Transport and the Economy

Memorandum from North Lincolnshire Council (TE 107)

Summary of the key points raised in the Formal Submission

· As stated in Sir Rod Eddington’s investigation into the relationship between transport and the UK’s long-term economic growth, the priorities for investment are, ‘reducing congestion in urban areas, on key inter-urban corridors and at key international gateways (major ports and airports).

· The Humber Ports is the UK's busiest in terms of tonnage, (66 million tonnes in 2008) and home to the UK’s biggest Refinery Cluster, providing 27% of total UK production. The advantages of the Humber does not stop there, the south bank of the Humber is also the largest remaining development site in the North of England fronting a deep water estuary, covering 4 square miles and potentially, the biggest job creator in the Region, or indeed the North with the prospect of 20,000 private sector jobs. It is the best opportunity in the North of England to rebalance the UK economy.

· Given the location of the Humber Ports, it is easy to see that it has the advantage of being accessible to most areas of the UK, with it being within the four hours' drivers' time directive - so the Humber's assets need to be reflected in Government transport policies. However, at the present time, given the recent DfT announcement’s this week regarding the A160 to the Port of Immingham and the A63 scheme to the Port of Hull, this does not seem to be the case.

· The importance of providing the road and rail infrastructure in serving the Port of Immingham, given the annual tonnage highlighted above, should be obvious.  The South Humber also has 20% of all UK rail freight passing through it.

· Relating these points back to the Government’s focus on transport and the economy and in particular, providing the infrastructure to stimulate private sector investment and jobs, the construction of these major roads and rail schemes needs to be timed accordingly. Without it, the Ports will not be able to achieve its full employment potential. The implications for the Humber if this is the case, will be far reaching and against the overall objectives that the Government are trying to achieve.

In Summary

Nationally, investment in transport infrastructure needs to be at a level commensurate with maximising the economic benefits that such investment generates. Judged against the key indicators of this, principally as contained in the Eddington report, investment in the Humber ports will deliver, whether measured regionally or nationally, significant economic benefits. Additionally, the nature of the proposed South Humber port developments will provide the type of sustainable developments, both economically and environmentally, that will lead the way to achieving national carbon-reduction targets. The substantial private sector investment the area is already attracting clearly demonstrates its potential to boost the local and regional economy, creating an estimated 20,000 jobs over the next 5 to 10 years. Critical to maximising the success of the South Humber is the provision of adequate transport infrastructure, both road and rail.

Humber Bridge

· While the Humber and its business community welcomes the recent announcement of a Treasury study into the impact of the tolls, there is a degree of frustration and impatience at the delay that this inevitably engenders. How many more studies are genuinely needed? We have already seen the 2008 and 2009 Buchanan study, phases 1 and 2 (which showed that, of all the policy instruments to support economic development in the Humber region, action on the tolls is likely to be the simplest and most effective); the £150,000 DfT commissioned study, which is due to report in the next couple of weeks and which the Treasury has had a watching brief over; and now the prospect of a Treasury led study, of which we have no details regarding its remit, start date or duration. What is now needed is action, not more good intentions or further studies.

· The Buchanan findings showed that toll abolition would bring economic benefits to the Humber of £1.1bn by 2032, or £580m if the toll is reduced to £1 for a car each way with corresponding reductions for all other classes of vehicle;

· There is a cross-party and business consensus, which extends to the wider region, that action on the actual level of the Humber Bridge tolls is a policy necessity. The high Humber Bridge tolls prevent the Humber sub-region realising its economic potential, with little labour mobility across both banks, creating two separate job by markets;

Further thoughts

· We envisage that many future decisions on transport may come through a Local Enterprise Partnership or similar function. We will work with our public and private sector partners in the Humber to prioritise areas of funding that will drive the economy, both regionally and nationally, and restructure local economies. North Lincolnshire Council, the Hull and Humber Chamber of Commerce, the Humber Chemical Focus, the FSB and the majority of the Humber’s MPs support a pan-Humber LEP. At the present time, unfortunately there is no cross-estuary agreement on this among the four Humber unitary councils. Business though is unequivocal in its support for pan-Humber working through a single LEP.

1 Introduction

1.1 This is North Lincolnshire Council’s formal response to the inquiry into Transport and the economy, in addition to the oral evidence given on Tuesday 02 November 2010.

1.2 In the present economic climate, and given recent announcements on future transport investment, North Lincolnshire Council welcomes the opportunity to respond and support the Government in its support for transport schemes that will rebalance the UK’s economy.

1.3 The following response is structured around the questions as outlined in the Terms of Reference and Call for Evidence.

2 Have the UK’s economic conditions materially changed since the Eddington Transport Study and, if so, does this affect the relationship between transport spending and UK economic growth?

2.1 The UK’s economic conditions have substantially changed since the Eddington Study in 2006 and, as such, it is more important than ever that transport spending is invested in schemes that will support economic growth.

2.2 Of course, it is also fair to say that, whilst supporting economic growth is vital, there is also an increasing awareness of environmental issues and climate change and transport’s role in addressing both issues. It is particularly crucial now that both should be addressed in unity rather than as two separate issues. This is the only way we will achieve real sustainable economic growth.

2.3 In the current economic climate, Sir Rod Eddington’s study into the relationship between transport and the UK’s long-term economic growth stated that the priorities for investment should be, ‘reducing congestion in urban areas, on key inter-urban corridors and at key international gateways (major ports and airports).’ This has never been more important in stimulating economic growth. Further, where Eddington refers to maximising economic growth whilst also responding to the challenge of climate change, this is of particular importance to the Humber, as detailed below.

2.4 The Humber Ports is the UK’s busiest in terms of tonnage, (66 million tonnes in 2008) and home to the UK’s biggest Refinery cluster, providing 27% of total UK production. The advantages of the Humber do not stop there. The south bank of the Humber is the largest remaining development site in the North of England fronting a deep-water estuary, covering 4 square miles and, potentially, the biggest job creator in the Region, or indeed the North, with the prospect of 20,000 private sector jobs. It is the best opportunity in the North of England to rebalance the UK economy.

2.5 Considering the economic potential with the low carbon, sustainable sectors, the south bank of the Humber has plans for the biggest environmental and port developments involving renewable energy, in the UK. A £400m Marine Energy Park and a 1600 quay will create the infrastructure for the offshore wind sector bringing with it up to 20,000 jobs. It will provide the facilities for manufacturing, commissioning and the installation base for offshore wind turbines and become the largest energy cluster in the UK. In addition it is worth noting that, due to the proximity to three offshore wind farms, delivery costs will be significantly lower than the rest of the UK and Europe. But the Government, too, has to play its part in helping us to rebalance our economy. The uncertainty created by a delay to the A160 scheme is perhaps not the best example of a supportive relationship.

2.6 Given this and the location of the ports to the rest of the mainland in the UK (most areas are within the four hours’ drivers’ time directive), the Humber’s assets clearly reflect Eddington and Government’s transport policies. Therefore, recent DfT announcement’s regarding the delays to the A160 scheme to the port of Immingham and the A63 scheme to the port of Hull, are baffling to comprehend. An explanation is sought.

2.7 In the previous Government’s November 2008 Pre-Budget Statement, up to an extra £30m was awarded by the DfT to enhance the quality of the A160 scheme. This was part of a programme aimed at removing bottlenecks at key UK airports and ports (in line with Eddington). And yet two years later, we find the scheme has been put back to start ‘at the earliest’ in 2015. This is in marked contrast to the Yorkshire and Humber Regional Transport Advisory Board’s intentions in February 2010 (with DfT present), where it was identified as a key priority and the scheme’s start date was brought forward by 10 months (to early 2013).

2.8 Given the Government’s focus on providing the infrastructure to stimulate private sector jobs, the construction of these major road schemes needs to be timed accordingly. Without it, the Humber ports will not be able to achieve their full economic potential. The implications for the Humber if this is the case, will be far reaching and against the overall objectives that the Government are trying to achieve. The Humber is absolutely united and clear, with the unequivocal support of business, that an early start on its two strategic road schemes to the ports of Immingham and Hull – the A160 and A63 respectively – are vitally important and inextricably-linked to any serious attempt to help rebalance its economy and improve its economic performance.

2.9 In summary

Nationally, investment in transport infrastructure needs to be at a level commensurate with maximising the economic benefits that such investment generates. Judged against the key indicators of this, principally as contained in the Eddington report, investment in the Humber ports will deliver, whether measured regionally or nationally, significant economic benefits. Additionally, the nature of the proposed South Humber port developments will provide the type of sustainable developments, both economically and environmentally, that will lead the way to achieving national carbon-reduction targets. The substantial private sector investment the area is already attracting clearly demonstrates its potential to boost the local and regional economy, creating an estimated 20,000 jobs over the next 5 to 10 years. Critical to maximising the success of the South Humber is the provision of adequate transport infrastructure, both road and rail.

3 What type of transport spending should be prioritised, in the context of an overall spending reduction, in order to support regional and national economic growth?

3.1 We recognise that in the current economic climate tough decisions have to be made on transport investment. Therefore, we feel that transport spending has to be prioritised in those areas that offer the greatest benefits in terms of:

· Facilitating / supporting economic growth, particularly from the private sector.

· Promoting sustainable growth (reducing carbon emissions, supporting investment in the renewables sector, opportunities for sustainable travel and so forth)

· Improving road safety

· Offering best value for public sector money

· Creating jobs

3.2 With this in mind, the points raised above, in answer to the previous question, are also relevant here. In addition, we would like to offer the following comments looking at our work on a Humber-wide level:

3.3 The A160 scheme for the port of Immingham (using DfT’s methodology) has a benefit cost ratio of over 10. This is the highest of any scheme in the Yorkshire and Humber and one of the best in the country.

3.4 Providing rail infrastructure is vitally important, given the points above (particularly on sustainability). The South Humber has 20% of all UK rail freight passing through it. Gauge enhancements from the South Humber Ports (Immingham and Grimsby) to the East Coast Mainline (to W10 and W12 standard, allowing the passage of large containers) cost approximately £5.5m and will provide significant economic benefits to the region and indeed nationally. In the absence of such investment, by 2014, the Humber ports will be the only major port in the UK without the benefits of these improvements.

3.5 There has long existed a cross-party and business consensus, which extends to the wider region, that action on the actual level of the Humber Bridge tolls is a policy necessity. This is, manifestly, not a transport spending demand, but a financial issue for Government. The infrastructure is in place and has been for almost thirty years. It is not the estuary that is the problem – simply the level of the tolls. Set at an unrealistically high level from the outset, the tolls prevent the Humber sub-region from realising its economic potential. As a result, there exists little labour mobility across both banks, creating two separate job markets. It is essential, with the prospect of significant offshore wind investment, that both sides of the bank can reap the benefits.

3.6 While the Humber and its business community welcomes the recent announcement of a Treasury study into the impact of the tolls, there is a degree of frustration and impatience at the delay that this inevitably engenders. How many more studies are genuinely needed? We have already seen the 2008 and 2009 Buchanan study, phases 1 and 2 (which showed that, of all the policy instruments to support economic development in the Humber region, action on the tolls is likely to be the simplest and most effective); the £150,000 DfT commissioned study, which is due to report in the next couple of weeks and which the Treasury has had a watching brief over; and now the prospect of a Treasury led study, of which we have no details regarding its remit, start date or duration. What is now needed is action, not more good intentions or further studies.

3.7 The Buchanan findings showed that toll abolition would bring economic benefits to the Humber of £1.1bn over the period 2009 to 2032, or £580m if the toll is reduced to £1 for a car each way (with corresponding reductions for all other classes of vehicle).

3.8 Annual operational and routine maintenance costs amount to around £3.5m a year. The Bridge Board receives over £21m a year in toll revenue. At the last public inquiry (March 2009), the Bridge Board confirmed that toll income over the period 1981 to 2008, amounted to £342.3m. Interest and capital paid to the Government, excluding grant over the same period, was £292.2m. The Humber Bridge toll is nothing other than a brake on the Humber’s competitiveness and a local tax on businesses and individuals. It is hoped that the recently announced Treasury-led review into the impact of the tolls on the Humber’s prosperity will recognise the heavy price paid by business and individuals since 1981 – and act accordingly.

3.9 The Humber, after years of poor economic performance, now has the opportunity, through Ports, logistics and offshore wind investment, to transform its economic base and the life chances of its residents on both banks. Of course, the two major road schemes need to be given the go ahead, but the issue of the prohibitively high Humber Bridge tolls must be addressed if the Humber is to realise its potential. We must have a skilled and mobile workforce able and willing to take advantage of job opportunities on either bank. With the tolls at their present level, this will not happen.

4 How should the balance between revenue and capital expenditure be altered?

4.1 Whilst, given the reasons above, there are obvious benefits to funding major capital schemes, particularly those that stimulate sustainable economic development and private sector investment, we also need to ensure that we can maintain the assets we already have and of course, should new capital schemes be built, we need to ensure we have the level of funding available to be able to maintain them. The relationship between the two is interlinked and complex.

4.2 To some degree, it is possible that a decision on where funding is spent (on smaller levels of funding), should be made at a local level in an informed way based on current assets and local needs. Therefore we welcome any changes to a more simplified transport funding system and await the outcomes on the recent transport allocation consultation from DfT.

5 Are the current methods for assessing proposed transport schemes satisfactory?

5.1 In this economic climate, we would welcome a process that takes further account of the scheme’s ability to drive economic recovery and rebalance the UK’s economy. It also seems relevant at this time to take account of predicted levels of private sector investment and job creation. Fundamental to all assessment of schemes is a value for money factor and the use of the benefit cost ratio methodology (BCR).

5.2 As mentioned earlier in paragraph 2.7, the Regional Transport Advisory Board, in February 2010, viewed the A160 as such a key regional priority that members agreed to bring forward the proposed start date for the scheme by 10 months to start construction in early 2013. In the current assessment mechanism, no account appears to be taken of the Region’s intentions. Dependent on the government’s intentions with regards to regional tiers or indeed local prioritisation mechanisms, it is fundamental to include this in methods of assessment.

5.3 Whilst it is understood that assessment criteria for assessing proposed transport schemes can be complex, taking into account these economic benefits appears to be fundamental in the current economic circumstances.

5.4 We do also recognise that environmental issues should be taken into account, particularly in the government’s drive to reduce greenhouse gas emissions and transport’s key role in achieving the targets. Schemes should also therefore, be considered on their ability to reduce these emissions and options be considered that promote the use of sustainable modes of transport. We do acknowledge and welcome that, through the ‘New Approach to Appraisal’ (NATA), some of these steps have already been taken both from an environmental and economic perspective.

6 How will schemes be planned in the absence of regional bodies and following revocation and abolition of regional spatial strategies?

6.1 We envisage that many future decisions on transport may come through a Local Enterprise Partnership or similar function. We will work with our public and private sector partners in the Humber to prioritise areas of funding that will drive the economy, both regionally and nationally, and restructure local economies. North Lincolnshire Council, the Hull and Humber Chamber of Commerce, the Humber Chemical Focus, the FSB and the majority of the Humber’s MPs support a pan-Humber LEP. At the present time, unfortunately there is no cross-estuary agreement on this among the four Humber unitary councils. Business though is unequivocal in its support for pan-Humber working through a single LEP.

6.2 Further explanation would be welcomed on how some of the issues that fall between the local priorities and issues of national significance will be dealt with without the presence of regional bodies providing the wider knowledge and expertise often needed on these types of schemes. It is felt that on some issues, including major transport infrastructure, a regional perspective (or equivalent) is needed to allow appropriate strategic decisions to be taken on a wider scale, such has been provided by the Regional Transport Advisory Board in the past. However, as also mentioned in paragraph 5.2, should such a body be in place, the government should recognise and assess schemes against criteria that takes the decisions of the region into account.

November 2010