but there are lots of smaller scale investments and, also, the opening or reopening of stations and lines to serve areas that were in decline when Beeching shut them but are now growing places. Mr Sturdy will know about places around York where there has been a lot of talk about new stations being needed to serve growing housing development. That kind of investment is very strongly needed to support local intraregional connectivity and to help economic growth.

I just make one comment in answer to some points you heard earlier which highlighted the idea of widening the A14 as a key route. We have looked at this in some detail. All the assessment we have done of this said that that was a very, very expensive scheme. It was £1.3 billion before anybody had got near contract for 21 miles of road. Our view is that there are plenty of cheaper ways of dealing with the problems on that corridor that do not involve £1.3 billion but that would deal with both the safety and congestion issues on somewhere like the A14. That, I think, is an example of what we might call a legacy scheme. People have been planning that scheme for years and years and years; nobody has reexamined it. We need to go back and have another look at that corridor as, in fact, the Government has, very welcomely, said should happen now. I mention that simply because you had a lot of very strong evidence in the other direction.

Chair: Mr Shuker, is it on that point?

Q377 Gavin Shuker: Yes, absolutely. I asked the Secretary of State about the A14 in our last session with him. He suggested that local authorities were looking at road pricing measures that might be possible to alleviate the congestion on the A14 stretch. Would you welcome that?

Stephen Joseph: We have done a report recently on the experience of the M6 toll, which I think is the sort of scheme that the Secretary of State and the local authorities have been talking about where you price a new piece of capacity. The evidence from what we looked at is that the M6 toll hasn’t worked for almost anybody except possibly some bankers, who seem to have done some very interesting debt swaps with the holding company. But it hasn’t improved journey times on the existing M6. It hasn’t helped the economy; in some ways it has actually added to congestion at the side of the tolled section and, indeed, on the local road network. Our concern is that, if you just build and toll a new bit of the A14 and leave everything else unchanged, you will worsen the problems in the area and you will have diversion impacts from other traffic through the surrounding villages. It will worsen the problem rather than solve it. If you were to talk about more general road pricing and tolling that is another matter, but that is not what is being talked about there.

Q378 Paul Maynard: This is aimed at Mr Joseph and Mr Buchan. Clearly, you are both in the business of improving the planning of transport policy in the future. I noted the Transport Planning Society’s evidence about the compromised lists of local schemes in terms of thinking strategically. I am wondering whether you can give me any concrete examples of small scale transport projects that have had a clear impact on the economy and to explain how they impacted on the economy.

Keith Buchan: I can, I suppose, instantly think of a lot of green travel plans and individual companies, for example, hi-tech companies getting employees to cycle to work, in which this becomes a selling point for the company. It becomes part of the image. In a sense a green travel plan attracts the sorts of employees that they wish to have, so that works at a very, very small local scale. At the company level, assisted by local authorities, there are lots of examples of that. I can think of bus networks, for example, put in place-very, very local bus networks- feeding into industrial estates. I can think of some in outer London where that has been done. The difficulty is putting them all the many examples into a basket that looks like something where you can say, "Well, this is a very big attractive project. Let’s do it." I think that is why, for example, our membership in the survey said, "This is the sort of thing that we want to see. Can we have it rolled up in a national programme?" It is also why I think the Society’s immediate reaction to the sustainable transport fund, similar to Mr Joseph, is a very positive one because that is seen as revenue-funding. It is seen as something that can have an effect at local level and, for that reason, it is very strongly supported.

In terms of the economy generally-and perhaps I can just bounce back and come back to the issue of connectivity-transport is seen as part of a transport, communications and land use tripartite planning block that needs to be done much, much better. Broadband has been mentioned; I mentioned video conferencing. We need to see this connectivity. We need to define that in as broad a way as possible.

Stephen Joseph: Can I add to that? First, a number of what are generally termed "public realm improvements", improving the quality of streets in places, has been undoubtedly economically beneficial. If you want to go down to the real detail, there is some work that was done for, I think, Transport for London which started to put money values on putting seats in public places and things like that. But, more generally, there was a piece of work which looked at where you had had investment in high quality public rail improvements, for example, in removing guardrails, changing the way streets looked and so on, and found that rental values in those places were greater-this is in parts of London-than in places that had not had that. So there is some hard economic data.

More generally, as Mr Buchan said, the evidence from companies like BT, GlaxoSmithKline and others that have invested in small scale green travel plan initiatives, in car sharing, in bus links and so on is that those companies have been able to make better use of the sites that they occupy, of the car parking that they have and have been able to attract people to work in those places. Companies like those rely on attracting high quality, highskilled workers, and places like the Cambridge Science Park, where something like 45% of workers cycle to work, is one of the countries leading hitech hubs. That is the result of local authority investment. It is those kinds of investments that make a difference. Again, going back to a point I made earlier, it is not the case that you have to choose between investing in sustainable transport and economy. You can get a low carbon economy with low carbon transport investment.

Q379 Paul Maynard: Under the previous Government we had a number of what were called demonstration towns, many of them linked to cycling. I am just wondering what you thought that they demonstrated in the end and what you feel the policy implications of those projects were for the current Government.

Stephen Joseph: I think Mr Davis may want to come in on this one because he is an expert on some of the evidence on this. Broadly, what it showed is that you can change travel behaviour significantly beyond what is in the Government’s national traffic forecasts, which tend to start from one end and move inextricably up to the level where we are all driving as much as people do in Los Angeles. Instead, what it showed is that you can change behaviour. In the sustainable travel towns, for example-Peterborough, Worcester and Darlington-car use was reduced by residents in those towns by about 10%, and there were significant increases particularly in cycling, and particularly in Worcester and Peterborough in bus use, something like 22% in those towns. The result, overall, was some reduction in congestion as well. That was with relatively small amounts of money. In fact, what has happened from that and from the cycling demonstration towns has been that the present Government has taken a view that there is now a strong evidence base that those kinds of small scale interventions do work.

Q380 Chair: Are you saying, Mr Joseph, that we should do more of that type of small scale intervention?

Stephen Joseph: Yes. What has happened, I think, is that that has fed into the local sustainable transport fund, which is going to have a significant-

Q381 Chair: Are you confident that there will be sufficient funding in that fund to enable this to happen on a big scale?

Stephen Joseph: We hope so. It entirely depends on what bids come forward from local authorities and others to make those work. I think it is worth saying that what we are concerned about is the transition from, say, some of the Cycling England funding for the cycling demonstration towns and cities into the new fund. We are concerned about whether a lot of local authorities will simply make all their school travel plan officers and their cycling officers redundant and then have to reemploy them again when they get the bids. That does not work on almost any level in terms of delivery of sensible transport projects.

Q382 Julie Hilling: I wanted to go back to High Speed 2. Is that okay?

Chair: Yes.

Julie Hilling: I am sorry about that because I think we were just developing a very interesting conversation there about other areas, but I did just want to go back in terms of the issue about the north. First, how many members in your organisation are from north of Birmingham and is this very much about a southern group saying, "We don’t want this railway through our back yards when the benefit for this railway is going to be from the north particularly"?

Joe Rukin: There are various people who have obviously been involved in terms of things like signing the petition and so on, from the north. There are a lot of people further north who have significant concerns about this. It is fair to say that most of the people are from the southern part of the route. However, the problem with this is that simply because people live in the locality of where the line is going does not mean to say that the position they have come to, after paying attention to the plans, isn’t valid. The fact is that we would say the transformational benefits are, at best, unproven.

Q383 Julie Hilling: Can I ask you then about the capacity, particularly on the West Coast Line, which is the one that I know most about? There is a reality that you can only have so many trains on a piece of line at any one time and, of course, you then have to have your periods where you are actually inspecting and repairing the line and in terms of swelling the assets. What is your suggestion then for increasing capacity to the north if we do not have an additional railway line that takes people there?

Joe Rukin: For a start, obviously, there is the increase in capacity generated by the long carriages, which hopefully will come about in the future, but it is questionable whether or not that gets transferred from Thameslink or wherever they are coming from. The reality is that, yes, there is a capacity problem. However, that capacity problem can be addressed in many ways. The other thing you have to add into that is, of course, will people need to travel as much in the future? That is a serious question which seems to have been completely ignored at this stage in that, for example, when the canals were built, people didn’t see the railways coming. When the railways were built, the internal combustion engine wasn’t seen coming. With high speed rail, what you are finding is that the future, the alternative, is already here and there will be increasing use-

Q384 Chair: But, Mr Rukin, if it is already here, how does that explain more and more people on the trains?

Joe Rukin: It is already here but it is not fully developed.

Q385 Chair: It doesn’t make any sense, does it, to say that in that way?

Joe Rukin: Sorry?
Chair: It doesn’t make any sense, does it? If you look at what’s happening now, more and more people are travelling on the trains, and that’s why we have the overcrowding problem.

Joe Rukin: More and more people have been travelling on the trains in the last six or seven years. Whether that growth is sustainable or not is another matter. The reality is that the businessmen, the business travellers of the future, are going to be the people who are teenagers today, the younger generation today, and for them high speed is instantaneous. The fact of the matter is, as communications progress, is there going to be such a greater demand for travel as there is now? Is it going to continue to grow? These are questions which are, quite frankly, unanswered at this stage.

Q386 Julie Hilling: It seems that there is evidence that it is continuing to grow and I guess what you are saying is, "We don’t need to travel anyway."

Joe Rukin: But is it going to continue at the same rate or at an increased rate?

Q387 Julie Hilling: If you look now, people don’t fly from Manchester to London any more because the West Coast Line is much faster. What are we doing about preventing people flying from further places? We are a small island but we still need that connectivity. It seems to me that what you are saying is that we won’t bother to travel any more; we’ll just talk to each other through the internet. But you are not addressing how people may then travel when already we are at capacity on the west coast.

Joe Rukin: No. I am saying that there are other ways of increasing capacity, such as increasing the number of carriages on West Coast Main Line trains. They can go up to 12 carriages.

Q388 Julie Hilling: That is happening, but it still doesn’t solve north of Manchester.

Joe Rukin: Other options have to be looked into: it’s that simple. The fact of the matter is that high speed rail is a massive, massive gamble and the question is, is it going to provide the benefits that are stated? Is the money that is going to be put into it worth it? That is a question that has to be asked. The problem is that a solution has been generated for the problem without necessarily understanding the problem first.

Q389 Chair: Are you suggesting that there is not a problem of overcapacity on the rail and the predictions that the West Coast Main Line, for example, will be full in a few years’ time is wrong?

Joe Rukin: I am not saying that is wrong at all. I am saying there are other ways of increasing capacity.

Chair: And you don’t know what they are.

Is the question on this point?

Q390 Kwasi Kwarteng: It is exactly on this point. You are all saying that the current appraisal or the current drive for big projects is wrong. You all seem to be joined up on that in terms of your views. Am I right in characterising you in this way?

Keith Buchan: Broadly.

Q391 Kwasi Kwarteng: Bear with me. If that is the case, what do you think is going wrong with the Transport Department in terms of its decisionmaking process, because, clearly, they have a very different view in terms of our needs and in terms of capital projects and all that sort of thing than your view? I was just thinking, from your point of view what would you change about the Department? Why is it consistently going for these big projects when, as you say, small projects are the way forward?

Joe Rukin: Quite simply, in the case of HS2 it does seem that momentum has built up behind a project and it has come simply from that point of view. The assessment has been done. "Basically, we would like to do this." It has not been assessed against other projects as robustly as it could have been and, quite frankly, it does seem that high intensity lobbying has gone. You will find that a lot of countries are all focusing on the idea of taking high speed rail on, all at the same time. It comes back to a period in the 1990s where there was a lobby going around effectively touting for business. You found that America-

Q392 Kwasi Kwarteng: So you don’t believe that they have any objective criteria at all. You think they are being swayed by lobbyists, essentially.

Joe Rukin: That is exactly in line with what Sir Rod Eddington said and we believe that.

Q393 Chair: What do you believe?

Joe Rukin: I completely agree with that because it does seem that these projects are coming to pass round about the same level of progression in a lot of countries, all at the same time. It goes back to a period in the 1990s when this lobbying for high speed rail started. Obviously, China is far progressed at that, but planning in China is a slightly different matter. However, it is fair to say that in China they are revisiting some of the planned lines, questioning the need for them and questioning whether they will ever pay for themselves.

Chair: We are not talking about that here.

Q394 Iain Stewart: I would like to pick up this point about the balance between smaller projects in the short to medium term and larger scale strategic projects in the medium to long term. It is a wider question than HS2 but that illustrates the point well. My view is that it is a false choice between the two. In terms of the West Coast Main Line, yes, there are small scale adjustments and improvements that can be made: lengthening trains, adjusting the franchise model, having different configurations in their use, for example. That will buy you time, but you are still then going to reach a point where the line is physically at capacity and cannot carry any more traffic. High Speed 2 is not due to come in, with the first trains running, until 2025. My concern is that, if we only focus on the small scale projects and ignore the longer term strategic ones, we are only going to buy ourselves a little time. Something we have got traditionally wrong in this country is that we have not taken that longer term perspective. It is not just HS2 but I use that as an example to illustrate the point.

Stephen Joseph: Can I come in on that and refer to Dr Kwarteng’s question as well?

Kwasi Kwarteng: The question was addressed to all of you.

Stephen Joseph : "What would you change about the Department for Transport?" I would integrate them much more with values planning in the way that almost every other developed country does so that you actually look and planning and transport together. I would also move them away from reliance on single forecasts towards scenario planning in the way that most private sector businesses do so that instead of looking at one possible future you look at a range. To disagree slightly with my colleague on the left, I think there is a perfectly good case you could make for some kind of high speed rail or, certainly, large scale increase in rail capacity simply because you are going to deal with scenarios that he has not mentioned yet around peak oil and climate change. In fact, to take another crisis that Dr Davis would probably want to highlight, about growing obesity, that requires a move away from the private car and also from a heavy reliance on internal aviation and short distance aviation.

That means that you might still have an overall reduction in travel but you might have much more increase in rail for both freight and passenger. You need to plan for that and plan not just for the rail itself but for the planning around it. That seems to me to be something that we have not really done. In our evidence we pointed out where one of the madnesses of forecastled planning took you, which was to project-because there is a uniformed view on car ownership-30% increases in car ownership in London in the next 20 years, which nobody believes is real or likely to happen and certainly not something that Transport for London is planning for. We need to move away from that kind of forecastled modelling and planning towards a much better scenario basis. But if you did that you would still need to think about some big as well as small scale transport projects to deal with these wider issues the Government is dealing with rather than just with today’s transport problems.

Dr Davis: Could I just make a point about what would you do to change the Department for Transport? One of the things over many years we have seen is a failure to link up with other Departments across Whitehall, and I obviously mention the Department of Health, as I would do. Transport could become much more part of the answer to many of our health problems, including obesity, because a lack of physical activity is a driving determinant of adult obesity. If we could raise population physical activity by the way that we used to travel a lot more, by walking and cycling integrated with public transport, we could save ourselves a lot of money. I would just remind people that the CBI’s figure of annual absenteeism cost is £17.4 billion each year, of which about 40% is due to illness related to physical inactivity, including the common cold, which is the number one reason why people phone up and say, "I’m not coming in today." So we have we have an opportunity to link transport and health in a much better way than we currently do.

Today is actually a fairly auspicious day because it is the launch of the public health White Paper, which announces the return of public health to local government. We hope, at a local level, that will allow us to do a lot more to address the determinants of ill health than sitting inside a separate organisation where we always run the risk of silo mentality. But that silo mentality is there in Whitehall, between the Department for Transport and other Departments and, particularly, there is a lack of really strong engagement on the health agenda.

Keith Buchan: Can I just say I think there is a governance issue here to be discussed about planning for the future and planning for large projects and having a vision, in a sense, of where transport is going? And I would agree. I would be very nervous about being put in the box of being anti-big projects altogether. I think healthy scepticism is the position of the Transport Planning Society and we wish to employ our members studying these proposals to see if they really hold water. It is important that we do unpick, for example, in a major project, exactly what we are trying to do. Are we trying to increase capacity, because there is certainly a consensus that there is a capacity issue over the railways, or are we trying to create a new form of intercity travel which will rival domestic aviation? In my view, that is another separate box. The important thing is not to conflate them together. Some very interesting discussions happened when we held a seminar about this. The society organised a seminar with speakers for and against, and indeed a regional speaker on HS2 who I believe you have interviewed-David Bull from Birmingham. What is clear is that there is tremendous support for HS2, but then, when you drill down into that support, you start finding all sorts of different interests in why that should come about. Certainly-and I heard it again earlier in the evidence you have taken today-the capacity issue is a key issue, a critical issue, for some of our big cities outside London. It needs to be addressed. If HS2 is an externally funded way of getting that capacity, then people of course are going to sign up to it. We are not against HS2. We want it properly examined and we want the issues unpicked so that we understand what they are.

Could I finish on the governance issue because I think this is important and was raised by Mr Maynard as well? Our membership was pretty clear in its view of the previous regional planning arrangements in that, in transport at least, they had failed to deliver a true regional sense and that was because, of course, if you look at the schemes they produced to be funded-and this is going to come back to the point about the Department-if you look at the schemes they asked the Department to fund, they were a ragbag of horsetraded individual schemes. They were not a coherent set. In fact, some of the analysis that the regions got in themselves from external consultants said exactly that. We do not sign up to the view that the existing arrangements were good, but we do sign up to the view that something might be needed to provide that level between the national and the local.

This is my final comment on the Department, because of course one of the things that they had to do was receive bids. They received, in the case of the regional funding allocation, an astonishing ragbag of incoherent bids, with a few honourable exceptions, which is why perhaps our membership was so cynical about the previous arrangements, although clear that something was needed between the national and the very local level.

Q395 Mr Leech: Can I ask Mr Buchan whether he thinks there is a model that would deliver regional priorities for transport and, if there is, what is it?

Keith Buchan: I think I would start from the bottom up on this one. When we surveyed our members, incidentally, we did do some subanalysis regions versus London and the south-east, which was quite interesting. Look at the great city regions of the UK. I live and work in London but we are not a city state. We are supposed to be a polycentric United Kingdom.

Q396 Chair: What would the scheme be that would deliver regional schemes?

Keith Buchan: I would start with the city regions and I would say that, at present, we need a broader view. We need champions in those city regions, for example, for local rail schemes. If you look at PTEs, they used to co-sign franchises; they don’t even do that any more. You need to have sort of impetus-that impetus for integrating the bus network, the walking and cycling scheme. We have people trying to make do with way suboptimal arrangements in place.

Q397 Chair: But what about strategic schemes that go across local authority areas? You said that you did not agree that what existed delivered things; you are unhappy about the current proposals. Mr Leech is asking you what scheme will deliver good regional programmes-not local ones but regional ones.

Keith Buchan: For example, in the context of a national infrastructure plan, what we will see come forward are some of the things that Eddington started to talk about-the key corridors in the country.

Q398 Chair: No, but what mechanism would do this? Mr Leech is asking you what mechanism should there be to deliver good regional schemes? You said the previous scheme, in your view, did not deliver the right schemes. You have expressed concerns about the current proposed arrangements and whether they will deliver them. What mechanism will deliver good strategic regional schemes?

Keith Buchan: I think we have to approach it from both ends: the LEP end, which is the grass roots end, which is being formed at the moment and is quite plainly insufficient to do that. From the national end, we have the idea of the national infrastructure plan coming downwards. In the middle of that, the Government has to sponsor cooperative working between the major city regions within those corridors which it identifies. If it does not do that, then I am not quite sure that there is a mechanism in place which will do it. Well, there is not, in fact.

Chair: Right. We were just trying to see if there was an answer to it. Does anyone else have any other questions? No. Then thank you very much, gentlemen, for coming and answering our questions.