Back to Report

Oral Evidence

Taken before the Transport Committee

on Wednesday 14 December 2011

Members present:

Mrs Louise Ellman (Chair)

Steve Baker

Jim Dobbin

Mr Tom Harris

Julie Hilling

Kwasi Kwarteng

Paul Maynard

Iain Stewart

Graham Stringer

Julian Sturdy

________________

Examination of Witnesses

Witnesses: Rt Hon Justine Greening MP, Secretary of State, Department for Transport, and Steve Gooding, Director General, Domestic Transport, Department for Transport, gave evidence.

Q79 Chair: Good afternoon, Secretary of State. I would like to welcome you to the Select Committee. I understand you would like to make some comments to us before we start with questions. I am happy for you to do that.

Justine Greening: I will make a very brief statement. I was delighted that transport and transport infrastructure, in particular, could play such a key role in the growth review that was announced by the Chancellor. It is a sign that the Treasury and the Government really see the value of investing in our transport infrastructure in terms of it being a driver for economic growth. I should also say that, in many respects, today we have announced the second half of the local authority majors programme and, of course, that very much complements the 20 local authority major schemes, which were part of the growth review announcement. That is pretty much all I wanted to say. You will see that, as part of the growth review, we had a very balanced package of investment in infrastructure, not just on roads, which had a substantial package, but also in the case of rail. There was a strand of environment running through there, too. I look forward to the Committee’s questions.

I should introduce my official, Steve Gooding, who looks after the Domestic Transport policy team, which of course, as you can imagine, is no mean feat.

Q80 Chair: Thank you. I was pleased to hear the various transport investment announcements in the Autumn Statement. During the course of this session, we would like to explore a number of aspects of that and try to discover a little more about exactly what lies behind those statements. Certainly, they are welcome. Could you summarise for us what has happened to the Department’s resource and capital budgets for the rest of the spending review, perhaps up to 2015?

Justine Greening: In terms of the growth review? Is that the focus of your question?

Q81 Chair: Yes, and how you see the budget, if you are expecting any changes beyond what we have already been told. How do you see it now?

Justine Greening: I would expect that, with the additional money made available for transport in relation to the growth review, which allowed us to pursue, in particular, more of the local authority majors, we would see measures taken to alleviate the difficult train fare rises that had been planned. I see those as the additional moneys that we have been given. Whether we will be able to continue to make our case within Government to get further funding, should that become available, I will certainly be beating the drum and be ready to continue to make our case for further investment. As you will be aware, for example, the money that went in to help reduce the RPI plus 3% planned fare rises to RPI plus 1% was actually money that was found from across Government, so I will continue to make the case on behalf of transport.

The other aspect of the growth review was the fact that, within the Department, we had some underspends. We had an opportunity, nevertheless, to continue to invest that money, so we decided to do that. There will be continued opportunities, I hope, for me to make the case for investment in transport across Government to make sure that I am continuing to challenge my own departmental budget to get the most out of it. Of course, as we have seen, part of that underspend came from the fact that we had more contribution into the departmental budget from the rail industry than we had expected. That demonstrates we can plan as well as we are able to, but, ultimately, there is always going to be some uncertainty and we would be ready to make the most of any underspends that come up over the remaining spending review.

Q82 Chair: How much truly additional funding has come into your budget for this period?

Justine Greening: The additional funding that we received over the spending review was £1.5 billion.

Q83 Chair: That is additional funding.

Justine Greening: That was additional.

Q84 Chair: It was not there before.

Justine Greening: That included an extra £500 million for local authority majors, the package that enabled us to cap rail fares at RPI plus 1% in 2012, and additional funding for Highways Agency schemes, which can bring some real benefits to tackling congestion.

Q85 Chair: The Government has set out overall spending levels to 2016-17, and that was also part of the Chancellor’s statement. Are you negotiating about the Department for Transport’s share of those funds?

Justine Greening: As you can imagine, one of the aspects of some of the investment decisions we have taken is that, although most of them fall within the current spending review, there are some that have a longer spending profile outside the existing spending review. Of course, I am making the case to ensure we see that funding supported from Government.

Q86 Chair: But how much extra do you think you are going to get and how hard are you fighting this corner?

Justine Greening: When you look at what we were able to achieve for this growth review, which was an extra £1.5 billion, I think that was an excellent result for the Department. It showed we have some credibility within Government in terms of our assessment of business cases and our ability to make our case on behalf of the investment that we see as so important to make sure transport is driving economic growth. Therefore, I can assure the Committee that I do not think I could work harder to get our message across on that point. The capping of rail fares, in particular, showed that I was absolutely prepared to make the case for investment in transport, and not just in infrastructure, when I felt that there was an opportunity to do the right thing and lessen the impact of the planned fare rises on many people who use the railways. Alongside everyone else, they are struggling with what have been difficult cost-of-living issues over the past few months.

Kwasi Kwarteng: My question is related to another topic, so someone else might want to come in on the actual overall spending issue.

Chair: It is okay. You can ask your question.

Q87 Kwasi Kwarteng: Thank you, Chair. Obviously we remember the Chancellor saying he will explore all the options for maintaining the UK’s aviation hub status, but clearly ruled out the third runway. The phrasing was quite interesting because he did not say that he was ruling out other runways. As a first question, I wanted to know what your view was on the general aviation capacity issue in the southeast. What are your thoughts? You have been in the job a few months now. Have you developed any ideas on that front?

Justine Greening: We are still at the same stage in the process as when I came to give evidence to the Committee back in October. We are looking at the evidence that was supplied as part of this call for evidence, which finished in mid-October. By the March time frame next year we aim to produce a draft strategic framework for aviation. As you know, one of the elements of that-not the only element, interestingly, but the element people focus on-is in relation to capacity. What the National Infrastructure Plan brought out very clearly was the question that we are looking at within the Department: what is the role of a hub airport and, in particular, how does that relate to the capacity we think we will need in the southeast? As I said to the Committee when I came in, in week one of the job, I did not think it would be right for me to pre-empt that process, but I can say I see that as a key part of the debate and the discussion that has to happen over the coming weeks and months. I do not think it is an easy or a quick question to answer, but it is an important one. That is one of the reasons why I am determined to get it right. The shorter-term challenge, of course, which we have already talked about and taken action on, is how we can get the most out of the capacity we do have. That is why you are seeing us trial some ways of better working, potentially, at Heathrow, which can help them to be a little more flexible to better use the capacity they have.

Q88 Kwasi Kwarteng: If I may, Chair, I would like to ask a more general question. Clearly, the aviation industry is under a lot of pressure with APD-I know that is not your Department-with the added tax on that. There is also a suspicion, and I have seen letters and papers, as I am sure you have, that the Government are not doing enough to promote aviation. What would you say to people who take that line? What words can you say to the Committee, which obviously will be relayed to the wider world, to reassure the industry that you are fully behind it and you see it as a key element of driving growth in the future?

Justine Greening: You only have to look at the National Infrastructure Plan, which we published at the growth review, to see that transport, and within that aviation, was a key part of it. My first visit as the new Secretary of State was to Heathrow to talk to them about winter resilience. We recognise how important that airport has been to our broader economy because of the capacity it has to deal with passengers. I am in no doubt about the importance of the aviation sector, not just for industry but for all of us, frankly, who rely on it to visit family abroad, to go on holiday or to go away for a weekend and enjoy some time with family. I absolutely recognise the importance of the aviation sector, although I think it is incumbent on us to come up with a strategy that is well thought through and will stand the test of time. We saw that the 2003 Air Transport White Paper, in fact, did not. I want to make sure that this particular strategy document is able to stand the test of time.

Q89 Chair: Are you going to explore the Boris Island scheme?

Justine Greening: Interestingly, although the Mayor effectively submitted two parts of his evidence, if you actually look at it-I do not know whether anyone in the Committee has read those two evidence submissions and, if anybody has, I would be interested if you could raise your hand.

Chair: No, no, no. We are asking you the questions.

Justine Greening: Okay. What is interesting is that it is largely around the actual questions the original scoping document-

Chair: Secretary of State, I am not asking for your comment on it-

Justine Greening: I will cut to the chase.

Chair: I am asking you a question. Are you willing to consider the Boris Island proposal?

Justine Greening: We are looking at all the proposals put to us through the call for evidence, which includes proposals from people like the Mayor. What I was about to say, and I think is important, is that you are asking me about the evidence given to that inquiry and that call for evidence. It seems to me, when you ask me that question-and I would propose-if you had actually read the evidence submitted you will see that the Mayor has actually proposed-

Q90 Chair: No, no, no. Just a moment. Secretary of State, we are asking you the questions. It is not for you to suppose or assume or think anything. We are asking you a question. I am asking you if you were considering that, and I would like an answer.

Justine Greening: I am trying to answer the question.

Q91 Chair: Your answer might be yes, no or not decided, but I would like an answer.

Kwasi Kwarteng: Do you think it is a good idea?

Justine Greening: What I am trying to get a chance to say to you is this: when you look at the evidence that he put in, the Mayor did not explicitly propose a Thames Estuary airport. What the Mayor proposed was that we should look at a new hub airport. That is the point I am trying to make to you. You are trying to pin me down about the fact that he asked this and what I am saying is actually he did not.

Q92 Chair: Would you like to give us the answer of what it is you are considering? I asked you about Boris’s proposal. Would you like to tell us whether you are considering that?

Justine Greening: We are considering all the proposals that have come in to us, including the Mayor’s.

Q93 Kwasi Kwarteng: You are head of a very important Department.

Justine Greening: Absolutely.

Q94 Kwasi Kwarteng: This is a massive strategic issue and you have simply flannelled and not given any kind of direction as to what your way of thinking is on this.

Justine Greening: I do not think that is true at all. It is incumbent on me not to jump a process that is already under way and it is also incumbent on the Select Committee, in a sense, to have some details behind questions. I guess that is what I wanted to point out.

Q95 Chair: Secretary of State, that is not in order. At this meeting we ask you the questions. You can have whatever thoughts you wish-

Justine Greening: I am delighted to answer as well.

Chair: But your role is to answer questions today.

Justine Greening: Actually, I am delighted to answer.

Chair: Do any other members wish to ask about aviation before I move to another topic?

Q96 Paul Maynard: We can maybe swap reading lists for Christmas, if you like. Clearly, what you said just now was that, as far as you are concerned, aviation policy has not changed in the light of the Chancellor’s statement. Do you recognise that, for very many people, what the Chancellor announced did represent a change in emphasis in terms of what the Government have been saying on aviation? Do you recognise that?

Justine Greening: You are always going to get interested parties scrutinising documents that come out of Government, which is perfectly right. That is often going to raise questions about whether the language that has been used simply represents a restatement of Government policy-which this did-or whether, as you point out, potentially it is intended to signal some kind of a departure. I do not think it was intended to signal a departure. I recognise that some people asked that question.

Q97 Paul Maynard: Has it always been the Government’s policy that the UK requires a hub airport?

Justine Greening: It has always been the Government’s policy that the UK requires a hub airport.

Q98 Paul Maynard: Has it always been the Government’s policy to encourage better links with emerging markets?

Justine Greening: Absolutely. I met the CBI, for example, this morning. That is one of the points they made to me and it is one of the reasons why the hub airport question is so important.

Q99 Paul Maynard: How do you think that might be achieved? In your view, is it more important to focus on the number of seats flying to a particular emerging market or the number of destinations that are served from the UK in that emerging market? If we take the example of China, although the UK has by far the most seats flying to that particular country, we have fewer destinations than Amsterdam, Paris or Frankfurt. Which do you consider to be the more important?

Justine Greening: In the past, we have allowed the market to decide what the balance between those two things should be. I think that is broadly the right approach. People have had a concern, including some people in the industry, about whether Heathrow is able to serve enough destinations as it ideally would like to. Alongside this question is spot allocation, which is largely driven by the European Union agenda. Our approach in the UK-not just of this Government, but all Governments-has been that, broadly, we allow the market to decide what that mix should be.

Q100 Paul Maynard: My final question at this stage is this: more generally, we saw in the Chancellor’s statement a disparate range of projects. The Economist described it as something of a "shopping list". Are you able to suggest an overarching theme of transport policy at the moment? We can identify lots of very attractive baubles hanging on the Christmas tree, but I am not sure what the overall Christmas tree is or whether it is even a Christmas tree.

Justine Greening: That is an interesting metaphorical question. However, for people who live in Leeds, who are going to see the inner ring road take place, for people who live in Bath, who are going to get better facilities to do park and ride, and for people who live in Norwich, who are going to get better transport systems with some sustainable transport proposal hopefully brought forward by their own county council, I do not think they would see what we have done as baubles. They would see that what we have done was a shrewd assessment of working alongside, in the case of those projects I have mentioned, local authorities who had proposed them to make sure we were able to get the most out of the money we had to invest on behalf of the taxpayer. All of those sat alongside £1 billion of additional investment in railways, which was, of course, to help some of the capacity problems we have.

If you asked me what the strand running through them is, I would say it is to try and make sure we get the best possible deal for the taxpayer in terms of investment of our capital proposal. It is to try and make sure that, when there is additional funding, potentially, from across Government, that the Department for Transport is well placed to bid for that successfully, which we were. Also, it is to try and make sure ultimately that, although we have a transport system that needs to get people from A to B and goes from A to B today-and we have some capacity challenges, which, in part, this package was designed to meet-we also make the investments to develop the transport system we know we will need for the future.

The final point I would say, when you asked me what the underlying strategy behind it was, is that we were quite keen, above all, to make sure we could get on with projects that were ones we could deliver in the short term. There are some shortterm challenges that we wanted to solve. There are a lot of local authority major projects that have been hanging around for years. Local authorities have been saying to Government, for years, that these projects were important and they have not happened. We have put the money in place so that they can finally happen. That is not just good for the local community to get better transport; it is good for the people who will get the jobs those transport systems create.

Q101 Steve Baker: Can I ask you, Secretary of State, about how funds are going to be found for these projects? In what proportion of new DfT projects would you like to include a private sector contribution?

Justine Greening: The short answer is as much private sector funding as possible. As you know, one of the changes with the development pool of local authority major projects was that we went back to local authorities and really pressed them to see what more funding they could pull in at the local level to complement the funding that we were willing to put in at the departmental level. That has meant we have been able to get on with more projects because we have been able to spread that taxpayer money more widely.

Another aspect of the growth review was the Chancellor’s announcement that we are looking to make sure we can access the funding available from pension funds, for example, so that we are better placed to leverage in some of that private capital for the country and for capital infrastructure. I think that would be not only welcome, but the kind of use of those funds that many people saving to those pensions would want to see.

Q102 Steve Baker: So to what extent will the Government be underwriting the returns to those pension funds?

Justine Greening: The Treasury is in the business, at the moment, of working out precisely how that private sector funding will be leveraged in. It is probably a question that is better directed to them in terms of getting an update about what stage those details are finalised to at this point, rather than for me to provide it. I am very happy to follow up with the Treasury on your behalf.

Q103 Steve Baker: Is there a danger we could end up misdirecting large quantities of capital, carefully saved over many years, into projects that would not provide a commercial return without Government support?

Justine Greening: There are some real opportunities for pension funds to invest in this area. There are commercial opportunities, too. The opportunity we are talking about is not twisting their arm to invest in noncommercial projects. It is about removing the barriers that may be stopping that from happening right now and recognising, as I said, that a lot of people who want to save for their pension want to see if their investment is going to have a broader positive impact while they are getting a return.

Q104 Steve Baker: But, surely, people primarily want a pension at the end of it.

Justine Greening: Absolutely.

Q105 Steve Baker: So I wonder how these pension funds will actually make a return. To what extent are you looking at applying tolling, and, if you are applying tolling, to what extent will you be cutting fuel duty to compensate for it?

Justine Greening: We did talk about looking at tolling as a coalition Government. There is recognition, as you said, that we need to look at innovative new ways to get private finance alongside public finance to try and make sure capital projects can happen. We will be looking at those opportunities over the coming months. As I said, they are viable opportunities and they can work for pension funds. It is quite right to investigate how much of an opportunity that is for us.

Q106 Steve Baker: We understand that the Humber Bridge debt is being halved by the Government. What sort of message would that send to pension fund investors looking for longterm safe returns on their investments?

Justine Greening: It would, in many respects, send a message that this Government is financially astute. The Humber Bridge business model saw it paying masses of debt interest. That meant tolls were excessively high, but not to an extent that particularly helped because they had so much of the cost base loaded up with debt interest. As a result, they had a bridge that was simply too expensive. It was not generating a revenue stream in the way it was capable of doing. We have now enabled it to halve the tolls, which should significantly generate traffic. This will make it a far better proposition for investment than it has been in the past.

Q107 Steve Baker: Is there not a danger pension funds could take the message from it that, if it is politically expedient to halve the fees they are allowed to charge on the investments they have made, the Government would intervene to make it so?

Justine Greening: No. They would recognise what we recognise: that particular bridge has a history, which has seen its debt mount out of all proportion to what was expected when the bridge was built. It cost something like £90 million to build. By the time we got to this decision, it had racked up an outstanding debt of £324 million. In a sense, we had a decision to take. Are we going to do what the last Government did, which was to try and sort it but not quite manage it, or did we want to have a more fundamental review and say, "Right, we have a chance to take a longterm decision that has cross-party support from local councils and local MPs who played a critical role in working with us to help develop this proposal"? We decided to do what I think was absolutely the right thing: to make sure we have a financial settlement for that bridge that will last for the long term, and also give the local authorities more control over it.

Q108 Steve Baker: Yesterday, we heard from your colleague about the economic regulation of airports and we were told that the new proposals would introduce-I think the phraseology was-flexible and real-time economic intervention, although those three parts may not have been brought together at once, but we were not able to hear which airports were going to be so regulated. How are entrepreneurs and investors supposed to invest for the long term in these major capital projects when the Government are explicitly telling them that there will be flexible realtime economic intervention in their business models?

Justine Greening: You raise an interesting example, because one of the main messages the industry has given to me, as an incoming Secretary of State, is that they want to see us get on with this Bill. They are keen for it to go ahead and they see a lot of positives in the steps that we are taking.

Q109 Steve Baker: I am sorry, who does? The airlines who wish their suppliers to be regulated and controlled or the investors who wish to provide infrastructure? It is a very different proposition.

Justine Greening: If you talk to BAA, they are already investing a significant amount in Heathrow, whether it is in terms of terminal development that they have under way or whether it is in terms of their steps to improve quality of service-for example, winter resilience. I have met them and I have talked with them. The general attitude is that they want to see some certainty in this environment. They also want to see a Civil Aviation Authority with a little more flexibility to adapt to circumstances as they change. We can all see, for example, how the security situation changes over time as we better understand terrorist threats. We need a system that can react to that and which allows us to take a more thoughtful approach for airports.

Q110 Chair: You mentioned tolls. Do you see tolls as the way to ease congestion?

Justine Greening: We have seen it as a way of providing the finance to enable new roads to be built in some cases, which, yes, to the extent they are possibly diverting traffic on existing roads, could in turn relieve congestion.

Q111 Chair: But, essentially, it is to do with funding new roads.

Justine Greening: Yes. We could just continue to have a model where we assume that the public sector and the taxpayer will fund everything, but we think there are some opportunities where we can get private sector involvement. As Steve says, the private sector, quite realistically, will look for a return. There are some opportunities to look at whether tolling on roads can enable some additional capacity to happen that otherwise will not be able to.

Q112 Iain Stewart: I would like to turn to the rail projects announced in the Autumn Statement. I should say at the outset as Chairman of the All-Party Group on East-West Rail, set up a month ago, that we are very pleased to have a reallife train set for Christmas. I would like to ask, first, what decisionmaking process you went through to pick these particular projects. How does that interact with the Control Period 5 process?

Justine Greening: That is a really good question. As you can imagine, there are a number of schemes, for example, East-West rail, which various consortia-

Chair: A Division has been called. We will suspend the Committee for about 10 minutes. Then we will resume. Thank you.

Sitting suspended for a Division in the House.

On resuming-

Q113 Chair: We will resume the Committee. Secretary of State, you were in the middle of answering Mr Stewart’s question.

Justine Greening: If you can pitch it to me again, it might be easier if we do this start to end.

Q114 Iain Stewart: I was looking specifically at the projects that were announced in the Autumn Statement and asking about what process you went through to evaluate and pick those, and how those decisions relate to the Control Period 5 decisionmaking process.

Justine Greening: Some of the proposals, again, have been developed at the more local level. For example, you will see the Northern Hub step of electrification, the Trans Pennine railway between Manchester and York. Others, like East-West Rail, were similarly things that had been really pushed by local players for a number of years. Working with all those parties, including the train operating companies, who have their own views as individual players and as an industry about where they think investment is needed, and of course Network Rail, we came up with the package we have. It is a blend of schemes that were ready to be implemented now and could be got on with, schemes that tackle particular capacity issues-you will see 130 extra carriages for the Southern franchise-and then schemes like East-West Rail and the Trans Pennine electrification, which are about improving the service for the future. As you point out, we have a more standardised process for looking at what the outlook should be. That is the HLOS process and that will, as it were, report in July time next year, when we also look at what money we have to go against that.

Q115 Iain Stewart: I appreciate the full funding envelope will not be set, but to what extent do you hope these projects are additional to the funding that might be available in Control Period 5 for rail investment?

Justine Greening: Some of it is, of course, money that is set against the RAB, if you like, and some of it is further spending that we have been able to get, as I talked about at the beginning. Overall, alongside the process that we will have for HLOS next year, it gives the ability for us, as a Department, to work with the industry to take a longer term look at the key needs of passengers and business in relation to the rail industry going forward. Of course, we have the Rail Command Paper, which will complement all of that work. Steve, would you like to give your perspective as the official working on a lot of this work?

Steve Gooding: I would take us back, briefly, to the Chair’s opening question. The big negotiation for the Department for Transport next year with the Treasury is about rail funding as we develop the high level output statement and the statement of funds available. We are hopeful, off the back of the successes of the Autumn Statement, that what we are seeing here is going to be a sustained extra. It is hard to promise that at this stage. To quite an extent, what we were doing in this package was bringing forward development work that might otherwise-in fact, if we read the rail press, quite probably would have been-within a CP5 package. We could not confirm that yet, but things like the development activity on East-West and on Trans Pennine mean we should actually see some spending earlier than otherwise would have been the case, rather than it being straightforwardly additional to what would have been the case.

Q116 Iain Stewart: Can I ask one final question on two specific projects-the new rolling stock for Southern and the Caledonian sleeper? I am right in thinking, am I, that these are coming in the current financial year and that the Government will be purchasing them outright rather than as part of the usual leasing process? Am I correct in that?

Justine Greening: I will let Steve follow up on this as well, but in relation to Southern, that is a procurement process that I think I am right in saying they are running. We are supporting that procurement process. We expect the trains to be operating in the south London area by December next year, so it will be money that is spent over the next 24 months, which is really good news for passengers who will get the extra capacity.

Steve Gooding: I would just add that neither of those are deals directly from the Department for Transport. For the Southern franchise, the proposition has come from the train operating company, which the Government are supporting. For the Caledonian sleeper, this is an issue for the Scottish Executive where the Chancellor’s offer to them was of match funding. At the moment, the Scottish Executive is thinking through exactly how it would play that and how it wanted to cover the procurement, which would be a decision they would need to take.

Q117 Iain Stewart: Do you have an ambition that either of these rolling stock contracts would go to Bombardier?

Justine Greening: We talked about this earlier with the Committee. We have, as a Government, worked really hard to challenge our procurement process to make sure that it has everybody on a level playing field, and that includes companies like Bombardier. I have had a number of discussions with them and I have met with Bombardier as well. At the same time, obviously they are a commercial company, so they have their own decisions about whether or not they want to bid for these contracts. But our intent as a Government is to make sure that that procurement process is an open one for companies like Bombardier to be successful in.

Q118 Chair: Are you saying, in relation to the Southern rail procurement and the Caledonian sleeper carriages, there would be opportunities for Bombardier to bid, should they wish to?

Justine Greening: Yes.

Q119 Chair: When are those contracts likely to be put out to tender?

Justine Greening: I understand that the Southern contract is one that is being discussed right now. Steve can probably confirm the exact timelines on that. In relation to the Scottish sleeper, that is going to very much depend on some of the financing questions, which have to be resolved with the Scottish Government.

Q120 Chair: Mr Gooding, could you give us an indication of the timings?

Steve Gooding: We are in the early stages of the competition for the Southern franchise and I do not think the formal invitation to tender has been issued yet. I am afraid I will have to come back and confirm that. For the Scottish rolling stock, the procurement timeline is within the gift of the Scottish Executive and I am afraid I do not have timing for that. As I said, that is tied up with the reaction of the Scottish Executive to the offer of match funding, which is what they are currently thinking through.

Q121 Chair: We would like any information you have on the Southern rail procurement, if you are able to get that. Secretary of State, you also made reference, in your other answer to Mr Stewart, to the Northern Hub. In fact, if I look at the welcome projects that were announced in the Autumn Statement, there is reference to the North Trans Pennine electrification, which is part of the Northern Hub but is not the Northern Hub. Why has the Northern Hub project, as a whole, not been put in this list when the OxfordBedford rail scheme has? That was not in Network Rail’s initial plan and the Northern Hub was.

Justine Greening: We wanted to make a start with one of the core pieces of the Northern Hub project, which had been proposed, and to consider what progress we could make on the rest as part of the HLOS review in the coming year. As ever with these timelines, in a sense, you have a timeline about when you are going to be making an announcement. In this case it was the growth review set for a particular date. At the same time, we have the departmental process we have to go through to make sure we are assured that projects are value for money. With this element of the Northern Hub we were confident that it was and, therefore, it was able to go in that statement. We are looking at the remaining programme. As you point out, there were other elements of it as part of the HLOS process that we have coming up.

Q122 Julian Sturdy: Sticking with rail and going back to the electrification of the Trans Pennine rail, for which I am very grateful, I might add-there are some good announcements there-there was a little bit of confusion. Hopefully, you can clarify it, although I think you have pretty much clarified it in an earlier answer. When the Chancellor announced it as Manchester to Leeds, as a York MP, that came as a little bit of a shock. Can you reassure me that it is now actually to York? In your earlier answer you did say to York.

Justine Greening: It is a route between Manchester and York via Leeds.

Q123 Julian Sturdy: So it is electrification to York.

Justine Greening: Yes.

Q124 Julian Sturdy: That is great news. There was a bit of confusion over that, so that is good to hear. Can I follow up on Mr Stewart’s questioning as well? Can you outline, in a little more detail, potentially what sort of time scales we are looking at for that specific project?

Justine Greening: We are expecting that to be confirmed to us by Network Rail. At the moment we are expecting it is going to be between late 2016 and 2018 and that the electric trains will be phased in during that period.

Q125 Chair: Before you move on, I would like to clarify with you the procurement rules when the contract for the Southern Rail extra carriages goes out. Will that be in accordance with new proposals the Government have spoken about before-new rules for procurement? How will it be done?

Justine Greening: It will be going out under the existing rules that we have, but, of course, that will build in some understanding of the process that both BIS and the Treasury have been through over the last few months to see how, over the medium term, we can improve the procurement process. We have some learning already: the need for us to work more closely with companies all the time, not just when we have a procurement process being scoped out. I do not think we need, per se, a change of rules to be able to start doing some of that better working with companies already.

Q126 Chair: So these contracts will go out under existing rules. Is that what you are saying there, or you are not sure?

Justine Greening: To be clear, Southern is running the procurement exercise. Obviously they have support from Government, but, as a company, they are running this exercise rather than Government.

Q127 Julie Hilling: I want to come back a little to the Northern Hub. Although the electrification of ManchesterYork is more than welcome, it was not a central part of the Northern Hub project. If anything, it was the additional part. What reassurance can you give that the whole of the Northern Hub project-the engineering work that will benefit the whole of the north-is going to be funded?

Justine Greening: As I said before, what we were planning to do is to look at the remainder of it as part of the HLOS statement. Once we get to the end of that process and we make the announcement on the HLOS proposal, the Northern Hub element of that will be clarified at that stage.

Q128 Julie Hilling: I do not quite understand the words you are saying. Previously, there seemed to be a commitment that in the next control periods the Northern Hub would feature highly in that funding, and the concern we had was that maybe some elements of it would not be done. Now you seem to be saying something of the opposite. I am not sure if I am misunderstanding what you are saying. It sounds like you are saying, "If there is money left, we might do some of it". The whole of the Northern Hub is what brings the economic benefits to the north.

Justine Greening: Obviously we have had quite a range of investment in our railways announced as part of the growth review. I want to try and reassure you that we are now going to look at the rest of it. I am delighted we were able to announce the electrification of the Trans Pennine element of the line as part of that, but, to provide you with some reassurance, we will now go through the rest of that Northern Hub package to see to what extent we can have that as part of our HLOS statement. We need to go through it, and in fact Network Rail need to go through it in order to look at their business case. That is a matter, ultimately, for them to come back to the Department on and that is the process by which we would then, as a Department, reach a conclusion about what was in that HLOS statement going forward.

Q129 Julie Hilling: Can you give us some idea of the timing of that? Network Rail have done the package-they have done the business case-and all of that has already gone to the Department.

Justine Greening: Yes. What I am saying is that, because we have made so much fresh investment in the railways as a part of the growth review, which is great, Network Rail need to go back, as you say, over that original package to reevaluate it. That then feeds into the HLOS process, which finishes and is announced in July next year, and at that stage-you asked about the timelines-we would make the announcement about the remainder of that Northern Hub package.

Q130 Julie Hilling: It is also a reality-do you agree-that the electrification of that line will not bring its benefits if the engineering works are not done around Manchester Piccadilly and the other engineering works that need to be done that are part of the Northern Hub?

Justine Greening: We will see benefits from the Trans Pennine electrification. Obviously, for people like Julian in York, those benefits are going to be very real to those communities, so it is a positive step forward. We will look at the rest of the Northern Hub proposal as part of the HLOS statement, which is ordinarily how we would get to the decision on some of these bigger packages. I can see Steve wanting to jump in as well.

Steve Gooding: I am just going to add one thing to what the Secretary of State has said. There is an issue about the total number of schemes that are taken forward at any one time, obviously. The key issue, which our technical folk have been discussing with Network Rail, is that, consequent on the electrification of the Trans Pennine, some of the individual elements of the Northern Hub will need to be recast and rethought because it opens up a different pattern of rolling stock use. That is what the guys at Network Rail need to think through. Therefore, when we are talking about the Northern Hub package, precisely what the components of that package are needs to be revisited. That was Network Rail’s advice to us. However, it is the Government’s commitment to have been through that with Network Rail and come to a conclusion, as the Secretary of State said, within the high level output statement package next July.

Q131 Graham Stringer: Can you expand on that, please? I find it a bit worrying. Can you just tell us precisely what is going to be changed?

Steve Gooding: That I cannot do. I am sorry if it sounded threatening. I was intending it to sound the opposite, actually. The opportunities for running the electrified service and deploying the rolling stock consequent on the electrification to get all the benefits the Northern Hub package is designed to achieve, I was advised, are going to be different in some respects, and those need to be worked through. I am afraid that is all I can tell you today, but I can probably get you a list.

Q132 Chair: Are you telling us you are in the process of working that through with Network Rail?

Steve Gooding: Yes, that is what we are doing.

Q133 Chair: That is happening at the moment.

Steve Gooding: Yes.

Q134 Graham Stringer: Essentially, apart from electrification, most of the rest of the Northern Hub is increasing the capacity at junctions.

Steve Gooding: Yes.

Q135 Graham Stringer: How has that changed?

Steve Gooding: Like I say, I am sorry I cannot give the technical answer to what the precise engineering changes are, but the advice that we had from Network Rail was, "If you are going to make this change here, we would like to look again at the precise components of the package-not the case for the package, but the components-to make sure we are getting all the right things"-

Q136 Chair: "This change". Could you clarify for us, Mr Gooding, which change they were referring to?

Steve Gooding: I am afraid I will have to come back with that.

Q137 Graham Stringer: Can you send us a note?

Steve Gooding: Yes, we can do that.

Q138 Chair: We would like a note on exactly what is happening in relation to the Northern Hub and, in particular, whatever discussions you may be having with Network Rail. We would like to have that, please.

Justine Greening: We will make sure we do that. It is just saying that when we take the final review it has to be on the most uptodate situation and business case, given that this package, which we have announced at the growth review, is a substantial one. We will get you a note on that process.

Chair: We would like to know what is involved in these discussions and where it is up to. I want to keep to rail questions for the moment.

Q139 Paul Maynard: Leaving aside the existential question of what is the Northern Hub, can I focus on the rail fares increases in particular? As I understood your predecessor’s intention, it was to transfer the burden of rail subsidy from the general taxpayer to the passenger. Obviously, by switching to RPI plus 1% from RPI plus 3%, you are shifting the burden back on to the general taxpayer from the passenger again. Is your longterm intention still to continue along that path or do you want to reinforce the notion, as you said earlier, of reducing the general burden on the taxpayer and making sure the user pays?

Justine Greening: We want to continue down the road of reducing the burden on the taxpayer. We have obviously had to take account of the economic circumstances we find ourselves in and the pressures on cost of living. The key to a lot of this, frankly, is the McNulty report, which talked about how the industry could start working with itself and with Government to take out some of that additional cost base, which you do not see in railways in Europe. That is one of the key ways in which we can not only lessen the pressure on the taxpayer, but hopefully over time as well-I know Philip Hammond was determined to do this-the pressure for year-on-year fare rises on passengers.

Q140 Steve Baker: Secretary of State, turning to my favourite subject of high-speed rail, can you confirm that the Government is considering the construction of a tunnel through parts of Buckinghamshire?

Justine Greening: I cannot confirm that because I am in the decision period where I have to look at all the responses to the consultation, then weigh them up and then reach a decision and announce it. What I do want to say is that, from the word go, I have been very clear that I understand how important this project is. Therefore, if it is to go ahead, I want to make sure we get it right. Getting it right means getting it right from an environmental perspective as well as the impact it has, potentially, for rail and rail users.

Q141 Steve Baker: Can you confirm you will be announcing your decision in January, please?

Justine Greening: Yes.

Q142 Steve Baker: Will there be a concurrent rail White Paper?

Justine Greening: I have said that I aim to issue my Rail Command Paper early in the new year and it is likely that that is in the January-February time frame.

Q143 Steve Baker: I understand that the Department refused a freedom of information request for the West Coast Main Line peak time loadings, but that it released similar data to The Sun for the Great Western Main Line. Are you aware of why that happened? Why was there an inconsistency?

Justine Greening: The short answer is no, I am not aware of that inconsistency. I am very happy to follow up.

Q144 Steve Baker: We understand that there was a survey carried out by HS2 Action Alliance and 51m, which showed that peak hour long-distance trains on the West Coast Main Line were only about half full. Do you accept that their survey was valid?

Justine Greening: I am not in a position to comment on that in this particular inquiry that you are doing. The job that I have to do, and I have to do it properly, is to reflect on the evidence that has been put into the consultation. We have had evidence from a range of different stakeholders and people and, of course, MPs. As you will be aware, in addition to that, I held an open meeting for all MPs who could come along and express their views to me on behalf of their communities. A number of MPs did come to that and I am reflecting on all of that now.

Q145 Steve Baker: As you know, I have always opposed it on the basis of the national interest. What I am interested in is, if the peak hour long-distance loading on that line is only about 50%, does that not mean the case for the Y network in HS2 just collapses on the basis of capacity?

Justine Greening: Chair, we can have a much more detailed discussion on HS2, but that would put at risk the part of the process we are in and I am in as the Secretary of State. A lot of those arguments have been made as part of the consultation process. I am now reflecting on all of them very carefully and-

Q146 Steve Baker: Can I ask you plainly if you will release the data on the West Coast Main Line peak hours loading?

Justine Greening: I have said I am very happy to follow up the issue you raised in relation to that. I cannot give you an answer here, simply because it is something I need to satisfy myself of, regarding the details, as Secretary of State before I am in a position to give you a proper answer.

Q147 Steve Baker: I am not looking for an answer on HS2 itself. I am looking for whether or not you will release that data about the peak hours loading of the West Coast Main Line.

Justine Greening: I have said very clearly I am happy to go back to the Department and understand why there has been an inconsistent approach.

Q148 Chair: Do you think that the survey undertaken by HS2 Action Alliance in relation to peak hour loadings is a valid survey?

Justine Greening: That is not a question I am able to answer at this point because it is part of the many submissions that came into the consultation. If I was to start pronouncing on various aspects of the evidence base that has been put in and views, and go beyond that, that would not be a very helpful intervention for me as Secretary of State. This is an incredibly important project and it is right that we run the process properly. Clearly, I would be delighted to be able to have a more in-depth conversation with the Committee about this, but I do not think it is right for me to do that given where we are in the process. I am taking an awful lot of time to consider all the evidence that has come in and I am looking forward to getting to a position where I can announce my decision.

Q149 Mr Harris: Secretary of State, you have already given an answer to Mr Maynard about rail fares and you started off by saying you wanted to continue the direction of travel whereby the farepaying public took more of the burden of the cost of the railways than the general taxpayer. You also said, towards the end of your answer, that, following the McNulty report, you wanted to see lower fares. Which of those is a priority for you?

Justine Greening: What I said is I wanted to see the pressure reduced-the underlying pressure that is pushing fares to go up in the first place. The priority has to be to try and get the railway industry into a position where it is less reliant on taxpayer subsidies. Part and parcel of that is going to be a general improvement in the industry’s financial position, which will also see less of a pressure, hopefully, for year-on-year fare rises.

Q150 Mr Harris: Surely the underlying pressure on rail fares is this movement from the general taxpayer to the farebox. That is what is pushing fares upwards. Unless you actually reverse that movement, you are not going to relieve the upward pressure on fares.

Justine Greening: In a sense, what we set out as a Government is a short-term position where we have said that, given the pressures on the public finances, we have to do what we can to make sure the taxpayer element of what we are putting into that industry as a subsidy is affordable. The real prize, though, to be aimed for is to tackle the underlying problem, which is that the railways themselves, according to Roy McNulty, are about 40% more expensive than railways in Europe. When he looked at it, he said, "Some of that is down to innate differences between the railways. If I try and screen that out, what do I think is left that is just extra cost that the industry ought to be challenged to say it can take out?" He came up with that figure of 30%. Yes, these are difficult balances that we are trying to strike in the short term, and you set them out very clearly. In the longer term, the real opportunity is for us to work with the industry and for the industry to work with Network Rail and within itself to try and work better and more efficiently to drive out costs that way.

Q151 Mr Harris: When you used the word "affordable" in that answer, were you referring to "affordable" from the perspective of the travelling passenger or "affordable" from the perspective of the Chancellor of the Exchequer?

Justine Greening: When I say "affordable", I was talking about it in the context of the taxpayer. This is not the Chancellor of the Exchequer’s money. It is taxpayers’ money.

Q152 Mr Harris: So not farepayers then?

Justine Greening: And farepayers, as Julie Hilling said to the previous Secretary of State when she talked about a railway for everybody. I think that is important. It is one of the reasons why I was keen to see, at the growth review, whether there was a way to lessen the impact of the planned fare rises on the travelling public. That was the right thing to do.

Q153 Mr Harris: Do you agree with the comments of your predecessor that the railways have become a rich man’s toy?

Justine Greening: That phrase was actually one proposed by our honourable colleague sat over there, the Member for Bolton West. My aim is to make sure that we do see railways-

Q154 Mr Harris: But do you think that your predecessor was wrong in saying that?

Justine Greening: I do not think that that is a question, if you like-

Q155 Mr Harris: It is a question I have just asked and I would quite like an answer.

Chair: Do you agree with that perception?

Justine Greening: I am not going to answer that question. I am the Secretary of State now and I have been very clear that I think having a railway that is affordable is important. I have already taken steps across Government to make sure that, even though we are dealing with a very difficult set of public finances, we have been able to lessen the more challenging aspects of the RPI plus 3% rise that was proposed. So I am trying to get that balance struck. It is not easy, but I have managed to get a better deal for passengers, which will benefit millions of people over the coming months. That is good news for them.

Q156 Graham Stringer: Can you give us a bit more insight than you did before into the selection process for these rail schemes? I do not want to distort by paraphrasing, but you basically said they were ready and you could use them. Can you give us a bit more insight into what criteria were used?

Justine Greening: I will let Steve come in on this, but whether it is road or rail, which are the two modes of transport the Department particularly invests in because aviation and ports are largely private sector, we have a very rigorous way of looking at both best benefits and costs. On the issues with these specific schemes-as you have said, a lot of them were ready to go-we would have a normal departmental process to look at the ongoing investment plan as part of the high level output specification process. These were things we felt we could get on with in advance of that and were value for money. The processes that we use within the Department, working with Network Rail, enable us to have a very clear assessment about how they stack up with one another in terms of whether we should be investing taxpayers’ money in them. I know that Steve will want to supplement that.

Steve Gooding: All I would add is that we have quite detailed discussions, particularly with Network Rail, taking into account their capacity both for bringing design work forward and for taking works forward: for example, the renewal of bridges, works to paint and renewing certain structures in advance of the next Control Period. In addition, the more customer-facing works-the Access for All Programme-have been accelerated. So it is a mix of smaller things that could be done really quickly-things passengers would benefit from and some enhancements that could reasonably be brought forward-and, also, as the Secretary of State said right at the outset, things where there was scope to accelerate investment that was worthwhile but would also be good for creating jobs in the short term.

Q157 Graham Stringer: That is a reasonable criterion, given the genesis of the decision that the Chancellor made, but were there other schemes that were rejected? Were these the only schemes that were ready to go or was there a bigger list that we are not aware of?

Justine Greening: The day we do not have a plethora of rail schemes that people want us to-

Q158 Graham Stringer: No, in terms of ready-to-go schemes.

Justine Greening: There are always a number of schemes people will be ready to be able to push the button on. We had to look at the ones we thought were a priority. We also had in mind that we are already engaged in the HLOS process, which will enable us. For those we were not in a position to assess as effectively as we wanted, they have that core process for the Department to go through anyway.

Q159 Graham Stringer: Given what has happened, I think it is a fair criterion. I am trying to get at whether there were other criteria. Some schemes must have been rejected and I am interested in the criteria for rejecting the schemes. Better still, if you could tell us which schemes were rejected, we could understand how the Department was coming to its decisions.

Justine Greening: I will let Steve answer this question as well. He broadly set out the criteria. Clearly, they had to be value for money. Secondly, they needed to be things we could get on with, otherwise they may as well have been a decision as part of the HLOS agreement. Thirdly, they needed to be things we felt would fit in with the broader infrastructure programme and priorities we were looking at.

Steve Gooding: All I would add is, when you say "rejected", we are thinking about what could best and most readily be brought forward. To pick a couple of fairly wellknown schemes that are also in development but we did not accelerate at this time, the electrification of the Midland Main Line and the Welsh Valleys Lines is still, if you like, on the "to do" list. They will be looked at as part of the high level output statement, but there were reasons-the state of development of both of those and the nature of the services-that meant they were not as attractive for pulling forward. It does not mean they have been rejected. It means they fitted more neatly. For example, the Valleys Lines fits more neatly after we have done the electrification of the Great Western.

Q160 Chair: So it was to do with the state of development?

Steve Gooding: Yes.

Chair: Ms Hilling, you wanted to ask something. After your question, I am going to move on to roads.

Q161 Julie Hilling: I think it links nicely to that last set of questions. Mine is an overall question of whether there is a regional breakdown of expenditure on rail, but then, also, across all the expenditure that has been announced in the statement.

Justine Greening: We certainly tried to provide that as part of the National Infrastructure Plan where we set out, if you like, where many of the key schemes were. There is always a bit of a challenge saying how rail can be split down regionally, mainly because, if you start off in one bit of the country and finish in another, it is not always easy to say where a national railway line improvement particularly gives you the most benefit. However, we did try and set out, broadly, the regional split in the National Infrastructure Plan.

Q162 Julie Hilling: In terms of the expenditure on those programmes, what is the regional spread of money? Has the finance gone equally to the different regions?

Justine Greening: We were very conscious of that. In fact, I remember having what I thought was a helpful conversation with you at this last Committee when we talked about the need to try and make sure there was some balance to where investment was going. Interestingly, when I did a TV interview today, one of the challenges put to me was, "There is nothing here for the southeast." So getting a balance is important. Maybe the best thing I can do is this. Let me come back to the Committee with the best split that we can try and do based on the growth review. We will have a go to see whether, even for some of those rail lines that perhaps are more national, we can give a sense about where we believe the benefits would really be felt.

Q163 Julie Hilling: Not just on the rail, but it is also about road programmes and the whole of the programme per se. There is a reality that more money is spent in London-there is three times as much spent on a Londoner as there is on somebody in my constituency-and it always feels like these are opportunities to try and rebalance some of that. However, it does not feel like that always happens, so it would be very interesting to have that information.

Justine Greening: The local authority major schemes are all over the country and they can more easily say where the benefit is going to be felt.

Q164 Chair: Is a certain regional impact one of the criteria used when selecting projects? Was it one of the criteria in selecting the list of development projects?

Justine Greening: It is one of the things that was considered. For example, we have an enterprise zone approach. That was part of the considerations we looked at. If we already have a strategy, if you like, that is more locally focused to try and encourage regeneration, or we knew that local authorities were saying, "We have some housing opportunities and some industrial economic opportunities here that we think could be unlocked and can be unlocked with more transport investment," those were precisely the considerations we had, alongside core taxpayer value for money, when we were trying to look at the best mix of spend we could get.

Q165 Chair: Were the Local Enterprise Partnerships consulted when you decided which schemes you were going ahead with?

Justine Greening: In relation to many of the road schemes, they had come predominantly from local authorities. However, when you looked at what the support was, you saw a lot of those had support from local businesses. Obviously, Local Enterprise Partnerships are at different stages of formation, but in many cases there was business support for the proposals that have been made.

Q166 Chair: But you did not necessarily consult with the Local Enterprise Partnerships? You are saying you looked at local views in a different way.

Justine Greening: One of the ways we got those views was to have that development pool of local authority majors made public, which then gave a chance for all interested parties, wherever they were, to comment on them. In reality, in proposing many of those projects, the local authorities themselves had very often engaged for the most part with local business in order to help them build that business case. They knew that was one of the ways they could make sure their proposals would be as strong as possible.

Q167 Julian Sturdy: Particularly on road schemes, you have just touched on the development pool that had the 45 major local schemes which have now got funding. Again, that is very welcome news. There is some good news there for York as well, which I am delighted to see. My question, though, is this. A number of essential road corridors with strategic local importance were not in the development pool, and for a number of different reasons. For some, and two in particular in my patch, the A1237 and the A64, it was based around the fact that the schemes had not been worked up in time. They were behind the curve, in that case, but might still be very worthy schemes when they had been worked up, and there are some big safety issues on the A64 at the moment. Are the Government going to be keeping a close eye on these more strategic road investments that are not in the development pool, is there going to be future investment for those schemes and how are the Highways Agency or local authorities going to be able to bring those forward in the future?

Justine Greening: One of the main things we are looking at to try and get these funding decisions right is how we can start to devolve some of those funding decisions to local communities themselves. That will be one approach we are looking to see if we can pursue over the coming years. Inevitably, whenever you have a cutoff point when you have to take a decision, there will be some projects where you have been able to work with local authorities and communities to get over the line. There will be others that, for various reasons, are simply at an earlier stage of development, but, having gone through that same process, can be shown to be valuable.

My approach is to say that we can continue to work with local authorities to do that, but we would like to start trying to give local authorities more ability to take those decisions themselves rather than having them driven quite so traditionally topdown, as they have been in the past. A key role for the Department is to make sure we continue to provide some quality check on business cases so that we can maintain good taxpayer value for money.

Q168 Julian Sturdy: As to some of these schemes that did not get the timing to be able to be worked up to fit into that particular category, what you are saying is the door is still potentially open for some of those schemes as long as they are worked up in the correct manner?

Justine Greening: The short answer is yes. Of course, we always have constrained funding.

Q169 Steve Baker: Just thinking about well-being, which the Government talk about quite often, has there been any consideration in this policy towards quietening roads? I know that my own constituency and that of Mr Dobbin are afflicted by noisy motorways very close to people’s homes. Have the Government considered spending money on quietening our motorway network?

Justine Greening: In relation to, if you like, the quality of journeys, there is money to improve journey quality. That is one of the ways we can, in a sense, make things quieter. If you look at what we have done with the Highways Agency, there are going to be more managed motorway schemes, which should, in a sense, help the free-flowing of traffic and manage traffic flow better. I would think that will reduce congestion and, in doing so, there will be some knockon advantages in terms of the qualitative experience of people living nearby. Perhaps more directly in relation to this is some of the funding we are putting towards local authorities to get on with some of those smaller projects-for example, improvements on signage; getting rid of cluttering signage, or improving miniroundabouts or bus stops that are not quite in the right place; and improving the high streets in terms of traffic flow. Those are some of the things that can help also reduce noise and the impact that traffic has on communities.

Q170 Steve Baker: Have you specifically considered road surfaces and noise abatement measures alongside motorways?

Justine Greening: I do not think we explicitly considered noise abatement per se. However, as part of the investment that is there, there is the potential for those local authorities who now have money to invest to consider that.

Q171 Steve Baker: The other issue where transport perhaps has a wider impact is with health services seeming too centralised. Certainly in my own constituency one of the biggest health problems we face is road transport to Aylesbury. I wonder whether the Department of Health has had very much input to roads policy in order to try and make sure that people can travel easily to their nearest hospital or specialist hospital.

Justine Greening: When we go through these processes we try to work across Government. The other key element of these sorts of process is the role that MPs play in alerting me and my ministerial team to the priorities that people have locally. With some of these more crosscutting issues, there is always a danger that they get missed when you have your individual Departments working up policy.

Q172 Steve Baker: Turning to fuel duty, if I may, if the Department wishes to reduce congestion and carbon emissions, is that part of the reason for having fuel duty in place, and, if so, why reduce it, from your perspective?

Justine Greening: I can definitely say that fuel duty is a matter for the Chancellor, and I am not in Treasury these days. I am sure we would all recognise that there is a need to strike a balance to make sure we push on this environmental agenda. If you look at the rails package, which is supporting more capacity to help people switch on to railway from roads, if you look at a lot of the investment that will, hopefully, alleviate congestion, which does nothing to help the environment when you have cars parked with their engines on, there was quite of lot of this money, which either directly or indirectly-and directly with low-carbon bus investment-will help the environment. I will leave fuel duty for the Treasury to respond to, though.

Q173 Steve Baker: In terms of the environment, what is the Government’s policy in terms of driving hydrocarbon-fuelled vehicles off the road? What is it you intend to achieve and by when?

Justine Greening: There are targets-I think I am right in saying by 2050-that tailpipe emissions will be reduced to zero by then. That is what we are working towards. In the meantime, we have a vehicle excise duty that is related to emissions. Certainly from my perspective within transport, it is an important agenda for us to work with the industry on to see what we can do to help make sure that transition happens fast.

Q174 Steve Baker: To what extent do you think the public are aware of this combination of factors they face? It seems that, over the next 40 years, they will be changing the kind of car they drive, they will be facing fuel duty at least as high as the levels they do currently and they will be facing road tolls. Have you done an assessment as to what extent the public are aware of this combination of factors they face on the roads?

Justine Greening: The fact that the Chancellor has decided to take action on fuel duty is, in a sense, a symptom of the fact that we know how aware the public are. There was a debate in Parliament a few weeks ago on the cost of motoring and the impact of high fuel prices. The public are acutely aware of the expense of motoring today. A lot of that has been driven by high oil prices, but, to the extent that we had picked up and inherited some planned fuel duty rises that were going to exacerbate that, we have worked as hard as we can as a Government, within the fiscal situation in which we find ourselves, to try and alleviate that problem to the extent we can.

Q175 Steve Baker: Is there not then a tension between this drive to eliminate tailpipe emissions by 2050 and the cost of motoring? Surely, part of the Government’s plans to eliminate tailpipe emissions will be at the price of maintaining a carbon-emitting car.

Justine Greening: I do not think that is true. If you look at the cost of maintaining electric cars, it is cheaper than maintaining a petrol car because there are fewer moving parts in the engine. If you look at the cost of electricity to charge up to get the same mileage that you would have to fill up another car to do the same mileage with petrol, it is a lot cheaper. The question is how we can see the motor industry developing viable technology so that it is commercial for people to be able to buy those cars in the first place. That is a big challenge for the industry. We are already seeing people switching increasingly to hybrids and that is probably one of the steps on the way towards getting rid of tailpipe emissions.

Q176 Steve Baker: For those people living perhaps in rural areas or driving in such a way that electric cars are not a feasible means of transport, what would you expect them to be doing?

Justine Greening: As I said, we are quite some way down the track from having everybody in an electric car. The industry would say there is a long way to go to understanding how viable electric cars will operate, what the market for them is, how it fits in with hybrid and how it fits in with the commercial market, frankly. We know that an awful lot of our vehicles are obviously white van man and HGVs. There is a whole strategy, if you like, that needs to be developed with the industry, predominantly to look at how we can effectively create vehicles for people to purchase who are in that position. At the moment, one of the challenges is that the technology is still very new. We are supporting that transition through schemes like Plugged-In Places and we will get some learning from that to understand how we can best work with people to transition. Plugged in Places is very much focused, for example, on workplaces because our sense is that people are more likely to be charging their car there. We will get the learnings from these investments to understand the extent Government are in this area of trying to encourage this shift, as well as industry, so that we can make sure the money we are putting against it has the biggest impact in terms of behaviour change.

Q177 Steve Baker: If I could summarise what I think I have understood here, it is the Government’s policy, over the next 40 years, to reduce tailpipe emissions to zero, to do it by encouraging both the industry and drivers to change their habits, and to do it without substantially increasing the cost of motoring. Is that what you are saying?

Justine Greening: I would say it can reduce the cost of motoring. If you look at the cost of petrol right now compared to the cost of running an electric car-

Q178 Steve Baker: But the cost of petrol is two-thirds tax.

Justine Greening: A huge amount of the rise in petrol that has led to this becoming one of the key pressures on cost of living has been the rise in the oil price.

Q179 Chair: It is a subject we might return to. It is correct, Secretary of State, that you do not set fuel duty rates, but are you or your Department involved in discussions on the fair fuel stabiliser?

Justine Greening: We have had discussions with the Treasury. As that policy was being developed, it was my predecessor, at the time, making his points in relation to the cost of motoring. The stabiliser was a policy that was something the Conservative party had talked about in opposition and we were then able to work up and deliver in government. It was one that was led by Treasury, but of course we have a Cabinet Government, so there is always a discussion about how we can best develop policies.

Q180 Julie Hilling: Are all the projects that are being announced new? I know they may have been in the pipeline for a while. I am just aware, to my cost, that the M1-M6 junction has had work being done on it for quite a period of time now and I am wondering if they are all new projects or if some of the money has already been committed and some of the work already started on them.

Justine Greening: There are a few projects where we have brought money forward. For example, there are some motorway improvements on the M25 and, I think I am right in saying, the M1, where we planned to spend money, but we took a decision to spend it earlier. Many of the other projects are ones where we had some budget allocated, but we had not taken a decision about where it would go. What you have seen through the process today, but of course the one in the growth review, is setting out where that money should go. Those are schemes that were not agreed with money against them, but now are. Of course, they cannot go ahead without the money. The point is we have taken a decision on a whole raft of these schemes so that they can happen. This time two months ago, they were schemes that were good value, but there was no money there to fund them so they were not happening. An awful lot of these are new schemes.

Q181 Julie Hilling: None of these schemes had started pre the statement.

Justine Greening: For the most part, no. I think I am probably right in saying the answer to that is no. Some of them were planned in our work planner and we brought them forward, but obviously, local authority majors-this is all work to happen.

Q182 Julie Hilling: I have another question about roads. Are you intending to introduce tolling on any of the things you are proposing in this or in the near future?

Justine Greening: Tolling is something that, as we talked about earlier, has been discussed in relation to potentially bringing in private sector capital to help build extra roads. In the context of the growth review, it was mentioned in the context of the A14. That A14 challenge, as it is called, is bringing together local authorities and some of the local businesses like Felixstowe Port-where I was a couple of weeks ago-to develop a plan. That plan could include tolling. That is one of the things they are looking at, working together.

Q183 Julie Hilling: I apologise if this was asked when I was caught in the lobby. The M6 toll is wonderful if you drive up it because there is nothing on it, but the M6 is still totally congested. Is there the risk with any tolling then, if you are talking about the A14 or anywhere else, that people will avoid the toll and just have congestion elsewhere?

Justine Greening: In that particular case, it was about choice. It comes back to Steve’s earlier question about looking at whether these are commercial propositions for the private sector in the first place. What we are saying, as a Government, is that we would be missing a trick if we did not look carefully at the prospect of getting private sector capital involved to try and get some of those projects done that, otherwise, given the constraints on the public finances, would not be able to happen. We do not see that as stopping every new road, by any means. What you have seen in the growth review and today is a huge amount of public money that is going to make a whole load of road schemes happen and Highways Agency money to improve some of our motorways. We have something like 150 miles worth of lanes that are going to be opened up to relieve congestion, so there is a huge amount of taxpayer money going into this, but of course we want to look to see whether we can get some private sector money in.

Q184 Chair: Will the schemes in the development pool that now have confirmed funding from the Department definitely go ahead?

Justine Greening: They will as long as they now provide that detailed business case to back them up.

Q185 Chair: So what will be the business case?

Justine Greening: They have all gone through the usual Department for Transport assessment. The key is for them now, on the back of knowing that they have the money, to bottom out the core detail of the business cases. Some of them still need planning consent. The point is we are saying that that money is there for those schemes to progress and they can now get on with that at the local level, which, for many of them, is excellent news.

Q186 Chair: Are you sure that the local authorities involved can make the contribution they are required to where that is appropriate?

Justine Greening: Yes. One of the key things we challenged local authorities on was their capacity to actually deliver these projects. Of course, we had gone back to them and challenged them on to what extent they were able to deliver the project and to what extent they were able to deliver any private sector or money that they were providing at their level. We had to get to a position where we were happy that the proposal was going to work. We are delighted that so many of them were at that stage and we have put the money aside for them to go ahead. Yes, those local authorities now need to develop the very detailed plans and, in some cases, go through planning consent, but we have done our level best to make sure we have put money against projects that we believe can happen.

Q187 Chair: Your predecessor told us that he would be looking more favourably on investment in road schemes if it got to the point where the "decarbonisation of motoring" was on an "unstoppable trajectory". That was his statement to us. The Autumn Statement and the proposals in it suggest a new policy of more investment in roads. What does that mean? Have we reached the point where decarbonisation of motoring is on an unstoppable trajectory, or has that policy been abandoned?

Justine Greening: We have to work hard to get to a position where decarbonisation of roads and vehicles is now on an unstoppable trajectory. Maybe it is on an unstoppable trajectory. If you look at the facts, you will see more people investing in hybrid vehicles. We are seeing a higher uptake of electric vehicles this year than we saw last year, although it is from such a low base it is very difficult to look at that percentage increase and draw too many conclusions from it. What we were doing today and over the growth review was to say that there were a number of schemes-road schemes in particular-where we had asked local authorities to tell us what they felt the best investment in their road system was, because that could provide a real value to local communities and local economies. We have got to the end of that process, we have made our decisions and now we have announced them.

Q188 Chair: Would we be right, then, in concluding that Government policy now is to invest more in road building than before? Is that a new policy?

Justine Greening: No. What you are seeing is us responding to the process that my predecessor started, which was to work with local authorities and ask them to say what their priorities were for some investment that we had set aside to invest in the road scheme. We know that is important because of the usage of it and because we have pinch points and congestion points that we want to see tackled. They came back with a number of proposals they felt would be valuable. We have now gone through a process of investing in them. To the extent that those proposals are good value for taxpayer money, we have said we are prepared to put money against them.

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

Prepared 16th February 2012