UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 473-v

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Transport Committee

Transport and the Economy

Tuesday 7 December 2010

Simon Buck, Michael Roberts, Richard Bird and Nick Gazzard

Professor Stephen Glaister, George Batten and Les Warneford

Professor Roger Vickerman, Richard Summers and Councillor Peter Box CBE

Evidence heard in Public Questions 399 - 485

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Transport Committee

on Tuesday 7 December 2010

Members present:

Mrs Louise Ellman (Chair)

Steve Baker

Julie Hilling

Kelvin Hopkins

Mr John Leech

Paul Maynard

Gavin Shuker

Iain Stewart

Julian Sturdy

________________

Examination of Witnesses

Witnesses: Simon Buck, British Air Transport Association, Michael Roberts, Association of Train Operating Companies, Richard Bird, UK Major Ports Group, and Nick Gazzard, Chartered Institute of Logistics and Transport, gave evidence.

Q399 Chair: Welcome to the meeting of the Transport Select Committee. Could you identify yourselves for our records with your name and the organisation you are representing?

Nick Gazzard: Nick Gazzard, Chartered Institute of Logistics and Transport.

Richard Bird: Richard Bird, Executive Director, UK Major Ports Group.

Michael Roberts: Michael Roberts, Chief Executive, the Association of Train Operating Companies.

Simon Buck: Simon Buck, Chief Executive of the British Air Transport Association.

Q400 Chair: You all represent different transport modes and I want to ask each of you what you think is the highest priority in your area. Mr Roberts, would you like to begin? What is the most important thing to be done in rail?

Michael Roberts: Our starting point would be to support what was mentioned in the Eddington report about the three priorities, which are around supporting growing and congested cities, serving inter-urban corridors between our main cities, and serving international gateways. We think rail has a major role to play in serving each of those markets. The critical priority is to make sure that the existing network is at a high level of quality. Following that, the most important priority is to enhance that network to serve what, in our view, is a growing market that will see passenger demand in particular doubling over the next 25 to 30 years.

Q401 Chair: Who would like to give us their thoughts next? Mr Bird?

Richard Bird: Of course, ports are privately financed so we don’t depend upon Government money for port development. But it is very important that there are good high quality links, both road and rail, to and from ports, bearing in mind, of course, that 95% of our international trade uses UK ports. We are very clear that the Eddington emphasis on good links to international gateways must continue to be a priority. We would very much want to see the strategic corridors which the previous Government developed under the Developing a Sustainable Transport System White Paper maintained and taken forward. We would want to have an effective link between port development and the relevant rail and road links to those ports.

Q402 Chair: Mr Gazzard, can you give us a view? What is the most important thing to do?

Nick Gazzard: First, could I say we are not a trade association? We are a membership professional body.

Chair: Yes, I know.

Nick Gazzard: Without reiterating the points that have already been made, we think that road is also important in the sense that a huge amount of goods travel on it. Therefore, not losing investment in, particularly, local bottlenecks would be very important. Also, freight is global. You have to think about airport capacity as well: 41% of goods by value internationally are going via airports. There is a growth in a lot of that because of international trade; so we need to ensure that the network is fit for that. Again, from the perspective that freight is global, we are competing with everybody else. Having regard to the growth in the BRIC countries, we need to be sure that we are an attractive place to do business, so we need to make sure that the balance of being able to move capacity around the network and move goods is there. With the growth that is going on in container traffic and things like port capacity, it is very critical that we have enough to move the goods that are going to be coming to the country around.

Q403 Chair: Mr Buck, in your written evidence you talk about problems with international aviation deterring investment and tourism. Is that the most important area on which you want to focus?

Simon Buck: We would be very happy if the Government were to have a proper aviation policy, but at the moment we don’t have that. We know the Government has made an announcement saying that it will be working towards that, but we feel it could be another two or three years before we do have a proper aviation policy. As has already been hinted, aviation does not receive any public funding for its infrastructure provision and is all privately funded, but we do believe that prosperous aviation is critical to the future prosperity of the United Kingdom. Indeed, with 75% of tourists who visit the UK flying here by air, we need to make sure that we have the capacity to accommodate those tourists if we are to compete with our near European rivals who are mopping up that tourist capacity to our great expense. Certainly, we need to have a proper, positive approach to aviation and less of a perception in Government circles that somehow aviation is a public bad and needs to be taxed more. That is very detrimental to the growth of aviation and the benefits that it can bring to the British economy.

Q404 Chair: What would you like to be done to encourage that growth?

Simon Buck: Certainly, a recognition on two fronts: first, on domestic aviation, that domestic aviation is not something that can be substituted-and I don’t mean to upset any of my colleagues here today-by some other form of transport, be it rail or road.

Q405 Chair: What would you like to be done?

Simon Buck: We would like the Government to have a recognition that this is something that is important for the UK economy. We would like a proper aviation policy. That is the main thing that we would like.

Q406 Chair: It isn’t a specific thing that you want to happen. It’s having a policy.

Simon Buck: We would like the Government to stop saying "no" to aviation development. Particularly in the south-east where we have capacity constraints, we would like the Government to be more openminded. The aviation policy paper that is being prepared by the Government has so many preconditions and so many decisions that are already made that we feel they almost have closed their minds to what is going to be in this paper in the end. We would like them to be a little bit more openminded and perhaps say yes occasionally rather than no.

Q407 Chair: What are the constraints on regional airports? Why can't they expand?

Simon Buck: We can expand.

Q408 Chair: Or expand the service?

Simon Buck: Absolutely. Regional airports have a vital role to play. Indeed, as I’ve said, huge numbers of people fly to and from regional airports because it’s not practicable to get there any other way. In fact, if you look at airports in places like Northern Ireland, the Western Isles, the Channel Islands, it would be impossible to replace those sorts of services by high speed rail at any time in the future. It is vital that we see the Government take a more positive approach to regional airports.

Q409 Chair: Are you involved in the work of the South East Airports Task Force?

Simon Buck: No. We protested loudly about that to the Department but they have not invited the British Air Transport Association to be a member of that group, which is a great shame because we do feel we have something considerable to offer to the deliberations there.

Q410 Chair: Mr Roberts, you spoke about expansion on the railways. How confident are you that passenger numbers are going to double within 25 years?

Michael Roberts: If we look back at the period since privatisation, since the mid-1990s, passenger journeys have grown by 60%. Looking forward, we are very confident that the forecast doubling the demand in the next 25 or 30 years is likely to happen, and not just on the back of the increase in patronage that we have seen in recent years. Incidentally, that increase has been stronger than historically was the case prior to privatisation. If I reflect on what we have seen happening during the recession, if you think of it as being divided into three types of market––the London south-east commuter market, the regional market and the intercity market––there has been growth in at least one of those sectors in every quarter of the recession. We now see growth across all three sectors. The combination of growth in all three sectors means that we’ve seen a return to growth in the last quarter for which we have figures at the highest level since the beginning of 2007. There has been a 9% growth year on year in the last quarter in passenger journeys. To see that sort of growth in the current economic climate is a sign of the strength of the rail product-one that we can always improve on-and I think that underlies our confidence that, looking to the future, rail passenger journeys are going to grow as rail seeks to meet the demands of the transport needs of the economy.

Q411 Chair: Is that despite the substantial increase in fares that is planned?

Michael Roberts: Yes. One would expect the recent decisions announced by the Government that the regulated fares will go up more than is currently the case to have some impact on demand. But the net effect would still be an increase in passenger journeys, not just over the next three to four years but, as I said, over the next 25 to 30 years.

Q412 Mr Leech: Rail has done relatively well out of the comprehensive spending review, certainly in comparison with other Departments but also within the Transport Department rail has done very well. There is cross-party political support for High Speed 2. Obviously, billions of pounds will be spent on High Speed 2. If you had that money and the Association of Train Operating Companies had the choice about how you would spend those billions of pounds, would High Speed 2 be your first priority or would you choose to spend that money differently?

Michael Roberts: The first priority is to improve the existing network. Of course, for the next five years at least, there are significant plans to invest not only to maintain that network but to enhance it. We have seen a very welcome shift of emphasis towards more of the overall capital spend for rail going on to enhancement than has been the case in the past, which is good, given what I said earlier about the likely growth in demand for passenger journeys. But, in a sense, trying to treat the existing network and potential new lines, particularly high speed lines, as two different things, is slightly false because part of the challenge and promise of improving the existing network is to provide additional new capacity through new lines, to relieve congestion which we already see on some parts of the network and which we are likely to see, given the sorts of demand forecasts that I mentioned. In fact, the two dimensions are part of the same picture. We will need new capacity if we are going to meet the sorts of demand forecasts that I mentioned before. High speed is not just about providing genuinely new high speed trains; it is about providing capacity to relieve the existing network. So I see them as two parts of the same picture.

Q413 Mr Leech: In terms of the timescale for the delivery of High Speed 2, is it being delivered quick enough to fulfil the expansion needs of the rail network but also to support economic growth?

Michael Roberts: The sort of timescales talked about up to now are satisfactory. What is uncertain is the extent to which the planning process will deliver on the sort of timescales that have been talked about, not just by this Administration but by the previous Administration. The other challenge is about affordability. I mentioned that from our point of view the first priority is improving the existing network-the socalled classic network. The ability of the nation to afford the development of high speed, both through the public and the private purse combined, rather depends on the extent to which the public sector is willing to sustain the sort of levels of investment that we currently have at the moment and which fundamentally go towards improving the existing network. That is an assumption that I don’t think we can take for granted.

You mentioned, rightly, that rail has done very well in the existing spending review. It’s not obvious that that level of expenditure from the public purse can be taken for granted for future years. There, it seems to me that if we are going to be able to afford not just to invest in the existing network but also to invest in new lines, high speed or otherwise, the industry has to improve value for money that it delivers. We have to get our unit costs down, for example, which is very much the focus of the McNulty review. I think you need to see these things almost as a jigsaw. Existing network and high speed network, or new lines more generally, are part of the same picture. Our ability to afford both depends on the extent to which we not only complete the investment programme on the existing network which is currently committed but the extent to which we can improve our value for money so that we can invest in additional capacity in the future.

Q414 Iain Stewart: Mr Bird, in your statement you mentioned the importance not only of enhancing the actual capacity of ports but of rail and road links to them for efficient movement of passengers and freight. To what extent do you think we’ve got it right in co-ordinating the priorities of all the different transport sectors? If you get an enhancement of a particular port, looking at the rail network as a whole, are you comfortable that we are planning sufficiently well in advance to allow for this? What I am trying to get at is that the extra rail freight is not going to clog up the passenger movement. Do you think we’ve got it right or is there more we could be doing?

Richard Bird: There is an overall issue of transport planning and that has been a big challenge over the years, particularly where you have to marry private sector activities with publicly funded activities. The structure is coming together rather better than it has done and some good work was set up post-Eddington on that. In theory, the national policy statements for ports and road and rail should help to take that process forward. We were concerned that the port statement was brought forward before the road and rail statements, which did rather suggest that there was still a degree of isolationism in terms of planning, but it may be now that the two statements will be prepared rather more together, which will be good.

On the specific question of the impact of developing rail freight on rail passenger services, clearly the proposals have to be taken forward through Network Rail, which has the responsibility for ensuring the infrastructure is being used as appropriately as possible. Again, there has been considerable progress there in recognising the very important role of freight. To its credit, I think Network Rail takes freight much more into account now and the Transport Innovation Fund and Strategic Rail Freight Network concepts have helped to give that a positive nudge. But there is still more to do here. There are, obviously, difficult issues. The more pressure there is on the passenger network, obviously, the more difficulty there can be about finding freight paths. To that extent of, course, anything which relieves capacity on the existing passenger rail network could have benefits for rail freight.

Q415 Iain Stewart: Do you believe High Speed 2 is critical for freeing up that capacity long term?

Richard Bird: I am no expert on the pressure on the rail network but, clearly, if the passenger railway is going to expand in response to the demand increases that have been discussed, then there is no doubt that some further increase in capacity will be necessary. Clearly, there is a very strong push internationally to develop high speed rail and so on, so it does seem a reasonably logical development. On the other hand, there are concerns about the amount of resource involved and whether that will get in the way of making other perhaps smaller scale improvements that could help. That is the area where I really couldn’t comment.

Q416 Steve Baker: Mr Buck, you mentioned domestic air and the relative proportion of public and private investment in your area. To what extent does domestic air compete with road and rail in the UK, and could you particularly refer to capacity, speed, price and flexibility in air in contrast to the other modes?

Simon Buck: First of all, 85% of domestic routes are over water, so there is no competition, effectively. But you have to look at the routes. The routes of up to about 2.5 hours by train are probably those that you could reasonably think are substitutable by air, and, indeed, there is competition there. If you look at Manchester to London, for example, you have a choice of going by air or by rail. It is really a personal choice for individuals as to whether their meetings are more convenient in the centre of a city or if they have another meeting elsewhere. But I think it’s important that we do offer choice to people. It is particularly hard for aviation to accept at least the perception we have that somehow we should be the last choice and the lower choice, if you like. If you look at what’s happened with the Government’s spending decisions, it defies logic that 90% of UK domestic emissions are from road transport but we have seen approval for a large number of road schemes, yet somehow the perception is that because aviation is environmentally damaging, there would not be the same support for aviation. To answer your question, there is competition. It’s in a structure that I think is perhaps not as fair as it should be because of the difference between rail transport and air transport. For example, air passengers pay a significant amount of tax in the form of air passenger duty. I’m not saying that other passengers should pay that, but it is important to highlight the fact that passengers pay a tax on aviation that they don’t pay on ferries or on rail, for example. There is a distorting effect against aviation there already.

Q417 Steve Baker: You talked there about substitutability. I have in mind the investment in high speed rail, which seems to be very sensitive to projections on passenger numbers. Could you explain how sensitive investment in air transport is to demand?

Simon Buck: Certainly, up until a few years ago-I think these figures still stand-the Government was talking about a doubling of air passengers flying into the UK in the next 20 years. I haven’t seen any figures yet that contradict or amend that. The Government may well be looking at new passenger projections, but it is important to highlight there that we’re talking about an intention of the Government to meet the requirements that demand makes on rail capacity, but if you look at aviation, they are not doing that. In many ways, because we are talking about, perhaps, the importance of inbound tourism to the UK-as I said, 75% of tourists come to the UK by air and the Prime Minister himself highlighted the importance of tourism to the UK-it does seem a shame that we’re not seeing a similar sort of perception that aviation is something that should be encouraged. We have a particular problem with capacity in the south-east. While, of course, it’s important that we see domestic regional airports expand and grow as demand requires, we can’t get away from the fact that 75% to 80% of people fly into the south-east of England because their journeys end there, that is where they want to visit or they live there. One third of people who live in London now, for example, were not born in London––not born in the UK––so they have a particular interest in having international links and connectivity. We do feel sometimes a little like the Cinderella of the Government’s transport strategy.

Q418 Paul Maynard: This is aimed at Mr Bird principally but I would welcome some other thoughts. In your evidence, you talk about politically attractive schemes that are economically less worthwhile. Do you have any examples of that, and, conversely, any examples of schemes which are economically worthwhile but politically unattractive? I’m trying to work out what the concept of a politically attractive transport scheme looks like. How do you define "politically attractive"? What would attract me? What would get my ardour racing?

Nick Gazzard: I have one that is politically unattractive. Road pricing would probably have a huge impact on people's behaviour and enable road to buy access to that network, but, politically, it has been avoided many many times in the past. I can’t give you one that’s attractive; I’m sure somebody could. But, in our view, road pricing is something that would enable the strategic road network to have a pricing mechanism that would actually work and discourage and encourage, and it’s not particularly politically attractive.

Q419 Chair: The Government have a very clear view that there’s not going to be road pricing in this Parliament. Therefore, if road pricing isn’t going to happen, in the absence of that, what should we have?

Nick Gazzard: We need a focus. To go back for a moment, I don't see it quite as an either/or with high speed rail. There is a price tag to some of these infrastructure projects: you have to pay if you want them. There is an argument between freight and passenger in terms of investment. Smaller investments in freight tend to bring enormous changes. You can transform the rail freight network for £200 million. But the other side of it is that there’s a tendency not to focus on behaviours and changing the way the supply chain works. Even if people wanted to get goods, which they do, on to rail, sea or, indeed, into the air, the complexity of the way the supply chain works means that you have to have the connections to handle goods efficiently to get them on to those modes. For example, on average only 17% of the goods come out of ports on rail. If you want to get goods out of ports on rail, you’ve got to be able to do what people do, to an extent, on road. So you need to change the way it works.

These aren’t necessarily massively expensive projects-things like transformation in the way you handle concrete in London for £1.3 million. There are things you can do in terms of behaviour. The average vehicle on the road is probably only about 50% or 60% full by weight; it is 60% to 70% full by cube. Consolidation centres again could remove a lot of road traffic. There is not a huge amount of money involved in putting up a warehouse. But it’s stuff that the private sector finds difficult, the current economic environment has cost everybody a fortune, the third party logistics providers have had a very difficult time in the last two years, and so getting investment and taking those risks is difficult. One of the things we can do is to start looking at a lot more local investment in bottlenecks. We can start looking at behavioural change much more seriously. You can start sitting there saying, as long as we get the balance right in investment between big, prestigious and transformational things versus ensuring that we still invest in the smaller important connectivity and enablers, then I think you will do well. There is a lot that can be done without just spending money.

Q420 Paul Maynard: I may need to rephrase my question a little better. What role is there for evidencebased policy in the decision making of politicians when it comes to transport? You used the example of road pricing. Would it be more attractive to a politician with a stronger evidence base that would make them make feel more confident about introducing it?

Nick Gazzard: If you look at Transport for London’s experience in congestion charging, there was a definite drop in use of the roads. If you look at the expansion of the low emission zones, behaviour did certainly change. The other thing you have to look at is that as the oil price starts going up and up and up-we’ve gone from $37 a year ago to $80 odd a barrel now-the cost of road transport, the physics of moving goods by water or rail is actually better. You’ll start seeing a situation where not only is there evidence that it does work but also, of course, the cost of moving things on road is going to get higher and higher. There will be huge pressure in fact, if you’re not careful, to remain competitive and the UK will have to get goods on to rail and water.

Q421 Paul Maynard: Could I just ask Mr Bird to explain his evidence to me because I am still interested?

Richard Bird: I have been very impressed with everything my colleague Mr Gazzard has been saying, so I don’t have a huge amount to add to that. In terms of evidencebased policy, the Department has quite a well-developed appraisal tool with the New Approach to Appraisals-the NATA approach-which has been around for some time and has been refined. I am very pleased to see that the Secretary of State has announced that it is going to be looked at again because it needs some updating. There is general agreement that the carbon aspects are not sufficiently taken into account at the moment. We think that international export traffic should be given a rather higher weighting in terms of appraisal. I guess this is the essence of your question because it would be wonderful if it could all be put into the appraisal approach so you could put in all your calculations, forecasts and so on, come out with a ranking for projects, and decisions were then taken on that basis. Of course, the world is not like that. There must always be a considerable area of uncertainty. My comment was really in favour of trying to be as dispassionate as possible, where that can be done. Let the appraisal tools speak for themselves and produce rankings, but recognise that at the end of the process, there must be an element of political discretion. If we can move it a little more in the direction of economic objective appraisal that would be of overall benefit to the sector.

Q422 Julie Hilling: My question very much follows on from that. It is about integration. A person has to get from their house to their place of work or to their holiday destination or they have to get goods from the factory abroad or wherever else. Looking at that integration, what are the things that you think most need to be done to enable your bit to work as well? It is not so much about your bit but, with regard to that integration, what else needs to be done as a priority?

Chair: Mr Roberts, it is about rail. How do you see integration of transport in relation to rail?

Michael Roberts: There are a number of fairly obvious dimensions to how we improve integration. Part of it is physical. It is trying to make sure, more than we currently do, that for individuals using different modes for an endtoend journey––if they are travelling by car to the station and at the other end taking a bus or another form of public transport––physically, those different modes can colocate: making sure the car parks are in the right places for the stations at the other end and the bus stop is close to the station. There are obvious things around the physical links which need to be integrated. Secondly, we need to make sure that the quality of information is such that people can plan to have multi-mode journeys by those different modes where they know that at the end of their bus journey there is going to be a train to take them to their onward destination and so forth. Quality of information is the second critical area. The third and potentially perhaps one of the more interesting areas at the moment is the opportunity to look at joint products-which is a term of art, I suppose. It is looking at the extent to which ticketing can enable people to pay in one place for transport across different modes. The rail industry, together with bus operators, has been operating a scheme called PLUSBUS, which I think now operates in 280 towns across the country whereby, effectively, you can book a combined bus and rail ticket. This isn't something which just applies to London and Greater London but something which is live in other areas as well. There’s probably scope to do a lot more, particularly with smart ticketing, which gives us the opportunity as providers of public transport to offer different products and a range of prices. But it’s that combination of physical integration, quality of information and looking at the extent to which we can offer jointly priced products which is an important part of the mix for improving integrated transport.

Q423 Chair: Mr Bird, do you have any thoughts about how integrated transport could help ports?

Richard Bird: This is an absolutely crucial area for ports of course because, apart from people making short specific ferry journeys and rollon rolloff freight journeys, ports are used as part of integrated journeys. So it’s crucial that ports are seen as part of a total logistics operation. Clearly, the development of containers has given that a very significant boost and it is now essential to view the operation as a whole rather than in individual parts. In terms of how this might be further developed, further developments in IT could certainly help here. It may be possible, for example, to be clearer about destinations of containers at an earlier stage in their journey. The destination is clear but the way in which they get from the port to their final destination may be less clear. It’s important there should be a degree of flexibility. On the other hand, where decisions can be taken early, that can be an advantage for ports in terms of using their space more effectively and improving productivity in that way. That probably is one area where things could improve further.

Another area is developing the use of coastal shipping. We’ve already had Cinderella mentioned once; I think this is another one. We’ve had two Cinderellas in one morning. It does have considerable potential to relieve pressure on road and rail for longer movements, particularly those to and from our deep-sea ports, where journeys have to make use of heavily used road and rail networks. That, certainly, is an area where there could be further improvement. At the moment, some coastal shipping is not perhaps as well integrated into total freight forwarding planning as it might be. This is an area where I think both the Government and industry have a role to play.

Simon Buck: For airports, of course, it is absolutely critical that we have a properly integrated transport infrastructure. It is most surprising that the UK's international hub, which is Heathrow airport, is probably not going to be linked directly to the new high speed line and effectively will go to Old Oak Common rather than to Heathrow. It is quite remarkable for many of us to contemplate that that could be a possibility. Similarly, we see at Gatwick airport almost a downgrading of the direct rail line that serves Victoria from Gatwick. It’s almost going against what we have believed in the past: that we should be seeing properly integrated transport strategy where we see road, rail and airports all linked together in a way that makes sense and makes ease of choice, ease of access to everybody, and it is easy to understand how they get from A to B.

Q424 Mr Leech: Mr Bird, we did a report in the last Parliament on ports and it was pretty clear from our discussions that if we just left ports to the market, there would be a big expansion of ports in the south-east to the detriment of ports around the rest of the country. In terms of the health of the economy of the whole of Great Britain and Northern Ireland, is it not more important that there is a more handson approach from the Government to try and expand the ports around the whole of Britain rather than allowing the market to just expand the ports in the south-east, because the knockon effect of expansion of the ports in the south-east is all the additional problems, with the need for extra capacity moving all the produce from the south-east to the north of Birmingham? Do we not need to take a more strategic approach, as a Government, to try and encourage you to be using your ports better around Britain?

Chair: Mr Bird, you said that we needed a strategy. Is that what you meant?

Richard Bird: Not entirely. Ultimately, we have to recognise that ports are privately financed. In order to get the investment in, there has to be a strongly established market for those movements. I don’t think it would be possible for Government sensibly to try and come forward with a policy that bucked the market without there being very significant financial consequences of that. Having said that, I think there are sectors where the Government can play a role. Clearly, one is the energy sector where, in developing new capacity and so on, on offshore renewables, biomass and so on, the Government has a role to play in terms of encouragement and planning and, occasionally, financial assistance, which can obviously have an impact on development of those particular trades at particular ports. I suppose, going back in time, Aberdeen has benefited enormously from the North Sea oil development and there are obviously other possibilities of that sort on the east coast. There are aspects of Government policy which can impact on ports but I think we would not want to see any interference fundamentally with ports being able to respond to market needs.

Q425 Julian Sturdy: To follow on, we all seem to be saying-and I agree with this-that connectivity and an integrated transport system is the key. Could I ask Mr Buck a question on this specifically? You talked about airports potentially being Cinderella services. Within regional airports-and this also applies to ports as well-if we get that integrated transport system into the regional airports and make them more connected, how do you believe that will help the regional economies? If we get better infrastructure into regional airports and better connections, will that also help take the pressure off Heathrow and the south-east as well?

Simon Buck: Certainly, I couldn’t agree with you more. I think it is absolutely right that where we have a properly integrated system it is far more attractive to business for business to locate in the regions. Many, many organisations across the country say that they locate in particular places because of the connectivity from their local airport, for example; so that is an enormous boost to regional economies where you have that. Where the airport has direct links to rail and road services and very good connections, that is an enormous help to regional development and to emerge from the problems that we have at the moment. Does that help?

Q426 Julian Sturdy: That’s fine on that section, but, if we can get that into the regional airports and get the regional airports expanded, do you think that will take the pressure off of the south-east airports at Heathrow and so on?

Simon Buck: It may do to an extent but the fact is, according to the Civil Aviation Authority’s own passenger survey, 75% or 80% of people are flying into the south-east because that’s where they want to be or they live there already. There is a limit to which you can actually alleviate pressure in the south-east by developing capacity elsewhere if that’s not where people either live or want to visit.

Q427 Julian Sturdy: So it will have an impact but you don’t feel-

Simon Buck: It’s not a substitute to having new capacity in the south-east, no.

Q428 Steve Baker: We’ve had a fascinating morning. A couple of the things that have come out for me have been the call for objective economic analysis and we also mentioned earlier about people’s individuals choices. I am very aware that the Institute for Logistics will also be looking at how to choose rationally between transport options. To what extent, in the current environment is it possible to perform rational economic calculation? The current environment, for me, includes price controls, subsidies, indirect pricing like fuel duty instead of road pricing, and political interventions. Within that environment, to what extent is economic calculation objective and rational?

Nick Gazzard: "Objective and rational" is an interesting one. Investment in analysing this market research is probably only about £2.93 million a year which, relative to the size of it, is not a huge amount of money to understand the economics. If you think about what is invested in econometrics in the economy as a total, it’s nothing. There’s an argument in my mind which is that a lot of the schemes that are actually considered are so blatantly obviously either good or bad that it’s not very difficult to appraise them; it really isn’t. They shine out or they definitely don’t.

When it comes to larger projects it is exceptionally difficult to judge the impacts. Take high speed rail. You know that it will free up capacity, you know it will impact the economy, but exactly how much you don’t know because it has not been done here in that way. We probably do under-invest in understanding a lot of the detail of those econometrics. There is a lot of advanced study going on in the academic world on the impacts of all these different demand patterns and whether you create and stimulate by investing or the other way round. I suspect we ought to understand that if we are going to start spending the sort of money we are spending. Certainly, the institute’s feeling would be that we ought to invest more in researching these things thoroughly. Indeed, we should differentiate between those schemes that are selfevidently okay and those that really require that.

I would probably also argue very rapidly that, when you look at the investment in certain things like bottlenecks or road links into ports and stuff like that, there are certain things in which the Government can have a role because there are market failures. There are things where the private sector finds it very difficult to invest because the participation is differential and that would have a disproportionate effect on freeing freight, and, again, studying those specifics. So you don't get to a stage where there is an argument about whether we should be investing in this, that or the other thing on the basis of one view or another. You have a whole bunch of constraints, problems and issues that are very obvious and seem to be very clear. There is a question mark, "Okay, how much money do we need to solve all of these in a joined-up way?"

The final thing I would say is that we’ve just changed over to LEPs now. I think it’s great and the institute thinks it’s good that more local power will be devolved. The only issue is making sure that they can both club together to get bigger schemes. For example, if you want a Lower Thames Crossing, one LEP is going to struggle, whereas two or three individual ones might get it. The other thing is joined-up thinking and joined-up planning. If we go too local, the danger is you’ll never get any of the big schemes through. So, again, we need research into that and, again, take the heat out. What’s the rational argument behind it?

Michael Roberts: I think Mr Baker’s comments are extremely well made. This is a point we made in our written submission, which is that it’s not obvious at the moment how all the different components which go together to form transport policy cohere as a rational product. We expressed the view that the Eddington report was extremely good and I think many in the transport world would say that what the Eddington report said back in 2006 remains extremely relevant and apposite. Yet there are at least three big things that featured in Eddington which are being dealt with or taken forward in a rather different way than was suggested was appropriate by Eddington.

Specifically, first of all, the Eddington report was relatively cool on high speed rail as the right proposition for the UK, yet we all know that, if anything, there’s an arms race between the three main Westminster parties in support of high speed rail, with each trying to outdo the other in terms of support. The second is that Eddington was quite clear about the economic rationale for the use of road pricing-paying for road use at the point of use-as a way of relieving one of the big economic challenges, which is congestion. Yet, as we have heard today, road pricing is not something that the coalition Government regards as a priority. Thirdly, Eddington identified the planning system as a hurdle, as a barrier, to delivering the transport links which the economy will need in the future. It’s probably best to say that there is a degree of uncertainty about the extent to which the sum total of the recent changes in planning policy-that is, the introduction of the IPC for example, the removal of regional planning groups and RDAs and replacing them with LEPs instead-is going to lead to a better planning system. Eddington identified a number of the things which were important in different ways to the way that they are currently viewed. If nothing else, that seems to me to be a good case for Government-maybe not right now but perhaps in the course of next year-restating what is transport strategy in the UK now and in the future in a way that actually joins these things up more rationally.

Q429 Chair: Mr Bird, there isn’t a final national policy statement on ports. Could you just tell me, very briefly, does that matter?

Richard Bird: It doesn’t matter hugely at the moment as far as very large projects which might go to things such as planning permission are concerned, because there aren’t any in immediate prospect. However, we do think it is important we get clarity quickly because of the role that the new Marine Management Organisation is playing now on port planning, because all but the very largest port development proposals will now go to the MMO in Newcastle and we do feel that they are somewhat light in terms of the guidance that they currently have. We see the ports NPS ideally linked in with road and rail national planning statements as providing the necessary basis for their decisions.

Chair: We do have a national infrastructure plan. Does anybody think that has added anything to the issues that you are concerned about? Speak up now or for ever hold your peace. No one thinks it does. Okay, thank you very much for coming.

Examination of Witnesses

Witnesses: Professor Stephen Glaister, RAC Foundation, George Batten, President ADEPT, and Les Warneford, Stagecoach, gave evidence.

Q430 Chair: Welcome to the Committee. Could you identify yourselves with your name and the organisation you are representing for our records?

Professor Glaister: My name is Stephen Glaister. I am Professor Emeritus in Transport and Infrastructure at Imperial College London and Director of the RAC Foundation, which is an independent endowed charitable trust.

Les Warneford: I am Les Warneford. I am the Managing Director of Stagecoach UK Bus Division.

George Batten: I am George Batten, Wiltshire Council. I am President of the Association of Directors of Environment, Economy, Planning and Transport-ADEPT.

Q431 Chair: Mr Batten, what is the top priority for local highways and transport authorities?

George Batten: At the moment, it is maintaining the transport assets that we have. That’s not just a road maintenance and potholes issue. Local authorities increasingly have very sophisticated electronic equipment and so on, urban traffic control systems and all these sorts of things. Maintaining the transport assets that we have, in the current downturn, would be our key priority.

Q432 Chair: Mr Glaister, what is the top priority for you?

Professor Glaister: The top priority for me is stepping back and forming a coherent view about what the problem we are trying to solve is and then assessing the proposals that are on the table against those objectives.

Q433 Chair: So there is no one thing that, at the moment, you would identify as being a top priority?

Professor Glaister: I think it’s premature to do that. Until you have done the exercise of saying, "What is the problem you are trying to solve?", in the new world, as it were, with the economic situation and our understanding of economic growth and population movements to come, until you have done that, you don’t know what are the right particular solutions.

Q434 Chair: Mr Warneford, what’s the top priority for the bus industry at the moment?

Les Warneford: In the current short term, to protect revenue expenditure which has been cut and to stop cuts in services, fare increases and job losses.

Q435 Chair: What is the impact of the comprehensive spending review on transport in the areas of which you have particular knowledge?

Professor Glaister: All of us in the transport business welcomed the Government’s achievement in protecting capital in transport. That was something many of us were looking for. There is a wide measure of agreement that not only in transport but investment in infrastructure is an important part of the future and that we do need to provide for growth in the economy and infrastructure is an important part of that. The Government were fair to claim that capital spending was not entirely but largely protected. Looking below that, it was not quite so clear that there had been a success in that there is a very marked pattern in the spending review within transport that railways have done very well. I have set out in a supplementary memorandum the figures but they are on the public record; there is a 20% increase in capital spending in railways. Highways and local public transport have probably done extremely badly. Highways Agency capital budgets are to be cut by over 40% in real terms over the four years. Local authority roads have been severely cut, local authority and Highways Agency maintenance will be severely cut, and others will speak about what is happening to local bus services. It’s a success in the round but within that it is actually quite a marked difference between railways and the forms of transport. That, I think, needs to be justified, as I was saying earlier, against what the Government is trying to achieve.

Q436 Chair: Mr Batten, do you agree with that analysis?

George Batten: Yes. Coming back to my original point that maintaining the transport assets is important to us, at the moment, local authorities will be experiencing a 28% cut in their revenue budgets, a large proportion of which will feed through to cuts at local transport level. Those decisions will be made by individual councils. There will be an 11% cut in the capital programmes, much of which will feed its way through to reductions in planned structural maintenance of our highway assets. The biggest casualty probably at a local authority level will be a combination of cuts around public transport, bus services, particularly rural bus services, where a combination of the revenue cuts, the adjustments to the bus operators’ grant and the rolling-up of the rural bus subsidy into un-ring-fenced grants will mean probably a very significant impact on rural bus services in the future.

Q437 Chair: Mr Warneford, in your written evidence you seem to play down the significance of cuts in subsidies for buses. Have I misread that evidence?

Les Warneford: I hope we didn’t play it down. We didn’t want to be pleading a special case when everybody was more or less in the same boat. But, having said that, perhaps we should have played it up rather more having seen that we have suffered rather badly. Remember, our evidence was before the review. We weren’t in the game of special treatment.

Q438 Chair: That explains it then. I was just a little mystified by some of the statements. Now we are speaking post-review. What you would like to say on the record then about the impact of the cuts?

Les Warneford: Post-review for the local bus industry, from next April there will be a very significant cut in the payment we receive for carrying concession passengers. The Department for Transport’s consultation document suggests that that will be in the order of £100 million a year in England. We, in the industry, think it may be as much as double that. The formula that they have produced to justify the alleged rational cut is extremely complicated and I can’t actually work out what my income will be next April at the moment-and I’m not stupid. On top of that, from April 2012, we have a cut of 20% in the bus service operators’ grant, which I think again is something in the order, for the whole industry, of about £80 million a year. So it is pretty significant both next April and the April following-two bites of the cherry.

Q439 Chair: Professor Glaister, the Chartered Institute of Logistics and Transportation say that car use is declining. Does that suggest that there is a weaker case for investment on roads than there has been?

Professor Glaister: The history of traffic over the decades, which is set out in our initial submission to you, is that total traffic has grown in a quite remarkable way since the 1950s, I would suggest, more or less a straight line, with deviations from a straight line depending on the current economic circumstances. You can see in the history that in the early 1970s it went below the line, in the late 1980s it went above the line and so forth. Recently, it is true that car traffic has flattened off and perhaps slightly reduced, but that has been more than compensated by the growth in vans and commercial traffic. Total traffic has been growing quite strongly until the last two or three years. In the last two or three years total traffic has indeed fallen a bit. It’s what you would expect to happen in view of the history and the fact we have quite a severe economic recession. There is a very strong direct relationship between transport movement of all kinds and the level of economic activity.

What that says to me is that you must expect that, when the economy recovers, the demand for the road network will recover as well. There may be a slightly different mix. In other words, we may have more commercial traffic and a bit less private traffic than we are expecting because of the phenomena I mentioned, but, basically, unless somebody has a theory as to why something fundamentally has changed, when the economy recovers, the demand on the road network will return to its growth. That is the official expectation. If you look at the official traffic forecasts it says that. They take into account the additional factor that in many parts of the country the population is expected to go up by 20% over the next couple of decades. It’s people living longer and it’s an inward migration from other parts of the nation. Nobody is addressing what’s going to be the consequence of a growing population putting demands on the road and rail network, hospitals and schools and the rest of it, because that will increase congestion on the network. So I believe the case for investment in all transport infrastructure remains very strong if we expect the economy to recover.

Q440 Chair: Is the current appraisal method correct in assessing which transport scheme should go ahead and what the benefits of different proposals are? Professor Glaister, what is your view?

Professor Glaister: The word "correct" is not one I would use; that’s not the game we are in. We are in the game of trying to form the best professional view we can of the forecasts of things like population and location of industry and the demands that will make on the infrastructure over a period of 50 or 60 years. It is difficult, but you do your best. You relate the estimates you have to the evidence available on willingness to pay, the benefits of relieving congestion on the different modes, on roads and railways. You try and estimate the performance of the different networks in relieving congestion and you then do your best to calculate the benefits in terms of time saved and accidents saved on the different modes of particular proposals. Whether they are correct or not is not quite the right question, if I may say so. It is whether you have done your best, made your best estimate and whether that information then is useful and used. My opinion is that Eddington went through all of this and came to the view that it is useful but it is not entirely used.

Q441 Chair: Is enough attention given to the impact of transport on the economy when appraisals are made?

Professor Glaister: The basic philosophy of the appraisal method is to try to estimate how much time would be saved at different kinds of time, by proposal, over the years; to ascribe a value to that time in terms of working time, commuting time and leisure time; and the value of the accidents saved in the same way. That is carefully constructed but limited. Everybody recognises there are other things you might want to include and, indeed, we do include the environmental effects and the carbon effects as best we can. There are other things, like the broader economy, inward investment, and competitiveness. The issue is whether the traditional techniques do or do not reflect that adequately. We know that that there are some things on which we could do better: things like reliability of the system, which we are not very good at estimating but we are doing work on that; things that are called the wider economic benefits, agglomeration benefits, where there has been recent work by colleagues at Imperial College and other places to try and pin down whether there are additional effects that have not in the past been included to do with making the economy closer together and improving access. That subject is improving. We are making progress and we are revising the techniques to reflect that. I wouldn’t claim everything is included; the subject improves as we go along. But at the same time I would claim that what is done is useful.

Q442 Chair: Are there any other views on current appraisal approaches and, in particular, the relevance to economic benefit of transport schemes?

George Batten: Yes. This reinforces Stephen’s point that the wider economic benefits aren’t properly taken into account in the current appraisal, but I think that is recognised and work is ongoing and the Department for Transport are looking to refresh the current appraisal model. But also, at the end of the day, these are political decisions. It is a tool, isn’t it? The testing of any project, having been through an appraisal process, through public inquiry and so on, is a very valuable mechanism also to tease out those wider benefits or disbenefits of a particular project. Then, ultimately, it is a political decision to proceed-a local political decision or a national political decision.

Q443 Chair: Mr Warneford, do you want to comment on this?

Les Warneford: I will offer a comment. I am not an economist. On cost benefit appraisal first, I think the question you originally asked was, "Is it correct?" My understanding is that it’s best seen as a means of ranking schemes in order of preference rather than being mathematically precise. We funded an independent appraisal of the cost benefit appraisal system through some of our colleagues outside the industry. They raised two particular points that are relevant to our business-local bus services-that bus passengers’ time is valued at less than car drivers’ time, although I fail to see why it should be. The other aspect that was raised was that Stephen Glaister said it brought in the environmental equation. I don’t think it really does bring in the current concern about the growth in carbon.

Q444 Mr Leech: In terms of economic benefit, has the Government made the right decision to prioritise investment in rail rather than in buses or roads?

Professor Glaister: To answer that question you would need to ask the Government what their estimates of the economic benefits of railways versus roads are.

Q445 Chair: What is your view?

Professor Glaister: I am not up to date because I don’t have the kind of uptodate information that the current Government would have had when they were doing the spending review. What I do know is what’s on the public record. The high speed rail proposal from London to Birmingham had a benefit in relation to cost of 2.4 to 1 if you do not include the wider economic benefits as estimated then, or 2.7 to 1, I believe, if you do include them. That is the publicly available figure for high speed rail from London to Birmingham.

There are also on the public record a very large number of road schemes where we have benefit cost ratios. If you care to go to our website, there is a paper by John Dodgson which simply documents what the Government has said. There is a very, very long list of road schemes where benefits in relation to costs are well over 5 to 1. The Secretary of State, when he announced the spending review, announced 14 major road schemes and said, in terms, that the benefits of those particular schemes estimated by the Government were 6 to 1 on average and some of them were over 10 to 1 on average.

I repeat, I am not up to date, but, taking those numbers at face value, you have to wonder why the Government is not investing on many road schemes where the rates of return are really quite high, not investing in public transport schemes where the rates of return are probably quite high but I don’t know the detail, but meanwhile spending £750 million preparing for high speed rail over the next four years and £12 billion in time on that particular scheme, when the benefits are estimated to be very much lower. That’s a political decision but it doesn’t match the Government’s own estimate of the economic benefits.

Q446 Mr Leech: Mr Warneford, you carry more passengers than local trains services. Should the bus industry have got more money?

Les Warneford: We don't go asking for more money. We would quite like to have kept what we have got and kept the services running but, unfortunately, it’s not to be. Should we have more money? You would have to decide what public benefit you would get from more public expenditure. I don’t think I’m the person-

Q447 Chair: As a bus operator, do you think there is a public benefit in more public funding being made available for bus services?

Les Warneford: The money that is available now produces a huge public benefit. For example, the bus service operators’ grant, which is effectively a rebate of some part of the fuel duty, very simply keeps fares down. The Government acknowledges that and, yet, it’s going to be reduced and fares will go up. That means less people will travel, more will be inclined to go by car, and some will not be able to afford to travel.

Q448 Mr Leech: But in terms of economic benefit of investment in public transport do you believe that there would have been more economic benefit to invest in bus services rather than rail services?

Les Warneford: I will say it again: I don’t think, in these economic circumstances, I should be asking for more money from the public purse.

Q449 Chair: You seem very coy this morning, Mr Warneford, I must say.

Les Warneford: I am not at all coy. We are not an industry-

Q450 Chair: Mr Batten, what is your view from the local authority's side?

George Batten: To make significant reductions in the amount of money available to maintain the current transport is the wrong decision, if that decision has been made to fund large expensive projects at the expense of maintaining the transport infrastructure that we have. It does seem sort of mad to be worrying about shaving a minute or two off a journey time with a major project whilst we can lose minutes and minutes of journey time with unplanned, unco-ordinated ad hoc repairs and failures to our local transport network.

In terms of whether they have got the right priorities, certainly I think Stephen has touched upon the rates of returns of schemes. Certainly small scale local schemes can produce staggering returns: 15 to 1 ratio of cost to benefits and so on. Small scale interventions which benefit the bus services benefit 93% of the travelling public who travel on things other than rail. There should have been greater emphasis on small scale investment rather than large scale and there should have been greater emphasis on maintaining the transport assets that we have. We know that with every pound spent on maintenance more jobs are created in the economy than every pound spent on new construction. It does seem that the warning of Eddington about large projects hasn’t perhaps been heeded in the comprehensive spending review.

Q451 Steve Baker: Professor Glaister, if I have understood correctly, you have argued that longterm correctness is very difficult in transport forecasting. If I have understood, you have said that that is less important than shortterm utility. Is that the right understanding and, if so, what disadvantages might such an approach have?

Professor Glaister: No, I don’t think that is the correct interpretation of what I was trying to say. Like other bits of public service such as health and education, we have a mixture of shortterm things to spend money on and very, very longterm things to spend money on. It’s a fundamental problem. It is nobody’s fault; it’s just a problem. There is Highways Maintenance filling the potholes, which is a big issue for a lot of the general public and local authorities, which is obviously a fairly shortterm thing. There is investing in massive road schemes and massive rail schemes where the horizon has to be 60 years because it takes 10 years to build the thing and plan it-probably more, 15 years-and then it starts delivering. So you can’t get away from that very longterm need to think about what the world might look like in 20, 30, 40 years. It is no different, I guess, from investing in aircraft which last for those kinds of periods. Lots of infrastructure industries struggle with this.

What I am trying to say is that it’s a mistake to only concentrate on the immediate present because you forget about the really important longterm consequences for the nation. Good government must be about looking long term as well as short term and vice versa. You can’t just throw all your money into something which is enormously long term and won’t produce any return at all for 20 or 30 years and ignore what is happening on a daytoday basis outside people’s houses. That is why, if I may say, the formal appraisal methods struggle so hard to deal with what we call discounting––how you trade future costs and benefits against present costs and benefits––because you cannot avoid that choice; you have to face up to it, as in nuclear power and many other things. It is difficult but you have to do your best to try and get it right.

Q452 Steve Baker: It seems to me that the possibility of entrepreneurial error in these investments is very high, given everything you have said. This is a bit of a leading question, but who should bear that entrepreneurial error? Should it be private investors or should it be the taxpayer?

Professor Glaister: I heard the end of your previous session where the national infrastructure plan was mentioned, a publication by Infrastructure UK and the Treasury. I regard that as an extremely important development to your question because what that is trying to do-and I very much welcome it-is to step back and say, "In respect of all our infrastructure-power, water, telecoms, road and rail-what are the long-term liabilities that we have? How much infrastructure have we got? What condition is it in? How much are we going to spend to put it in reasonable condition? How are we going to have to spend to meet the growing demands in the future?" That is, as it were, a Janet and John audit of the situation we are in.

The next question is, "How is it going to be paid for?" That question has to be addressed. Fundamentally-and I agree with them-I think they say it is either the taxpayer or it is the user. There is nowhere else it is going to come from at the end of the day. If it is the taxpayer, then that’s fine but we all know the difficulties. If it is going to be the user, then I think that it’s a perfectly sensible thing to say: the user should pay for what they get at the end of the day. But then how is that going to be provided––by the state or by the private sector? In other words, in answer to your question, who is going to bear the risks? The risks are enormous. Arguably, as one of your previous witnesses said, the risks are of a nature where you cannot expect the private sector to bear all of those costs because if you do they just won’t supply what you need.

The issue for Government is where does the Government need to step in to mitigate the risks, to spread the risks, to pool the risks, in a sensible way to allow the private sector to do what you want it to do to deliver all of this infrastructure? That is the issue this infrastructure plan is trying to address and, in my view, very sensibly. What it says is that the position in the other utilities of a regulated asset base with an independent regular to adjudicate on what is reasonable is a good place to start, and I agree. But there are things which Government is going to have to worry about in the regulatory regime to make sure that the risks about climate change and interdependency of different utilities are dealt with in a sensible way. I would put roads in that same box because roads are kept quite separate. There is no regulated asset base; there is no regulator. They are left on their own to be planned in a completely separate system by central Government. Railways are in the box, roads are outside the box, and I think that’s a big issue.

Q453 Julie Hilling: I wanted to come back to the bus issue and that sort of integration. We waste a huge amount of money with people sitting in traffic jams. How can we then ease some of that? Some of that is about road network but some of it is about bus. We have been given information that the effect of the cuts will be very limited in terms of cuts in service, but you don’t seem to be saying that. I am interested to know what your feeling is in terms of what reduction in service and increase in fares there will be. London is wonderful, it is all integrated, but you go out of London and it is much harder and much more expensive, etcetera.

Chair: Mr Batten, do you have any comment on that?

George Batten: I think the belief, certainly in the Department for Transport, is that the cut in bus service operators’ grant isn’t going to have a huge impact on fares: a couple of per cent, I think, has been mentioned. Underlying that, though, is the belief that it may not have a huge impact on fares but there will be significant service withdrawals and reductions as a result of the cumulative effect of that and other cuts in public transport support, particularly from local authorities.

Q454 Julie Hilling: Do you have an idea of the percentage of those?

George Batten: It would not surprise me at all if in a year’s time up to 50% of rural bus networks no longer exist.

Q455 Chair: Mr Warneford, do you want to add anything there?

Les Warneford: Yes, there were a lot of questions in that. First, you touched on this issue of London, which always comes up. London has a wonderful system and, if the rest of the country had the same spend per head of population as London has, we would all have a wonderful system. But that’s not the case. Transport for London buses take the bulk of the public transport subsidy for the bus industry-something like 60% of it-and your metropolitan areas do rather badly out of it. I’ve lost track of the other questions.

Q456 Chair: Given the system we’ve got, what is the likely impact on fares and effects on services as well?

Les Warneford: First, you need to accept that the impacts of the spending review are compounded on top of the effects of recession. We are still in recession. For about five years our company had some very modest passenger growth year on year, but in the last two years we haven’t. So that has been a problem in itself.

We also have some other external factors. There are extremely volatile fuel prices and, whilst we have hedging in place, my fuel bill will go up quite dramatically next year. Add to that the cut in concessionary reimbursement next year, whatever level that might be, and cutting BSOG the year after, I think the compound effect of those things, outwith the effects of normal price inflation, could be up to maybe a 5% fare increase and a 5% service cut, but with a big proviso: that service cut will not be spread uniformly. Those services that carry very high proportions of the elderly and disabled will become unprofitable and be reduced or cut. There are already many, many services at different times of the day which are only marginal. The Monday evening service will probably go. It will be patchy. The main daytime frequent services maybe will be okay; they’ll just make a bit less than they did before. But those things that are on the margin, and particularly the rural stuff, are very vulnerable.

Professor Glaister: It may be helpful to clarify that in the bus industry there are essentially two sectors. There is the commercial sector and there is the tendered sector. Both have difficulties but for different reasons. The commercial sector, as Mr Warneford mentioned, has rising costs, reducing fuel duty rebate and so forth. But the tendered sector is where local authorities put out to tender unremunerative services, which are the classic deep rural, night services, that kind of thing. I suspect-I don’t know if colleagues will agree-that the financial pressure on local authorities will make it much harder than it was to keep those tendered services going. I suspect they will be hurt quite badly by this. The public transport industry does take a lot of public money and there is nothing wrong with that. It is assessed on the same basis as roads and railways in the official methods. You can look on the public record and see that quite a lot of bus services do show a reasonably good rate of return for public money, compared with some road schemes and, indeed, some rail schemes. It’s not a completely blank sheet of paper. We do know that bus subsidy put in the right places produces good benefits for that public money.

Q457 Paul Maynard: I have a question to Mr Warneford. I realise that you are unwilling to compare yourself too closely to other modes of transport. If we could look at your specific business, obviously BSOG is being reduced by 20% for your bus services. In terms of the coach services that Stagecoach provides, you are having an abolition of BSOG and the loss of the 50% concessionary fares. In terms of those two types of service, which of those reductions will have the greatest impact on those particular services in terms of economic disbenefits?

Chair: Mr Warneford, can you give us an assessment?

Les Warneford: Our coach services fall into two categories. Some are eligible for BSOG and concession fares support because, although they are run with coaches and express services, they are still stopping services. They carry local passengers. Those will be affected in just the same way as our normal local bus services. The only main two services we operate which are outwith the traditional local bus market is our Megabus National Express coach service and our Oxford to London service. We get no support whatsoever on the Megabus service so it won’t have any effect whatsoever, although I believe it does affect the National Express service. I can’t tell you what that effect might be, but they do have quite an amount of concessionary fare support. Our Oxford to London express coach service does benefit from what is called CSOG-coach service operators’ grant-and some concessionary revenue support. But it will not materially affect the service. We shall just have to adjust our pricing to cope with it.

George Batten: From a local authority perspective, there are two kinds of bus services we procure. One is the school bus service and the other is publicly supporting the bus services that otherwise wouldn’t be there from a commercial operator. The balance between the two has got terribly out of kilter in recent years. The school bus service typically for an upper tier authority might cost £10 million or £12 million a year procuring buses to get children back and forth to school. Whilst you try and integrate as much as you can school bus services with public bus services, it is extraordinarily difficult to have a complete overlap. That means that, as cuts come in local government expenditure, the school bus service has to be protected. The cuts are compounded then in terms of the money that’s available to support the noncommercial bus services, which is why I leap to the conclusion that there are going to be significant reductions in public bus services. The irony is that you may be able to wave your concessionary fare card but you may not have a bus to ride on with it. Perhaps the Committee might wish to look at the relevance of the 1948 Education Act and the requirement that it still provides for local authorities to provide buses in its future work.

Chair: We will be looking more closely at buses quite soon.

Q458 Julian Sturdy: To follow on from that question to Mr Batten, you have touched on it already but you talked at the beginning about the removal of the ring fencing on local authorities’ transport budget. You said you believed that would have more impact on the local bus services-the rural bus services-which are usually the subsidised services because they don’t have the passenger demand to warrant a commercial service. Do you not feel that local authorities, within the new system, will be able to prioritise where they feel they want to spend their transport money? Some local authorities might say, "We want to protect our rural bus services", and they will prioritise that, rather than deciding that cycleways or something like that might actually fall by the wayside rather than the rural bus services. It will be ultimately down to them.

George Batten: It’s "Be careful what you ask for", isn’t it, in local government? We have asked for flexibility and we have asked for relaxation of the rules, and we’ve now got it, but that puts the monkey on the local authority’s back. The problem here is that, typically, revenue expenditure is the sort of money we are talking about-supporting bus services. Revenue expenditure to a local authority is going to be cut in the order of 28%. Within that, you then protect education. You then have to deal with a growing elderly population in adult social care. Therefore the bit that you can get down to playing with in the local authority might be about a quarter of its revenue budget. That gets you down into the transport field. You then have to protect your education school transport commitment. So the bit that’s left for you to play with is very small and will come under extraordinary pressure. I think you are right: the local authority does have the option to protect its services but, in reality, given the other pressures on a local authority, I don’t think that is what will happen.

Q459 Julian Sturdy: Following on from that, in your role what sort of feedback are you getting from local authorities? Do you know where their position might lie on prioritising rural bus services compared to new cycleways or crossings and things like that?

George Batten: Generally speaking, local authorities will prioritise maintaining what they currently have, which then will rattle back, I am afraid, to a hard choice and it will be the bus services that will bear the brunt. A straw poll around my colleagues in local authorities would suggest that it’s not outrageous to suggest that up to 50% of rural bus services could be the casualty of all this.

Q460 Iain Stewart: To follow on from that, we have talked primarily about existing bus services, but I would like to ask a question on additional services in areas of the country where you have significant housing development and population growth. One initiative the Government has introduced is the new homes bonus, which will provide for six years a matched council tax revenue which can be, as I understand, for both revenue and capital spending. Do you think that will be helpful in providing public transport links to new housing areas and, in particular, buses?

George Batten: Increasingly, in recent years, local authorities have been getting commuted payment sums and so on from developers to support revenue services into the future in the hope, I suppose, that after a few years of public subsidy these services will become selfsustaining as developer contributions dry up. It’s an area that local authorities have been active in and there is no doubt that, if we are going to deliver what we want, we have to be much smarter at tapping up the new sources of money of which the new homes bonus will be one. So I think, yes, given that the rates of return on small scale projects at a local authority level will be the main beneficiaries, and public transport will take a fair share of that.

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

Examination of Witnesses

Witnesses: Professor Roger Vickerman, University of Kent, Richard Summers, Royal Town Planning Institute, and Councillor Peter Box CBE, Local Government Association, gave evidence.

Q461 Chair: Good morning, gentlemen. Could you give your name and the organisation you represent for our records?

Councillor Box: Peter Box. I am Chair of the LGA Economy and Transport Board.

Richard Summers: I am Richard Summers, Senior Vice-President of the Royal Town Planning Institute.

Professor Vickerman: I am Roger Vickerman. I am Professor of Economics at the University of Kent.

Q462 Chair: Councillor Box, in the written evidence from the LGA you say: "All capital investment for infrastructure should be devolved to the local level". Does that mean you don’t think there should be any limit at all on the size of schemes that local authorities decide?

Councillor Box: I think, when you look at the new structures that we have in place at subregional level, the nature of investment has changed anyway and that groups of authorities working through city region LEPs will be able to take on the kind of schemes to which you have referred.

Q463 Chair: So absolutely everything, including major strategic schemes that go through large numbers of authorities?

Councillor Box: There clearly will be a national framework for investment, but within that national framework, yes.

Q464 Chair: The Secretary of State said to us that it could be not until the end of this Parliament that alternative structures to the current system to look at strategic schemes are going to be established. Is that something that gives you some concern, if we are going to have to wait until the end of the Parliament before there is an appropriate subnational system established?

Councillor Box: Apart from being Chair of LGA Economy and Transport, I am also the leader of Wakefield council as the day job, as it were, and I work with the Leeds city region and the evolving LEP that is being created. My view is that the Leeds city region, of which I have personal knowledge, is ready and willing to take on that task now. I feel certain that other LEPs throughout the country will be in a similar position.

Q465 Chair: I am just repeating to you what has been said to us by the Secretary of State. You are seeking new powers to raise funds for infrastructure investment. Do you have any further ideas of what those powers should be and what sort of investment you would like to raise?

Councillor Box: There is tax incremental funding of course, the power to charge more, and business rates. I know there is some clear debate about that but that is the LGA's position-that business rates should remain local.

Q466 Chair: Do any of our other witnesses have ideas about how additional funds could be raised for infrastructure investment?

Professor Vickerman: There are two points to make, one following on from what Councillor Box said. The difficulty of defining the area which is appropriate to any particular scheme is one of these areas where you have to be aware of all the simple rules when you are dealing with transport because there isn’t a simple way that you can deal with everything, and defining the area which is relevant to a scheme is difficult. That feeds on to where the money comes from in that, because in some cases it’s clear that from the point of view of public money a great proportion needs to come from the national level; in others it can come quite easily from the local level. But, also, the often rather naïve belief that the private sector can step in to do this and certainly accept the risk of doing that when there are public decisions being taken is also something that seems, now we have much more examples of these private partnerships and PFI schemes, not always to be the solution that it was thought to be. So I think you have to be very, very careful about defining exactly the area in which you are dealing with these things and it is going to be different for each different scheme.

Richard Summers: We need to distinguish between the funding that comes from central Government for major national infrastructure projects and the funding that is required for local transport projects. I am not convinced that the new homes bonus will be able to make a significant impact on that, but we should also bring into consideration the proposals for the community infrastructure levy and the continuation of section 106 planning agreements which will generate funding out of new development, particularly major new development, where associated transport and other services are required.

Q467 Paul Maynard: Professor Vickerman, from what I understand, you have had a great deal of experience in studying the impact of high speed rail in Spain, China and so on. We heard last week from The Northern Way that improved productivity between two centres tended to benefit the centre that was the most economically performing but that improvement within urban centres would benefit the converse. Have you studied the experience of Spain where I know that the link from Madrid to Seville with the AVE was designed to transform the economy of Seville, which suffered from very high unemployment, was economically deprived and so on? Did that achieve its goal and, if so, how did it achieve its goal?

Professor Vickerman: The first thing I would say is to repeat what I said before: beware of simple answers with transport because each case is different. On your specific example of Madrid to Seville, no, it didn’t achieve the goal if the goal was to achieve the development of Seville. However, it has done some quite interesting things in Spain. It has actually changed patterns of urban development in and around Madrid. If the line had not been there, there are intermediate places, and particularly the one I am thinking of, where I have been doing some work with a colleague, is Ciudad Real, which is 200 km or one hour from Madrid. Commuting patterns have developed, but what is very interesting is that they are twoway commuting patterns. People are moving out of Madrid to work in Ciudad Real and people are moving out from Madrid to live in Ciudad Real but to work in Madrid.

That also is the experience, I would say, of the French examples-the early lines in France. If you look at Paris to Lyon, for example, where there was a fear that this would have this sucking-in effect of activities to Paris, generally the experience is that it didn’t. The same thing is true of Paris to Lille. There wasn't a particular movement into Paris; there was a movement in both directions. What you do identify, however, is that there is a movement into those regional centres so that parts of Nord Pasde-Calais and parts of the RhôneAlpes region have suffered relative to the major metropolitan centres.

From the point of view of The Northern Way, what they need to think about is not particularly the balance between London and parts in the north, but it’s the effect that it’s going to have on the relative performance of the better performing centres, the Manchesters, the Leeds and so on, relative to those more peripheral areas around, where activities get sucked in to where you have much improved accessibility. Those are just two examples but I could find others if we had loads of time.

Q468 Paul Maynard: I am sure. A second point has been made to me that, whenever investment is made in infrastructure, you can build a new road, a railway, an airport or whatever, but it will only actually make a difference if there is adequate and effective economically relevant planning that occurs alongside it. Is that your finding from your studies?

Professor Vickerman: Absolutely; that’s very, very clear. You can see that very much in the French cases where there are large numbers of places where, for example, stations on high speed lines were put in and nothing really has happened. There are other cases where associated planning went in and supported that. If you want a British example of that, it is the lack of development at Ashford relative to what was expected. Just putting in transport does not cause development to happen; you have to do other things as well. This, in a sense, is the problem with the most peripheral regions. Just putting transport in does not create development.

In the larger centres where you do something, it creates two things. One is connectivity with the local transport system and the other is developing activities which sit right on top of the interchange point. Lyon-PartDieu, for example, and Lille-Europe, though it’s not quite such a good example, are examples are where you do get that activity. You get the office block on top of the station, as it were. That sort of thing is important to see how it becomes integrated into the urban infrastructure.

Richard Summers: I would like to broaden the question that Mr Maynard has raised and Professor Vickerman has been answering because one of the main points that the RTPI would like to make to the Committee today is that we need to look at investment in major transport projects in a broader context than just the transport project itself. We need to see how the transport project can be used to help promote the economic development and regeneration that Paul Maynard is talking about, as well as providing improvements to transport movement and reducing congestion through the scheme itself. When you come to talking about transport appraisal, Chair, I would like to add some further points in that direction. But it’s central to what you are saying in your terms of reference that a good transport system is a precondition of the longterm economic growth required to drive the UK’s economic recovery that needs to be borne in mind here. Roads, rail, airports, ports and all major transport investments provide a catalyst for economic growth and that needs, in some areas, support from positive economic development policies.

Councillor Box: I think the question gets at the heart of the matter really. Too often in the past economic development has been seen separately from investment in transport. I think the point you are making-and I agree with my two colleagues as well-is that the LGA position and local government's position is that we need far better integration between economic development and transport. The point you make about HS2, for example, is that if it goes through Wakefield that’s fine. I hope it does, if that is a national decision. I take the smiles as perhaps I can tell people back in Wakefield it will. The real issue is then, within the city region, how do we make sure that areas like York or Barnsley aren’t disproportionately affected by HS2, say, going through Wakefield and that the whole of the city region benefits?

Q469 Paul Maynard: Are you saying that the economic development has to take place at the Leeds city region level rather than for example, say, the Wakefield MBC level?

Councillor Box: In terms of transport, yes. We have taken the decision in my own authority that we will be heavily involved in the city region and I think I can say quite confidently that all the local authority partners in the city region feel exactly the same way.

Q470 Paul Maynard: Just for clarity, Wakefield is part of a Leeds city region LEP.

Councillor Box: It is.

Q471 Paul Maynard: Are you forming a single coherent LEP?

Councillor Box: Yes, and we have done.

Q472 Paul Maynard: What do you think would therefore happen where the city region was not coterminous with the LEP? How would that contradiction be resolved?

Chair: In many places there isn’t a solution in the way that you have found one, that the LEPs don’t necessarily relate to the city regions; there are gaps, there are disputes. Where that is the case, how is the city region going to-

Councillor Box: But the LEPs have come together based on markets. It doesn’t matter whether it is a city region or not. As long as those local authorities have come together based on a market economy, then it can work and I am sure it will work. I think we have seen that there is a great willingness on the part of local government to be involved in LEPs, because I think the point was made earlier about local government working alongside business to make some of these longterm investment decisions about the economy and about transport. We believe in Leeds-and, as I say, I know Leeds is not unique-that this is the way forward.

Q473 Iain Stewart: Could I return to Professor Vickerman’s evidence from France and Spain about areas on the periphery of a terminus for a high speed rail link? They have suffered because of that, but have there been retrospective attempts to try and create a better connectivity there and is that a lesson we can perhaps take on board for planning for high speed in this country?

Professor Vickerman: The way that has happened in Spain is probably not a good example to follow because what they decided that the important thing was to make the network bigger, aided by, of course, a lot of European Cohesion Fund money to do that. Therefore, they have probably taken more decisions. In fact, I was just two weeks ago in Barcelona and they are very concerned about the amount of money that has been spent on that. That may be a local difficulty between Spain and Catalonia, but there is a bit of a backlash going on about the amount of money that has been spent in creating huge networks. I think that would also be true of France, that there has been a tendency for regions to say, "Everybody wants one. They’ve got one so we would like one, please", without going through the activity of seeing whether that is the solution to their problems.

A point that has come up so many times in the evidence I have heard this morning, Chair, is that it’s a problem of deciding what is the problem and what is the right solution to that problem. If you go blinkered into high speed rail as the solution, then you won’t necessarily get the right set of problems. Spain went very fast into it. They built the first line in five years from the idea to having it operational, which is much faster than you would ever contemplate that it could be. Then it snowballed as an effect of that and now they are starting to see that it has different sorts of effects. It happened a little bit in the same way in France, but fortunately they have come back from it. But there are some peripheral bits of the network that have been built that really don’t make any sense at all in economic terms or probably in transport terms either. It’s, again, avoiding this snowballing effect of a simple solution to it that is always applicable everywhere.

Q474 Chair: Are you saying then that the High Speed 2 proposals have been applied a different way in different places and it is a concept that is applied differently?

Professor Vickerman: High speed rail certainly in the French context was originally done for exactly the same reason that HS2 is being proposed. It is about providing increased capacity, essentially. That is the first and foremost issue. There is a capacity problem. If we are solving the capacity problem, we may as well go for the high speed with it because it will bring certain additional benefits. It’s quantifying precisely what those benefits are that is often the difficulty. The French didn’t do that with the first one. Because it made a lot of sense in its own terms, the social benefits were a simple add-on, as they have been in so many cases with this. They found that in that particular case there were huge benefits to it, but those benefits have tended to be not replicated in the other examples to the same extent as they were in that first Paris to Lyon. Joining your first city and your second city by high speed rail is almost a nobrainer in those terms. That is the one that really makes sense, though, as far as I understand it, the rates of return on HS2 actually go up when you add the extra bits on, when you start getting the greater benefits of the more high speed from that. China is a different question. We won’t go there.

Q475 Chair: We will leave China.

Councillor Box: The real question is at what level decisions should be made. Whilst HS2 is clearly a national decision that will be made by Government, it’s making sure that what then will happen at a subregional level is taken into consideration and allowing the subregion, through the new LEPs, the ability and having the powers to be able to then deal with some of those city region issues that will arise from investment through HS2. I referred to what would happen to those quite major conurbations, say, in West Yorkshire, that did not have HS2 passing through them, to make sure that everybody is included in the economic growth that HS2 can bring.

Q476 Chair: Let me ask you about appraisals more generally. Are you satisfied with the method of appraisal for transport schemes?

Richard Summers: They are helpful as far as they go, but, as I touched on earlier in the discussion, they deal principally with the transport investment project itself. They don’t set it sufficiently in the context of the wider planning and development and, particularly, regeneration objectives for the area as a whole. I’ve worked on a series of economic impact studies of major road projects in the south-west and the south-east in recent years where we have used a multifaceted approach to appraisal. We have looked at the development potential that would be enabled by the construction of the road scheme in this case in a particular area, for employment uses, for retail uses, for housing uses, and assessed the scale of employment that might be generated from each of those and put that into a re-run of an econometric forecast for the area as a whole. Out of that we have been able to bring an estimate of net additional employment impact that can then be reconciled with the methodology of what at that time was the economic impact report method.

Professor Vickerman: I’m an academic economist. I’m never satisfied with things; they can always be better. But I think we have the basis for that. We do what we do in a current appraisal well and very rigorously. That doesn’t mean that it solves all the answers to it and there are ways continually of trying to improve it, both as basic research helps to clarify some of the issues but also as these other issues come up. But at the end of the day it has to be a decision that is taken on the basis of a very wide range of evidence, some of which is very technical, involving economics and econometrics; some of which involves very, very detailed forecasts of how a new system will affect traffic patterns; and another which is going to depend on judgment as to where effects will be beneficial.

If a scheme, for example, unlocks a piece of land or an area that is constrained by transport, then you will get a different effect from one which is just ameliorating the transport situation that exists there. You have to use judgment in terms of being able to do that. So I don’t think there is anything that is going to replace that. I would be appalled if everything could be programmed into a computer and you just pressed a button and it came out because I think there has got to be that judgment, both by professionals and by decisionmakers, politicians at the end, to take those decisions.

Q477 Chair: Mr Summers, in your written evidence you say that the way the appraisal system now works has led to more investment in roads and less in public transport. How has that happened?

Richard Summers: Because the tendency with the appraisal methodology used at the moment is that larger schemes generate higher levels of time savings for drivers. In fact, somebody in the previous session was saying that the time savings for car drivers are valued higher than the time savings for bus passengers, which I think helps to reinforce this point. But we have got to go beyond measuring time savings alone. They are having perhaps a disproportionate influence on the way that decisions are informed at the moment and we need to look at the way in which a transport investment project will contribute to the planning development and regeneration objectives of the area, which goes beyond the transport economics to which Professor Vickerman has been referring and it allows also for the judgment that you were talking about.

Q478 Chair: Councillor Box, did you want to comment on that?

Councillor Box: I totally agree with that last point about transport having to be integrated into the wider economic development that takes place at a subregional level. But again-and I hate to sound like a record-the question is, who does the appraising? Clearly, there has to be a national framework. There clearly has to be a national framework, but, bearing in mind the Government's wish to devolve down to subregional level, why can’t there be an appraisal that takes place at city region level, at LEP level, where you have business and local government working side by side, who are probably far better placed to carry out some appraisals, some of the schemes that actually mean more in economic terms to a city region than would be the case otherwise?

Q479 Julie Hilling: Looking at appraisal and localism, do you think there is a risk that certain areas are going to lose out very badly? If you live within the Greater Manchester conurbation, grand; if you are within the Leeds conurbation, grand. But if you are Blackpool, if you are in East Lancashire, if you are in other places, do you think there is a big risk, with the system in place in terms of appraisal and then the move to more localism, that big areas are going to lose very badly?

Richard Summers: That is a very interesting question because it gets to the heart of the administrative arrangements that we are looking into. We have heard the proposal for local economic partnerships. We haven’t yet seen the chapter and verse of the new Decentralisation and Localism Bill. Those two taken together will give us a clearer idea of the arrangements which will set a framework in which these appraisals and these policies can be developed. If I may say a little more about that, it is important that whatever comes out in the Bill and whatever is then able to be joined up enables the local economic partnerships to look at the strategic planning issues for an area as well as the economic development issues and that that can be connected to the decisions that are made at local level. At the moment we don’t know whether those connections will be made. I sincerely hope they will.

Professor Vickerman: Thank you for mentioning Blackpool, which is my home town. It goes back to this issue that I mentioned earlier about defining the appropriate geographical area. There is a scheme of facts. One area where a lot of work has been done more recently is looking at the way that what are technically called "spillovers" between areas exist. If you improve the transport in or to one area, does that stay within that area or under what circumstances does it spill out, or under what circumstances does it suck in? I think we are getting a better handle on this where you can see that improvements of transport in one area have disproportional positive benefits in an area aside from it because it helps to improve and to unlock some of the benefits in that area.

In other examples, the examples I gave earlier with the high speed rail, the tendency to suck in towards the rail heads work. But, again, I can’t say, "Right, this is a group of schemes that will work this way and this is a group that will work this way." You have to look at each one individually because they will all interact with the way that the current local economy is set up, the way that the connectivity and labour markets develop, and the extent to which they do or they don’t coincide with local authority boundaries or LEP boundaries.

All those things make it very, very difficult to be, in a priori terms, prescriptive about where the effects will be. That is a big difficulty for it, I think, because you have got to look, particularly at big schemes, in that sort of way. But there are some very small schemes that can do that. There are particularly difficult motorway junctions which have disproportional effects way away from those areas and improving those could make a huge difference to businesses over a very wide area.

Q480 Chair: So it comes back to judgment and whether a localism agenda can actually relate to a wider strategic interest?

Professor Vickerman: If I may, it is not purely judgment. It means that you have to have a protocol for looking very carefully at schemes to make that judgment, but, also, to see what sort of advance research you need to do in order to inform the decision as to what sort of area is taken into account.

Councillor Box: There is a lot of talk about rebalancing the economy and I would take it to mean that the economic gap between the north and the south is reduced. The point that has been made is well made because, if you look at West Yorkshire, it accounts for 50% of Yorkshire and Humber’s GDP and population as well. If we’ve got a LEP, how do we make sure that the Leeds city region doesn’t grow at the expense of those areas of Yorkshire and Humber that don’t have a LEP? It seems to me that is a real issue-to make sure, if we have strong LEPs that are effective working with business and local government, that we don’t create an even greater imbalance in the economy. It seems to me that is a real issue that we need to address.

Richard Summers: The situation that we face at the moment is that we’ve only seen the first round of approvals of local economic partnerships and the map at this stage is incomplete across the country. When we see the second round, which hopefully will give us complete coverage of LEPs, then we will have the benefit of being able to undertake economic development in the areas that may feel the draught of things that happen in the city regions. Equally, we hopefully will then have the structure I was referring to just now that will provide the strategic context for decisions that need to be made at the local level.

Q481 Paul Maynard: Can I just go back to Professor Vickerman and probably the other two witnesses too? You have outlined the potential architecture that exists in terms of local government, city regions and national Governments. We could also have travel-to-work areas. We could have any number of what I think you called jurisdictions, which are all competing with each other to have some sort of final dynamic say over transport policy. How do we resolve those contradictions? How do you solve what I call the Skelmersdale question whereby Skelmersdale is not part of either Merseyside or Greater Manchester?

Chair: I have to use Chair’s prerogative here: it is part of Lancashire, having represented Skelmersdale on Lancashire county council for many years.

Paul Maynard: It is in the travel-to-work area for both Liverpool and Manchester. It is not yet in a LEP; we hope it will be at some point. How do you solve those questions that, as connectivity becomes ever wider across a larger distance, more and more stakeholders want to have a say?

Councillor Box: I was going to say that I have some experience in this regard in that I was chair of the regional assembly, and I am sorry to mention the words "regional assembly". We had regional chambers at first, then we had regional assemblies and the RDA. So the region assemblies were scrapped. We have now got a new Government, they have scrapped the RDA, and we’ve got LEPs. The real issue is that we need to have some certainty for a period of time. If LEPs are felt to be the way to deal with some of the economic issues, then we’ve got to make sure that they work and there is no duplication.

One of the problems in the past, in my experience, was that there was uncertainty. You had the Government Office, for example, then you had an RDA and you had the regional assembly. We need to make sure, if we are going to be effective as local government working with business, that we’ve got clarity and we don’t have that duplication to which you have referred. So the LGA's position is strongly in support of LEPs that have adequate powers, and finance-raising powers as well, to be able to make a difference.

Q482 Chair: Is there any final comment on that?

Professor Vickerman: Could I just perhaps answer Mr Maynard's question, as he did sort of pick it up from me in the first place. I think you have raised a very difficult point there, but I think the problem is that the constant changing of the map is not helpful. I think we need to get that stability that has been referred to into the decisionmaking process so that we can see that. In my view we need to be perhaps a little less touchy about historical jurisdictions-and I say this again as a Lancastrian-and look very closely at the economics. Your particular example, of course, is a difficult one because somebody decided to put Skelmersdale where they did and it falls right in the trough between two major employment areas. There will be lots of other examples of that sort of type, not least in the south-east where, of course, we had this terrible problem with an RDA that went in a curious banana from Oxford to Dover and the whole thing that was driving it was London. So it was very difficult to take regional transport decisions in an RDA of that sort of type and it may be better to get back to the localism that can identify what the particular areas are-not little localism but big localism in particular sorts of areas, like Essex and Kent for example.

Q483 Chair: Thank you. I think your answers really reemphasised the need to resolve this question and I won’t have anything bad said about Skelmersdale. Mr Summers, a final comment then, briefly.

Richard Summers: I don’t think there is any perfect final answer to the delineation of boundaries. We have boundaries for particular purposes, be they economic, social, cultural, transport or travel-to-work or whatever, and they don’t always settle conveniently into the same pattern. I am not involved in the Lancashire and Yorkshire discussion here. I speak more widely I hope. But what is important is that the mechanisms and the administrative arrangements that we have for making decisions about investment priorities for transport and relating that to planning and regeneration and development can operate across those overlapping spheres of influence so that we can determine, on a balanced view, what needs to be done.

Chair: That is the big question. Thank you very much for coming, gentlemen, and answering our questions.