Back to Report

Oral Evidence

Taken before the Transport Committee

on Wednesday 19 October 2011

Members present:

Mrs Louise Ellman (Chair)

Jim Dobbin

Julie Hilling

Kwasi Kwarteng

Mr John Leech

Paul Maynard

Iain Stewart

Graham Stringer

Julian Sturdy

________________

Examination of Witnesses

Witnesses: Rt Hon Justine Greening MP, Secretary of State, and Lin Homer, Permanent Secretary, Department for Transport, gave evidence.

Q1 Chair: Good afternoon, Secretary of State. Welcome to the Transport Select Committee and congratulations on your appointment. I am glad that we have this early opportunity to discuss with you a number of very important issues. We appreciate that you have taken up office within a very short time, but we are glad to have this early opportunity.

Justine Greening: I think you got the first possible Wednesday, so it could not have been sooner than this.

Q2 Chair: Maybe we knew something. I understand that you would like to make a statement to us before we pursue any questions.

Justine Greening: I thought I would broadly set out my initial thoughts two and a half days into the role. I know how important the Select Committee will be going forward in its role in informing me as Secretary of State about what it sees as its priorities and the key issues in transport. Needless to say, I am going to put a huge amount of effort into this role and will take the care that I think I need to in an incredibly important policy area. But, as you say, it is early days and I will do my best to answer some of your questions.

I come into this role as somebody who uses public transport an awful lot. For many people up and down our country, whether they have a good or bad day is often very much coloured by their journey to and from work. I am very conscious of that. If I had to sum up how I see my role, it is about keeping people on the move-by working with key stakeholders like the devolved authorities and TfL-not just today but tomorrow and in 10, 20 and 30 years’ time, and taking decisions to make sure that can happen.

Also, it is absolutely critical that the Department for Transport plays its role in being a driver of economic growth. In the near term we also have some important decisions to take about our transport infrastructure, about which I am sure you will ask me. We have the Olympics on the near horizon, and one of my key priorities is to make sure I work with the Mayor on that issue. I also realise that we have an important agenda on rail reform, looking at franchising and making sure we get investment in the industry. With winter approaching, there is also a clear resilience agenda for me in the short term. Finally, there is the green agenda, which perhaps has a slightly longer-term aspect to it but is important. There are many aspects of the transport agenda to which I know I have not referred, but I am sure we can come on to those.

Q3 Chair: There are a number of very important and perhaps controversial issues in which the Committee is already engaged, and it would help us to have an indication of your position on some of them. The Committee has been looking at the award of the Thameslink contract to Siemens as the preferred status bidder rather than Bombardier. We questioned your predecessor on this. He said that he did not intend to change the contract but was looking at developing further work with other franchises and producing more possible work for Bombardier. We also raised with him the question of the assessment of credit rating. That was one of the issues Bombardier raised with us as a possible reason why they were not awarded that contract. One of the related issues was the implication of the award of that contract to Siemens, if that should be confirmed, for the possible tender and award of the contract on the Crossrail project. Yesterday I received an answer to a written parliamentary question that I put to your Minister of State. He said that in relation to the procurement of Crossrail rolling stock "it is unlikely that the underlying parent company credit ratings will be specifically scored". That was not the situation for the award of preferred bidder status on the Thameslink contract. Does this mean that there has been a change of policy?

Justine Greening: You are right to flag up that a number of issues arose from that tender process which saw Bombardier lose out to Siemens. I have already had a chance to speak with André Navarri, head of Bombardier, to talk through his perspective on this. I will be meeting him shortly. We have agreed that we will meet face to face as a matter of urgency. One of the lessons that we learned instantly as a Government was that there was a real question about whether the UK plc strategic need was properly part of that procurement process. As you will be aware, since that announcement, BIS has very much led the way in looking at how we can improve procurement processes generally, and we will be making some announcements shortly on the outcome of that work. We have made good progress and, to the extent it is able to, I would like to see that feed into the invitation to tender on the Crossrail work that will be coming out early next year.

You are right to point out that that is a decision in the past; it is done and we have to move on. The alternative would be a two-year delay. As part of the Thameslink work, 3,000 infrastructure jobs will be created, a significant number of which will be with SMEs. It is important to get on with that, but you are right to point out that we can improve the procurement process going forward. As you pointed out, there is also the issue of making sure we are clear with companies, including Bombardier, about the opportunities on the near horizon for bids of which they can be part, if they choose to.

Q4 Chair: As to the current status, what does that mean? Are you going to look again at the award of the contract?

Justine Greening: No, we are not going to.

Q5 Chair: Are you looking to modify the Voyager trains, which your predecessor told us was being considered?

Justine Greening: We are looking at that. I would like to think that any of the future tendering processes in which we engage would be able to reflect any changes in the strategic procurement process on which BIS has been leading the work. We have made good progress on that, and we will be setting out more clearly over the coming months exactly what impact that will have on the contracting process going forward. I would expect that to be reflected in the way the DfT, alongside other Departments, works. You are right that, in the context of these near-term contracts on the horizon which potentially will go through the new process, we have the eVoyager proposal, which will be an Aviva project; the Crossrail proposal, which will be going out to invitation to tender early next year; and the potential order for new trains by Southern Trains. There are key contracts quite close on the horizon that, hopefully, will be positively affected by the review we have put in place.

Q6 Chair: What is your position on High Speed 2 which we are currently inquiring into? Your predecessor was strongly in favour of High Speed 2. What is your view?

Justine Greening: We need to make sure we can build our economy on the back of the rail infrastructure in which we invest. If we look at the existing infrastructure, for example, passenger numbers over the next three decades are predicted to double for both the East Coast and Midland main lines. There is a question about how you meet that demand. One looks at the benefits that high speed rail has brought to other European countries. When we travel to countries like France, I am sure most of us have had the chance to use the TGV; I certainly have. It is impossible not to see the benefits that those projects can bring. We are absolutely right now formally to look at the benefits that High Speed 2 can potentially bring to our economy, not just by helping to bridge the north-south divide in the longer term but in the shorter term by the work and jobs that will be created as part of it, which will be substantial. Phase one alone will lead to approximately 40,000 jobs.

I would like to take this opportunity to emphasise that I recognise how important a decision this is. We have just finished the first consultation. I recognise that on both sides there have been some big debates on this. I have just set out that this Government, like the last one, see the huge potential in having a better high speed rail network for our country. I also recognise that there are some concerns in local communities and I want to take this opportunity to reassure them that I will take great care in how I look at this decision over the coming weeks and months.

Q7 Chair: Would you describe yourself as an enthusiast for High Speed 2?

Justine Greening: The way I will approach this will not be an emotional one; it will be a rational, sensible approach that looks at the facts and business case, but also takes note of some of the concerns of local communities. I do not want to have words put in my mouth. We as a Government, like the last one, have been very clear that we think high speed rail can have a really important role to play in our future rail infrastructure. We are going through a process of assessing exactly how that can work, and I will look at the responses to those consultations. The consultations have been many and varied, and I will weigh up all of that evidence as I reach my conclusions.

Q8 Chair: The third thing I want to raise at this stage is related to aviation. It has been suggested by critics that perhaps you are compromised because in the past you have made very strong statements disputing the significance and importance of Heathrow as a hub airport. What would you say to the people who put that to me?

Justine Greening: I would counter your question. I am well known for saying that I thought the third runway was a very bad idea, and that is Government policy. It would be far more controversial if I was sitting here as a new Secretary of State fundamentally at odds with Government policy on Heathrow. I am fundamentally at one with Government policy. We are just at the close of the very first important step towards developing our aviation strategy and the consultation on that will come out next year. As with high speed rail, I will look very carefully at the quite wide and varied response to what is in that scoping document.

Q9 Kwasi Kwarteng: Aviation is a big concern nationally in terms of trying to get the economy growing. I believe that the Government have ruled out the construction of additional runways at Heathrow, Gatwick and Stansted. I know you are new to your role and I congratulate you on your promotion, but what are the Department’s plans, if any, to extend aviation capacity in this country?

Justine Greening: The whole point of the scoping document, which will be reflected on to generate a draft aviation framework policy document next spring, is to assess how we make sure that over the coming decades we have a competitive and successful aviation sector, but also one that meets the environmental needs of our country and is achieved in a sustainable way. In a nutshell, that is what we are trying to achieve. You are right that we have been very clear about whether or not we will have extra runways at Heathrow, Stansted and Gatwick-we have said that we will not-but after that we want to make sure we have an aviation policy that is able to meet the demands of our economy.

One thing we should not forget is that there are a lot of regional airports which play an important role for the communities they serve and their local economies in particular. I see that as a very important part of the future debate we will be having about the aviation sector as a whole. I recognise the importance of Heathrow. That was why I slightly countered what the Chair said, because I do not think I have ever disputed that Heathrow is an important airport. The debate that we had was about the right way for it to develop.

Q10 Kwasi Kwarteng: You have given a very good general answer. You come to the Department as an MP known for your opposition to the third runway, which then became Government policy. You have a seat in London and understand the needs of London. What do you think about the Mayor of London’s suggestion of an island airport? That is an answer to aviation capacity. What is your feeling about that particular policy?

Justine Greening: I do not think it would be right for me, having been in this role for literally two and a half days, to make major pronouncements-

Q11 Kwasi Kwarteng: But you have been part of the debate.

Justine Greening: -on aviation that would be a key part of a future aviation strategy, because it would be so big. I do not think that is sensible or right, given that we have a structured process to follow. The Mayor put in his response last Monday, so it is hot off the press.

Q12 Kwasi Kwarteng: But you are a London MP and you follow this.

Justine Greening: We will look at the suggestion he has made. I have already had a very brief, initial general discussion on transport with the Mayor, and I am very much looking forward to working with him on how, together, we can meet London’s important transport needs over the coming few years.

Q13 Iain Stewart: You talked initially about high speed rail and aviation. I appreciate that you have been in the job for a maximum of 72 hours, but what is your initial impression about whether the Department will be looking at an aviation strategy in conjunction with other strategic projects like high speed rail and there will not be almost a silo decision on each one, given the need to look at the strategic network in the round?

Justine Greening: That is a very good point, and that is precisely why the worst thing I could do, having been in this role for just a couple of days, would be to make grand pronouncements about what should happen at such a strategic level. You are right that a key component of High Speed 2 is this modal shift discussion, but alongside it is the question of how it sits alongside rail reform, the investment going into that and the planned review of rail over the coming year. These have clear cross-overs of which we need to be conscious. I am certainly aware of that. In my initial meetings with officials they are clearly aware of that, and we will take it into consideration carefully as we develop all of these policy areas.

Q14 Iain Stewart: But are you comfortable that the time scale of the decision you will make on High Speed 2, which I presume has not changed from your predecessor, is in the correct sequence in order to look at aviation in the new year? You do not want to close down any options prematurely.

Justine Greening: I think it is, broadly, the right sequence. My predecessor Philip Hammond was very careful to make sure that that sequencing made sense. We have the right sequencing, but you are right to flag up that those policies are interlinked. One of the key challenges is connectivity, being conscious of whole journeys and the fact that, for example, sometimes I take a No. 37 bus to Clapham Junction, get the overland to Waterloo and then take the Jubilee line here. That is important. We have to have that slightly higher level view at times to see overall connectivity.

Q15 Iain Stewart: It was reported recently in the press that the Heathwick rail link is an option that is being considered. Is that part of DfT policy, or is it someone else flying a kite?

Justine Greening: One of the great things about transport is that, inevitably, you have to get very broad-based and creative thinking. As to the debate about London’s airports and how you can make a virtual hub work better, that is one option that I know has been flagged up. It is absolutely right for us to consider a number of different proposals that people have flagged up as part of this process.

Q16 Chair: Does your answer to Mr Stewart’s question mean that we should expect a Government statement on transport strategy? This Committee has called for a White Paper on transport strategy that looks at all modes of transport.

Justine Greening: To all intents and purposes, that is what you will end up with by the time we have developed the aviation framework and the rail reform that is planned. There is also the work being undertaken by Alan Cook to look at the Highways Agency and how that might be developed over the next few years. You have already seen our initial announcements about the 14 road infrastructure investments that we are going to make. Another tranche will come out in the following spending review period. You will see the overall strategy emerge over the period that those processes take to come to fruition.

Q17 Chair: But it will not be a statement about what the strategy is against which we can assess the individual announcements.

Justine Greening: I am probably too new to the job to say whether I would want to sum it all up. In a very short, snappy sentence I tried to tell you how I viewed the overall vision and strategy. That is the other slight problem I have with your "strategy" question. The question is how you define it, but, in response to Iain and, indeed, you, Chair, I want to make sure that, having done the work on the modal strategy over the coming year and a half or so, as a totality it will make sense.

Q18 Graham Stringer: I congratulate you on your new job. I want to ask some general questions; I would not expect you to answer detailed ones. You mentioned in your introduction that you were looking at green policies. We are all in favour of sustainable transport. Can you give the Committee your definition of "sustainable"?

Justine Greening: It means that transport is playing its role in ensuring that for us as a nation we meet our climate change targets. We see sectors like aviation coming within the emissions trading scheme for the first time next year, and that is good. There is a European agenda that helps to drive this area, but there is also an important domestic agenda. We have £400 million or £500 million invested in things like the Local Sustainable Transport Fund. If you look not just at the Department for Transport but the Treasury, where I was recently, the Government have put in place a number of different policies-and continued some of the previous Government’s policies-to try to stimulate the shift to greener transport. Looking at electric cars, as many have been sold in the first six months of this year as were sold in the whole of last year. The problem is that we are starting from a very low base. It is on my agenda to see what we can do to pursue that green transport agenda effectively. When we talk about railways and high speed rail, they are lower carbon than, for example, road in terms of per passenger mile.

Q19 Graham Stringer: To take the big headline issues, when the railways were privatised the then Government said they expected them to be at zero cost. Roughly, they cost about £3.5 billion at the moment-they have cost more in some years-and that is at a time when they carry record numbers of passengers. Do you see it as part of your job as Secretary of State to reduce and reallocate that subsidy? Standing back and looking at the expenditure over the last 20 years, it does not look reasonable, does it?

Justine Greening: I want to see a successful, sustainable railway industry. The underlying problem is that at the moment it is subsidised. The per passenger mile subsidy is just over 8p; in other words, the more successful we have been in getting people to travel on railways-we have had record passenger numbers-the more it has become a drain on the public purse. We need to look at how we can change that and get off that hook. That is happening in two ways. We have taken some very difficult decisions on fares, but, if you look at what Sir Roy McNulty identified in his report, he was very clear that there is a huge opportunity to reduce costs in the industry significantly by 30%.

A couple of days ago I had the chance to meet the Rail Delivery Group. Another of his key recommendations was that the industry had to take responsibility in reducing its own cost base. I had a very good meeting with the Rail Delivery Group. They are looking at a number of work streams that challenge the way they work, both by working more collaboratively and reducing their own costs and making sure that technology works better for them to reduce costs. Combined with the work we can do to improve the effectiveness of franchising and look at fares and ticketing, those are the key planks which mean we can get away from the fact that the necessary outcome of a successful rail strategy to get people on to the railway is a huge and growing cost to the taxpayer. That is one of the key things I would like to change, because it is the right thing to do for passengers but also right for the taxpayer.

Q20 Graham Stringer: Apart from Portugal, we have the lowest motorway density in all the countries of what used to be known as western Europe. Are you satisfied that our motorway network is complete, or do you think the country suffers economically because it has fewer motorways than elsewhere and therefore less connectivity, to use your word? I can give you examples if you like. Are you satisfied that the motorway network is complete?

Justine Greening: It is probably too early in my role to give you a full answer to that question. Investment in the road network is absolutely vital, which is why we have already announced 14 initial projects that we want to get cracking on. I will be making sure that I hold the Department’s feet to the fire on those projects so they are delivered on time and budget. I am well aware of how important those projects are to the economic prospects of the communities they serve. Congestion can be a huge drain on economic growth. Therefore, that investment is incredibly important. If you look overall at the capital investment this Government are making, it is £2 billion higher than had been pencilled in by the previous one. We have picked up a very challenging financial situation, but we have always been very clear that we will have to put investment into our infrastructure, and-critically-into transport infrastructure, to give ourselves that real driver of economic growth, both in the short term but also the longer term to make sure we keep our country competitive.

Q21 Graham Stringer: The report of the National Audit Office provides nice bubbles and balloons about how much is spent where and on what. Two little circles next to each other show the amount spent on transport in London and in the rest of England. From memory, the ratio as between London and the rest of the country is about three to two. Do you think it is a fair balance that London gets so much more spent on transport per capita than the whole of the rest of England?

Justine Greening: If you do not mind me saying, I do not think you can put it in such simplistic terms.

Q22 Graham Stringer: It is a very direct term, is it not? "How much you are spending where" is simple.

Justine Greening: It is not. If I take a train from Manchester to London, and we have put investment into that line, or I drive along the A11, once it has been dualled, going from A to B, who benefits most?

Q23 Graham Stringer: I am talking about local transport schemes. The subsidies to the rail and motorway networks will come out of different pockets, unless they are in a different balloon. We are talking about local transport schemes and how much more is spent in London. I ask it in the most generalised form because you are new to the job. I just want an idea of whether you think that is fair, as my kids say.

Justine Greening: I understand the importance of the issue you raise. We have a process within the DfT by which we look at individual decisions so that we can have a portfolio approach. We look at cost-benefit ratios and that does not change by region, but we have to take an overview on this. I will take a pragmatic overview on where I think the priorities lie. London is critical for us as our capital. It is incredibly important we have investment going into things like the tube upgrade and Crossrail to make sure it is successful. But I am conscious that we have to make sure we truly have a United Kingdom transport-wise so you can get from A to B. If you listened, as I did, to the high speed rail debate last week, it was striking that some MPs from northern communities could see the real benefits of their communities being connected to London, and perhaps from Manchester to Leeds, in a way they had not been before. As somebody who grew up just outside Sheffield, I could understand those arguments. You are right to flag up that we need a balanced approach, and I will make sure that happens.

Q24 Mr Leech: Secretary of State, I congratulate you on your appointment. I apologise for missing your opening statement, but I was attending a briefing by BALPA in relation to the EU flight time limitations. This is quite an important issue in terms of aviation safety. I was shocked to hear from the study they had done that over 30% of pilots have woken up to find that their co-pilots are also asleep, or that they had been asleep at the same time, yet the Government have said that as long as the CAA are happy with the flight time limitations they will sign up to the EU proposal. I seek reassurance from you that as the new Secretary of State you will take a very close look at this to ensure that we are maintaining aviation safety.

Justine Greening: I can assure you that aviation safety is critically important. I have not yet had the chance to have a briefing on this, but I will ensure that I am briefed on it and will take a very close look at it.

Q25 Mr Leech: I am aware that the CAA have some minor concerns but certainly not the major ones that BALPA do. I would certainly hope you could take that on board.

Justine Greening: That is helpful feedback. I am not fully immersed in that particular part of aviation policy yet, but I can assure you I will get immersed, reflect on it and respond to what you have just said.

Q26 Mr Leech: If I may throw another hand grenade while I am at it, at the moment there is also consideration being given to changes to the MoT structure. Currently, we have a three-year and then every-year approach, and consideration is being given to the possibility of changing that to four years and then every year, or four years and then every two years. This was considered and ruled out by the previous Government because there was significant evidence that the number of road deaths would increase if changes were made to the MoT structure. If that evidence is still apparent, can we be assured that the Department will not go ahead with changes if there is any chance that the number of road deaths would increase as a result?

Justine Greening: We have a consultation process in relation to that potential policy change. We have seen good progress on road safety in our country’s roads over the years, and that is something I want to continue. Again, this is one of the areas in which perhaps I have not yet had the chance to get fully immersed. I think we are approaching it in the right way, in that there is consultation that gives people the chance to flag up their concerns and provides the sort of inputs in terms of data that you flag up, and I shall look at those very carefully.

Q27 Mr Leech: My final question is less of a hand grenade. One of the good things the coalition Government have done is to maintain capital investment in the railways despite significant budget restraints across the board. Can we be assured that under you as Secretary of State we will continue the approach of maintaining a high level of capital investment in public transport, which is vital in terms of creating growth and keeping people in jobs?

Justine Greening: You will know that we have our spending review settlement. As you point out, it provides one of the largest amounts of investment going into our transport infrastructure that we have seen in a very long time. I cannot prejudge what will happen in the next spending review, but I will want to make sure that we have the right amount of investment so that we stay competitive and we have a transport infrastructure that can cope with the capacity that is needed. I can also assure you, putting my accountant hat back on, that I shall be looking to get absolute value for money out of the budget available to me.

Q28 Kwasi Kwarteng: I appreciate that some of my colleagues have asked very specific questions on which, being new to the job, you need to be perhaps better briefed. You mentioned that you were an accountant and you were at the Treasury-

Justine Greening: Nobody is perfect.

Q29 Kwasi Kwarteng: Given that, you should perhaps have a view on the status of Network Rail’s debt and the structure of Network Rail. I remember that when last year your predecessor came to this Committee, he said he did not take a theological view about the status of this debt. What is your view on that? Further, do you have any wider thoughts about the structure of Network Rail?

Justine Greening: They are important questions, and I would probably echo what Philip Hammond said. I have to say that it is a privilege to take over from Philip, who did an outstanding job, and I will probably take his approach. But part of the reason we need to look at railway reform is to consider the best way to structure the industry. I am looking forward to having further discussions with Network Rail. They were at the meeting I chaired with Tim O’Toole on Tuesday evening, and I am sure that I will be a frequent visitor over the coming months and years.

Q30 Kwasi Kwarteng: You were a Treasury Minister for nearly 18 months and now you have this job. Do you have a view about the balance sheet of Network Rail and whether it should be on or off the Government balance sheet?

Justine Greening: I do not think it is for me to have a view; that is something on which the Comptroller and Auditor General and the National Audit Office reach a conclusion. Their conclusion is that the way in which Network Rail operates, which effectively is independently, means that it is off balance sheet.

Q31 Kwasi Kwarteng: Do you think as an accountant that is a good thing?

Justine Greening: Yes. I do not think it is up to me to disagree with the Comptroller and Auditor General. It is up to them to reach their decision on the accounting treatment and, in the light of what is in or out, for us to manage the public finances.

Q32 Kwasi Kwarteng: Are you indifferent about the accounting treatment?

Justine Greening: It is what it is.

Q33 Chair: The point of this is that its status has implications for the way in which it is run and whether the Government may or may not seek to influence it, so it is relevant to transport policy.

Justine Greening: It is relevant; it is something that will necessarily be covered by the rail review. It is a decision outside my sphere. There are clearly some important implications in how it is treated, but ultimately it is not for me to say whether I think the decision on the treatment is right or wrong.

Q34 Kwasi Kwarteng: To restate the question, pretend that you are not the Secretary of State, or even a politician, but an accountant. What would be your view about this entity and the treatment of its debt?

Justine Greening: I will tell you one thing: no accountant would give you a snap view. They would take a very long process of due diligence before reaching any kind of view. You can keep pushing, but we have the thinking to do to launch the rail review. I think that is the most important piece of work I will be looking at in that area.

Chair: The issue is how the railway should be structured and no doubt we will return to that.

Q35 Paul Maynard: Welcome to your new role. Perhaps we may draw the conversation back to the slightly bigger picture, although you are new to your role. Your predecessor would almost invariably use the phrase "de-carbonisation agenda". I note that already you have used the phrase "the green agenda". Do you consider those to be two sides of the same coin, or do they have slightly different meanings in your view?

Justine Greening: Maybe I did not choose my words carefully enough, but, if you ask me to say what are the differences between "green" and "de-carbonisation", I think the latter is a strand of the overall green agenda.

Q36 Paul Maynard: Without trying to entrap you further, you have frequently used the phrase "sustainable aviation". Would you accept that to many people one common definition is that it would involve a degree of demand management and constraint? Do you accept that that terminology has that meaning to many people?

Justine Greening: I do not necessarily agree with that. Whether you are talking about noise, carbon emissions or the broader environmental impact in terms of air pollution, aviation, like any other sector, has to be approached in a sustainable way. When you look at the low-carbon agenda, there is an obvious and particular imperative about delivering on it, but, more broadly, for me as an MP the general aspect of quality of life is incredibly important. That is where transport needs to play a role, ideally, in helping to enhance it.

Q37 Paul Maynard: Even if that began to constrain economic growth by failing to deliver sufficient airport capacity.

Justine Greening: You are jumping to a hypothesis on an aviation strategy that we have a very structured process to deliver. I am certainly not going to sit here today and make some pronouncements that box in where we will end up.

Q38 Julian Sturdy: I also add my congratulations, Secretary of State, on your new appointment. The predict and provide strategy has been used by the Government to drive up rail investment, which I fully support, and it is working very well. Why do you feel that predict and provide as a strategy is not being put into aviation, or even into roads as well? Is that something that potentially needs looking at?

Justine Greening: I am sure Lin Homer will jump in instantly if I am wrong, but the Civil Aviation Authority’s long-standing remit has been to predict and provide. Interestingly, if you go back to rail, Sir Roy McNulty felt we needed to go from predict and provide to predict, manage and provide in relation to the rail industry, which I thought was an interesting observation. That would be my response to the question.

Q39 Julian Sturdy: I will have to double-check this, but I believe the previous Secretary of State said that predict and provide was not being used in aviation strategy, but again that is probably something that needs looking into.

Justine Greening: Yes. Obviously, my comments refer to what has been a long-standing remit of the Civil Aviation Authority as distinct from a Government strategy on aviation.

Q40 Julian Sturdy: Following Mr Maynard’s question, in your opening statement you referred to the importance of transport as a driver for economic growth. I fully agree with you on that. It is vitally important to the country as a driver for economic growth. You also mentioned the green or de-carbonisation agenda. Whichever way we want to phrase it, they both cover the same issues. Do you feel we will get to a point where there will be a conflict between those two?

Justine Greening: I do not think that is necessarily the case. It is an interesting question. Probably I have not been in this role long enough to answer it in as structured a way as I would like, but I do not think it is necessarily the case. A few months ago I went to see Ford’s key research centre in Essex. It was very interesting to look at some of the technology they are developing. That could see people in high-performance cars that are far cheaper to run than petrol-driven cars and will create the next wave of jobs in the car industry, which, despite the tough economic conditions, has been doing very well over the last few years. I do not necessarily see a conflict, but I can probably give you a better answer to that in a few weeks’ or months’ time.

Q41 Jim Dobbin: Congratulations on your appointment, Secretary of State. It must be great coming along and getting congratulated by everybody.

Justine Greening: You can imagine that I thought, "Brilliant", when I was told on Saturday afternoon.

Q42 Jim Dobbin: Yesterday, the Manchester Chamber of Commerce was up and they were talking to Greater Manchester MPs. I should point out that there are about six on this Committee, so there is an inbuilt bias here. It was basically about the national economy and the north-south divide, which is quite apparent in the cost of housing.

Justine Greening: I am sorry; I missed the first bit.

Q43 Jim Dobbin: I was talking about the north-south divide, which is apparent. You can measure that through the cost of housing in the south and the north. They were looking at transport, which came up because it is a very important aspect of the economy. Of course, the transport links were talked about. They were stressing that there is a need to see if we can speed up through a high speed line from wherever to the midlands and right up to Greater Manchester. There are also the east-west links, for example, Liverpool to Hull, which goes through a number of cities. Will that be really high on your agenda, because it is very important for us and our communities?

Justine Greening: You raise a really good point. We had a few questions about high speed rail right at the beginning. Although I realise it has been a controversial subject, there are some key potential benefits in bridging the north-south divide. Phase one, which is key, goes to Birmingham, but phase two starts to get to cities like Manchester and Leeds. You look at connectivity between places like Nottingham and Leeds. I think I am right in saying that it takes you nearly two hours to get between the two by train, even though they are only 70 miles apart. I recognise that, compared with London and important economic areas well connected to it, like Milton Keynes and Reading, connectivity can be improved by something like high speed rail for those particular communities. I think there is a question about making sure we look at connectivity in advance of that, too, and ensuring there is capacity on the lines that serve those communities.

Q44 Jim Dobbin: I listened to what you said about subsidies and particularly public subsidies. It is apparent that on the continent there is quite substantial subsidy in the railways. Do you think there is a need for the Government to put investment by the public purse higher up the agenda?

Justine Greening: I reiterate what I said before, which is that you have to look at the underlying reasons why that subsidy is required. The rail review is a key mechanism by which we can look at the different aspects of it. Part of it is the cost base. Speaking as somebody who has spent 15 years in industry, to say that a cost base could be 30% lower is a significant statement. The meeting that I had on Tuesday night was very encouraging because the industry is looking at six different work streams by which it can challenge itself to deliver a lower-cost service, be that by a train-operating company or Network Rail,. We know from the exhaustive work done by Sir Roy McNulty that this is possible. Part of my job is to work with the industry, look at some of the questions about how it is structured and how fares work, and to get to a point where that subsidy is not needed any more. That is the process that I would like to go through. I do not believe you can get there overnight, but when I say we need to make sure the railways move on to a sustainable footing it must also be a sustainable financial footing.

Q45 Jim Dobbin: My view, if you want to hear it-

Justine Greening: I always want to ask people what they think and I get told off when I do so.

Q46 Jim Dobbin: My view is that you will never get to a stage where transport that people use will not be subsidised. That is my own personal view.

Justine Greening: But we can aim towards that.

Q47 Jim Dobbin: We are surrounded by motorways and distribution parks, with heavy goods vehicles trundling along, so getting them on to rail is bit of a hobbyhorse of mine. I remember asking a previous Secretary of State for Transport what the Government’s policy was on that. I was immediately summoned by the heavy goods vehicle organisations in my patch to ask me what I was playing at. There is that tension, interest and pressure coming from organisations. How would you deal with it?

Justine Greening: The key is to make sure that companies have choice and that, whichever choice they make, it is a form of transport that is of high quality. Hauliers need to be able to go on motorways that do not become snarled up and congested. We want to have the option for freight to go on rail. We have seen a dramatic increase in the amount of freight going on rail, but it is also one of the reasons we need to look at things like high speed rail. Only last week I was on a train that was slightly delayed because we were behind a freight train which did not go as fast. Clearly, on that track you cannot overtake. Such questions are quite important for us to reach a more strategic view on, but ultimately people and businesses have to have choice, and it is part of my role to make sure that the business choices they make are ones that can be fulfilled and we do not have a transport system that lets them down.

Q48 Chair: Your predecessor told us that he thought the railways were already a rich man’s toy relatively. If you want to move to a situation without any subsidy, do you not think we will make that worse?

Justine Greening: I do not think it is in anybody’s interest to have a railway industry that needs such a large subsidy from the public purse in the long term. There are a number of reasons why that is not a good idea. If you are looking at the DfT budget, I would much rather have that funding freed to be able to put into other projects potentially, but also for passengers and the rail industry it does not have to be at the current level. There is a huge evidence base to say that we can make substantial progress on this over the coming years. We also have to accept that passengers, who are the people who very much benefit from this, will also have to pay part of that. That sits alongside the fact that the taxpayer and industry are paying part of that investment, but the long-term challenge is to deliver on the sorts of issues Sir Roy McNulty identified, which will mean that pressure on fares is lessened because you are making progress on reducing costs overall in the industry.

Q49 Graham Stringer: I have a few questions on motorists. You talked about green issues previously. The fuel duty escalator and VAT on fuel are really a green tax. It is also regressive and the road haulage industry hate it; they believe that it puts this country’s road haulage business at a disadvantage to continental Europe. Do you have any views on the future of the fuel duty escalator and how you would deal with that competitive imbalance?

Justine Greening: As you may be aware, we have scrapped it and we are to replace it with a fair fuel stabiliser. During my time in the Treasury we worked very hard on the underlying default plan we inherited. That was an escalator which, if we had not done anything, would have meant a fuel duty 6p higher than it is today. We worked very hard to come up with a way to make sure that we could get rid of that escalator. I know that Mike Penning, the Roads Minister, works very closely with the road haulage industry so that in other ways we can ensure it is able to be competitive.

Q50 Graham Stringer: Do you have a view on the 80 mph speed limit discussion?

Justine Greening: We will get to that via the consultation that is to take place. The general point is that the 70 mph speed limit has been in place for a long time. A lot has changed in terms of road management, vehicle safety and vehicle technology and it is quite right to look at whether it is appropriate to raise that. We spend an awful lot of time talking about congestion, but it is important to say that we have motorways so let’s make sure people can travel from A to B along them as fast as possible. If we have a consultation that says maybe we could do that by increasing the speed limit, to my mind that is a sensible question to ask. We will wait and see what comes out of that consultation, and I will take a very careful look at it.

Q51 Graham Stringer: You mentioned previously that our safety record in this country is good, and it has improved massively over the last 20 or 30 years. Part of that has been successful drink driving campaigns, particularly at Christmas but at other times as well. Have you had time to think about your approach to drink driving campaigns this Christmas? Do you believe there should be more or less of it?

Justine Greening: For this Christmas the Department has an agreed approach. It is not one on which I have been briefed in detail as yet, but I recognise just how important it is. As you say, we have made a lot of progress on road safety over the years and I want to ensure that that continues.

Q52 Graham Stringer: There have been huge battles up and down the country in many of our major cities about whether or not there should be investment in trams. Do you see a future for investment in tram systems in our cities? Do you like trams? Are they a good part of the urban transport infrastructure?

Justine Greening: I do not think that I will ever be a purist on modes of transport. Such decisions are probably best dealt with by local authorities working with local businesses looking at local needs. I would like to ensure that we have an approach to transport that enables such proposals, if they are good ones, to come forward. Alongside that, we are developing a transport strategy in which local authorities have flexibility on financing and can find different ways to fund local projects. Many local communities want that. Personally, I do not have a particular view on trams, but if people think they are a good thing for their local area then absolutely.

Q53 Julie Hilling: I join in the congratulations on your appointment and also say how good it is to see a woman in that position. Maybe it will give a lead for the rest of the industry, which seems to be somewhat male-dominated.

Justine Greening: There is a slow but steady agenda creep which I think is very positive.

Q54 Julie Hilling: We are getting there. I was really alarmed to see the underspend in the Department’s 2010-11 budget, with over £500 million being given back to the Treasury. I am not going to ask you any details about that, but, with your background in the Treasury, will you make sure that you spend all of the allocation on transport on infrastructure projects that are much needed?

Justine Greening: On pages 48 and 49 of the accounts that you have there is a good review of that underspend and how the different components of the Treasury budget led to that overall position. That gives you the overall backdrop to why we had some underspends. My perspective is that I want us to get cracking on the projects that we have in place. I will look at the scope for bringing forward projects if I can do that within the spending review settlement I have been given. I will have a conversation with my former colleagues in the Treasury-I hope that I am well placed to have it-on how I can manage my Department’s budget responsibly. I am not just going to spend money at year-end on projects that I do not think will add value, but where I think there are projects on which we can get cracking I will take a close look at whether we can make it happen.

Q55 Julie Hilling: That is really welcome. I also welcome your recognition about the difficulty of connectivity, particularly among northern cities. One of the concerns people have raised about High Speed 2 is that all the money will go into that and some of the much-needed smaller projects, particularly electrification of Manchester-Leeds and so on, will not happen because of that. How do you view the rest of the spending that is not on High Speed 2?

Justine Greening: I do not see it that way. We have a very analytical approach within the DfT at where we can get the best value for money and projects can make the biggest difference. I will want to take a look at whether we can make that process even better. If you look at things like procurement, for example, we want to take a more strategic UK plc approach than perhaps has been done in the past. That is the work on which Vince Cable is leading from BIS. I do not think it is either/or. We will always have a limit on how much we can spend, because there will always be a limit to how much the public can afford, but we will take a strategic approach to what is needed and when, and then do our best to deliver that.

Q56 Julie Hilling: Following Mr Stringer’s question, three times as much money is spent in London on public transport generally as it is in the north-west. Your predecessor talked about the economic case for each investment. Often, it can be seen that there is a better economic return from something that is happening in the capital than something happening out in the provinces. The need for that investment, however, whether it is in Greater Manchester or other areas in the north, is as great, and sometimes greater, because of the difficulty in travelling across the country. How do you see that economic return on an investment compared with need for the investment?

Justine Greening: You are absolutely right, and it is something of which I am very conscious. We are determined to make sure we put in place the building blocks so that all parts of our country can grow. That means looking at transport infrastructure outside London just as carefully and importantly as we look at infrastructure in London. Having spent a large chunk of my life living outside London as well as in it, I know how important the transport system is for people. When we talk about transport, it might mean different things to different people. When we talk about public transport, to people in London it means tubes, buses and trains; for people in rural areas it means their bus service. I am very conscious of the need to bear that in mind as I look at decisions. We want a fact-based approach and to ensure that we end up with a mix of spend that makes sense in the light of our other priorities, which include ensuring that transport is one of the key drivers to help our economy grow again.

Q57 Julie Hilling: What do you think about the statements that public transport is a public service? It follows on from the points people have made about the need for subsidy. If you look at what is happening in some communities, people are being priced off buses or trains and are unable to seek work, or go to work, in places further afield. Where do you see that balance of public transport as a public service?

Justine Greening: I certainly want public transport that is affordable to the public. Another aspect which you did not touch on but I would also put into that is making sure it is accessible to people. Accessibility is also an important aspect of what I need to look at as the new Secretary of State for Transport. That means really cracking on with programmes like Access for All, which can make the difference between somebody being able to get on to the transport system and get to a job and somebody who cannot. I recognise those issues, but I do not believe there are necessarily any easy answers. It would be lovely if we had come into Government with a set of public finances that would mean there were fewer financial constraints on us than there are today. We have to get those sorted out and work and live within our means, but I recognise that making sure public transport is affordable is incredibly important.

Q58 Julie Hilling: I have a more specific question about the franchises that are coming up for relet. I know that Northern and TPE have had an extension to their franchise. I am thinking particularly about Virgin, which serves us in the north-west. I have a concern. There is a fare review which has not yet started, the McNulty review, which needs to be worked through in terms of what it actually means, and a review of the development of Network Rail. But we are looking to relet one of the major franchises during next year when, it seems to me, the Government still want to work through the framework for that franchise. What is your view on that? Are you minded to talk about an extension? I do not know whether other franchises are due for reletting over that period, but until there is a real framework for what the Government expect from a franchise it seems wrong to get people to bid for something that could be changed in the future. Maybe we will not get best value from it, especially if it is longer.

Justine Greening: While I understand the question, I will not comment on that particular franchise for two reasons: first, I probably need to be better briefed on the details of it; and, second, the reality is that we have to get on with continuing to run the transport system and respond to the fact that franchises are up for renewal while we go through this process. I do not believe there is really any other way of doing it ultimately. We touched on this at the beginning when we were talking about the review of strategic procurement that was going on, seeing whether we can make sure, to the extent we can, that that feeds quickly into process. As we get closer to finalising strategies and perhaps clearer strands emerge as to what those strategies are likely to be, we want to make sure they are able to be reflected, to the extent they can be, in our interaction with industry, whether it is me working on an agenda with the Rail Delivery Group or the more core important franchising process that takes place. But there is no doubt we have to get on with running the transport infrastructure network, even though we have to resolve some big, exciting and important questions about strategy in relation to rail.

Q59 Iain Stewart: I would like to turn to next year’s Olympic and Paralympic Games, which will pose a unique challenge for the transport network in London and surrounding areas. The National Audit Office estimate that the regular demand on the network will have to be reduced by about 30% to cope with the extra Olympic-related journeys. In your first few days have you had an opportunity to look at how the Department, working with Transport for London, can help prepare for this situation?

Justine Greening: I have had an initial high-level briefing and I will be getting more detailed briefings literally in the next few days. I will also be meeting Peter Hendy, and I had a brief conversation with the Mayor on Friday evening. We both recognise that this is an incredibly important thing on which the two of us will be working hand in hand over the coming months. Interestingly, if you look at how London coped with the royal wedding, for example, we have a history of understanding how to deal with huge events of world importance.

You mentioned capacity. The statistics I have show that on a typical London working day 24 million trips take place on public transport on the roads. For the busiest games day we expect an extra 3 million trips. You are right that we can expect a significant amount of extra traffic. I know that TfL is already working with businesses and freight operators to make sure they can take appropriate decisions. One aspect will be managing demand during the course of the Olympics itself; making sure that the Olympians taking part in the games can travel effectively; and making sure that for everybody else in London disruption is minimised as far as possible, although inevitably there will be some. That involves planning ahead and communication.

Our other challenge is to make sure that people can leave. They may come in a staggered fashion, but the day after the Olympics finish will probably be Heathrow’s biggest day ever. That will be another key issue and I will be looking at the plans to see how we can deal with things smoothly, not just during the Olympics but after them from a transport perspective. I recognise that an awful lot of this on the ground is being delivered through the Mayor and TfL, but I shall be working closely with them to deliver what hopefully will be a successful approach to the Olympics. Peter Hendy has said that it will not be business as usual, but business as unusual, and we will have to make sure our plans are robust. An awful lot of work has already gone on, but clearly I will be better briefed on that over the next couple of days. I also recognise that, while the Olympics are predominantly in London, key parts are at venues outside London. I am alive to that fact, and that is, of course, part of the plans we have in place.

Q60 Chair: The Deputy Prime Minister has said that 40 of the biggest infrastructure projects will be handpicked and given special priority status. Which transport projects are in that list?

Justine Greening: I apologise that I do not have the information to answer that question, but I am sure I can write to you afterwards with some clarification.

Q61 Chair: We have also been told by the Chief Secretary to the Treasury that there is to be a new Growing Places Fund. What can you tell us about that, and which transport investment will benefit from it?

Justine Greening: I have a meeting in place with the Secretary of State for Communities and Local Government to talk about transport’s role within the Growing Places Fund. We recognise that transport is a key part of how we can make sure that communities develop sustainably, so I am very pleased that we have a role in that. Although I have yet to be briefed on it in detail, I have already asked officials and briefly spoken with the Secretary of State for Communities and Local Government, so I will be meeting him over the coming days.

Q62 Chair: Do you expect any money from current Department for Transport budgets to be used in that regard?

Justine Greening: I think I am right in saying that collectively it is £500 million, part of which will be from the Department for Transport.

Q63 Chair: Do you know how much?

Justine Greening: I cannot remember at the moment. A number flicked into my brain and it may be the right one. I think it is about £125 million.

Q64 Chair: We would like to know what progress is being made on that.

Justine Greening: I would be very happy to provide you with a written update once I have got under the skin of it. My job is to make sure that we get as much delivery for local communities from a transport perspective as we can.

Q65 Chair: What progress is being made in setting up local transport consortia made up of groupings of local enterprise partnerships and local authorities?

Justine Greening: Again, it is one of those areas on which I am yet to be fully briefed. My understanding is that we are making initial progress on it, but it would probably be better if I could write to you about that afterwards, with apologies. You have managed to ask me two questions to which I do not have an answer. That is very frustrating.

Q66 Chair: I will try for a third one. Which transport schemes have been funded from the Regional Growth Fund to date?

Justine Greening: I will have to write to you on that as well.

Lin Homer: There were four from the first round but the second round has not yet been completed, so there are some more in that. Another meeting is due to happen very quickly, and there are a number of transport funds from that.

Q67 Chair: Can you give us information on those four-what they are and how much they are?

Lin Homer: Yes.

Q68 Paul Maynard: From what I gather, a third of the Regional Growth Fund was paid for by the Department for Transport. Are the bids coming in proportionate in terms of their purpose to what the DfT put in in the first place, or are you cross-subsidising other departmental activities for not getting in enough bids?

Lin Homer: The original Regional Growth Fund was created by money from three Departments but was not ring-fenced to absolute proportionality. There is a ministerial group, which the Secretary of State will now join, which has looked at all the projects, and those have been assessed. There are a number that are pure transport but there are many where transport is a key element. The previous Secretary of State did not go into that looking to get his third specifically spent on transport.

Q69 Chair: No, but we are asking that question.

Lin Homer: It was not a hypothecated fund.

Q70 Chair: Nevertheless, we would like information on it.

Lin Homer: Absolutely; I have already promised that, but, in answer to the question, we did not go in expecting to spend a third of it absolutely on transport. All the schemes were measured against published criteria, which we can also provide to you.

Q71 Chair: Nevertheless, we would like to know what went in.

Justine Greening: We will make sure that you get that information.

Q72 Kwasi Kwarteng: This is a question you may well be able to answer. First, what are your initial impressions of the Department, in particular with regard to the challenges you face? Second, how do you judge success? What are your indicators? Are there things that perhaps in a year’s time, or two years’ time, you want to be judged upon specifically in regard to performance within the Department?

Justine Greening: My initial impressions of the Department have been very positive. Certainly, its response to an unpredicted change of Secretary of State has been incredibly impressive. I have already had a chance to meet the key directors general and the key managers within their teams. I am very much looking forward to working with the Department. Going forward, from talking to people within the Department, there is a very good team culture that I want to continue. As with all Government Departments, we have our own spending review settlement which sees our head count already reduced. I am conscious of the fact that, combined with other changes, for example, those to do with public sector pensions, they are important changes for people’s day-to-day working lives. As Secretary of State I will do my best to make sure the Department plays its role to have in place what is needed to make it work effectively together.

The other challenge is that it is not all in Whitehall. There are lots of people working in the DfT who are out on the ground doing stuff every day for the Highways Agency or the DVLA. I want to make sure that, for those people who are not immediately in Great Minster House and sitting in the same building as me, I am out and about seeing them and they feel part of the overall DfT organisation.

Q73 Kwasi Kwarteng: On what criteria would you want to be judged in a year or two years’ time?

Justine Greening: I would like to think that we had, most importantly, done a number of things: that we had delivered on time and on budget the transport projects we identified as a high priority; that, where there has been a capability to go further, we have been able to go beyond that successfully within our spending review envelope because we have managed it effectively; that we have achieved as a Department our own spending review deliverables that are important; and, perhaps as importantly, if not most importantly, that members of the public feel broadly we have got our priorities right. They know there is not a bottomless pot of cash for transport but, looking across the piece at where we have chosen to invest and tackle today’s problems-whether it is congestion on the roads or having to stand on a train for too long during a long distance journey, when one thought one had paid for a seat-I hope they will think we have now got to grips with those problems, but also not lost sight of the investment required to make sure that, for people who travel in five, 10 or 15-plus years’ time, their journey is of even better quality and is still affordable.

Q74 Graham Stringer: Of all the Transport Secretaries from Belisha to Hammond, is there one of them you regard as a particular role model you would like to emulate?

Justine Greening: The short answer to that is no. I do not think I would be able to point to any one of them. I will probably be my own person. I will always do my best basically, so it is about how well I think I can perform in the job, as opposed to how well somebody else performed it. I will approach it, hopefully, with a huge amount of enthusiasm and energy but also a huge amount of care, because the decisions we take as a Department and Government in this area have a profound and long-lasting effect on the communities they touch. That can be for good or bad; it can be an opportunity seized or lost. It is my job to make sure we make the most of the opportunities we have, and that MPs sitting here in future when grilling another Secretary of State, who hopefully has had a chance to be in the job longer than me, will look at what we did and say, "You know what? They really set up this country to be successful transport-wise."

Q75 Chair: In 2010, about 250 people were killed on the roads in drinking and driving incidents, and 28% of the public admit that they have driven when over the legal limit. What is the Department doing to address that? What kinds of campaigns are to be mounted?

Justine Greening: I think I am right in saying that we have a campaign on drink driving this Christmas. Just to give you my broader views, although Christmas is one of the key times during the year when we see a particular risk around drink driving, this is something we want to bear down on throughout the whole of the year.

Q76 Chair: In the past the Department has spoken about refocusing advertising campaigns on social media. What kinds of campaigns are you considering?

Lin Homer: We plan to continue our Think! campaign. We are increasingly learning each year that, if we focus it on particular targets-children and young men-and use a wide range of media, we can get the same impact potentially for less money. This year we will again be focusing on campaigns that target children to think about their own safety and campaigns that focus on young drivers. We find it successful to use social media, but we also continue to use things such as cinema media, where we get very good impact and effectively good returns. Each year we are building on that, but the Think! campaign remains a big marketing plan not just for Christmas but the whole year. Christmas is obviously a particular problem.

Q77 Julie Hilling: On road safety, about 10,000 people are driving with more than 12 points on their licence. Many of them are driving without insurance, and some have over 20 points on their licence. Do you have a view on that? It seems to me that is giving another message that road offences are not the same as other forms of law-breaking. Is that something about which you would want to take action?

Justine Greening: The Department has already taken a number of steps to try to reduce uninsured driving. As to points, you make an important comment. It was not something with which I was familiar perhaps until perhaps the last couple of days, but I plan to look at it. I had a brief discussion with the Roads Minister about this earlier this week, because it is something I certainly want to take a close look at. Part of the problem has been to do with making sure there is better process and communication among what happens in the courts, with the DVLA and subsequent enforcement. Perhaps that is one that might be worth coming back to over the coming weeks and months. I have also seen the articles in today’s papers, so that is definitely a challenge to be addressed.

Q78 Chair: Thank you very much for coming.

Justine Greening: I look forward to the reports that you are going to write. I hope they will be ones that can inform and feed into our policymaking process.

Chair: We look forward to questioning you again.

Prepared 16th February 2012