House of Commons Transport Committee
Counting the cost: financial scrutiny of the Department for Transport 2011–12
Fifteenth Report of Session 2010–12
Volume I: Report, together with formal minutes, oral and written evidence
Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/transcom
Ordered by the House of Commons to be printed 7 February 2012
HC 1560 [Incorporating HC 1713-i] Published on 23 February 2012 by authority of the House of Commons London: The Stationery Office Limited £12.00
The Transport Committee
The Transport Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Transport and its Associate Public Bodies.
Current membership Mrs Louise Ellman (Labour/Co-operative, Liverpool Riverside) (Chair) Steve Baker (Conservative, Wycombe) Jim Dobbin (Labour/Co-operative, Heywood and Middleton) Mr Tom Harris (Labour, Glasgow South) Julie Hilling (Labour, Bolton West) Kwasi Kwarteng (Conservative, Spelthorne) Mr John Leech (Liberal Democrat, Manchester Withington) Paul Maynard (Conservative, Blackpool North and Cleveleys) Iain Stewart (Conservative, Milton Keynes South) Graham Stringer (Labour, Blackley and Broughton) Julian Sturdy (Conservative, York Outer)
The following were also members of the committee during the Parliament.
Angie Bray (Conservative, Ealing Central and Acton) Lilian Greenwood (Labour, Nottingham South) Kelvin Hopkins (Labour, Luton North) Gavin Shuker (Labour/Co-operative, Luton South) Angela Smith (Labour, Penistone and Stocksbridge)
Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk.
Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at http://www.parliament.uk/transcom. A list of Reports of the Committee in the present Parliament is at the back of this volume.
The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Additional written evidence may be published on the internet only.
Committee staff The current staff of the Committee are Mark Egan (Clerk), Jessica Montgomery (Second Clerk), David Davies (Committee Specialist), Tony Catinella (Senior Committee Assistant), Edward Faulkner (Committee Assistant), Stewart McIlvenna (Committee Support Assistant) and Hannah Pearce (Media Officer).
Contacts All correspondence should be addressed to the Clerk of the Transport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6263; the Committee’s email address is [email protected]
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Contents
Report Page
Summary 3
1 Introduction 5
2 Department for Transport’s expenditure 6 Presentation and information 6 2010/11 underspend 8 Regional spend 9 Regional Growth and Growing Places Funds 10 Regional Growth Fund 10 Growing Places Fund 11
3 Project appraisal 12
4 Performance reporting 14 Measuring progress 14 Transport security 14
5 Conclusion 15
Conclusions and recommendations 16
Formal Minutes 18
Witnesses 19
List of printed written evidence 19
List of additional written evidence 19
List of Reports from the Committee during the current Parliament 20
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Summary
Throughout 2011–12 we have followed announcements on public expenditure from the Department for Transport, culminating in the new transport projects announced in the Chancellor of the Exchequer’s autumn statement. We commend the department for simplifying the way in which it presents financial information so that it is now possible to compare future plans with past outturns. However, we recommend that more information should be published about in-year changes to budgets.
We note that the department’s underspend for 2010–11 was larger than the cuts to its budget during the year. We recommend that the department could do more to ensure that its expenditure plans involve a fair allocation of resources across the nation and we seek information about how the department’s funding of the Regional Growth and Growing Places Funds has been used.
Although we welcome the additional investment in road and rail infrastructure projects announced in the autumn statement we have some concerns about how the projects were chosen. We recommend that the new rail schemes be regarded as additional to those which the Government will agree to fund as part of planning for the 2014–19 rail spending period.
Finally, we are critical of the thin account of the department’s performance in its annual report for 2010–11. There is no agreed way of measuring the department’s performance which again highlights the absence of a strategy for transport. We again recommend that the Government publish such a strategy.
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1 Introduction
1. Government spending—how much money is spent on which activities and projects and how decisions are taken to determine priorities—is an issue at the heart of British politics. It is especially significant during a time of austerity, when the focus is on where to make cuts and the impact these might have on service provision, public welfare and employment. The Government’s Spending Review in autumn 2010 was unprecedented in modern times in envisaging at least five years of austerity, in order to reduce the budget deficit. The impact of the Spending Review on transport has underpinned several of our inquiries and in January 2011 we published a strategy for financial scrutiny of the Department for Transport (DfT).1 This report is the first in what we intend will be a series of financial scrutiny reports arising from that strategy. We comment on what has happened to the DfT’s budget since the Spending Review, the department’s business plan and its annual report.
2. We are also taking this opportunity to follow up some of the recommendations we made in our report Transport and the Economy which was published in March 2011.2 This report’s recommendations on the appraisal of transport projects and the wider strategic context are particularly relevant in the light of the host of new road and rail projects approved by the DfT as part of the Chancellor of the Exchequer’s autumn economic statement in November.
3. Throughout the last year we have corresponded with the DfT on its financial announcements. We also took oral evidence from Rt Hon Justine Greening MP, the Secretary of State for Transport, and Lin Homer, then Permanent Secretary, on the work of the DfT on 19 October and from the Secretary of State and Steve Gooding, a senior official, on the autumn economic statement on 14 December. We publish all of this material with this report. We acknowledge the assistance we received from the House of Commons Scrutiny Unit in analysing financial information for us and drawing our attention to the salient issues.
1 Financial scrutiny of the Department for Transport, Second Report, Session 2010-12, HC 683 (hereafter Financial scrutiny). 2 Transport and the economy, Third Report, Session 2010-12, HC 473 (hereafter Transport and the economy).
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2 Department for Transport’s expenditure
Presentation and information 4. Government finances are notoriously complex, with distinctions between different forms of expenditure (for example, resource and capital spending; departmental expenditure limits and more volatile annually managed expenditure) and complicated adjustments to the figures to ensure that cash and resource budgets and outturns can be kept in line. In the past there were different bases for expenditure plans and outturn figures, which made it difficult to compare planned spending in one year with what actually happened. There has been some simplification in recent years, as a result of the Treasury’s Alignment project. Last year we welcomed the intention of Rt Hon Philip Hammond MP, the then Secretary of State for Transport, to go beyond the requirements of the project to simplify the DfT’s annual budget (its Main Estimate).3 We saw the first fruits of this work with the publication of the DfT’s annual report and accounts for 2010–11, which includes a three-page table showing outturn and estimated expenditure for the period from 2005–06 to 2014–15 itemised by some 20 comprehensible categories.4 Figure 1 uses this information to show the department’s overall spending profile for the decade. We commend the Department for Transport for simplifying the structure of its Main Estimate and publishing detailed information about spending for the 2005–15 period, which enables us to see more clearly where the department spends money and trends over time.
Figure 1: DfT expenditure 2005–15
18 16 14 12 10 Resource 8
£ Millions Capital 6 Total 4 2 0
Notes: Annual Report and Accounts 2010-11, pp35-37. Figures are provided in cash terms (ie without accounting for inflation). The 2010–11 figures are estimated outturns. Figures for subsequent years are for planned expenditure.
3 Financial scrutiny, paragraph 7. 4 Annual report and accounts 2010-11, DfT, HC (2010-12) 972 (hereafter 2010-11 report and accounts) pp35-37.
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5. Each year the DfT provides us with a memorandum to explain its annual Main Estimate—we publish the memorandum for 2011–12 with this report.5 These have become more useful documents, with clearer explanations of how the figures have changed. However, there remains a problem with inadequate explanation of in-year budget changes. Three recent examples stand out. Firstly, after the 2010 election the new Government reduced the DfT’s budget by £683 million, as part of a wider programme of cuts in public expenditure ahead of the Spending Review. Information about where those cuts would be made was released in response to a parliamentary question, rather than proactively by the department.6
6. An even more striking example occurred at the time of the 2011 Budget. £300 million of new DfT spending was announced, comprising £100 million in grants to local authorities for road maintenance and £200 million in rail projects.7 This was in addition to another £100 million in road maintenance grants announced in February 2011.8 The DfT attributed the new commitments to “savings” but no further explanation was offered. We wrote to Mr Hammond, the then Secretary of State, on 26 April 2011 to ask where and how these savings had arisen and had to wait until 21 July to receive a reply. This explained that the savings had arisen as follows:9
• £336m from “successful commercial negotiations”
• £273m from efficiencies, such as reduced dependence on consultants
• £229m because buoyant rail demand had reduced subsidy payments to train operating companies
• £94m from other rail budgets
• £29m from the early sale of HS1
Mr Hammond concluded that:
Overall the Department spent £1,029 million less than originally planned in 2010/11, of which £486 million was recycled into transport initiatives and £543 million surrendered to the Treasury.
We return to the underspend issue below, but it is worth noting that without our intervention the DfT would not have been obliged to explain how it could make new spending commitments in March 2011.
5 Ev w3-12. 6 HC Deb, 13 Jul 10, c625w and see Reducing costs in the Department for Transport, NAO, 14 Dec 11, HC (2010-12) 1700, figure 1. 7 See DfT press release, More than £100 million of extra funding to repair winter potholes, 23 Feb 11 and HC Deb, 15 Mar 11, c284-85w (roads); Ev w2 and HC Deb, 30 Mar 11, c22-23 WS (rail); and also see Budget 2011, HM Treasury, HC (2010-12) 836, paragraphs 1.96–1.97. 8 See above. 9 Ev w2-3 and see 2010-11 report and accounts, pp48-50.
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7. Finally, a number of new transport infrastructure projects were announced by the Chancellor in his 2011 autumn statement, including 35 new road and rail schemes.10 In addition, it was announced that regulated rail fares would increase by RPI + 1% in January 2012, not RPI + 3% as had been intended at the time of the Spending Review. The Treasury’s autumn statement document contained some useful information about the costs associated with these changes,11 but questions remain about whether the DfT had been given additional funding by the Treasury and about the profile of the spending to 2014–15 and beyond.
8. In oral evidence the Secretary of State said that the DfT had been awarded £1.5 billion additional funding over the spending review period.12 In addition, it was suggested that the DfT had again been able to recycle budgetary underspends to fund new initiatives.13 Numerous parliamentary questions have been tabled to find out more information about the spending profile for individual projects, with limited success.14 We wrote to the Secretary of State on 16 January to request further details about some of the announcements in the autumn statement and received her reply on 6 February, the day before this Report was agreed.15
9. In our view, the DfT does not provide Parliament and the public with adequate information about in-year changes in its budget. Cuts have been announced without an explanation of where they would fall and new spending commitments have been made without proper explanation of how they have been funded. We recommend that when the DfT makes an announcement to Parliament about a change to its budget it should explain the effects of the change on specific budget lines and, where a new spending commitment is involved, an explanation of how the money has been found. If the details have not been finalised at the time of the headline announcement the department should indicate when it will be in a position to provide those details and make a written statement at a later date.
2010/11 underspend 10. Returning to the 2010/11 underspend, we were surprised to learn that the Department had ended up in a position where it was required to return over £500 million to the Treasury. This is more than the estimated cost of the entire Northern Hub project and is also likely to have exceeded the total reduction in annual revenue for the English bus industry following the Spending Review.16 Put another way, the DfT accepted a cut to its in-year budget of £683 million and then underspent on its revised budget by over £1 billion, calling into question whether the in-year cut was necessary.
10 See annex A of Autumn Statement 2011, HM Treasury, Cm 8231, Nov 11 (hereafter Autumn Statement). 11 See in particular Autumn Statement, paragraphs 1.82-1.96 and National Infrastructure Plan 2011, HM Treasury and Infrastructure UK, Nov 11, paragraphs 3.1-3.58. 12 Qq 82-84. 13 Q81. 14 For example see HC Deb, 30 Jan 12, c 410w (rail schemes). 15 Ev 35-36. 16 For Northern Hub see Network Rail, Initial Industry Plans 2011: Definition of Proposed CP5 Enhancements, p89. For the bus subsidy see Bus Services after the Spending Review, HC (2010-12) HC 750, paragraph 12.
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11. The Secretary of State said that in the event of an underspend she would “look at the scope for bringing forward projects” but would “not just ... spend money at year-end on projects that I do not think will add value”.17 Her predecessor spoke of “lessons for the Department to learn” following the underspend.18 We also note that the Department’s accounts were qualified by the Comptroller and Auditor General because more income was received from train operating companies than the limit for this set by Parliament.19 This was a technical error but one which suggests that budgetary control at the Department has been slack. Money voted by Parliament for expenditure on transport should be spent on transport, not handed back to the Treasury. We will be watching the Department’s performance in this area carefully to check that the lessons Mr Hammond referred to have been learnt.
Regional spend 12. The debate about how much DfT expenditure is incurred in London compared to the rest of the UK was further stoked by the publication in December 2011 of a report by IPPR North which claimed that 84% of planned new infrastructure spending was aimed at London and the south east, compared to just 6% in northern England. The average spend per head in London works out at £2,731 compared to a miserly £5 per head in north east England.20 IPPR North concluded that this analysis “betray[ed] the government’s ongoing failure to take seriously the importance of spatial rebalancing”.21 This report chimes with the conclusions of research by pteg which found that a total of £774 is spent on transport for every Londoner, compared to less than £300 spending per head in Yorkshire and Humberside, the West Midlands and north east England.22
13. Responding in the House to the IPPR report Norman Baker MP, Parliamentary Under- Secretary of State at the DfT, said the report’s analysis was “not complete; it did not, for example, include the December announcements on local major projects and did not take into account the further £1 billion from the regional growth fund. It is not a complete analysis”.23 He later pointed out that “it can be difficult and misleading to assign spend to a particular region as the benefits of certain projects can be far more widespread” and published a breakdown by region of spending on schemes announced as part of the autumn statement and on local major transport schemes.24 In a welcome move, the DfT also now publishes a regional breakdown of its overall spending in its annual report. According to this, spending in 2009–10 in London and south east England accounted for
17 Q54. 18 Ev w3. 19 2010-11 report and accounts, pp79-81. 20 On the wrong track: an analysis of the autumn statement announcements on transport infrastructure, IPPR North, Dec 11. 21 Ibid., p13. 22 2011 pteg funding gap report (http://www.pteg.net/NR/rdonlyres/DC78CD78-F557-44F5-8014- FF35C279B17C/0/pteg_2011FundingGapreport_20111102.pdf) p2. 23 HC Deb, 12 Jan 12, c318. 24 HC Deb, 31 Jan 12, cc568-71w.
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32% of total identifiable UK expenditure. Spending per head in London was £170 compared to £140 in north east England and £120 in south west England.25
14. There remain concerns that DfT spending, particularly on infrastructure projects, is unduly focused on London and south east England. We acknowledge, however, that calculating how spending is distributed between regions is complex and some projects may well benefit the nation as a whole. We consider that the DfT could do more to ensure that its expenditure plans involve a fair allocation of resources across the nation. We recommend that the DfT’s next annual report and accounts includes a more comprehensive analysis of regional spend, including a fuller explanation of how its figures (which are drawn from National Statistics) are arrived at. In addition, we recommend that major new spending announcements, such as the Spending Review or recent autumn statement, should be accompanied by a comprehensive analysis of their regional impact.
Regional Growth and Growing Places Funds 15. The DfT contributes to two inter-departmental funding schemes announced since the Spending Review.
Regional Growth Fund 16. The Regional Growth Fund is a £1.4 billion fund which operates over three years from 2011 to 2014 and aims to “stimulate private sector investment by providing support for projects that offer significant potential for long term economic growth and the creation of additional sustainable private sector jobs”.26 The fund is administered by the Department for Business, Innovation and Skills: the DfT has contributed £500 million.
17. In November 2010 the then Secretary of State, Mr Hammond, said:27
We have made a sizeable contribution from the transport budget to the regional growth fund, and I will be very disappointed if we don’t get at least our money back, and preferably a lot more, in terms of transport projects.
In October, Lin Homer, the DfT’s then Permanent Secretary struck a different note, arguing that the Fund was “not ring-fenced to absolute proportionality ... the previous Secretary of State did not go into that looking to get his third specifically spent on transport”.28 The DfT subsequently told us that 21 transport schemes and bids had been approved as part of the first and second Regional Growth Fund announcements, and sent us the list.29 What remains unclear is how much Government money will be spent on these schemes.
25 2010-11 Report and Accounts, p44. Also see Ev 33. 26 http://www.bis.gov.uk/policies/economic-development/regional-growth-fund/faq#1. 27 Financial Scrutiny, Q11. 28 Q68. 29 Ev 29-32.
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18. In our view, there are important reasons for the amount of money allocated to the Regional Growth Fund by the DfT to be at least broadly equivalent to the value of the transport schemes the Fund promotes. The principle of parliamentary control over Government spending would be undermined if money which Parliament agreed should be spent on transport was in fact spent on something else. We recommend that the DfT provide us with details of how much it has contributed to the Regional Growth Fund and how that money has been, or is planned to be, used on transport schemes.
Growing Places Fund 19. The Growing Places Fund is a joint initiative of the DfT and the Department for Communities and Local Government. Intended to tackle short term constraints to infrastructure investment, £500 million is available for allocation in 2011–12, from departmental underspends.30 The DfT told us that its contribution to the fund was £125 million and that it was likely to be disbursed to groups of Local Enterprise Partnerships.31 This new fund has the potential to ensure that departmental underspends are used creatively rather than handed back to the Treasury but we are concerned about whether a fair proportion of the fund will be allocated to transport projects. We recommend that the DfT explain how the Growing Places Fund is disbursed and what arrangements are in place to ensure that transport projects benefit in proportion to the DfT’s contribution to the Fund.
30 http://www.communities.gov.uk/documents/regeneration/pdf/2024617.pdf. 31 Ev 29.
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3 Project appraisal
20. How the DfT achieves value for money in its decisions on infrastructure investment was a central theme of our Transport and the Economy report. In reply to that report, the Government drew attention to the five different components of the business case for a transport project.32 We recommended that “more comprehensive information and greater transparency should be provided in the decision-making process so that both the technical basis and ministerial judgements are explicit”, a recommendation that the department did not fully address.33
21. The DfT’s approach to investment in road projects initially demonstrated a rigorous approach to project appraisal. Projects for local major transport schemes were split into different categories to reflect the level of preparedness of their business cases.34 Highways Agency schemes were treated similarly.35 Ministers were able to use the categorisation of projects to explain why some had been funded while others had not.36
22. Focusing on the local major transport schemes, it was announced in February 2011 that 45 schemes were competing for funding on the basis of value for money, deliverability, strategic importance, modal and regional balance, and the proportion of funding from non-DfT sources. The DfT warned that it “did not expect that all these schemes will be funded when final decisions are made in December”.37 However, all of these 45 schemes were given the go ahead in the autumn economic statement, as was a scheme for a Manchester Airport link road which had not been included in the appraisal process.
23. A structured process of a different kind exists for deciding on rail investment schemes. Network Rail puts forward an initial industry plan listing desirable projects to be undertaken in the next five-year planning period; the Government responds with a high level output specification and statement of funds available; Network Rail then publishes a strategic business plan; and the Office of Rail Regulation uses all of this information to decide what Network Rail should deliver and at what cost.38 Preparations for the next planning period, from 2014–19, are well underway. The autumn statement by-passed this process by committing the Government to a number of new rail schemes, including a new railway from Oxford to Bedford and electrification of the North Trans Pennine route. It is not clear whether these schemes are additional to the normal planning process for the 2014–19 period. Steve Gooding of the DfT said he was “hopeful ... that what we are seeing here is going to be a sustained extra” investment but he described the major rail
32 Transport and the Economy, paragraph 43. 33 Ibid., paragraph 95. 34 Investment in Local Major Transport Schemes, DfT, Oct 2010. 35 Investment in Highways Transport Schemes, DfT, Oct 2010. 36 For example, see HC Deb, 2 Dec 10, cc946-48. 37 Investment in Local Major Transport Schemes: Update, DfT, Feb 2011, p8. 38 For more information see Periodic Review 2013: first consultation, Office of Rail Regulation, May 2011, especially table 5.1.
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announcements as “some spending earlier than otherwise would have been the case, rather than ... straightforwardly additional to what would have been the case”.39
24. Asked for the rationale for the new rail schemes, Ms Greening described them as “a blend of schemes that were ready to be implemented now and could be got on with”.40 A similar justification was given for the new road projects: “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”.41
25. We welcome the additional investment in road and rail infrastructure projects announced in the Chancellor’s autumn statement. These have been prioritised because they can proceed quickly and thus help boost economic activity. Nevertheless, we have some concerns about how these schemes have been appraised to ensure they offer sufficient value for money. A project’s readiness to proceed does not necessarily demonstrate that it is the best way of using public money to promote growth.
26. In relation to rail, we recommend that the Government regard the rail schemes announced in the autumn statement as additional to those which the Government will include in its high level output specification (HLOS) for the 2014–19 period. Reducing the scope of the HLOS to take account of these new projects would be counter-productive if the Government’s aim was to increase spending on infrastructure in order to help improve the economic situation.
39 Q115. 40 Qq114, 156. 41 Q100.
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4 Performance reporting
Measuring progress 27. The DfT’s annual report for 2010–11 was a shorter and less glossy document than its immediate predecessors. It contains 10 paragraphs on “measurement of performance and progress” which cover progress against the department’s structural plan, key achievements, and input and impact indicators. These indicators were first published in the department’s business plan. No explanation was given there of the purpose of the input indicators, which are all concerned with the cost of the rail and road networks and bus services. The impact indicators, which include, for example, measures of the reliability of journeys and road safety, were described as being “designed to help the public to judge whether our policies and reforms are having the effect they want”.42
28. The department’s annual report simply restates the input and impact indicators without providing any figures or explanation of what they are intended to show. Figures are provided in a separate business plan quarterly update, although there have been problems in some areas with publishing them.43 The quarterly summary offers no explanation of the figures or of recent trends.
29. The DfT’s 2010–11 annual report gives a very thin account of the department’s performance during the year. In particular, simply listing the department’s key indicators of performance does nothing to help people judge whether the DfT’s policies are effective. The problem starts with the department’s failure to explain what its indicators are for. We recommend that the department rectify this omission in its 2011–12 annual report. In addition, the next annual report should include data for each of the indicators, a brief assessment of trends in the data, and the Government’s view of the preferred direction of travel for each indicator.
Transport security 30. The DfT has for some years published a specific annual report on transport security issues.44 It is the only consolidated source of information on this subject and was originally produced in response to parliamentary pressure.45 This year the DfT announced that “any necessary transport security parliamentary reporting” will be included in the department’s annual report, in order to rationalise reporting requirements.46 We value the annual report on transport security, which is the only consolidated source of information on this important topic. We would be strongly opposed to any diminution in the quantity and quality of information published by the DfT on transport security as a result of its aim to rationalise reporting requirements by merging the transport security annual report with the departmental annual report.
42 Business Plan 2011-15, DfT, Nov 10 p25. 43 Ev 30. 44 The latest being published in November 2011, Cm 8217. 45 Ibid., paragraph 1.16. 46 Ibid., paragraph 1.17.
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5 Conclusion
31. In our report on Transport and the economy we called for the DfT to publish a strategy to explain what the Government aims to achieve by spending money on transport and how its policies support these aims.47 The department dismissed our recommendation, pointing us to the lists of actions in the business plan.48 The business plan is a useful and informative document but it does little more than list transport policies and target dates for implementation. It sits in a strategic vacuum and can easily be overtaken by events. For example, the sudden rash of extra investment in transport projects announced by the Chancellor of the Exchequer was not anticipated in the business plan.
32. New in post, Ms Greening told us that an overall transport strategy would emerge from work on the sustainable framework for aviation, rail reform and the review of the Highways Agency: “You will see the overall strategy emerge over the period that those processes take to come to fruition”.49 She later said:50
I recognise that the development of [a] holistic vision for transport that draws all the various threads together into one space may have some value and will be considering the benefits of such an approach.
Our scrutiny of the DfT’s annual report and the financial information it publishes reinforces our view that an overall strategy for transport is needed. The paucity of information about performance in the annual report is because there is no agreed way of measuring the department’s performance, except to tick off completed actions in the business plan. It might be thought that the various indicators chosen by the department are a way of measuring performance, but the DfT does no more than publish the bare data. It has not explained why the indicators matter or in which direction the Government would like them to go. Answering these questions would go a long way to providing the DfT with a strategy. We were pleased to see that the new Secretary of State saw the force in our argument and is considering the benefits of drawing up an overall strategy. We recommend that the DfT publish an overall strategy for transport, preferably in or alongside the next departmental annual report.
47 Transport and the Economy, paragraphs 42-43. 48 Transport Committee, Transport and the economy: Government response to the Committee’s Third Report of Session 2010-12, Fourth Special Report of 2010-12, HC 962, pp4-5. 49 Q16. 50 Ev 28.
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Conclusions and recommendations
Department for Transport’s expenditure 1. We commend the Department for Transport for simplifying the structure of its Main Estimate and publishing detailed information about spending for the 2005–15 period, which enables us to see more clearly where the department spends money and trends over time. (Paragraph 4)
2. In our view, the DfT does not provide Parliament and the public with adequate information about in-year changes in its budget. Cuts have been announced without an explanation of where they would fall and new spending commitments have been made without proper explanation of how they have been funded. We recommend that when the DfT makes an announcement to Parliament about a change to its budget it should explain the effects of the change on specific budget lines and, where a new spending commitment is involved, an explanation of how the money has been found. If the details have not been finalised at the time of the headline announcement the department should indicate when it will be in a position to provide those details and make a written statement at a later date. (Paragraph 9)
3. We consider that the DfT could do more to ensure that its expenditure plans involve a fair allocation of resources across the nation. We recommend that the DfT’s next annual report and accounts includes a more comprehensive analysis of regional spend, including a fuller explanation of how its figures (which are drawn from National Statistics) are arrived at. In addition, we recommend that major new spending announcements, such as the Spending Review or recent autumn statement, should be accompanied by a comprehensive analysis of their regional impact. (Paragraph 14)
4. We recommend that the DfT provide us with details of how much it has contributed to the Regional Growth Fund and how that money has been, or is planned to be, used on transport schemes. (Paragraph 18)
5. We recommend that the DfT explain how the Growing Places Fund is disbursed and what arrangements are in place to ensure that transport projects benefit in proportion to the DfT’s contribution to the Fund. (Paragraph 19)
Project appraisal 6. We welcome the additional investment in road and rail infrastructure projects announced in the Chancellor’s autumn statement. These have been prioritised because they can proceed quickly and thus help boost economic activity. Nevertheless, we have some concerns about how these schemes have been appraised to ensure they offer sufficient value for money. A project’s readiness to proceed does not necessarily demonstrate that it is the best way of using public money to promote growth. (Paragraph 25)
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7. We recommend that the Government regard the rail schemes announced in the autumn statement as additional to those which the Government will include in its high level output specification (HLOS) for the 2014–19 period. (Paragraph 26)
Performance reporting 8. The DfT’s 2010–11 annual report gives a very thin account of the department’s performance during the year. In particular, simply listing the department’s key indicators of performance does nothing to help people judge whether the DfT’s policies are effective. The problem starts with the department’s failure to explain what its indicators are for. We recommend that the department rectify this omission in its 2011–12 annual report. In addition, the next annual report should include data for each of the indicators, a brief assessment of trends in the data, and the Government’s view of the preferred direction of travel for each indicator. (Paragraph 29)
9. We value the annual report on transport security, which is the only consolidated source of information on this important topic. We would be strongly opposed to any diminution in the quantity and quality of information published by the DfT on transport security as a result of its aim to rationalise reporting requirements by merging the transport security annual report with the departmental annual report. (Paragraph 30)
Conclusion 10. Our scrutiny of the DfT’s annual report and the financial information it publishes reinforces our view that an overall strategy for transport is needed. We recommend that the DfT publish an overall strategy for transport, preferably in or alongside the next departmental annual report. (Paragraph 32)
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Formal Minutes
Tuesday 7 February 2012
Members present:
Mrs Louise Ellman, in the Chair
Jim Dobbin Paul Maynard Mr Tom Harris Graham Stringer Julie Hilling Julian Sturdy Mr John Leech
Draft Report (Counting the cost: financial scrutiny of the Department for Transport 2011–12), proposed by the Chair, brought up and read.
Ordered, That the draft Report be read a second time, paragraph by paragraph.
Paragraphs 1 to 33 read and agreed to.
Summary agreed to.
Resolved, That the Report be the Fifteenth Report of the Committee to the House.
Ordered, That the Chair make the Report to the House.
Ordered, That embargoed copies of the Report be made available, in accordance with the provisions of Standing Order No. 134.
Written evidence was ordered to be reported to the House for printing with the Report.
[Adjourned till Wednesday 22 February at 9.30 am
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Witnesses
Wednesday 19 October 2011 Page
Rt Hon Justine Greening MP, Secretary of State for Transport and Lin Homer, Permanent Secretary, Department for Transport Ev 1
Wednesday 14 December 2011
Rt Hon Justine Greening MP, Secretary of State for Transport and Steve Gooding, Director General, Domestic Transport, Department for Transport Ev 13
List of printed written evidence
1 Letter from the Chair to Rt Hon Justine Greening MP, 26 October 2011 Ev 28 2 Reply from Rt Hon Justine Greening MP to the Chair, 14 November 2011 Ev 28 3 Supplementary evidence from the Department for Transport regarding the Autumn Economic Statement: Transport Ev 32 4 Letter from the Chair to Rt Hon Justine Greening MP, 16 January 2012 Ev 35 5 Reply from Rt Hon Justine Greening MP to the Chair, 3 February 2012 Ev 35
List of additional written evidence
(published in Volume II on the Committee’s website www.parliament.uk/transcom)
1 Letter from the Chair to Rt Hon Philip Hammond MP, 18 January 2011 Ev w1 2 Reply from Rt Hon Philip Hammond MP to the Chair, 22 February 2011 Ev w1 3 Letter from the Department for Transport to the Clerk of Committee, Ev w2 14 February 2011 4 Letter from the Department for Transport to the Clerk of Committee, Ev w2 30 March 2011 5 Letter from the Chair to Rt Hon Philip Hammond MP, 26 April 2011 Ev w2 6 Reply from Rt Hon Philip Hammond MP to the Chair, 21 June 2011 Ev w3 7 Department for Transport Estimate Memorandum: Main Estimate 2011–12 Ev w3 8 Letter from the Chair to Rt Hon Philip Hammond MP, 17 March 2011 Ev w24 9 Reply from Rt Hon Philip Hammond MP to the Chair, 25 March 2011 Ev w24 10 Letter from the Chair to the Office of Rail Regulation, 17 March 2011 Ev w24 11 Reply from the Office of Rail Regulation to the Chair, 28 March 2011 Ev w24
20
List of Reports from the Committee during the current Parliament
The reference number of the Government’s response to each Report is printed in brackets after the HC printing number.
Session 2010–12 Fifteenth Report Counting the cost: financial scrutiny of the HC 1560 Department for Transport 2011–12 Fourteenth Report Cable theft on the Railway HC 1609 Thirteenth Report Draft Civil Aviation Bill: Pre-Legislative Scrutiny HC 1694 Twelfth Report Cost of motor insurance: follow up HC 1451 Eleventh Report Thameslink rolling stock procurement HC 1453 Tenth Report High Speed Rail HC 1185-I (HC 1754) Ninth Report Out of the jam: reducing congestion on our roads HC 872 (HC 1661) Eighth Report Bus Services after the Spending Review HC 750 (HC 1550) Seventh Report Taxis and private hire vehicles: the road to reform HC 720 (HC 1507) Sixth Report The Coastguard, Emergency Towing Vessels and the HC 948, incorporating Maritime Incident Response Group HC 752-i (HC 1482) Fifth Report Keeping the UK moving: The impact on transport of HC 794 (HC 1467) the winter weather in December 2010 Fourth Report The cost of motor insurance HC 591 (HC 1466) Third Report Transport and the economy HC 473 (HC 962) Second Report Financial Scrutiny of the Department for Transport HC 683 First Report Drink and drug driving law HC 460 (Cm 8050) Tenth Special Report The proposal for a National Policy Statement on HC 1598 Ports: Government Response to the Committee Fifth Report of Session 2009–10 Third Special Report The performance of the Department for Transport: HC 549 Government response to the Committee’s Fourth Report of Session 2009–10 Second Special Report Update on the London Underground and the public- HC 467 private (PPP) partnership agreements: Government response to the Committee’s Seventh Report of Session 2009–10 First Special Report The major road network: Government response to HC 421 the Committee’s Eighth Report of Session 2009–10
Transport Committee: Evidence Ev 1
Oral evidence
Taken before the Transport Committee on Wednesday 19 October 2011
Members present: Mrs Louise Ellman (Chair)
Jim Dobbin Paul Maynard Julie Hilling Iain Stewart Kwasi Kwarteng Graham Stringer Mr John Leech 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. green agenda, which perhaps has a slightly longer- Welcome to the Transport Select Committee and term aspect to it but is important. There are many congratulations on your appointment. I am glad that aspects of the transport agenda to which I know I have we have this early opportunity to discuss with you a not referred, but I am sure we can come on to those. number of very important issues. We appreciate that you have taken up office within a very short time, but Q3 Chair: There are a number of very important and we are glad to have this early opportunity. perhaps controversial issues in which the Committee Justine Greening: I think you got the first possible is already engaged, and it would help us to have an Wednesday, so it could not have been sooner than this. indication of your position on some of them. The Committee has been looking at the award of the Q2 Chair: Maybe we knew something. I understand Thameslink contract to Siemens as the preferred status that you would like to make a statement to us before bidder rather than Bombardier. We questioned your we pursue any questions. predecessor on this. He said that he did not intend to Justine Greening: I thought I would broadly set out change the contract but was looking at developing my initial thoughts two and a half days into the role. further work with other franchises and producing I know how important the Select Committee will be more possible work for Bombardier. We also raised going forward in its role in informing me as Secretary with him the question of the assessment of credit rating. That was one of the issues Bombardier raised of State about what it sees as its priorities and the key with us as a possible reason why they were not issues in transport. Needless to say, I am going to put awarded that contract. One of the related issues was a huge amount of effort into this role and will take the the implication of the award of that contract to care that I think I need to in an incredibly important Siemens, if that should be confirmed, for the possible policy area. But, as you say, it is early days and I will tender and award of the contract on the Crossrail do my best to answer some of your questions. project. Yesterday I received an answer to a written I come into this role as somebody who uses public parliamentary question that I put to your Minister of transport an awful lot. For many people up and down State. He said that in relation to the procurement of our country, whether they have a good or bad day is Crossrail rolling stock “it is unlikely that the often very much coloured by their journey to and from underlying parent company credit ratings will be work. I am very conscious of that. If I had to sum up specifically scored”. That was not the situation for the how I see my role, it is about keeping people on the award of preferred bidder status on the Thameslink move—by working with key stakeholders like the contract. Does this mean that there has been a change devolved authorities and TfL—not just today but of policy? tomorrow and in 10, 20 and 30 years’ time, and taking Justine Greening: You are right to flag up that a decisions to make sure that can happen. number of issues arose from that tender process which Also, it is absolutely critical that the Department for saw Bombardier lose out to Siemens. I have already Transport plays its role in being a driver of economic had a chance to speak with André Navarri, head of growth. In the near term we also have some important Bombardier, to talk through his perspective on this. I decisions to take about our transport infrastructure, will be meeting him shortly. We have agreed that we about which I am sure you will ask me. We have the will meet face to face as a matter of urgency. One of Olympics on the near horizon, and one of my key the lessons that we learned instantly as a Government priorities is to make sure I work with the Mayor on was that there was a real question about whether the that issue. I also realise that we have an important UK plc strategic need was properly part of that agenda on rail reform, looking at franchising and procurement process. As you will be aware, since that making sure we get investment in the industry. With announcement, BIS has very much led the way in winter approaching, there is also a clear resilience looking at how we can improve procurement agenda for me in the short term. Finally, there is the processes generally, and we will be making some Ev 2 Transport Committee: Evidence
19 October 2011 Rt Hon Justine Greening MP and Lin Homer announcements shortly on the outcome of that work. divide in the longer term but in the shorter term by We have made good progress and, to the extent it is the work and jobs that will be created as part of it, able to, I would like to see that feed into the invitation which will be substantial. Phase one alone will lead to tender on the Crossrail work that will be coming to approximately 40,000 jobs. out early next year. I would like to take this opportunity to emphasise that You are right to point out that that is a decision in the I recognise how important a decision this is. We have past; it is done and we have to move on. The just finished the first consultation. I recognise that on alternative would be a two-year delay. As part of the both sides there have been some big debates on this. Thameslink work, 3,000 infrastructure jobs will be I have just set out that this Government, like the last created, a significant number of which will be with one, see the huge potential in having a better high SMEs. It is important to get on with that, but you are speed rail network for our country. I also recognise right to point out that we can improve the procurement that there are some concerns in local communities and process going forward. As you pointed out, there is I want to take this opportunity to reassure them that I also the issue of making sure we are clear with will take great care in how I look at this decision over companies, including Bombardier, about the the coming weeks and months. opportunities on the near horizon for bids of which they can be part, if they choose to. Q7 Chair: Would you describe yourself as an enthusiast for High Speed 2? Q4 Chair: As to the current status, what does that Justine Greening: The way I will approach this will mean? Are you going to look again at the award of not be an emotional one; it will be a rational, sensible the contract? approach that looks at the facts and business case, but Justine Greening: No, we are not going to. also takes note of some of the concerns of local communities. I do not want to have words put in my Q5 Chair: Are you looking to modify the Voyager mouth. We as a Government, like the last one, have trains, which your predecessor told us was being been very clear that we think high speed rail can have considered? a really important role to play in our future rail Justine Greening: We are looking at that. I would like infrastructure. We are going through a process of to think that any of the future tendering processes in assessing exactly how that can work, and I will look at which we engage would be able to reflect any changes the responses to those consultations. The consultations in the strategic procurement process on which BIS has have been many and varied, and I will weigh up all been leading the work. We have made good progress of that evidence as I reach my conclusions. on that, and we will be setting out more clearly over the coming months exactly what impact that will have Q8 Chair: The third thing I want to raise at this stage on the contracting process going forward. I would is related to aviation. It has been suggested by critics expect that to be reflected in the way the DfT, that perhaps you are compromised because in the past alongside other Departments, works. You are right you have made very strong statements disputing the that, in the context of these near-term contracts on significance and importance of Heathrow as a hub the horizon which potentially will go through the new airport. What would you say to the people who put process, we have the e-Voyager proposal, which will that to me? be an Aviva project; the Crossrail proposal, which will Justine Greening: I would counter your question. I be going out to invitation to tender early next year; am well known for saying that I thought the third and the potential order for new trains by Southern runway was a very bad idea, and that is Government Trains. There are key contracts quite close on the policy. It would be far more controversial if I was horizon that, hopefully, will be positively affected by sitting here as a new Secretary of State fundamentally the review we have put in place. at odds with Government policy on Heathrow. I am fundamentally at one with Government policy. We are Q6 Chair: What is your position on High Speed 2 just at the close of the very first important step which we are currently inquiring into? Your towards developing our aviation strategy and the predecessor was strongly in favour of High Speed 2. consultation on that will come out next year. As with What is your view? high speed rail, I will look very carefully at the quite Justine Greening: We need to make sure we can build wide and varied response to what is in that scoping our economy on the back of the rail infrastructure in document. which we invest. If we look at the existing infrastructure, for example, passenger numbers over Q9 Kwasi Kwarteng: Aviation is a big concern the next three decades are predicted to double for both nationally in terms of trying to get the economy the East Coast and Midland main lines. There is a growing. I believe that the Government have ruled out question about how you meet that demand. One looks the construction of additional runways at Heathrow, at the benefits that high speed rail has brought to other Gatwick and Stansted. I know you are new to your European countries. When we travel to countries like role and I congratulate you on your promotion, but France, I am sure most of us have had the chance to what are the Department’s plans, if any, to extend use the TGV; I certainly have. It is impossible not to aviation capacity in this country? see the benefits that those projects can bring. We are Justine Greening: The whole point of the scoping absolutely right now formally to look at the benefits document, which will be reflected on to generate a that High Speed 2 can potentially bring to our draft aviation framework policy document next economy, not just by helping to bridge the north-south spring, is to assess how we make sure that over the Transport Committee: Evidence Ev 3
19 October 2011 Rt Hon Justine Greening MP and Lin Homer coming decades we have a competitive and successful happen at such a strategic level. You are right that a aviation sector, but also one that meets the key component of High Speed 2 is this modal shift environmental needs of our country and is achieved discussion, but alongside it is the question of how it in a sustainable way. In a nutshell, that is what we are sits alongside rail reform, the investment going into trying to achieve. You are right that we have been that and the planned review of rail over the coming very clear about whether or not we will have extra year. These have clear cross-overs of which we need runways at Heathrow, Stansted and Gatwick—we to be conscious. I am certainly aware of that. In my have said that we will not—but after that we want to initial meetings with officials they are clearly aware make sure we have an aviation policy that is able to of that, and we will take it into consideration carefully meet the demands of our economy. as we develop all of these policy areas. One thing we should not forget is that there are a lot of regional airports which play an important role for Q14 Iain Stewart: But are you comfortable that the the communities they serve and their local economies time scale of the decision you will make on High in particular. I see that as a very important part of the Speed 2, which I presume has not changed from your future debate we will be having about the aviation predecessor, is in the correct sequence in order to look sector as a whole. I recognise the importance of at aviation in the new year? You do not want to close Heathrow. That was why I slightly countered what the down any options prematurely. Chair said, because I do not think I have ever disputed Justine Greening: I think it is, broadly, the right that Heathrow is an important airport. The debate that sequence. My predecessor Philip Hammond was very we had was about the right way for it to develop. careful to make sure that that sequencing made sense. We have the right sequencing, but you are right to flag Q10 Kwasi Kwarteng: You have given a very good up that those policies are interlinked. One of the key general answer. You come to the Department as an challenges is connectivity, being conscious of whole MP known for your opposition to the third runway, journeys and the fact that, for example, sometimes I which then became Government policy. You have a take a No. 37 bus to Clapham Junction, get the seat in London and understand the needs of London. overland to Waterloo and then take the Jubilee line What do you think about the Mayor of London’s here. That is important. We have to have that slightly suggestion of an island airport? That is an answer to higher level view at times to see overall connectivity. aviation capacity. What is your feeling about that particular policy? Justine Greening: I do not think it would be right for Q15 Iain Stewart: It was reported recently in the me, having been in this role for literally two and a press that the Heathwick rail link is an option that is half days, to make major pronouncements— being considered. Is that part of DfT policy, or is it someone else flying a kite? Q11 Kwasi Kwarteng: But you have been part of Justine Greening: One of the great things about the debate. transport is that, inevitably, you have to get very Justine Greening:—on aviation that would be a key broad-based and creative thinking. As to the debate part of a future aviation strategy, because it would be about London’s airports and how you can make a so big. I do not think that is sensible or right, given virtual hub work better, that is one option that I know that we have a structured process to follow. The has been flagged up. It is absolutely right for us to Mayor put in his response last Monday, so it is hot off consider a number of different proposals that people the press. have flagged up as part of this process.
Q12 Kwasi Kwarteng: But you are a London MP Q16 Chair: Does your answer to Mr Stewart’s and you follow this. question mean that we should expect a Government Justine Greening: We will look at the suggestion he statement on transport strategy? This Committee has has made. I have already had a very brief, initial called for a White Paper on transport strategy that general discussion on transport with the Mayor, and I looks at all modes of transport. am very much looking forward to working with him Justine Greening: To all intents and purposes, that is on how, together, we can meet London’s important what you will end up with by the time we have transport needs over the coming few years. developed the aviation framework and the rail reform that is planned. There is also the work being Q13 Iain Stewart: You talked initially about high undertaken by Alan Cook to look at the Highways speed rail and aviation. I appreciate that you have Agency and how that might be developed over the been in the job for a maximum of 72 hours, but what next few years. You have already seen our initial is your initial impression about whether the announcements about the 14 road infrastructure Department will be looking at an aviation strategy in investments that we are going to make. Another conjunction with other strategic projects like high tranche will come out in the following spending speed rail and there will not be almost a silo decision review period. You will see the overall strategy on each one, given the need to look at the strategic emerge over the period that those processes take to network in the round? come to fruition. Justine Greening: That is a very good point, and that is precisely why the worst thing I could do, having Q17 Chair: But it will not be a statement about what been in this role for just a couple of days, would be the strategy is against which we can assess the to make grand pronouncements about what should individual announcements. Ev 4 Transport Committee: Evidence
19 October 2011 Rt Hon Justine Greening MP and Lin Homer
Justine Greening: I am probably too new to the job is a huge opportunity to reduce costs in the industry to say whether I would want to sum it all up. In a very significantly by 30%. short, snappy sentence I tried to tell you how I viewed A couple of days ago I had the chance to meet the the overall vision and strategy. That is the other slight Rail Delivery Group. Another of his key problem I have with your “strategy” question. The recommendations was that the industry had to take question is how you define it, but, in response to Iain responsibility in reducing its own cost base. I had a and, indeed, you, Chair, I want to make sure that, very good meeting with the Rail Delivery Group. having done the work on the modal strategy over the They are looking at a number of work streams that coming year and a half or so, as a totality it will challenge the way they work, both by working more make sense. collaboratively and reducing their own costs and making sure that technology works better for them to Q18 Graham Stringer: I congratulate you on your reduce costs. Combined with the work we can do to new job. I want to ask some general questions; I improve the effectiveness of franchising and look at would not expect you to answer detailed ones. You fares and ticketing, those are the key planks which mentioned in your introduction that you were looking mean we can get away from the fact that the necessary at green policies. We are all in favour of sustainable outcome of a successful rail strategy to get people on transport. Can you give the Committee your definition to the railway is a huge and growing cost to the of “sustainable”? taxpayer. That is one of the key things I would like to Justine Greening: It means that transport is playing change, because it is the right thing to do for its role in ensuring that for us as a nation we meet our passengers but also right for the taxpayer. climate change targets. We see sectors like aviation coming within the emissions trading scheme for the Q20 Graham Stringer: Apart from Portugal, we first time next year, and that is good. There is a have the lowest motorway density in all the countries European agenda that helps to drive this area, but of what used to be known as western Europe. Are you there is also an important domestic agenda. We have satisfied that our motorway network is complete, or £400 million or £500 million invested in things like do you think the country suffers economically because the Local Sustainable Transport Fund. If you look not it has fewer motorways than elsewhere and therefore just at the Department for Transport but the Treasury, less connectivity, to use your word? I can give you where I was recently, the Government have put in examples if you like. Are you satisfied that the place a number of different policies—and continued motorway network is complete? some of the previous Government’s policies—to try Justine Greening: It is probably too early in my role to stimulate the shift to greener transport. Looking at to give you a full answer to that question. Investment electric cars, as many have been sold in the first six in the road network is absolutely vital, which is why months of this year as were sold in the whole of last we have already announced 14 initial projects that we year. The problem is that we are starting from a very want to get cracking on. I will be making sure that I low base. It is on my agenda to see what we can do hold the Department’s feet to the fire on those projects to pursue that green transport agenda effectively. so they are delivered on time and budget. I am well When we talk about railways and high speed rail, they aware of how important those projects are to the are lower carbon than, for example, road in terms of economic prospects of the communities they serve. per passenger mile. Congestion can be a huge drain on economic growth. Therefore, that investment is incredibly important. If Q19 Graham Stringer: To take the big headline you look overall at the capital investment this issues, when the railways were privatised the then Government are making, it is £2 billion higher than Government said they expected them to be at zero had been pencilled in by the previous one. We have cost. Roughly, they cost about £3.5 billion at the picked up a very challenging financial situation, but moment—they have cost more in some years—and we have always been very clear that we will have to that is at a time when they carry record numbers of put investment into our infrastructure, and— passengers. Do you see it as part of your job as critically—into transport infrastructure, to give Secretary of State to reduce and reallocate that ourselves that real driver of economic growth, both in subsidy? Standing back and looking at the expenditure the short term but also the longer term to make sure over the last 20 years, it does not look reasonable, we keep our country competitive. does it? Justine Greening: I want to see a successful, Q21 Graham Stringer: The report of the National sustainable railway industry. The underlying problem Audit Office provides nice bubbles and balloons about is that at the moment it is subsidised. The per how much is spent where and on what. Two little passenger mile subsidy is just over 8p; in other words, circles next to each other show the amount spent on the more successful we have been in getting people transport in London and in the rest of England. From to travel on railways—we have had record passenger memory, the ratio as between London and the rest of numbers—the more it has become a drain on the the country is about three to two. Do you think it is a public purse. We need to look at how we can change fair balance that London gets so much more spent on that and get off that hook. That is happening in two transport per capita than the whole of the rest of ways. We have taken some very difficult decisions on England? fares, but, if you look at what Sir Roy McNulty Justine Greening: If you do not mind me saying, I identified in his report, he was very clear that there do not think you can put it in such simplistic terms. Transport Committee: Evidence Ev 5
19 October 2011 Rt Hon Justine Greening MP and Lin Homer
Q22 Graham Stringer: It is a very direct term, is it policy yet, but I can assure you I will get immersed, not? “How much you are spending where” is simple. reflect on it and respond to what you have just said. Justine Greening: It is not. If I take a train from Manchester to London, and we have put investment Q26 Mr Leech: If I may throw another hand grenade into that line, or I drive along the A11, once it has while I am at it, at the moment there is also been dualled, going from A to B, who benefits most? consideration being given to changes to the MoT structure. Currently, we have a three-year and then Q23 Graham Stringer: I am talking about local every-year approach, and consideration is being given transport schemes. The subsidies to the rail and to the possibility of changing that to four years and motorway networks will come out of different then every year, or four years and then every two pockets, unless they are in a different balloon. We are years. This was considered and ruled out by the talking about local transport schemes and how much previous Government because there was significant more is spent in London. I ask it in the most evidence that the number of road deaths would generalised form because you are new to the job. I increase if changes were made to the MoT structure. just want an idea of whether you think that is fair, as If that evidence is still apparent, can we be assured my kids say. that the Department will not go ahead with changes if Justine Greening: I understand the importance of the there is any chance that the number of road deaths issue you raise. We have a process within the DfT by would increase as a result? which we look at individual decisions so that we can Justine Greening: We have a consultation process in have a portfolio approach. We look at cost-benefit relation to that potential policy change. We have seen ratios and that does not change by region, but we have good progress on road safety in our country’s roads to take an overview on this. I will take a pragmatic over the years, and that is something I want to overview on where I think the priorities lie. London continue. Again, this is one of the areas in which is critical for us as our capital. It is incredibly perhaps I have not yet had the chance to get fully immersed. I think we are approaching it in the right important we have investment going into things like way, in that there is consultation that gives people the the tube upgrade and Crossrail to make sure it is chance to flag up their concerns and provides the sort successful. But I am conscious that we have to make of inputs in terms of data that you flag up, and I shall sure we truly have a United Kingdom transport-wise look at those very carefully. 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 Q27 Mr Leech: My final question is less of a hand that some MPs from northern communities could see grenade. One of the good things the coalition the real benefits of their communities being connected Government have done is to maintain capital to London, and perhaps from Manchester to Leeds, in investment in the railways despite significant budget a way they had not been before. As somebody who restraints across the board. Can we be assured that grew up just outside Sheffield, I could understand under you as Secretary of State we will continue the those arguments. You are right to flag up that we need approach of maintaining a high level of capital a balanced approach, and I will make sure that investment in public transport, which is vital in terms happens. of creating growth and keeping people in jobs? Justine Greening: You will know that we have our Q24 Mr Leech: Secretary of State, I congratulate spending review settlement. As you point out, it you on your appointment. I apologise for missing your provides one of the largest amounts of investment opening statement, but I was attending a briefing by going into our transport infrastructure that we have BALPA in relation to the EU flight time limitations. seen in a very long time. I cannot prejudge what will This is quite an important issue in terms of aviation happen in the next spending review, but I will want to safety. I was shocked to hear from the study they had make sure that we have the right amount of done that over 30% of pilots have woken up to find investment so that we stay competitive and we have a that their co-pilots are also asleep, or that they had transport infrastructure that can cope with the capacity been asleep at the same time, yet the Government that is needed. I can also assure you, putting my have said that as long as the CAA are happy with accountant hat back on, that I shall be looking to get the flight time limitations they will sign up to the EU absolute value for money out of the budget available proposal. I seek reassurance from you that as the new to me. Secretary of State you will take a very close look at this to ensure that we are maintaining aviation safety. Q28 Kwasi Kwarteng: I appreciate that some of my Justine Greening: I can assure you that aviation colleagues have asked very specific questions on safety is critically important. I have not yet had the which, being new to the job, you need to be perhaps chance to have a briefing on this, but I will ensure that better briefed. You mentioned that you were an I am briefed on it and will take a very close look at it. accountant and you were at the Treasury— Justine Greening: Nobody is perfect. Q25 Mr Leech: I am aware that the CAA have some minor concerns but certainly not the major ones that Q29 Kwasi Kwarteng: Given that, you should BALPA do. I would certainly hope you could take that perhaps have a view on the status of Network Rail’s on board. debt and the structure of Network Rail. I remember Justine Greening: That is helpful feedback. I am not that when last year your predecessor came to this fully immersed in that particular part of aviation Committee, he said he did not take a theological view Ev 6 Transport Committee: Evidence
19 October 2011 Rt Hon Justine Greening MP and Lin Homer about the status of this debt. What is your view on Q35 Paul Maynard: Welcome to your new role. that? Further, do you have any wider thoughts about Perhaps we may draw the conversation back to the the structure of Network Rail? slightly bigger picture, although you are new to your Justine Greening: They are important questions, and role. Your predecessor would almost invariably use I would probably echo what Philip Hammond said. I the phrase “de-carbonisation agenda”. I note that have to say that it is a privilege to take over from already you have used the phrase “the green agenda”. Philip, who did an outstanding job, and I will probably Do you consider those to be two sides of the same take his approach. But part of the reason we need to coin, or do they have slightly different meanings in look at railway reform is to consider the best way to your view? structure the industry. I am looking forward to having Justine Greening: Maybe I did not choose my words further discussions with Network Rail. They were at carefully enough, but, if you ask me to say what are the meeting I chaired with Tim O’Toole on Tuesday the differences between “green” and “de- evening, and I am sure that I will be a frequent visitor carbonisation”, I think the latter is a strand of the over the coming months and years. overall green agenda. Q36 Paul Maynard: Without trying to entrap you Q30 Kwasi Kwarteng: You were a Treasury further, you have frequently used the phrase Minister for nearly 18 months and now you have this “sustainable aviation”. Would you accept that to many job. Do you have a view about the balance sheet of people one common definition is that it would involve Network Rail and whether it should be on or off the a degree of demand management and constraint? Do Government balance sheet? you accept that that terminology has that meaning to Justine Greening: I do not think it is for me to have many people? a view; that is something on which the Comptroller Justine Greening: I do not necessarily agree with and Auditor General and the National Audit Office that. Whether you are talking about noise, carbon reach a conclusion. Their conclusion is that the way emissions or the broader environmental impact in in which Network Rail operates, which effectively is terms of air pollution, aviation, like any other sector, independently, means that it is off balance sheet. has to be approached in a sustainable way. When you look at the low-carbon agenda, there is an obvious and Q31 Kwasi Kwarteng: Do you think as an particular imperative about delivering on it, but, more accountant that is a good thing? broadly, for me as an MP the general aspect of quality Justine Greening: Yes. I do not think it is up to me of life is incredibly important. That is where transport to disagree with the Comptroller and Auditor General. needs to play a role, ideally, in helping to enhance it. It is up to them to reach their decision on the accounting treatment and, in the light of what is in or Q37 Paul Maynard: Even if that began to constrain out, for us to manage the public finances. economic growth by failing to deliver sufficient airport capacity. Q32 Kwasi Kwarteng: Are you indifferent about the Justine Greening: You are jumping to a hypothesis accounting treatment? on an aviation strategy that we have a very structured Justine Greening: It is what it is. process to deliver. I am certainly not going to sit here today and make some pronouncements that box in where we will end up. Q33 Chair: The point of this is that its status has implications for the way in which it is run and whether Q38 Julian Sturdy: I also add my congratulations, the Government may or may not seek to influence it, Secretary of State, on your new appointment. The so it is relevant to transport policy. predict and provide strategy has been used by the Justine Greening: It is relevant; it is something that Government to drive up rail investment, which I fully will necessarily be covered by the rail review. It is a support, and it is working very well. Why do you feel decision outside my sphere. There are clearly some that predict and provide as a strategy is not being put important implications in how it is treated, but into aviation, or even into roads as well? Is that ultimately it is not for me to say whether I think the something that potentially needs looking at? decision on the treatment is right or wrong. Justine Greening: I am sure Lin Homer will jump in instantly if I am wrong, but the Civil Aviation Q34 Kwasi Kwarteng: To restate the question, Authority’s long-standing remit has been to predict pretend that you are not the Secretary of State, or even and provide. Interestingly, if you go back to rail, Sir a politician, but an accountant. What would be your Roy McNulty felt we needed to go from predict and view about this entity and the treatment of its debt? provide to predict, manage and provide in relation to Justine Greening: I will tell you one thing: no the rail industry, which I thought was an interesting accountant would give you a snap view. They would observation. That would be my response to the take a very long process of due diligence before question. reaching any kind of view. You can keep pushing, but we have the thinking to do to launch the rail review. Q39 Julian Sturdy: I will have to double-check this, I think that is the most important piece of work I will but I believe the previous Secretary of State said that be looking at in that area. predict and provide was not being used in aviation Chair: The issue is how the railway should be strategy, but again that is probably something that structured and no doubt we will return to that. needs looking into. Transport Committee: Evidence Ev 7
19 October 2011 Rt Hon Justine Greening MP and Lin Homer
Justine Greening: Yes. Obviously, my comments starts to get to cities like Manchester and Leeds. You refer to what has been a long-standing remit of the look at connectivity between places like Nottingham Civil Aviation Authority as distinct from a and Leeds. I think I am right in saying that it takes Government strategy on aviation. you nearly two hours to get between the two by train, even though they are only 70 miles apart. I recognise Q40 Julian Sturdy: Following Mr Maynard’s that, compared with London and important economic question, in your opening statement you referred to areas well connected to it, like Milton Keynes and the importance of transport as a driver for economic Reading, connectivity can be improved by something growth. I fully agree with you on that. It is vitally like high speed rail for those particular communities. important to the country as a driver for economic I think there is a question about making sure we look growth. You also mentioned the green or de- at connectivity in advance of that, too, and ensuring carbonisation agenda. Whichever way we want to there is capacity on the lines that serve those phrase it, they both cover the same issues. Do you feel communities. we will get to a point where there will be a conflict between those two? Q44 Jim Dobbin: I listened to what you said about Justine Greening: I do not think that is necessarily subsidies and particularly public subsidies. It is the case. It is an interesting question. Probably I have apparent that on the continent there is quite substantial not been in this role long enough to answer it in as subsidy in the railways. Do you think there is a need structured a way as I would like, but I do not think it for the Government to put investment by the public is necessarily the case. A few months ago I went to purse higher up the agenda? see Ford’s key research centre in Essex. It was very Justine Greening: I reiterate what I said before, interesting to look at some of the technology they are which is that you have to look at the underlying developing. That could see people in high- reasons why that subsidy is required. The rail review performance cars that are far cheaper to run than is a key mechanism by which we can look at the petrol-driven cars and will create the next wave of different aspects of it. Part of it is the cost base. jobs in the car industry, which, despite the tough Speaking as somebody who has spent 15 years in economic conditions, has been doing very well over industry, to say that a cost base could be 30% lower the last few years. I do not necessarily see a conflict, is a significant statement. The meeting that I had on but I can probably give you a better answer to that in Tuesday night was very encouraging because the a few weeks’ or months’ time. industry is looking at six different work streams by which it can challenge itself to deliver a lower-cost Q41 Jim Dobbin: Congratulations on your service, be that by a train-operating company or appointment, Secretary of State. It must be great Network Rail,. We know from the exhaustive work coming along and getting congratulated by everybody. done by Sir Roy McNulty that this is possible. Part of Justine Greening: You can imagine that I thought, my job is to work with the industry, look at some of “Brilliant”, when I was told on Saturday afternoon. the questions about how it is structured and how fares work, and to get to a point where that subsidy is not Q42 Jim Dobbin: Yesterday, the Manchester needed any more. That is the process that I would Chamber of Commerce was up and they were talking like to go through. I do not believe you can get there to Greater Manchester MPs. I should point out that overnight, but when I say we need to make sure the there are about six on this Committee, so there is an railways move on to a sustainable footing it must also inbuilt bias here. It was basically about the national be a sustainable financial footing. economy and the north-south divide, which is quite apparent in the cost of housing. Q45 Jim Dobbin: My view, if you want to hear it— Justine Greening: I am sorry; I missed the first bit. Justine Greening: I always want to ask people what they think and I get told off when I do so. Q43 Jim Dobbin: I was talking about the north-south divide, which is apparent. You can measure that Q46 Jim Dobbin: My view is that you will never get through the cost of housing in the south and the north. to a stage where transport that people use will not be They were looking at transport, which came up subsidised. That is my own personal view. because it is a very important aspect of the economy. Justine Greening: But we can aim towards that. Of course, the transport links were talked about. They were stressing that there is a need to see if we can Q47 Jim Dobbin: We are surrounded by motorways speed up through a high speed line from wherever to and distribution parks, with heavy goods vehicles the midlands and right up to Greater Manchester. trundling along, so getting them on to rail is bit of a There are also the east-west links, for example, hobbyhorse of mine. I remember asking a previous Liverpool to Hull, which goes through a number of Secretary of State for Transport what the cities. Will that be really high on your agenda, because Government’s policy was on that. I was immediately it is very important for us and our communities? summoned by the heavy goods vehicle organisations Justine Greening: You raise a really good point. We in my patch to ask me what I was playing at. There is had a few questions about high speed rail right at the that tension, interest and pressure coming from beginning. Although I realise it has been a organisations. How would you deal with it? controversial subject, there are some key potential Justine Greening: The key is to make sure that benefits in bridging the north-south divide. Phase one, companies have choice and that, whichever choice which is key, goes to Birmingham, but phase two they make, it is a form of transport that is of high Ev 8 Transport Committee: Evidence
19 October 2011 Rt Hon Justine Greening MP and Lin Homer quality. Hauliers need to be able to go on motorways Justine Greening: We will get to that via the that do not become snarled up and congested. We consultation that is to take place. The general point is want to have the option for freight to go on rail. We that the 70 mph speed limit has been in place for a have seen a dramatic increase in the amount of freight long time. A lot has changed in terms of road going on rail, but it is also one of the reasons we need management, vehicle safety and vehicle technology to look at things like high speed rail. Only last week and it is quite right to look at whether it is appropriate I was on a train that was slightly delayed because we to raise that. We spend an awful lot of time talking were behind a freight train which did not go as fast. about congestion, but it is important to say that we Clearly, on that track you cannot overtake. Such have motorways so let’s make sure people can travel questions are quite important for us to reach a more from A to B along them as fast as possible. If we have strategic view on, but ultimately people and a consultation that says maybe we could do that by businesses have to have choice, and it is part of my increasing the speed limit, to my mind that is a role to make sure that the business choices they make sensible question to ask. We will wait and see what are ones that can be fulfilled and we do not have a comes out of that consultation, and I will take a very transport system that lets them down. careful look at it.
Q48 Chair: Your predecessor told us that he thought Q51 Graham Stringer: You mentioned previously the railways were already a rich man’s toy relatively. that our safety record in this country is good, and it If you want to move to a situation without any has improved massively over the last 20 or 30 years. subsidy, do you not think we will make that worse? Part of that has been successful drink driving Justine Greening: I do not think it is in anybody’s campaigns, particularly at Christmas but at other times interest to have a railway industry that needs such a as well. Have you had time to think about your large subsidy from the public purse in the long term. approach to drink driving campaigns this Christmas? There are a number of reasons why that is not a good Do you believe there should be more or less of it? idea. If you are looking at the DfT budget, I would Justine Greening: For this Christmas the Department has an agreed approach. It is not one on which I have much rather have that funding freed to be able to put been briefed in detail as yet, but I recognise just how into other projects potentially, but also for passengers important it is. As you say, we have made a lot of and the rail industry it does not have to be at the progress on road safety over the years and I want to current level. There is a huge evidence base to say ensure that that continues. that we can make substantial progress on this over the coming years. We also have to accept that passengers, Q52 Graham Stringer: There have been huge who are the people who very much benefit from this, battles up and down the country in many of our major will also have to pay part of that. That sits alongside cities about whether or not there should be investment the fact that the taxpayer and industry are paying part in trams. Do you see a future for investment in tram of that investment, but the long-term challenge is to systems in our cities? Do you like trams? Are they a deliver on the sorts of issues Sir Roy McNulty good part of the urban transport infrastructure? identified, which will mean that pressure on fares is Justine Greening: I do not think that I will ever be a lessened because you are making progress on reducing purist on modes of transport. Such decisions are costs overall in the industry. probably best dealt with by local authorities working with local businesses looking at local needs. I would Q49 Graham Stringer: I have a few questions on like to ensure that we have an approach to transport motorists. You talked about green issues previously. that enables such proposals, if they are good ones, to The fuel duty escalator and VAT on fuel are really a come forward. Alongside that, we are developing a green tax. It is also regressive and the road haulage transport strategy in which local authorities have industry hate it; they believe that it puts this country’s flexibility on financing and can find different ways to road haulage business at a disadvantage to continental fund local projects. Many local communities want Europe. Do you have any views on the future of the that. Personally, I do not have a particular view on fuel duty escalator and how you would deal with that trams, but if people think they are a good thing for competitive imbalance? their local area then absolutely. Justine Greening: As you may be aware, we have scrapped it and we are to replace it with a fair fuel Q53 Julie Hilling: I join in the congratulations on stabiliser. During my time in the Treasury we worked your appointment and also say how good it is to see very hard on the underlying default plan we inherited. a woman in that position. Maybe it will give a lead That was an escalator which, if we had not done for the rest of the industry, which seems to be anything, would have meant a fuel duty 6p higher than somewhat male-dominated. it is today. We worked very hard to come up with a Justine Greening: There is a slow but steady agenda way to make sure that we could get rid of that creep which I think is very positive. escalator. I know that Mike Penning, the Roads Minister, works very closely with the road haulage Q54 Julie Hilling: We are getting there. I was really industry so that in other ways we can ensure it is able alarmed to see the underspend in the Department’s to be competitive. 2010–11 budget, with over £500 million being given back to the Treasury. I am not going to ask you any Q50 Graham Stringer: Do you have a view on the details about that, but, with your background in the 80 mph speed limit discussion? Treasury, will you make sure that you spend all of the Transport Committee: Evidence Ev 9
19 October 2011 Rt Hon Justine Greening MP and Lin Homer allocation on transport on infrastructure projects that it, I know how important the transport system is for are much needed? people. When we talk about transport, it might mean Justine Greening: On pages 48 and 49 of the different things to different people. When we talk accounts that you have there is a good review of that about public transport, to people in London it means underspend and how the different components of the tubes, buses and trains; for people in rural areas it Treasury budget led to that overall position. That means their bus service. I am very conscious of the gives you the overall backdrop to why we had some need to bear that in mind as I look at decisions. We underspends. My perspective is that I want us to get want a fact-based approach and to ensure that we end cracking on the projects that we have in place. I will up with a mix of spend that makes sense in the light look at the scope for bringing forward projects if I can of our other priorities, which include ensuring that do that within the spending review settlement I have transport is one of the key drivers to help our economy been given. I will have a conversation with my former grow again. colleagues in the Treasury—I hope that I am well placed to have it—on how I can manage my Q57 Julie Hilling: What do you think about the Department’s budget responsibly. I am not just going statements that public transport is a public service? It to spend money at year-end on projects that I do not follows on from the points people have made about think will add value, but where I think there are the need for subsidy. If you look at what is happening projects on which we can get cracking I will take a in some communities, people are being priced off close look at whether we can make it happen. buses or trains and are unable to seek work, or go to work, in places further afield. Where do you see that Q55 Julie Hilling: That is really welcome. I also balance of public transport as a public service? welcome your recognition about the difficulty of Justine Greening: I certainly want public transport connectivity, particularly among northern cities. One that is affordable to the public. Another aspect which of the concerns people have raised about High Speed you did not touch on but I would also put into that is 2 is that all the money will go into that and some of making sure it is accessible to people. Accessibility is the much-needed smaller projects, particularly also an important aspect of what I need to look at as electrification of Manchester-Leeds and so on, will not the new Secretary of State for Transport. That means happen because of that. How do you view the rest of really cracking on with programmes like Access for the spending that is not on High Speed 2? All, which can make the difference between Justine Greening: I do not see it that way. We have somebody being able to get on to the transport system a very analytical approach within the DfT at where and get to a job and somebody who cannot. I we can get the best value for money and projects can recognise those issues, but I do not believe there are make the biggest difference. I will want to take a look necessarily any easy answers. It would be lovely if we at whether we can make that process even better. If had come into Government with a set of public you look at things like procurement, for example, we finances that would mean there were fewer financial want to take a more strategic UK plc approach than constraints on us than there are today. We have to get perhaps has been done in the past. That is the work those sorted out and work and live within our means, on which Vince Cable is leading from BIS. I do not but I recognise that making sure public transport is think it is either/or. We will always have a limit on affordable is incredibly important. how much we can spend, because there will always be a limit to how much the public can afford, but we Q58 Julie Hilling: I have a more specific question will take a strategic approach to what is needed and about the franchises that are coming up for relet. I when, and then do our best to deliver that. know that Northern and TPE have had an extension to their franchise. I am thinking particularly about Q56 Julie Hilling: Following Mr Stringer’s question, Virgin, which serves us in the north-west. I have a three times as much money is spent in London on concern. There is a fare review which has not yet public transport generally as it is in the north-west. started, the McNulty review, which needs to be Your predecessor talked about the economic case for worked through in terms of what it actually means, each investment. Often, it can be seen that there is a and a review of the development of Network Rail. But better economic return from something that is we are looking to relet one of the major franchises happening in the capital than something happening out during next year when, it seems to me, the in the provinces. The need for that investment, Government still want to work through the framework however, whether it is in Greater Manchester or other for that franchise. What is your view on that? Are you areas in the north, is as great, and sometimes greater, minded to talk about an extension? I do not know because of the difficulty in travelling across the whether other franchises are due for reletting over that country. How do you see that economic return on an period, but until there is a real framework for what investment compared with need for the investment? the Government expect from a franchise it seems Justine Greening: You are absolutely right, and it is wrong to get people to bid for something that could something of which I am very conscious. We are be changed in the future. Maybe we will not get best determined to make sure we put in place the building value from it, especially if it is longer. blocks so that all parts of our country can grow. That Justine Greening: While I understand the question, I means looking at transport infrastructure outside will not comment on that particular franchise for two London just as carefully and importantly as we look reasons: first, I probably need to be better briefed on at infrastructure in London. Having spent a large the details of it; and, second, the reality is that we chunk of my life living outside London as well as in have to get on with continuing to run the transport Ev 10 Transport Committee: Evidence
19 October 2011 Rt Hon Justine Greening MP and Lin Homer system and respond to the fact that franchises are up shall be working closely with them to deliver what for renewal while we go through this process. I do hopefully will be a successful approach to the not believe there is really any other way of doing it Olympics. Peter Hendy has said that it will not be ultimately. We touched on this at the beginning when business as usual, but business as unusual, and we will we were talking about the review of strategic have to make sure our plans are robust. An awful lot procurement that was going on, seeing whether we of work has already gone on, but clearly I will be can make sure, to the extent we can, that that feeds better briefed on that over the next couple of days. I quickly into process. As we get closer to finalising also recognise that, while the Olympics are strategies and perhaps clearer strands emerge as to predominantly in London, key parts are at venues what those strategies are likely to be, we want to make outside London. I am alive to that fact, and that is, of sure they are able to be reflected, to the extent they course, part of the plans we have in place. can be, in our interaction with industry, whether it is me working on an agenda with the Rail Delivery Q60 Chair: The Deputy Prime Minister has said that Group or the more core important franchising process 40 of the biggest infrastructure projects will be that takes place. But there is no doubt we have to get handpicked and given special priority status. Which on with running the transport infrastructure network, transport projects are in that list? even though we have to resolve some big, exciting Justine Greening: I apologise that I do not have the and important questions about strategy in relation to information to answer that question, but I am sure I rail. can write to you afterwards with some clarification.
Q59 Iain Stewart: I would like to turn to next year’s Q61 Chair: We have also been told by the Chief Olympic and Paralympic Games, which will pose a Secretary to the Treasury that there is to be a new unique challenge for the transport network in London Growing Places Fund. What can you tell us about that, and surrounding areas. The National Audit Office and which transport investment will benefit from it? estimate that the regular demand on the network will Justine Greening: I have a meeting in place with the have to be reduced by about 30% to cope with the Secretary of State for Communities and Local extra Olympic-related journeys. In your first few days Government to talk about transport’s role within the have you had an opportunity to look at how the Growing Places Fund. We recognise that transport is Department, working with Transport for London, can a key part of how we can make sure that communities help prepare for this situation? develop sustainably, so I am very pleased that we have Justine Greening: I have had an initial high-level a role in that. Although I have yet to be briefed on it briefing and I will be getting more detailed briefings in detail, I have already asked officials and briefly literally in the next few days. I will also be meeting spoken with the Secretary of State for Communities Peter Hendy, and I had a brief conversation with the and Local Government, so I will be meeting him over Mayor on Friday evening. We both recognise that this the coming days. is an incredibly important thing on which the two of us will be working hand in hand over the coming Q62 Chair: Do you expect any money from current months. Interestingly, if you look at how London Department for Transport budgets to be used in that coped with the royal wedding, for example, we have regard? a history of understanding how to deal with huge Justine Greening: I think I am right in saying that events of world importance. collectively it is £500 million, part of which will be You mentioned capacity. The statistics I have show from the Department for Transport. 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. Q63 Chair: Do you know how much? You are right that we can expect a significant amount Justine Greening: I cannot remember at the moment. of extra traffic. I know that TfL is already working A number flicked into my brain and it may be the with businesses and freight operators to make sure right one. I think it is about £125 million. they can take appropriate decisions. One aspect will be managing demand during the course of the Q64 Chair: We would like to know what progress is Olympics itself; making sure that the Olympians being made on that. taking part in the games can travel effectively; and Justine Greening: I would be very happy to provide making sure that for everybody else in London you with a written update once I have got under the disruption is minimised as far as possible, although skin of it. My job is to make sure that we get as much inevitably there will be some. That involves planning delivery for local communities from a transport ahead and communication. perspective as we can. Our other challenge is to make sure that people can leave. They may come in a staggered fashion, but the Q65 Chair: What progress is being made in setting day after the Olympics finish will probably be up local transport consortia made up of groupings of Heathrow’s biggest day ever. That will be another key local enterprise partnerships and local authorities? issue and I will be looking at the plans to see how Justine Greening: Again, it is one of those areas on we can deal with things smoothly, not just during the which I am yet to be fully briefed. My understanding Olympics but after them from a transport perspective. is that we are making initial progress on it, but it I recognise that an awful lot of this on the ground is would probably be better if I could write to you about being delivered through the Mayor and TfL, but I that afterwards, with apologies. You have managed to Transport Committee: Evidence Ev 11
19 October 2011 Rt Hon Justine Greening MP and Lin Homer ask me two questions to which I do not have an the key managers within their teams. I am very much answer. That is very frustrating. looking forward to working with the Department. Going forward, from talking to people within the Q66 Chair: I will try for a third one. Which transport Department, there is a very good team culture that I schemes have been funded from the Regional Growth want to continue. As with all Government Fund to date? Departments, we have our own spending review Justine Greening: I will have to write to you on that settlement which sees our head count already reduced. as well. I am conscious of the fact that, combined with other Lin Homer: There were four from the first round but changes, for example, those to do with public sector the second round has not yet been completed, so there pensions, they are important changes for people’s day- are some more in that. Another meeting is due to to-day working lives. As Secretary of State I will do happen very quickly, and there are a number of my best to make sure the Department plays its role to transport funds from that. have in place what is needed to make it work effectively together. Q67 Chair: Can you give us information on those The other challenge is that it is not all in Whitehall. four—what they are and how much they are? There are lots of people working in the DfT who are Lin Homer: Yes. out on the ground doing stuff every day for the Highways Agency or the DVLA. I want to make sure Q68 Paul Maynard: From what I gather, a third of that, for those people who are not immediately in the Regional Growth Fund was paid for by the Great Minster House and sitting in the same building Department for Transport. Are the bids coming in as me, I am out and about seeing them and they feel proportionate in terms of their purpose to what the part of the overall DfT organisation. DfT put in in the first place, or are you cross- subsidising other departmental activities for not Q73 Kwasi Kwarteng: On what criteria would you getting in enough bids? want to be judged in a year or two years’ time? Lin Homer: The original Regional Growth Fund was Justine Greening: I would like to think that we had, created by money from three Departments but was most importantly, done a number of things: that we not ring-fenced to absolute proportionality. There is a had delivered on time and on budget the transport ministerial group, which the Secretary of State will projects we identified as a high priority; that, where now join, which has looked at all the projects, and there has been a capability to go further, we have been those have been assessed. There are a number that are able to go beyond that successfully within our pure transport but there are many where transport is a spending review envelope because we have managed key element. The previous Secretary of State did not it effectively; that we have achieved as a Department go into that looking to get his third specifically spent our own spending review deliverables that are on transport. important; and, perhaps as importantly, if not most importantly, that members of the public feel broadly Q69 Chair: No, but we are asking that question. we have got our priorities right. They know there is Lin Homer: It was not a hypothecated fund. not a bottomless pot of cash for transport but, looking across the piece at where we have chosen to invest Q70 Chair: Nevertheless, we would like information and tackle today’s problems—whether it is congestion on it. on the roads or having to stand on a train for too long Lin Homer: Absolutely; I have already promised that, during a long distance journey, when one thought one but, in answer to the question, we did not go in had paid for a seat—I hope they will think we have expecting to spend a third of it absolutely on transport. now got to grips with those problems, but also not lost All the schemes were measured against published sight of the investment required to make sure that, for criteria, which we can also provide to you. people who travel in five, 10 or 15-plus years’ time, their journey is of even better quality and is still Q71 Chair: Nevertheless, we would like to know affordable. what went in. Justine Greening: We will make sure that you get Q74 Graham Stringer: Of all the Transport that information. Secretaries from Belisha to Hammond, is there one of them you regard as a particular role model you would Q72 Kwasi Kwarteng: This is a question you may like to emulate? well be able to answer. First, what are your initial Justine Greening: The short answer to that is no. I impressions of the Department, in particular with do not think I would be able to point to any one of regard to the challenges you face? Second, how do them. I will probably be my own person. I will always you judge success? What are your indicators? Are do my best basically, so it is about how well I think I there things that perhaps in a year’s time, or two can perform in the job, as opposed to how well years’ time, you want to be judged upon specifically somebody else performed it. I will approach it, in regard to performance within the Department? hopefully, with a huge amount of enthusiasm and Justine Greening: My initial impressions of the energy but also a huge amount of care, because the Department have been very positive. Certainly, its decisions we take as a Department and Government response to an unpredicted change of Secretary of in this area have a profound and long-lasting effect on State has been incredibly impressive. I have already the communities they touch. That can be for good or had a chance to meet the key directors general and bad; it can be an opportunity seized or lost. It is my Ev 12 Transport Committee: Evidence
19 October 2011 Rt Hon Justine Greening MP and Lin Homer job to make sure we make the most of the very good impact and effectively good returns. Each opportunities we have, and that MPs sitting here in year we are building on that, but the Think! campaign future when grilling another Secretary of State, who remains a big marketing plan not just for Christmas hopefully has had a chance to be in the job longer but the whole year. Christmas is obviously a than me, will look at what we did and say, “You know particular problem. what? They really set up this country to be successful transport-wise.” Q77 Julie Hilling: On road safety, about 10,000 people are driving with more than 12 points on their Q75 Chair: In 2010, about 250 people were killed licence. Many of them are driving without insurance, on the roads in drinking and driving incidents, and and some have over 20 points on their licence. Do 28% of the public admit that they have driven when you have a view on that? It seems to me that is giving over the legal limit. What is the Department doing to another message that road offences are not the same address that? What kinds of campaigns are to be as other forms of law-breaking. Is that something mounted? about which you would want to take action? Justine Greening: I think I am right in saying that we Justine Greening: The Department has already taken have a campaign on drink driving this Christmas. Just a number of steps to try to reduce uninsured driving. to give you my broader views, although Christmas is As to points, you make an important comment. It was one of the key times during the year when we see a not something with which I was familiar perhaps until particular risk around drink driving, this is something perhaps the last couple of days, but I plan to look at we want to bear down on throughout the whole of it. I had a brief discussion with the Roads Minister the year. about this earlier this week, because it is something I certainly want to take a close look at. Part of the Q76 Chair: In the past the Department has spoken problem has been to do with making sure there is about refocusing advertising campaigns on social better process and communication among what media. What kinds of campaigns are you considering? happens in the courts, with the DVLA and subsequent Lin Homer: We plan to continue our Think! enforcement. Perhaps that is one that might be worth campaign. We are increasingly learning each year that, coming back to over the coming weeks and months. I if we focus it on particular targets—children and have also seen the articles in today’s papers, so that is young men—and use a wide range of media, we can definitely a challenge to be addressed. get the same impact potentially for less money. This year we will again be focusing on campaigns that Q78 Chair: Thank you very much for coming. target children to think about their own safety and Justine Greening: I look forward to the reports that campaigns that focus on young drivers. We find it you are going to write. I hope they will be ones that successful to use social media, but we also continue can inform and feed into our policymaking process. to use things such as cinema media, where we get Chair: We look forward to questioning you again. Transport Committee: Evidence Ev 13
Wednesday 14 December 2011
Members present: Mrs Louise Ellman (Chair)
Steve Baker Paul Maynard Jim Dobbin Iain Stewart Mr Tom Harris Graham Stringer Julie Hilling Julian Sturdy Kwasi Kwarteng ______
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 difficult train fare rises that had been planned. I see would like to welcome you to the Select Committee. those as the additional moneys that we have been I understand you would like to make some comments given. Whether we will be able to continue to make to us before we start with questions. I am happy for our case within Government to get further funding, you to do that. should that become available, I will certainly be Justine Greening: I will make a very brief statement. beating the drum and be ready to continue to make I was delighted that transport and transport our case for further investment. As you will be aware, infrastructure, in particular, could play such a key role for example, the money that went in to help reduce in the growth review that was announced by the the RPI plus 3% planned fare rises to RPI plus 1% Chancellor. It is a sign that the Treasury and the was actually money that was found from across Government really see the value of investing in our Government, so I will continue to make the case on transport infrastructure in terms of it being a driver behalf of transport. for economic growth. I should also say that, in many The other aspect of the growth review was the fact respects, today we have announced the second half of that, within the Department, we had some the local authority majors programme and, of course, underspends. We had an opportunity, nevertheless, to that very much complements the 20 local authority continue to invest that money, so we decided to do major schemes, which were part of the growth review that. There will be continued opportunities, I hope, for announcement. That is pretty much all I wanted to me to make the case for investment in transport across say. You will see that, as part of the growth review, Government to make sure that I am continuing to we had a very balanced package of investment in challenge my own departmental budget to get the infrastructure, not just on roads, which had a most out of it. Of course, as we have seen, part of substantial package, but also in the case of rail. There that underspend came from the fact that we had more was a strand of environment running through there, contribution into the departmental budget from the rail too. I look forward to the Committee’s questions. industry than we had expected. That demonstrates we I should introduce my official, Steve Gooding, who can plan as well as we are able to, but, ultimately, looks after the Domestic Transport policy team, which there is always going to be some uncertainty and we of course, as you can imagine, is no mean feat. would be ready to make the most of any underspends that come up over the remaining spending review. Q80 Chair: Thank you. I was pleased to hear the various transport investment announcements in the Q82 Chair: How much truly additional funding has Autumn Statement. During the course of this session, come into your budget for this period? we would like to explore a number of aspects of that Justine Greening: The additional funding that we and try to discover a little more about exactly what received over the spending review was £1.5 billion. lies behind those statements. Certainly, they are welcome. Could you summarise for us what has Q83 Chair: That is additional funding. happened to the Department’s resource and capital Justine Greening: That was additional. budgets for the rest of the spending review, perhaps up to 2015? Q84 Chair: It was not there before. Justine Greening: In terms of the growth review? Is Justine Greening: That included an extra £500 that the focus of your question? million for local authority majors, the package that enabled us to cap rail fares at RPI plus 1% in 2012, Q81 Chair: Yes, and how you see the budget, if you and additional funding for Highways Agency are expecting any changes beyond what we have schemes, which can bring some real benefits to already been told. How do you see it now? tackling congestion. Justine Greening: I would expect that, with the additional money made available for transport in Q85 Chair: The Government has set out overall relation to the growth review, which allowed us to spending levels to 2016–17, and that was also part of pursue, in particular, more of the local authority the Chancellor’s statement. Are you negotiating about majors, we would see measures taken to alleviate the the Department for Transport’s share of those funds? Ev 14 Transport Committee: Evidence
14 December 2011 Rt Hon Justine Greening MP and Steve Gooding
Justine Greening: As you can imagine, one of the I do not think it is an easy or a quick question to aspects of some of the investment decisions we have answer, but it is an important one. That is one of the taken is that, although most of them fall within the reasons why I am determined to get it right. The current spending review, there are some that have a shorter-term challenge, of course, which we have longer spending profile outside the existing spending already talked about and taken action on, is how we review. Of course, I am making the case to ensure we can get the most out of the capacity we do have. That see that funding supported from Government. is why you are seeing us trial some ways of better working, potentially, at Heathrow, which can help Q86 Chair: But how much extra do you think you them to be a little more flexible to better use the are going to get and how hard are you fighting this capacity they have. corner? Justine Greening: When you look at what we were Q88 Kwasi Kwarteng: If I may, Chair, I would like able to achieve for this growth review, which was an to ask a more general question. Clearly, the aviation extra £1.5 billion, I think that was an excellent result industry is under a lot of pressure with APD—I know for the Department. It showed we have some that is not your Department—with the added tax on credibility within Government in terms of our that. There is also a suspicion, and I have seen letters assessment of business cases and our ability to make and papers, as I am sure you have, that the our case on behalf of the investment that we see as so Government are not doing enough to promote important to make sure transport is driving economic aviation. What would you say to people who take that growth. Therefore, I can assure the Committee that I line? What words can you say to the Committee, do not think I could work harder to get our message which obviously will be relayed to the wider world, across on that point. The capping of rail fares, in to reassure the industry that you are fully behind it particular, showed that I was absolutely prepared to and you see it as a key element of driving growth in make the case for investment in transport, and not just the future? in infrastructure, when I felt that there was an Justine Greening: You only have to look at the opportunity to do the right thing and lessen the impact National Infrastructure Plan, which we published at of the planned fare rises on many people who use the the growth review, to see that transport, and within railways. Alongside everyone else, they are struggling that aviation, was a key part of it. My first visit as the with what have been difficult cost-of-living issues new Secretary of State was to Heathrow to talk to over the past few months. them about winter resilience. We recognise how Kwasi Kwarteng: My question is related to another important that airport has been to our broader topic, so someone else might want to come in on the economy because of the capacity it has to deal with actual overall spending issue. passengers. I am in no doubt about the importance of Chair: It is okay. You can ask your question. the aviation sector, not just for industry but for all of us, frankly, who rely on it to visit family abroad, to Q87 Kwasi Kwarteng: Thank you, Chair. Obviously go on holiday or to go away for a weekend and enjoy we remember the Chancellor saying he will explore some time with family. I absolutely recognise the all the options for maintaining the UK’s aviation hub importance of the aviation sector, although I think it status, but clearly ruled out the third runway. The is incumbent on us to come up with a strategy that is phrasing was quite interesting because he did not say well thought through and will stand the test of time. that he was ruling out other runways. As a first We saw that the 2003 Air Transport White Paper, in question, I wanted to know what your view was on fact, did not. I want to make sure that this particular the general aviation capacity issue in the south-east. strategy document is able to stand the test of time. What are your thoughts? You have been in the job a few months now. Have you developed any ideas on Q89 Chair: Are you going to explore the Boris that front? Island scheme? Justine Greening: We are still at the same stage in Justine Greening: Interestingly, although the Mayor the process as when I came to give evidence to the effectively submitted two parts of his evidence, if you Committee back in October. We are looking at the actually look at it—I do not know whether anyone in evidence that was supplied as part of this call for the Committee has read those two evidence evidence, which finished in mid-October. By the submissions and, if anybody has, I would be interested March time frame next year we aim to produce a draft if you could raise your hand. strategic framework for aviation. As you know, one of Chair: No, no, no. We are asking you the questions. the elements of that—not the only element, Justine Greening: Okay. What is interesting is that interestingly, but the element people focus on—is in it is largely around the actual questions the original relation to capacity. What the National Infrastructure scoping document— Plan brought out very clearly was the question that we Chair: Secretary of State, I am not asking for your are looking at within the Department: what is the role comment on it— of a hub airport and, in particular, how does that relate Justine Greening: I will cut to the chase. to the capacity we think we will need in the Chair: I am asking you a question. Are you willing south-east? As I said to the Committee when I came to consider the Boris Island proposal? in, in week one of the job, I did not think it would be Justine Greening: We are looking at all the proposals right for me to pre-empt that process, but I can say I put to us through the call for evidence, which includes see that as a key part of the debate and the discussion proposals from people like the Mayor. What I was that has to happen over the coming weeks and months. about to say, and I think is important, is that you are Transport Committee: Evidence Ev 15
14 December 2011 Rt Hon Justine Greening MP and Steve Gooding asking me about the evidence given to that inquiry represent a change in emphasis in terms of what the and that call for evidence. It seems to me, when you Government have been saying on aviation? Do you ask me that question—and I would propose—if you recognise that? had actually read the evidence submitted you will see Justine Greening: You are always going to get that the Mayor has actually proposed— interested parties scrutinising documents that come out of Government, which is perfectly right. That is often going to raise questions about whether the Q90 Chair: No, no, no. Just a moment. Secretary of language that has been used simply represents a State, we are asking you the questions. It is not for restatement of Government policy—which this did— you to suppose or assume or think anything. We are or whether, as you point out, potentially it is intended asking you a question. I am asking you if you were to signal some kind of a departure. I do not think it considering that, and I would like an answer. was intended to signal a departure. I recognise that Justine Greening: I am trying to answer the question. some people asked that question.
Q91 Chair: Your answer might be yes, no or not Q97 Paul Maynard: Has it always been the decided, but I would like an answer. Government’s policy that the UK requires a hub Kwasi Kwarteng: Do you think it is a good idea? airport? Justine Greening: What I am trying to get a chance Justine Greening: It has always been the to say to you is this: when you look at the evidence Government’s policy that the UK requires a hub that he put in, the Mayor did not explicitly propose a airport. Thames Estuary airport. What the Mayor proposed was that we should look at a new hub airport. That is Q98 Paul Maynard: Has it always been the the point I am trying to make to you. You are trying Government’s policy to encourage better links with to pin me down about the fact that he asked this and emerging markets? what I am saying is actually he did not. 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 Q92 Chair: Would you like to give us the answer of airport question is so important. what it is you are considering? I asked you about Boris’s proposal. Would you like to tell us whether Q99 Paul Maynard: How do you think that might you are considering that? be achieved? In your view, is it more important to Justine Greening: We are considering all the focus on the number of seats flying to a particular proposals that have come in to us, including the emerging market or the number of destinations that Mayor’s. are served from the UK in that emerging market? If we take the example of China, although the UK has Q93 Kwasi Kwarteng: You are head of a very by far the most seats flying to that particular country, important Department. we have fewer destinations than Amsterdam, Paris or Justine Greening: Absolutely. Frankfurt. Which do you consider to be the more important? Q94 Kwasi Kwarteng: This is a massive strategic Justine Greening: In the past, we have allowed the issue and you have simply flannelled and not given market to decide what the balance between those two any kind of direction as to what your way of thinking things should be. I think that is broadly the right is on this. approach. People have had a concern, including some Justine Greening: I do not think that is true at all. It people in the industry, about whether Heathrow is able is incumbent on me not to jump a process that is to serve enough destinations as it ideally would like already under way and it is also incumbent on the to. Alongside this question is spot allocation, which is Select Committee, in a sense, to have some details largely driven by the European Union agenda. Our behind questions. I guess that is what I wanted to approach in the UK—not just of this Government, but point out. all Governments—has been that, broadly, we allow the market to decide what that mix should be. Q95 Chair: Secretary of State, that is not in order. At this meeting we ask you the questions. You can Q100 Paul Maynard: My final question at this stage have whatever thoughts you wish— is this: more generally, we saw in the Chancellor’s Justine Greening: I am delighted to answer as well. statement a disparate range of projects. The Economist Chair: But your role is to answer questions today. described it as something of a “shopping list”. Are Justine Greening: Actually, I am delighted to answer. you able to suggest an overarching theme of transport Chair: Do any other members wish to ask about policy at the moment? We can identify lots of very aviation before I move to another topic? attractive baubles hanging on the Christmas tree, but I am not sure what the overall Christmas tree is or Q96 Paul Maynard: We can maybe swap reading whether it is even a Christmas tree. lists for Christmas, if you like. Clearly, what you said Justine Greening: That is an interesting metaphorical just now was that, as far as you are concerned, question. However, for people who live in Leeds, who aviation policy has not changed in the light of the are going to see the inner ring road take place, for Chancellor’s statement. Do you recognise that, for people who live in Bath, who are going to get better very many people, what the Chancellor announced did facilities to do park and ride, and for people who live Ev 16 Transport Committee: Evidence
14 December 2011 Rt Hon Justine Greening MP and Steve Gooding in Norwich, who are going to get better transport would be not only welcome, but the kind of use of systems with some sustainable transport proposal those funds that many people saving to those pensions hopefully brought forward by their own county would want to see. council, I do not think they would see what we have done as baubles. They would see that what we have Q102 Steve Baker: So to what extent will the done was a shrewd assessment of working alongside, Government be underwriting the returns to those in the case of those projects I have mentioned, local pension funds? authorities who had proposed them to make sure we Justine Greening: The Treasury is in the business, at were able to get the most out of the money we had to the moment, of working out precisely how that private invest on behalf of the taxpayer. All of those sat sector funding will be leveraged in. It is probably a alongside £1 billion of additional investment in question that is better directed to them in terms of railways, which was, of course, to help some of the getting an update about what stage those details are capacity problems we have. finalised to at this point, rather than for me to provide If you asked me what the strand running through them it. I am very happy to follow up with the Treasury on is, I would say it is to try and make sure we get the your behalf. best possible deal for the taxpayer in terms of investment of our capital proposal. It is to try and Q103 Steve Baker: Is there a danger we could end make sure that, when there is additional funding, up misdirecting large quantities of capital, carefully potentially, from across Government, that the saved over many years, into projects that would not Department for Transport is well placed to bid for that provide a commercial return without Government successfully, which we were. Also, it is to try and support? make sure ultimately that, although we have a Justine Greening: There are some real opportunities transport system that needs to get people from A to B for pension funds to invest in this area. There are and goes from A to B today—and we have some commercial opportunities, too. The opportunity we are capacity challenges, which, in part, this package was talking about is not twisting their arm to invest in designed to meet—we also make the investments to non-commercial projects. It is about removing the develop the transport system we know we will need barriers that may be stopping that from happening for the future. right now and recognising, as I said, that a lot of The final point I would say, when you asked me what people who want to save for their pension want to see the underlying strategy behind it was, is that we were if their investment is going to have a broader positive quite keen, above all, to make sure we could get on impact while they are getting a return. with projects that were ones we could deliver in the short term. There are some short-term challenges that Q104 Steve Baker: But, surely, people primarily we wanted to solve. There are a lot of local authority want a pension at the end of it. major projects that have been hanging around for Justine Greening: Absolutely. years. Local authorities have been saying to Government, for years, that these projects were Q105 Steve Baker: So I wonder how these pension important and they have not happened. We have put funds will actually make a return. To what extent are the money in place so that they can finally happen. you looking at applying tolling, and, if you are That is not just good for the local community to get applying tolling, to what extent will you be cutting better transport; it is good for the people who will get fuel duty to compensate for it? the jobs those transport systems create. Justine Greening: We did talk about looking at tolling as a coalition Government. There is recognition, as Q101 Steve Baker: Can I ask you, Secretary of State, you said, that we need to look at innovative new ways about how funds are going to be found for these to get private finance alongside public finance to try projects? In what proportion of new DfT projects and make sure capital projects can happen. We will would you like to include a private sector be looking at those opportunities over the coming contribution? months. As I said, they are viable opportunities and Justine Greening: The short answer is as much they can work for pension funds. It is quite right to private sector funding as possible. As you know, one investigate how much of an opportunity that is for us. of the changes with the development pool of local authority major projects was that we went back to Q106 Steve Baker: We understand that the Humber local authorities and really pressed them to see what Bridge debt is being halved by the Government. What more funding they could pull in at the local level to sort of message would that send to pension fund complement the funding that we were willing to put investors looking for long-term safe returns on their in at the departmental level. That has meant we have investments? been able to get on with more projects because we Justine Greening: It would, in many respects, send a have been able to spread that taxpayer money more message that this Government is financially astute. widely. The Humber Bridge business model saw it paying Another aspect of the growth review was the masses of debt interest. That meant tolls were Chancellor’s announcement that we are looking to excessively high, but not to an extent that particularly make sure we can access the funding available from helped because they had so much of the cost base pension funds, for example, so that we are better loaded up with debt interest. As a result, they had placed to leverage in some of that private capital for a bridge that was simply too expensive. It was not the country and for capital infrastructure. I think that generating a revenue stream in the way it was capable Transport Committee: Evidence Ev 17
14 December 2011 Rt Hon Justine Greening MP and Steve Gooding of doing. We have now enabled it to halve the tolls, which allows us to take a more thoughtful approach which should significantly generate traffic. This will for airports. make it a far better proposition for investment than it has been in the past. Q110 Chair: You mentioned tolls. Do you see tolls as the way to ease congestion? Q107 Steve Baker: Is there not a danger pension Justine Greening: We have seen it as a way of funds could take the message from it that, if it is providing the finance to enable new roads to be built politically expedient to halve the fees they are allowed in some cases, which, yes, to the extent they are to charge on the investments they have made, the possibly diverting traffic on existing roads, could in Government would intervene to make it so? turn relieve congestion. Justine Greening: No. They would recognise what we recognise: that particular bridge has a history, Q111 Chair: But, essentially, it is to do with funding which has seen its debt mount out of all proportion to new roads. what was expected when the bridge was built. It cost Justine Greening: Yes. We could just continue to something like £90 million to build. By the time we have a model where we assume that the public sector got to this decision, it had racked up an outstanding and the taxpayer will fund everything, but we think debt of £324 million. In a sense, we had a decision to there are some opportunities where we can get private take. Are we going to do what the last Government sector involvement. As Steve says, the private sector, did, which was to try and sort it but not quite manage quite realistically, will look for a return. There are it, or did we want to have a more fundamental review some opportunities to look at whether tolling on roads and say, “Right, we have a chance to take a long-term can enable some additional capacity to happen that decision that has cross-party support from local otherwise will not be able to. councils and local MPs who played a critical role in working with us to help develop this proposal”? We Q112 Iain Stewart: I would like to turn to the rail decided to do what I think was absolutely the right projects announced in the Autumn Statement. I should thing: to make sure we have a financial settlement for say at the outset as Chairman of the All-Party Group that bridge that will last for the long term, and also on East-West Rail, set up a month ago, that we are give the local authorities more control over it. very pleased to have a real-life train set for Christmas. I would like to ask, first, what decision-making Q108 Steve Baker: Yesterday, we heard from your process you went through to pick these particular colleague about the economic regulation of airports projects. How does that interact with the Control and we were told that the new proposals would Period 5 process? introduce—I think the phraseology was—flexible and Justine Greening: That is a really good question. As real-time economic intervention, although those three you can imagine, there are a number of schemes, for parts may not have been brought together at once, but example, East-West rail, which various consortia— we were not able to hear which airports were going to Chair: A Division has been called. We will suspend be so regulated. How are entrepreneurs and investors the Committee for about 10 minutes. Then we will supposed to invest for the long term in these major resume. Thank you. capital projects when the Government are explicitly Sitting suspended for a Division in the House. telling them that there will be flexible real-time On resuming— economic intervention in their business models? Justine Greening: You raise an interesting example, Q113 Chair: We will resume the Committee. because one of the main messages the industry has Secretary of State, you were in the middle of given to me, as an incoming Secretary of State, is that answering Mr Stewart’s question. they want to see us get on with this Bill. They are Justine Greening: If you can pitch it to me again, it keen for it to go ahead and they see a lot of positives might be easier if we do this start to end. in the steps that we are taking. Q114 Iain Stewart: I was looking specifically at the Q109 Steve Baker: I am sorry, who does? The projects that were announced in the Autumn airlines who wish their suppliers to be regulated and Statement and asking about what process you went controlled or the investors who wish to provide through to evaluate and pick those, and how those infrastructure? It is a very different proposition. decisions relate to the Control Period 5 Justine Greening: If you talk to BAA, they are decision-making process. already investing a significant amount in Heathrow, Justine Greening: Some of the proposals, again, have whether it is in terms of terminal development that been developed at the more local level. For example, they have under way or whether it is in terms of their you will see the Northern Hub step of electrification, steps to improve quality of service—for example, the Trans Pennine railway between Manchester and winter resilience. I have met them and I have talked York. Others, like East-West Rail, were similarly with them. The general attitude is that they want to see things that had been really pushed by local players some certainty in this environment. They also want to for a number of years. Working with all those parties, see a Civil Aviation Authority with a little more including the train operating companies, who have flexibility to adapt to circumstances as they change. their own views as individual players and as an We can all see, for example, how the security situation industry about where they think investment is needed, changes over time as we better understand terrorist and of course Network Rail, we came up with the threats. We need a system that can react to that and package we have. It is a blend of schemes that were Ev 18 Transport Committee: Evidence
14 December 2011 Rt Hon Justine Greening MP and Steve Gooding ready to be implemented now and could be got on Steve Gooding: I would just add that neither of those with, schemes that tackle particular capacity issues— are deals directly from the Department for Transport. you will see 130 extra carriages for the Southern For the Southern franchise, the proposition has come franchise—and then schemes like East-West Rail and from the train operating company, which the the Trans Pennine electrification, which are about Government are supporting. For the Caledonian improving the service for the future. As you point out, sleeper, this is an issue for the Scottish Executive we have a more standardised process for looking at where the Chancellor’s offer to them was of match what the outlook should be. That is the HLOS process funding. At the moment, the Scottish Executive is and that will, as it were, report in July time next year, thinking through exactly how it would play that and when we also look at what money we have to go how it wanted to cover the procurement, which would against that. be a decision they would need to take.
Q115 Iain Stewart: I appreciate the full funding Q117 Iain Stewart: Do you have an ambition that envelope will not be set, but to what extent do you either of these rolling stock contracts would go to hope these projects are additional to the funding that Bombardier? might be available in Control Period 5 for rail Justine Greening: We talked about this earlier with investment? the Committee. We have, as a Government, worked Justine Greening: Some of it is, of course, money really hard to challenge our procurement process to that is set against the RAB, if you like, and some of make sure that it has everybody on a level playing it is further spending that we have been able to get, as field, and that includes companies like Bombardier. I I talked about at the beginning. Overall, alongside the have had a number of discussions with them and I process that we will have for HLOS next year, it gives have met with Bombardier as well. At the same time, the ability for us, as a Department, to work with the obviously they are a commercial company, so they industry to take a longer term look at the key needs of have their own decisions about whether or not they passengers and business in relation to the rail industry want to bid for these contracts. But our intent as a Government is to make sure that that procurement going forward. Of course, we have the Rail Command process is an open one for companies like Bombardier Paper, which will complement all of that work. Steve, to be successful in. would you like to give your perspective as the official working on a lot of this work? Q118 Chair: Are you saying, in relation to the Steve Gooding: I would take us back, briefly, to the Southern rail procurement and the Caledonian sleeper Chair’s opening question. The big negotiation for the carriages, there would be opportunities for Department for Transport next year with the Treasury Bombardier to bid, should they wish to? is about rail funding as we develop the high level Justine Greening: Yes. output statement and the statement of funds available. We are hopeful, off the back of the successes of the Q119 Chair: When are those contracts likely to be Autumn Statement, that what we are seeing here is put out to tender? going to be a sustained extra. It is hard to promise that Justine Greening: I understand that the Southern at this stage. To quite an extent, what we were doing contract is one that is being discussed right now. Steve in this package was bringing forward development can probably confirm the exact timelines on that. In work that might otherwise—in fact, if we read the rail relation to the Scottish sleeper, that is going to very press, quite probably would have been—within a CP5 much depend on some of the financing questions, package. We could not confirm that yet, but things like which have to be resolved with the Scottish the development activity on East-West and on Trans Government. Pennine mean we should actually see some spending earlier than otherwise would have been the case, Q120 Chair: Mr Gooding, could you give us an rather than it being straightforwardly additional to indication of the timings? what would have been the case. Steve Gooding: We are in the early stages of the competition for the Southern franchise and I do not Q116 Iain Stewart: Can I ask one final question on think the formal invitation to tender has been issued two specific projects—the new rolling stock for yet. I am afraid I will have to come back and confirm Southern and the Caledonian sleeper? I am right in that. For the Scottish rolling stock, the procurement thinking, am I, that these are coming in the current timeline is within the gift of the Scottish Executive financial year and that the Government will be and I am afraid I do not have timing for that. As I purchasing them outright rather than as part of the said, that is tied up with the reaction of the Scottish usual leasing process? Am I correct in that? Executive to the offer of match funding, which is what Justine Greening: I will let Steve follow up on this as they are currently thinking through. well, but in relation to Southern, that is a procurement process that I think I am right in saying they are Q121 Chair: We would like any information you running. We are supporting that procurement process. have on the Southern rail procurement, if you are able We expect the trains to be operating in the south to get that. Secretary of State, you also made London area by December next year, so it will be reference, in your other answer to Mr Stewart, to the money that is spent over the next 24 months, which Northern Hub. In fact, if I look at the welcome is really good news for passengers who will get the projects that were announced in the Autumn extra capacity. Statement, there is reference to the North Trans Transport Committee: Evidence Ev 19
14 December 2011 Rt Hon Justine Greening MP and Steve Gooding
Pennine electrification, which is part of the Northern with companies all the time, not just when we have a Hub but is not the Northern Hub. Why has the procurement process being scoped out. I do not think Northern Hub project, as a whole, not been put in this we need, per se, a change of rules to be able to start list when the Oxford-Bedford rail scheme has? That doing some of that better working with companies was not in Network Rail’s initial plan and the already. Northern Hub was. Justine Greening: We wanted to make a start with Q126 Chair: So these contracts will go out under one of the core pieces of the Northern Hub project, existing rules. Is that what you are saying there, or which had been proposed, and to consider what you are not sure? progress we could make on the rest as part of the Justine Greening: To be clear, Southern is running HLOS review in the coming year. As ever with these the procurement exercise. Obviously they have timelines, in a sense, you have a timeline about when support from Government, but, as a company, they are you are going to be making an announcement. In this running this exercise rather than Government. case it was the growth review set for a particular date. At the same time, we have the departmental process Q127 Julie Hilling: I want to come back a little to we have to go through to make sure we are assured the Northern Hub. Although the electrification of that projects are value for money. With this element Manchester-York is more than welcome, it was not a of the Northern Hub we were confident that it was central part of the Northern Hub project. If anything, and, therefore, it was able to go in that statement. We it was the additional part. What reassurance can you are looking at the remaining programme. As you point give that the whole of the Northern Hub project—the out, there were other elements of it as part of the engineering work that will benefit the whole of the HLOS process that we have coming up. north—is going to be funded? Justine Greening: As I said before, what we were Q122 Julian Sturdy: Sticking with rail and going planning to do is to look at the remainder of it as part back to the electrification of the Trans Pennine rail, of the HLOS statement. Once we get to the end of for which I am very grateful, I might add—there are that process and we make the announcement on the some good announcements there—there was a little HLOS proposal, the Northern Hub element of that will bit of confusion. Hopefully, you can clarify it, be clarified at that stage. although I think you have pretty much clarified it in an earlier answer. When the Chancellor announced it Q128 Julie Hilling: I do not quite understand the as Manchester to Leeds, as a York MP, that came as a words you are saying. Previously, there seemed to be little bit of a shock. Can you reassure me that it is a commitment that in the next control periods the now actually to York? In your earlier answer you did Northern Hub would feature highly in that funding, say to York. and the concern we had was that maybe some Justine Greening: It is a route between Manchester elements of it would not be done. Now you seem to and York via Leeds. be saying something of the opposite. I am not sure if I am misunderstanding what you are saying. It sounds Q123 Julian Sturdy: So it is electrification to York. like you are saying, “If there is money left, we might Justine Greening: Yes. do some of it”. The whole of the Northern Hub is what brings the economic benefits to the north. Q124 Julian Sturdy: That is great news. There was Justine Greening: Obviously we have had quite a a bit of confusion over that, so that is good to hear. range of investment in our railways announced as part Can I follow up on Mr Stewart’s questioning as well? of the growth review. I want to try and reassure you Can you outline, in a little more detail, potentially that we are now going to look at the rest of it. I am what sort of time scales we are looking at for that delighted we were able to announce the electrification specific project? of the Trans Pennine element of the line as part of Justine Greening: We are expecting that to be that, but, to provide you with some reassurance, we confirmed to us by Network Rail. At the moment we will now go through the rest of that Northern Hub are expecting it is going to be between late 2016 and package to see to what extent we can have that as part 2018 and that the electric trains will be phased in of our HLOS statement. We need to go through it, and during that period. in fact Network Rail need to go through it in order to look at their business case. That is a matter, ultimately, Q125 Chair: Before you move on, I would like to for them to come back to the Department on and that clarify with you the procurement rules when the is the process by which we would then, as a contract for the Southern Rail extra carriages goes out. Department, reach a conclusion about what was in that Will that be in accordance with new proposals the HLOS statement going forward. Government have spoken about before—new rules for procurement? How will it be done? Q129 Julie Hilling: Can you give us some idea of Justine Greening: It will be going out under the the timing of that? Network Rail have done the existing rules that we have, but, of course, that will package—they have done the business case—and all build in some understanding of the process that both of that has already gone to the Department. BIS and the Treasury have been through over the last Justine Greening: Yes. What I am saying is that, few months to see how, over the medium term, we because we have made so much fresh investment in can improve the procurement process. We have some the railways as a part of the growth review, which is learning already: the need for us to work more closely great, Network Rail need to go back, as you say, over Ev 20 Transport Committee: Evidence
14 December 2011 Rt Hon Justine Greening MP and Steve Gooding that original package to re-evaluate it. That then feeds Steve Gooding: Yes. into the HLOS process, which finishes and is announced in July next year, and at that stage—you Q135 Graham Stringer: How has that changed? asked about the timelines—we would make the Steve Gooding: Like I say, I am sorry I cannot give announcement about the remainder of that Northern the technical answer to what the precise engineering Hub package. changes are, but the advice that we had from Network Rail was, “If you are going to make this change here, Q130 Julie Hilling: It is also a reality—do you we would like to look again at the precise components agree—that the electrification of that line will not of the package—not the case for the package, but the bring its benefits if the engineering works are not done components—to make sure we are getting all the around Manchester Piccadilly and the other right things”— engineering works that need to be done that are part of the Northern Hub? Q136 Chair: “This change”. Could you clarify for Justine Greening: We will see benefits from the Trans us, Mr Gooding, which change they were referring to? Pennine electrification. Obviously, for people like Steve Gooding: I am afraid I will have to come back Julian in York, those benefits are going to be very real with that. to those communities, so it is a positive step forward. We will look at the rest of the Northern Hub proposal Q137 Graham Stringer: Can you send us a note? as part of the HLOS statement, which is ordinarily Steve Gooding: Yes, we can do that. how we would get to the decision on some of these bigger packages. I can see Steve wanting to jump in Q138 Chair: We would like a note on exactly what as well. is happening in relation to the Northern Hub and, in Steve Gooding: I am just going to add one thing to particular, whatever discussions you may be having what the Secretary of State has said. There is an issue with Network Rail. We would like to have that, please. about the total number of schemes that are taken Justine Greening: We will make sure we do that. It forward at any one time, obviously. The key issue, is just saying that when we take the final review it has which our technical folk have been discussing with to be on the most up-to-date situation and business Network Rail, is that, consequent on the electrification case, given that this package, which we have of the Trans Pennine, some of the individual elements announced at the growth review, is a substantial one. of the Northern Hub will need to be recast and We will get you a note on that process. rethought because it opens up a different pattern of Chair: We would like to know what is involved in rolling stock use. That is what the guys at Network these discussions and where it is up to. I want to keep Rail need to think through. Therefore, when we are to rail questions for the moment. talking about the Northern Hub package, precisely what the components of that package are needs to be Q139 Paul Maynard: Leaving aside the existential revisited. That was Network Rail’s advice to us. question of what is the Northern Hub, can I focus on However, it is the Government’s commitment to have the rail fares increases in particular? As I understood been through that with Network Rail and come to a your predecessor’s intention, it was to transfer the conclusion, as the Secretary of State said, within the burden of rail subsidy from the general taxpayer to high level output statement package next July. the passenger. Obviously, by switching to RPI plus 1% from RPI plus 3%, you are shifting the burden Q131 Graham Stringer: Can you expand on that, back on to the general taxpayer from the passenger please? I find it a bit worrying. Can you just tell us again. Is your long-term intention still to continue precisely what is going to be changed? along that path or do you want to reinforce the notion, Steve Gooding: That I cannot do. I am sorry if it as you said earlier, of reducing the general burden on sounded threatening. I was intending it to sound the the taxpayer and making sure the user pays? opposite, actually. The opportunities for running the Justine Greening: We want to continue down the road electrified service and deploying the rolling stock of reducing the burden on the taxpayer. We have consequent on the electrification to get all the benefits obviously had to take account of the economic the Northern Hub package is designed to achieve, I circumstances we find ourselves in and the pressures was advised, are going to be different in some on cost of living. The key to a lot of this, frankly, is respects, and those need to be worked through. I am the McNulty report, which talked about how the afraid that is all I can tell you today, but I can industry could start working with itself and with probably get you a list. Government to take out some of that additional cost base, which you do not see in railways in Europe. Q132 Chair: Are you telling us you are in the That is one of the key ways in which we can not only process of working that through with Network Rail? lessen the pressure on the taxpayer, but hopefully over Steve Gooding: Yes, that is what we are doing. time as well—I know Philip Hammond was determined to do this—the pressure for year-on-year Q133 Chair: That is happening at the moment. fare rises on passengers. Steve Gooding: Yes. Q140 Steve Baker: Secretary of State, turning to my Q134 Graham Stringer: Essentially, apart from favourite subject of high-speed rail, can you confirm electrification, most of the rest of the Northern Hub is that the Government is considering the construction increasing the capacity at junctions. of a tunnel through parts of Buckinghamshire? Transport Committee: Evidence Ev 21
14 December 2011 Rt Hon Justine Greening MP and Steve Gooding
Justine Greening: I cannot confirm that because I am Justine Greening: I have said I am very happy to in the decision period where I have to look at all the follow up the issue you raised in relation to that. I responses to the consultation, then weigh them up and cannot give you an answer here, simply because it is then reach a decision and announce it. What I do want something I need to satisfy myself of, regarding the to say is that, from the word go, I have been very details, as Secretary of State before I am in a position clear that I understand how important this project is. to give you a proper answer. Therefore, if it is to go ahead, I want to make sure we get it right. Getting it right means getting it right from Q147 Steve Baker: I am not looking for an answer an environmental perspective as well as the impact it on HS2 itself. I am looking for whether or not you has, potentially, for rail and rail users. will release that data about the peak hours loading of the West Coast Main Line. Q141 Steve Baker: Can you confirm you will be Justine Greening: I have said very clearly I am happy announcing your decision in January, please? to go back to the Department and understand why Justine Greening: Yes. there has been an inconsistent approach.
Q142 Steve Baker: Will there be a concurrent rail Q148 Chair: Do you think that the survey White Paper? undertaken by HS2 Action Alliance in relation to peak Justine Greening: I have said that I aim to issue my hour loadings is a valid survey? Rail Command Paper early in the new year and it is Justine Greening: That is not a question I am able to likely that that is in the January-February time frame. answer at this point because it is part of the many submissions that came into the consultation. If I was Q143 Steve Baker: I understand that the Department to start pronouncing on various aspects of the refused a freedom of information request for the West evidence base that has been put in and views, and go Coast Main Line peak time loadings, but that it beyond that, that would not be a very helpful released similar data to The Sun for the Great Western intervention for me as Secretary of State. This is an incredibly important project and it is right that we run Main Line. Are you aware of why that happened? the process properly. Clearly, I would be delighted to Why was there an inconsistency? be able to have a more in-depth conversation with the Justine Greening: The short answer is no, I am not Committee about this, but I do not think it is right for aware of that inconsistency. I am very happy to me to do that given where we are in the process. I am follow up. taking an awful lot of time to consider all the evidence that has come in and I am looking forward to getting Q144 Steve Baker: We understand that there was a to a position where I can announce my decision. survey carried out by HS2 Action Alliance and 51m, which showed that peak hour long-distance trains on Q149 Mr Harris: Secretary of State, you have the West Coast Main Line were only about half full. already given an answer to Mr Maynard about rail Do you accept that their survey was valid? fares and you started off by saying you wanted to Justine Greening: I am not in a position to comment continue the direction of travel whereby the on that in this particular inquiry that you are doing. farepaying public took more of the burden of the cost The job that I have to do, and I have to do it properly, of the railways than the general taxpayer. You also is to reflect on the evidence that has been put into the said, towards the end of your answer, that, following consultation. We have had evidence from a range of the McNulty report, you wanted to see lower fares. different stakeholders and people and, of course, MPs. Which of those is a priority for you? As you will be aware, in addition to that, I held an Justine Greening: What I said is I wanted to see the open meeting for all MPs who could come along and pressure reduced—the underlying pressure that is express their views to me on behalf of their pushing fares to go up in the first place. The priority communities. A number of MPs did come to that and has to be to try and get the railway industry into a I am reflecting on all of that now. position where it is less reliant on taxpayer subsidies. Part and parcel of that is going to be a general Q145 Steve Baker: As you know, I have always improvement in the industry’s financial position, opposed it on the basis of the national interest. What which will also see less of a pressure, hopefully, for I am interested in is, if the peak hour long-distance year-on-year fare rises. loading on that line is only about 50%, does that not mean the case for the Y network in HS2 just collapses Q150 Mr Harris: Surely the underlying pressure on on the basis of capacity? rail fares is this movement from the general taxpayer Justine Greening: Chair, we can have a much more to the farebox. That is what is pushing fares upwards. detailed discussion on HS2, but that would put at risk Unless you actually reverse that movement, you are the part of the process we are in and I am in as the not going to relieve the upward pressure on fares. Secretary of State. A lot of those arguments have been Justine Greening: In a sense, what we set out as a made as part of the consultation process. I am now Government is a short-term position where we have reflecting on all of them very carefully and— said that, given the pressures on the public finances, we have to do what we can to make sure the taxpayer Q146 Steve Baker: Can I ask you plainly if you will element of what we are putting into that industry as a release the data on the West Coast Main Line peak subsidy is affordable. The real prize, though, to be hours loading? aimed for is to tackle the underlying problem, which Ev 22 Transport Committee: Evidence
14 December 2011 Rt Hon Justine Greening MP and Steve Gooding is that the railways themselves, according to Roy for these rail schemes? I do not want to distort by McNulty, are about 40% more expensive than paraphrasing, but you basically said they were ready railways in Europe. When he looked at it, he said, and you could use them. Can you give us a bit more “Some of that is down to innate differences between insight into what criteria were used? the railways. If I try and screen that out, what do I Justine Greening: I will let Steve come in on this, think is left that is just extra cost that the industry but whether it is road or rail, which are the two modes ought to be challenged to say it can take out?” He of transport the Department particularly invests in came up with that figure of 30%. Yes, these are because aviation and ports are largely private sector, difficult balances that we are trying to strike in the we have a very rigorous way of looking at both best short term, and you set them out very clearly. In the benefits and costs. On the issues with these specific longer term, the real opportunity is for us to work with schemes—as you have said, a lot of them were ready the industry and for the industry to work with to go—we would have a normal departmental process Network Rail and within itself to try and work better to look at the ongoing investment plan as part of the and more efficiently to drive out costs that way. high level output specification process. These were things we felt we could get on with in advance of that Q151 Mr Harris: When you used the word and were value for money. The processes that we use “affordable” in that answer, were you referring to within the Department, working with Network Rail, “affordable” from the perspective of the travelling enable us to have a very clear assessment about how passenger or “affordable” from the perspective of the they stack up with one another in terms of whether Chancellor of the Exchequer? we should be investing taxpayers’ money in them. I Justine Greening: When I say “affordable”, I was know that Steve will want to supplement that. talking about it in the context of the taxpayer. This is Steve Gooding: All I would add is that we have quite not the Chancellor of the Exchequer’s money. It is detailed discussions, particularly with Network Rail, taxpayers’ money. taking into account their capacity both for bringing design work forward and for taking works forward: Q152 Mr Harris: So not farepayers then? for example, the renewal of bridges, works to paint Justine Greening: And farepayers, as Julie Hilling and renewing certain structures in advance of the next said to the previous Secretary of State when she talked Control Period. In addition, the more customer-facing about a railway for everybody. I think that is works—the Access for All Programme—have been important. It is one of the reasons why I was keen to accelerated. So it is a mix of smaller things that could see, at the growth review, whether there was a way to be done really quickly—things passengers would lessen the impact of the planned fare rises on the benefit from and some enhancements that could travelling public. That was the right thing to do. reasonably be brought forward—and, also, as the Secretary of State said right at the outset, things where Q153 Mr Harris: Do you agree with the comments there was scope to accelerate investment that was of your predecessor that the railways have become a worthwhile but would also be good for creating jobs rich man’s toy? in the short term. Justine Greening: That phrase was actually one proposed by our honourable colleague sat over there, Q157 Graham Stringer: That is a reasonable the Member for Bolton West. My aim is to make sure criterion, given the genesis of the decision that the that we do see railways— Chancellor made, but were there other schemes that were rejected? Were these the only schemes that were Q154 Mr Harris: But do you think that your ready to go or was there a bigger list that we are not predecessor was wrong in saying that? aware of? Justine Greening: I do not think that that is a Justine Greening: The day we do not have a plethora question, if you like— of rail schemes that people want us to—
Q155 Mr Harris: It is a question I have just asked Q158 Graham Stringer: No, in terms of ready-to- and I would quite like an answer. go schemes. Chair: Do you agree with that perception? Justine Greening: There are always a number of Justine Greening: I am not going to answer that schemes people will be ready to be able to push the question. I am the Secretary of State now and I have button on. We had to look at the ones we thought were been very clear that I think having a railway that is a priority. We also had in mind that we are already affordable is important. I have already taken steps engaged in the HLOS process, which will enable us. across Government to make sure that, even though we For those we were not in a position to assess as are dealing with a very difficult set of public finances, effectively as we wanted, they have that core process we have been able to lessen the more challenging for the Department to go through anyway. aspects of the RPI plus 3% rise that was proposed. So I am trying to get that balance struck. It is not easy, Q159 Graham Stringer: Given what has happened, but I have managed to get a better deal for passengers, I think it is a fair criterion. I am trying to get at which will benefit millions of people over the coming whether there were other criteria. Some schemes must months. That is good news for them. have been rejected and I am interested in the criteria for rejecting the schemes. Better still, if you could tell Q156 Graham Stringer: Can you give us a bit more us which schemes were rejected, we could understand insight than you did before into the selection process how the Department was coming to its decisions. Transport Committee: Evidence Ev 23
14 December 2011 Rt Hon Justine Greening MP and Steve Gooding
Justine Greening: I will let Steve answer this about where we believe the benefits would really be question as well. He broadly set out the criteria. felt. Clearly, they had to be value for money. Secondly, they needed to be things we could get on with, Q163 Julie Hilling: Not just on the rail, but it is also otherwise they may as well have been a decision as about road programmes and the whole of the part of the HLOS agreement. Thirdly, they needed to programme per se. There is a reality that more money be things we felt would fit in with the broader is spent in London—there is three times as much spent infrastructure programme and priorities we were on a Londoner as there is on somebody in my looking at. constituency—and it always feels like these are Steve Gooding: All I would add is, when you say opportunities to try and rebalance some of that. “rejected”, we are thinking about what could best and However, it does not feel like that always happens, so most readily be brought forward. To pick a couple of it would be very interesting to have that information. fairly well-known schemes that are also in Justine Greening: The local authority major schemes development but we did not accelerate at this time, are all over the country and they can more easily say the electrification of the Midland Main Line and the where the benefit is going to be felt. Welsh Valleys Lines is still, if you like, on the “to do” list. They will be looked at as part of the high level Q164 Chair: Is a certain regional impact one of the output statement, but there were reasons—the state of criteria used when selecting projects? Was it one of development of both of those and the nature of the the criteria in selecting the list of development services—that meant they were not as attractive for projects? pulling forward. It does not mean they have been Justine Greening: It is one of the things that was rejected. It means they fitted more neatly. For considered. For example, we have an enterprise zone example, the Valleys Lines fits more neatly after we approach. That was part of the considerations we have done the electrification of the Great Western. looked at. If we already have a strategy, if you like, that is more locally focused to try and encourage Q160 Chair: So it was to do with the state of regeneration, or we knew that local authorities were development? saying, “We have some housing opportunities and Steve Gooding: Yes. some industrial economic opportunities here that we Chair: Ms Hilling, you wanted to ask something. think could be unlocked and can be unlocked with more transport investment,” those were precisely the After your question, I am going to move on to roads. considerations we had, alongside core taxpayer value for money, when we were trying to look at the best Q161 Julie Hilling: I think it links nicely to that last mix of spend we could get. set of questions. Mine is an overall question of whether there is a regional breakdown of expenditure Q165 Chair: Were the Local Enterprise Partnerships on rail, but then, also, across all the expenditure that consulted when you decided which schemes you were has been announced in the statement. going ahead with? Justine Greening: We certainly tried to provide that Justine Greening: In relation to many of the road as part of the National Infrastructure Plan where we schemes, they had come predominantly from local set out, if you like, where many of the key schemes authorities. However, when you looked at what the were. There is always a bit of a challenge saying how support was, you saw a lot of those had support from rail can be split down regionally, mainly because, if local businesses. Obviously, Local Enterprise you start off in one bit of the country and finish in Partnerships are at different stages of formation, but another, it is not always easy to say where a national in many cases there was business support for the railway line improvement particularly gives you the proposals that have been made. most benefit. However, we did try and set out, broadly, the regional split in the National Infrastructure Plan. Q166 Chair: But you did not necessarily consult with the Local Enterprise Partnerships? You are Q162 Julie Hilling: In terms of the expenditure on saying you looked at local views in a different way. those programmes, what is the regional spread of Justine Greening: One of the ways we got those money? Has the finance gone equally to the different views was to have that development pool of local regions? authority majors made public, which then gave a Justine Greening: We were very conscious of that. In chance for all interested parties, wherever they were, fact, I remember having what I thought was a helpful to comment on them. In reality, in proposing many of conversation with you at this last Committee when we those projects, the local authorities themselves had talked about the need to try and make sure there was very often engaged for the most part with local some balance to where investment was going. business in order to help them build that business Interestingly, when I did a TV interview today, one of case. They knew that was one of the ways they could the challenges put to me was, “There is nothing here make sure their proposals would be as strong as for the south-east.” So getting a balance is important. possible. Maybe the best thing I can do is this. Let me come back to the Committee with the best split that we can Q167 Julian Sturdy: Particularly on road schemes, try and do based on the growth review. We will have you have just touched on the development pool that a go to see whether, even for some of those rail lines had the 45 major local schemes which have now got that perhaps are more national, we can give a sense funding. Again, that is very welcome news. There is Ev 24 Transport Committee: Evidence
14 December 2011 Rt Hon Justine Greening MP and Steve Gooding some good news there for York as well, which I am congestion and, in doing so, there will be some delighted to see. My question, though, is this. A knock-on advantages in terms of the qualitative number of essential road corridors with strategic local experience of people living nearby. Perhaps more importance were not in the development pool, and for directly in relation to this is some of the funding we a number of different reasons. For some, and two in are putting towards local authorities to get on with particular in my patch, the A1237 and the A64, it was some of those smaller projects—for example, based around the fact that the schemes had not been improvements on signage; getting rid of cluttering worked up in time. They were behind the curve, in signage, or improving mini-roundabouts or bus stops that case, but might still be very worthy schemes that are not quite in the right place; and improving the when they had been worked up, and there are some high streets in terms of traffic flow. Those are some big safety issues on the A64 at the moment. Are the of the things that can help also reduce noise and the Government going to be keeping a close eye on these impact that traffic has on communities. more strategic road investments that are not in the development pool, is there going to be future Q170 Steve Baker: Have you specifically considered investment for those schemes and how are the road surfaces and noise abatement measures Highways Agency or local authorities going to be able alongside motorways? to bring those forward in the future? Justine Greening: I do not think we explicitly Justine Greening: One of the main things we are considered noise abatement per se. However, as part looking at to try and get these funding decisions right of the investment that is there, there is the potential is how we can start to devolve some of those funding for those local authorities who now have money to decisions to local communities themselves. That will invest to consider that. be one approach we are looking to see if we can pursue over the coming years. Inevitably, whenever Q171 Steve Baker: The other issue where transport you have a cut-off point when you have to take a perhaps has a wider impact is with health services decision, there will be some projects where you have seeming too centralised. Certainly in my own been able to work with local authorities and constituency one of the biggest health problems we communities to get over the line. There will be others face is road transport to Aylesbury. I wonder whether that, for various reasons, are simply at an earlier stage the Department of Health has had very much input to of development, but, having gone through that same roads policy in order to try and make sure that people process, can be shown to be valuable. can travel easily to their nearest hospital or specialist My approach is to say that we can continue to work hospital. with local authorities to do that, but we would like to Justine Greening: When we go through these start trying to give local authorities more ability to processes we try to work across Government. The take those decisions themselves rather than having other key element of these sorts of process is the role them driven quite so traditionally top-down, as they that MPs play in alerting me and my ministerial team have been in the past. A key role for the Department to the priorities that people have locally. With some is to make sure we continue to provide some quality of these more cross-cutting issues, there is always a check on business cases so that we can maintain good danger that they get missed when you have your taxpayer value for money. individual Departments working up policy.
Q168 Julian Sturdy: As to some of these schemes Q172 Steve Baker: Turning to fuel duty, if I may, if that did not get the timing to be able to be worked up the Department wishes to reduce congestion and to fit into that particular category, what you are saying carbon emissions, is that part of the reason for having is the door is still potentially open for some of those fuel duty in place, and, if so, why reduce it, from schemes as long as they are worked up in the correct your perspective? manner? Justine Greening: I can definitely say that fuel duty Justine Greening: The short answer is yes. Of course, is a matter for the Chancellor, and I am not in we always have constrained funding. Treasury these days. I am sure we would all recognise that there is a need to strike a balance to make sure Q169 Steve Baker: Just thinking about well-being, we push on this environmental agenda. If you look at which the Government talk about quite often, has the rails package, which is supporting more capacity there been any consideration in this policy towards to help people switch on to railway from roads, if you quietening roads? I know that my own constituency look at a lot of the investment that will, hopefully, and that of Mr Dobbin are afflicted by noisy alleviate congestion, which does nothing to help the motorways very close to people’s homes. Have the environment when you have cars parked with their Government considered spending money on engines on, there was quite of lot of this money, which quietening our motorway network? either directly or indirectly—and directly with low- Justine Greening: In relation to, if you like, the carbon bus investment—will help the environment. I quality of journeys, there is money to improve journey will leave fuel duty for the Treasury to respond to, quality. That is one of the ways we can, in a sense, though. make things quieter. If you look at what we have done with the Highways Agency, there are going to be more Q173 Steve Baker: In terms of the environment, managed motorway schemes, which should, in a what is the Government’s policy in terms of driving sense, help the free-flowing of traffic and manage hydrocarbon-fuelled vehicles off the road? What is it traffic flow better. I would think that will reduce you intend to achieve and by when? Transport Committee: Evidence Ev 25
14 December 2011 Rt Hon Justine Greening MP and Steve Gooding
Justine Greening: There are targets—I think I am obviously white van man and HGVs. There is a whole right in saying by 2050—that tailpipe emissions will strategy, if you like, that needs to be developed with be reduced to zero by then. That is what we are the industry, predominantly to look at how we can working towards. In the meantime, we have a vehicle effectively create vehicles for people to purchase who excise duty that is related to emissions. Certainly from are in that position. At the moment, one of the my perspective within transport, it is an important challenges is that the technology is still very new. We agenda for us to work with the industry on to see what are supporting that transition through schemes like we can do to help make sure that transition happens Plugged-In Places and we will get some learning from fast. that to understand how we can best work with people to transition. Plugged in Places is very much focused, Q174 Steve Baker: To what extent do you think the for example, on workplaces because our sense is that public are aware of this combination of factors they people are more likely to be charging their car there. face? It seems that, over the next 40 years, they will We will get the learnings from these investments to be changing the kind of car they drive, they will be understand the extent Government are in this area of facing fuel duty at least as high as the levels they do trying to encourage this shift, as well as industry, so currently and they will be facing road tolls. Have you that we can make sure the money we are putting done an assessment as to what extent the public are against it has the biggest impact in terms of aware of this combination of factors they face on the behaviour change. roads? Justine Greening: The fact that the Chancellor has Q177 Steve Baker: If I could summarise what I think decided to take action on fuel duty is, in a sense, a I have understood here, it is the Government’s policy, symptom of the fact that we know how aware the over the next 40 years, to reduce tailpipe emissions to public are. There was a debate in Parliament a few zero, to do it by encouraging both the industry and weeks ago on the cost of motoring and the impact of drivers to change their habits, and to do it without high fuel prices. The public are acutely aware of the substantially increasing the cost of motoring. Is that expense of motoring today. A lot of that has been what you are saying? driven by high oil prices, but, to the extent that we Justine Greening: I would say it can reduce the cost had picked up and inherited some planned fuel duty of motoring. If you look at the cost of petrol right now rises that were going to exacerbate that, we have compared to the cost of running an electric car— worked as hard as we can as a Government, within the fiscal situation in which we find ourselves, to try Q178 Steve Baker: But the cost of petrol is two- and alleviate that problem to the extent we can. thirds tax. Justine Greening: A huge amount of the rise in petrol Q175 Steve Baker: Is there not then a tension that has led to this becoming one of the key pressures between this drive to eliminate tailpipe emissions by on cost of living has been the rise in the oil price. 2050 and the cost of motoring? Surely, part of the Government’s plans to eliminate tailpipe emissions Q179 Chair: It is a subject we might return to. It is will be at the price of maintaining a carbon-emitting correct, Secretary of State, that you do not set fuel car. duty rates, but are you or your Department involved Justine Greening: I do not think that is true. If you in discussions on the fair fuel stabiliser? look at the cost of maintaining electric cars, it is Justine Greening: We have had discussions with the cheaper than maintaining a petrol car because there Treasury. As that policy was being developed, it was are fewer moving parts in the engine. If you look at my predecessor, at the time, making his points in the cost of electricity to charge up to get the same relation to the cost of motoring. The stabiliser was a mileage that you would have to fill up another car to policy that was something the Conservative party had do the same mileage with petrol, it is a lot cheaper. talked about in opposition and we were then able to The question is how we can see the motor industry work up and deliver in government. It was one that developing viable technology so that it is commercial was led by Treasury, but of course we have a Cabinet for people to be able to buy those cars in the first Government, so there is always a discussion about place. That is a big challenge for the industry. We are how we can best develop policies. already seeing people switching increasingly to hybrids and that is probably one of the steps on the Q180 Julie Hilling: Are all the projects that are way towards getting rid of tailpipe emissions. being announced new? I know they may have been in the pipeline for a while. I am just aware, to my cost, Q176 Steve Baker: For those people living perhaps that the M1-M6 junction has had work being done on in rural areas or driving in such a way that electric it for quite a period of time now and I am wondering cars are not a feasible means of transport, what would if they are all new projects or if some of the money you expect them to be doing? has already been committed and some of the work Justine Greening: As I said, we are quite some way already started on them. down the track from having everybody in an electric Justine Greening: There are a few projects where we car. The industry would say there is a long way to go have brought money forward. For example, there are to understanding how viable electric cars will operate, some motorway improvements on the M25 and, I what the market for them is, how it fits in with hybrid think I am right in saying, the M1, where we planned and how it fits in with the commercial market, frankly. to spend money, but we took a decision to spend it We know that an awful lot of our vehicles are earlier. Many of the other projects are ones where we Ev 26 Transport Committee: Evidence
14 December 2011 Rt Hon Justine Greening MP and Steve Gooding had some budget allocated, but we had not taken a Q184 Chair: Will the schemes in the development decision about where it would go. What you have seen pool that now have confirmed funding from the through the process today, but of course the one in the Department definitely go ahead? growth review, is setting out where that money should Justine Greening: They will as long as they now go. Those are schemes that were not agreed with provide that detailed business case to back them up. money against them, but now are. Of course, they cannot go ahead without the money. The point is we Q185 Chair: So what will be the business case? have taken a decision on a whole raft of these schemes Justine Greening: They have all gone through the so that they can happen. This time two months ago, usual Department for Transport assessment. The key they were schemes that were good value, but there is for them now, on the back of knowing that they was no money there to fund them so they were not have the money, to bottom out the core detail of the happening. An awful lot of these are new schemes. 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 Q181 Julie Hilling: None of these schemes had get on with that at the local level, which, for many of started pre the statement. them, is excellent news. Justine Greening: For the most part, no. I think I am probably right in saying the answer to that is no. Some Q186 Chair: Are you sure that the local authorities of them were planned in our work planner and we involved can make the contribution they are required brought them forward, but obviously, local authority to where that is appropriate? majors—this is all work to happen. Justine Greening: Yes. One of the key things we challenged local authorities on was their capacity to Q182 Julie Hilling: I have another question about actually deliver these projects. Of course, we had gone roads. Are you intending to introduce tolling on any back to them and challenged them on to what extent of the things you are proposing in this or in the near they were able to deliver the project and to what future? extent they were able to deliver any private sector or Justine Greening: Tolling is something that, as we money that they were providing at their level. We had talked about earlier, has been discussed in relation to to get to a position where we were happy that the potentially bringing in private sector capital to help proposal was going to work. We are delighted that so build extra roads. In the context of the growth review, many of them were at that stage and we have put the it was mentioned in the context of the A14. That A14 money aside for them to go ahead. Yes, those local challenge, as it is called, is bringing together local authorities now need to develop the very detailed authorities and some of the local businesses like plans and, in some cases, go through planning Felixstowe Port—where I was a couple of weeks consent, but we have done our level best to make sure ago—to develop a plan. That plan could include we have put money against projects that we believe tolling. That is one of the things they are looking at, can happen. working together. Q187 Chair: Your predecessor told us that he would Q183 Julie Hilling: I apologise if this was asked be looking more favourably on investment in road when I was caught in the lobby. The M6 toll is schemes if it got to the point where the wonderful if you drive up it because there is nothing “de-carbonisation of motoring” was on an on it, but the M6 is still totally congested. Is there the “unstoppable trajectory”. That was his statement to us. risk with any tolling then, if you are talking about the The Autumn Statement and the proposals in it suggest A14 or anywhere else, that people will avoid the toll a new policy of more investment in roads. What does and just have congestion elsewhere? that mean? Have we reached the point where Justine Greening: In that particular case, it was about de-carbonisation of motoring is on an unstoppable choice. It comes back to Steve’s earlier question about trajectory, or has that policy been abandoned? looking at whether these are commercial propositions Justine Greening: We have to work hard to get to a for the private sector in the first place. What we are position where de-carbonisation of roads and vehicles saying, as a Government, is that we would be missing is now on an unstoppable trajectory. Maybe it is on a trick if we did not look carefully at the prospect of an unstoppable trajectory. If you look at the facts, you getting private sector capital involved to try and get will see more people investing in hybrid vehicles. We some of those projects done that, otherwise, given the are seeing a higher uptake of electric vehicles this year constraints on the public finances, would not be able than we saw last year, although it is from such a low to happen. We do not see that as stopping every new base it is very difficult to look at that percentage road, by any means. What you have seen in the growth increase and draw too many conclusions from it. What review and today is a huge amount of public money we were doing today and over the growth review was that is going to make a whole load of road schemes to say that there were a number of schemes—road happen and Highways Agency money to improve schemes in particular—where we had asked local some of our motorways. We have something like 150 authorities to tell us what they felt the best investment miles worth of lanes that are going to be opened up in their road system was, because that could provide to relieve congestion, so there is a huge amount of a real value to local communities and local economies. taxpayer money going into this, but of course we want We have got to the end of that process, we have made to look to see whether we can get some private sector our decisions and now we have announced them. money in. Transport Committee: Evidence Ev 27
14 December 2011 Rt Hon Justine Greening MP and Steve Gooding
Q188 Chair: Would we be right, then, in concluding because we have pinch points and congestion points that Government policy now is to invest more in road that we want to see tackled. They came back with a building than before? Is that a new policy? number of proposals they felt would be valuable. We Justine Greening: No. What you are seeing is us have now gone through a process of investing in them. responding to the process that my predecessor started, To the extent that those proposals are good value for which was to work with local authorities and ask them taxpayer money, we have said we are prepared to put to say what their priorities were for some investment money against them. that we had set aside to invest in the road scheme. We Chair: Thank you very much for coming and know that is important because of the usage of it and answering questions. Ev 28 Transport Committee: Evidence
Written evidence
Letter from the Chair to Rt Hon Justine Greening MP, 26 October 2011 I am writing to thank you for the oral evidence you gave to the Committee on 19 October and to confirm requests for information we made at that meeting. In relation to the evidence session: — Could you clarify whether or not the department will be publishing an overall strategy and, if not, what form the “overall strategy” you referred to in Q16 will take? — Could you confirm the Government’s position in relation to EU flight time limitations and pilot safety (Qq24–25)? — When will the consultation on possible changes to the MoT test be launched (Q26)? — When did a) the department’s management board and b) ministers first become aware of the scale of the likely cash underspend in 2010–11; what proposals were made for using the underspend on alternative transport projects; when was it decided to use some of the underspend to commence work on the Ordsall Chord and provide extra funding for rural and community bus services and for local authority road maintenance; and why was the department not able to use all or most of the cash derived from the underspend on transport projects (Q54)? — Following the speech by the Deputy Prime Minister on 14 September on capital spending, which transport projects will have “special priority” status and what will this mean in practice (Q60)? — Could you provide further details on the department’s contribution to the Growing Places Fund, from which budgets the money has been taken, the objectives of the fund, and the timescale for its disbursement (Qq61–64)? — Could you provide an assessment of how LEPs have performed so far in working with the department on prioritising, planning and funding regional transport schemes, and how it is proposed that Local Transport Consortia will operate to manage the funding of local transport schemes (Q65)? — Could you provide a breakdown of the successful bids for funding from the first tranche of the Regional Growth Fund, showing the schemes which were wholly, mostly, or partly transport projects and the funding each has secured from the fund (Qq66–71)? In addition, I would be grateful if you could answer the following questions: — In the department’s July business plan update, figures for only nine of the 14 impact and input indicators have been published. Why is it taking so long to publish figures for all of these indicators and when will they all be published? — Could you provide further details about how the department has been reorganised and where staff cuts have been made? I would be grateful if you could reply by Friday 11 November. October 2011
Supplementary written evidence from Rt Hon Justine Greening MP on the Work of the Department for Transport Thank you for your letter of 26 October following the Transport Select Committee oral evidence session I attended on 19 October. I was very pleased to have been able to appear in front of you so early in my tenure and would like to thank you and other members of the Committee for the valuable discussion that took place. During the evidence session, I undertook to submit additional information to you on a number of points. You have also asked me to respond to some further questions in your subsequent letter. I am now in a position to do so. In response to your question about the formulation of an “overall strategy”, I should begin by reiterating the response I gave at the oral evidence session, that the development of an Aviation Policy Framework, alongside our plans for rail reform and the investment that we are putting into both the Strategic Road Network and Local Authority major schemes, collectively provide a clear and strong narrative for the future of the UK’s transport networks. However, I recognise that the development of holistic vision for transport that draws all the various threads together into one space may have some value and will be considering the benefits of such an approach. On the issue of the European Aviation Safety Agency’s (EASA) proposed amendments to the flight time limitations for airline crews, as raised by John Leech, I should clarify that rather than simply raising some minor concerns, the Civil Aviation Authority (CAA) submitted approximately 70 technical comments to EASA. Of these, there were comments on three very significant issues that my Department advised EASA to treat as Transport Committee: Evidence Ev 29
“major objections”. The three areas of concern were changes to the maximum allowable flight duty period for overnight operations, amending the minimum recovery periods between hours of duty and the periods used for calculating cumulative duty hour limits. EASA referred these issues to the Advisory Group of National Authorities for specific discussion. Officials from my Department and from the CAA attended the Advisory Group meeting on 25 and 26 October to ensure that the Agency and other Member States understood the UK’s concerns. Following these discussions we expect EASA to publish their consultation response document and the reports of the independent scientists by the end of the year. Ultimately these requirements will need the agreement of Member States by Qualified Majority Voting, but we will not support any proposal which the CAA advises does not provide an adequate level of protection against crew fatigue. The new rules are expected to come into force after April 2012. On the issue of MoT testing, I am determined to ensure there is a full and balanced review that focuses on ensuring that the public gets the best possible service from the MOT test. We will publish the scope of the review shortly. On the topic of the Department’s underspend in 2010–11, I have been informed that this was monitored through our monthly financial management process and it was apparent by October 2010 that there would be an underspend for the year, after allowing for ring-fenced budgets, and this then grew month on month. The full extent of the underspend did not become clear until late in the year, partly a consequence of successful commercial negotiations with train operating companies in the final quarter. The DfT Board (chaired by my predecessor) were made aware of the end-October position at their December 2010 meeting, although the expected underspend at that time was relatively small and the proposed options for alternative avenues of spend were much more limited. Further options for using the underspend were formally submitted by officials to ministers in February and to the Executive Board at the beginning of March. A package of proposals including funding for local authority road maintenance and Network Rail (including Ordsall Chord) was then agreed. In deciding which schemes to progress, the Department needed to consider whether they were deliverable, whether they would score as in-year DEL expenditure and whether they offered value for money. Not all the underspend was available to reprioritise, because some of it related to ring-fenced budgets (eg depreciation) which cannot be used for other purposes and it is necessary to allow a margin for year-end adjustments, etc. Any additional expenditure had to meet both ministerial and HMT approval and comply with accounting rules including, of course, the need to deliver value for money. In response to your question on the number of transport projects that are in the top 40 list of priorities announced by the Deputy Prime Minister, the announcement included examples of major improvements to the rail network, such as Crossrail and Great Western electrification, and projects to reduce congestion on the road network, targeting pinch points on the M1, the M25, and elsewhere. I understand that the full list will be published alongside the Chancellor’s Autumn Statement and the Growth Review on 29 November. This publication will include details of how the priority schemes will be progressed. I can confirm my response to your question about the Growing Places Fund, in that the amount my Department is contributing to the £500 million Fund is indeed £125 million. The fund aims to kick start developments that are currently stalled, delivering key infrastructure needed to create jobs and build houses. The money comes from a combination of unallocated and reallocated resources and savings achieved against current programmes across Government. The Treasury is currently considering the governance procedures for approving the manner in which the Growing places fund will be disbursed and details will be confirmed in due course, but broadly we envisage making allocations to groups of Local Enterprise Partnerships, which will be best-placed to agree local priorities, with one lead local authority identified to act as the accountable body. We are working on allocating funding as soon as possible and for it to be paid out by the end of financial year as an absolute. You asked me about the progress that had been made on the development of Local Consortia made up of groupings of Local Authorities and Local Enterprise Partnerships. My officials have undertaken wide-ranging informal engagement with local authorities and Local Enterprise Partnerships across England in order to identify the most important issues and create an open dialogue about the rationale for forming consortia. Emerging feedback from this engagement indicates that local authorities and Local Enterprise Partnerships generally welcome the opportunity to work together at the right geographical scale. I am considering the best way of building on these informal discussions with local authorities and Local Enterprise Partnerships and ensure that a system for the next Spending Review period is both fit for purpose and practical in delivery terms. In response to the question you asked me about the transport schemes that have been funded from the Regional Growth Fund, a total of 21 transport schemes and programme bids, that have transport proposals as elements within a wider package, have been approved for funding in principle in the first and second round announcements. These bids are subject to further due diligence and funding will be confirmed once this has been successfully completed. Details of all the schemes can be found at Annex A. Of the 21 schemes, the Tees Multimodal Bio-freight Terminal project already has its conditional offer letter signed, following completion of successful due diligence. Ev 30 Transport Committee: Evidence
On the whole these schemes offer high value for money and will deliver long-term sustainable economic growth as well as create a substantial number of private sector jobs. Over 1,000 jobs are expected to be created through the A45 Corridor Improvement and Gateway to Sheffield City Region schemes alone. With respect to your additional question on the topic of the Department’s Business Plan updates, I can confirm that four out of the five indicators that were not published in July have recently been published in October’s Quarterly Data Summary (QDS). The delays experienced in July were due to system limitations on sourcing the necessary data. However, it is worth noting that input indicator 5—the cost of running the rail network—was always due to be published in October. An overall figure for this particular indicator was included in the October QDS return and further data has since been published on our website, disaggregated by individual train operating companies. The only indicator that remained blank in the latest return was impact indicator 1—reliability of journeys on Highway Agency’s motorway and A-road network—which has been delayed due to errors being uncovered in one of the data sources that underpin the measure. The Highways Agency has recently completed a programme of activity to identify and correct the issues with this data source and we expect to commence the publication of performance data for this indicator before the end of the year and for it to feature in the next iteration of the QDS in January 2012. With respect to your question about the reorganisation of the Department, this followed a “design and populate” approach, where we designed against the needs of the business, including the skills we needed to deliver those, but within the smaller budget we knew we would have. The subsequent selection process reflected this design and additional efficiencies in how we deliver, for example how we manage correspondence, as well as changes in policy, for example the reduction in marketing activity. As part of the Department’s corporate planning process, we are reviewing priorities and resourcing on an ongoing basis to maintain a proper balance between these two and ensure we remain on target to deliver a reduction in the total admin budget of the Department.
Julian Sturdy asked me about infrastructure investment and the “predict and provide” approach to increasing aviation capacity. I should clarify that unlike road and rail, the Government does not of course either own or fund the aviation sector. However, as you will know, we are currently in the process of developing a policy framework for the sustainable development of aviation which will provide the aviation industry with a framework within which it can grow. The Government also has a role in the planning process for major airport investments that are provided by commercial parties and we will of course ensure that in performing this role that growth in the aviation sector occurs in a sustainable manner.
I should further clarify that the Civil Aviation Authority does not consider the adequacy of aviation capacity as part of its remit. Rather it has a duty, amongst others, in setting price caps for the major London airports to encourage efficient investments by commercial operators in new facilities in time to satisfy anticipated passenger demands.
On the issue of Network Rail debt being off balance sheet, as raised by Kwasi Kwarteng, determining the status of Network Rail—and particularly the question of whether the company sits in the public or private sector—is a matter for the independent Office of National Statistics ONS. The ONS has examined all aspects of Network Rail’s structure and governance, including the reserve powers held by Government and has concluded that the company should be classified to the private sector. The decision documents setting out the reasons behind the company’s classification are publically available.
Government cannot make a direct decision to simply change the status of the company at will. We recognise that given the degree of public funding that Network Rail receives, there is a strong interest in ensuring that the company is both efficient and accountable. The company has kept us informed of the steps it is taking to review its governance processes.
Finally, I was asked about the disparity of transport investment between London and the rest of the country. It is important to recognise the role London plays in the economy of the whole country and that transport demand in London is on a different scale to elsewhere. For example, public transport usage in London is at levels unmatched by any other major city—as an indicator, about 46% of the total bus journeys in England are in London.
Comparing outcomes achieved makes more sense than simply comparing levels of spend. Achieving acceptable levels of overcrowding at the major London termini requires much more significant and costly interventions than outside London. Having said that, we have some strong examples of investment that will address the North-South gap in economic growth rates, such as the proposed High Speed 2 network that has the potential to transform the social and economic geography of Britain, and the £560 million local sustainable transport fund which enabled local, authorities outside London to bid for funding to support packages of transport interventions that support economic growth and reduce carbon emissions in their communities.
I hope this information is helpful. I look forward to working closely with you and the other members of the Committee in the months and years ahead. Transport Committee: Evidence Ev 31
Annex A The schemes are: 1. A45 Corridor Improvement (Damson Parkway to M42 Junction 6). The project will divert the A45 transport corridor to provide a dual carriageway incorporating a public transport corridor, along with technology enhancements at junctions to improve traffic flows. Diversion of the A45 proposes to enable the expansion of Birmingham Airport runway. The corridor also serves several employment and development sites, the railway/airport interchange and the NEC. 2. Expansion of the Mersey Multi-modal Gateway 3MG—this is a major rail linked logistics park currently under development at Ditton. RGF funding will support the expansion of the site through remediation of 100 acres of brown field land and rail infrastructure to open up a green field site known as Halton Fields. 3. Gateway to the Sheffield City Region—Infrastructure to improve access to the Sheffield Gateway. The business space created is expected to be partly for air freight, rail freight and other logistics activities and partly to accommodate an expansion of business to business services, warehousing and light manufacturing. 4. Tees Multimodal Bio-Freight Terminal—the project will involve the construction and development of a new rail freight terminal adjacent to the Network Rail Middlesbrough Goods Rail Yard, the construction of new bulk storage facilities, and the linking of two river wharfs to create additional quay space and a new deep water shipping berth. 5. Todmodern Curve and Weavers Triangle—Scheme to reinstate a section of rail to create a direct linkage between Burnley and Manchester and unlock the adjoining Weavers Triangle site: a collection of historic mill buildings and brown-field land. 6. Luton Borough Council—M1 Junction 10A improvement. Scheme to improve Junction 10A of the M1 motorway which claims to unlock the constraints to business investment in the strategic corridor connecting Luton airport to the Ml, and proposes to provide skills training and cluster and supply chain development for SMEs. 7. Able UK Ltd, Installation of new drydock gates located in Hartlepool reopening the drydock to enable Able Seaton UK to compete in ship repair, offshore wind, ship and rig decommissioning, recycling and assembly. 8. Southampton Eastern Docks—upgrading Platform Road to improve traffic flows to Southampton Eastern docks (Dock Gate 4). This is part of a wider programme to increase capacity at Dock Gate 4 and regenerate parts of the Royal Pier and Town Depot. 9. Ferrybridge Dish Hill roundabout—scheme to provide road infrastructure works in Ferrybridge/ Knottingley, including construction of a roundabout to provide direct lorry access to the A162, reducing lorry traffic in Ferrybridge town centre, and facilitating development of employment land in the area, including development of a new multi-fuel combined heat and power (CHP) plant. 10. Etruria Valley Enterprise Zone—funding transport infrastructure to unlock the full potential of the proposed Etruria Valley Enterprise Zone, comprising works to key road junctions, and construction of a bridge over the River Trent. 11. Private Railway Network—Stoke on Trent/Cauldon Lowe/Alton Towers/Leek—North Staffordshire—acquiring and renovating disused railway lines to create private sustainable rail infrastructure to provide passenger rail access to Leek and Alton Towers, rail freight connections to a cement works and quarries. 12. Black Country Light Rail Link—R&D and manufacture of light rail hybrid railcars to operate a shuttle passenger service on freight rail line between Stourbridge Junction and Brierley Hill. 13. PD Teesport’s infrastructure development to support manufacturing and logistics facilities in the offshore wind energy sector. 14. Newcastle Central Gateway—to improve access to key development sites in central Newcastle, including improving access to and from Central Station and remodelling of Neville Street. 15. Expansion East Kent Programme—proposal for improving line speeds between Ashford and Ramsgate to reduce journey time to London by 8 minutes. 16. Low Emission Transport and Sustainable Manufacturing North East—to support manufacturing and development for next generation of transport technology, including R&D centre for low emission vehicle technologies. 17. West of England RIF Programme to provide developers with loans to invest in enabling infrastructure across the LEP area. 18. (Manchester programme bid) Port Salford—the completion of Western Gateway Enabling Scheme to further develop the Barton Strategic Employment Site. 19. (Manchester Business Growth Programme: Delivering National Rebalancing and Recovery- Pipeline projects)—proposal to develop a new electric vehicle. Ev 32 Transport Committee: Evidence
20. Cornwall and Isles of Scilly Investment Programme—Investment in Isles of Scilly Airport, improving road access to eco-community, and testing of offshore renewable infrastructure. 21. Middlewich Action Plan—constructing the Middlewich Eastern Bypass, to allow the achievement of the Middlewich Action Plan. November 2011
Supplementary written evidence from Rt Hon Justine Greening MP on the Autumn Economic Statement: Transport When I recently gave evidence before the Transport Select Committee about the transport elements of the Autumn Statement, I promised to come back to you and the Committee on a number of points. Please find further clarification on these below:
The Timetable of Southern”s Procurement of Additional Vehicles Southern issued an Invitation To Tender in September to procure additional vehicles to enable it to deliver its December 2013 timetable. The deadline for bids was 16 November. Since then, commercial discussions between the train operating company and the bidders have continued in order to agree an acceptable, value for money position before they move to preferred bidder status. If such a position can be achieved, my Department will be progressing commercial discussions With the operator on any required changes to their Franchise Agreement in light of this procurement.
Trans Pennine Electrification and the Northern Hub The Northern Hub has been developed from a base of today”s diesel-operated network and takes account of the slower acceleration and line speeds of older suburban diesel trains. Electrification of the North West Triangle between Manchester, Leeds and Preston, and now of the north Trans Pennine route between Manchester, Leeds and York, has changed the way the railway in the north will operate. Faster electric suburban trains are likely to replace the older diesel trains and changes to service routes and calling patterns may offer more efficient alignment of train capacity against demand. This has changed the base assumption of the Northern Hub. For example, a local diesel train from Liverpool to Manchester Victoria would be caught up by a faster diesel Trans Pennine train by Manchester Victoria and therefore needs overtaking at Victoria if the trans Pennine train is not to be delayed. However if both these services are electric—as is expected to be the case later this decade—then the electric local train can reach Stalybridge before it is caught up by the trans Pennine train. Thus the investment in overtaking facilities for diesel trains at Victoria needs to be replaced by investment in reversing sidings at Stalybridge for electric trains. The Northern Hub schemes need to be reviewed to see if they are still the best solutions against the background of electric trains replacing diesels on the core routes. As well as having good acceleration and high line speeds, the electric trains are likely to have greater passenger capacity and, with modern sliding doors, may require less time at stations than the older diesel trains during the peak hours. The redeployment of the faster Trans Pennine diesels also has to be considered as this too will change the services that can be provided. The train operating companies have started to consider with Network Rail the range of opportunities for service improvements this wide-ranging electrification plan brings. We expect the rail industry to work with stakeholders to agree the likely service changes that will result and then review these against forecast demand to validate Northern Hub projects. This could change both the mix of schemes and the scheme priorities within the package of schemes that constitute the Northern Hub programme. We have committed to consider the Northern Hub schemes again as part of the Government”s High Level Output Specification (HLOS) for rail investment in Control Period 5 (2014–15 to 2018–19). This will be published by July 2012 and will take account of the revised advice on the Northern Hub.
FOI Request about West Coast Main Line Train Loading Data Though the Department for Transport has—with the explicit agreement of the train operators concerned— published lists of most crowded trains (see: http://www.dft.gov.uk/publications/overcrowded-train-services) no other data on train loadings have been released by the Department, as this material in held under terms of commercial confidentiality. The decision to withhold the peak loading information for the West Coast Mainline has been appealed. There is an established procedure for handling appeals where an applicant feels an information request has not been dealt with properly which my Department is following, and I would not want to interfere with that process. Transport Committee: Evidence Ev 33
Breakdown of New Transport Schemes by Region
The following table breaks down spend on both the transport schemes announced as part of the Autumn Statement and the further Local Major schemes announced on 14 December.
The Department received an extra £1.5 billion in the Autumn Statement over the rest of this Spending Review period. The schemes below are either funded by the Departmental budget, the extra funding from HM Treasury or, for some rail projects, by increasing the Regulatory Asset Base. Although £972 million of Departmental spend on Local Major Schemes is outlined in this table, the total cost of these schemes are £1.4 billion, with Local Authorities and other third parties responsible for the additional funding.
As I explained during the session with the Committee, it can be difficult to assign spend to a particular region, particularly with some rail projects. For Trans Pennine Electrification, I have apportioned spend between the North West and Yorkshire and the Humber for the purpose of this exercise. Description Total spend (ern)
NORTH EAST
Morpeth northern bypass 21.1 Sunderland strategic corridor 82.6 Accelerate NEXUS (Tyne and Wear metro) modernisation programme* 4.0 107.7 NORTH WEST
New link road for M56 (Manchester Airport) to the A6 120.0 Crewe Green link southern section 15.7 Manchester cross city bus* 32.5 Pennine Reach (East Lancs rapid transit) 31.9 Rochdale interchange* 7.0 Trans Pennine electrification (spend arbitrarily split between regions) 145.0 352.1 YORKSHIRE AND THE HUMBER
Accelerating M1 J39–42 improvements* 50.0 Leeds inner ring road** 18.5 Leeds rail growth 10.3 A6182 White Rose Way improvement scheme 9.7 South Yorkshire bus rapid transit phase 1 (Sheffield) 19.4 A164 Humber bridge to Beverley 7.7 Beverley integrated transport plan 20.7 A684 Bedale bypass 35.9 Access York park and ride 15.3 New road linking the A18 and A180 4.9 Supertram additional vehicles (Sheffield) 12.4 Large debt write off and lower tolls for the Humber Bridge 294.0 Trans Pennine electrification (spend arbitrarily split between regions) 145.0 643.8 WEST MIDLANDS
Managed motorway on the M6—Junction 10a to Junction 13 118.9 Improving the A45/46 at Tollbar End 113.0 A45 westbound bridge (Solihull) 8.5 Darlaston (Walsall) 14.3 Evesham bridge maintenance 8.6 Worcester ITS 14.2 Chester Road (Birmingham) 8.3 Coventry-Nuneaton rail upgrade 9.8 295.6 EAST MIDLANDS
Widening A453 between Nottingham, the M1 and East Midlands Airport 160.0 Improving Junction 19—the junction between the Ml, M6 and A14, a key 153.0 freight route, as well as improving safety Widening A14 Junction 7 to Junction 9 (Kettering Bypass) 113.4 New A43 Corby link road 21.2 Hucknall town centre improvement scheme 8.5 Lincoln eastern bypass 50.0 Ev 34 Transport Committee: Evidence
Description Total spend (ern) London road bridge (Derby) 4.4 Loughborough town centre transport scheme 14.8 Nottingham ring road 12.8 538.1 EAST
A14 targeted improvements between Cambridge and Huntingdon 20.0 Croxley rail link (Watford) 76.2 Luton town centre transport scheme 15.9 Norwich northern distributor road 86.5 198.6 SOUTH WEST
South Bristol link phases 1 and 2 27.6 New A380 road linking Newton Abbot to Torbay (Kingskerswell Bypass) 76.4 Bath transportation package 11.7 BRT Ashton Vale to Temple Meads (Bristol) 34.5 Camborne-Pool-Redruth transport package 16.1 Elmbridge transport (Gloucester) 14.1 Weston Super Mare package 10.4 North Fringe to Hengrove package BRT (Bristol) 51.1 241.9 LONDON
Managed motorway on the M3, Junction 2 to Junction 4a 150.1 Accelerating M25 Junction 23 to Junction 27 improvements* 50.0 Retrofit existing buses for air quality purposes (this will be match funded by 5.0 the Mayor) Move to RPI+1 (lost revenues for TfL) 136.0 341.1 SOUTH EAST
Tipner interchange (Portsmouth) 19.8 Northern road bridge (Portsmouth) 11.1 East-West rail project 270.0 Flexible commuter rail tickets 45.0 New Southern rail carriages 80.0 425.9 NOT REGION SPECIFIC
Integrated transport block top up—Used by local transport authorities for 50.0 small transport improvement schemes costing less than £5 million Road pinch point fund—Local Managed Network Schemes and highways 217.5 technology improvements New low carbon emission buses—green bus fund round 3 20.0 Tackle local problems on the rail network more quickly (NRDF) 100.0 Metal theft taskforce 5.0 Move to RPI+1 (lost rail revenues and transitional costs) 154.0 Rail winter resilience 10.0 Access for All station accessibility improvements 26.0 Bridge renewals 250.0 832.5
*These schemes are being accelerated and spend is being brought forward from future years. ** This is the maximum DfT spend and is dependent on the successful resolution of various funding agreements with other bodies who have liability for some of the works. December 2012 Transport Committee: Evidence Ev 35
Letter from the Chair to Rt Hon Justine Greening MP, 16 January 2012 Thank you for your letter of 16 December in which you followed up on various points raised during the oral evidence session we held on 14 December to discuss the transport implications of the Autumn Economic Statement. We have a number of additional issues arising from the session and your letter on which we would be grateful for a reply. You offered to follow up with the Treasury our questions about the progress being made in securing investment from pension funds in major infrastructure projects (Q24). Could you provide us with the Government’s current position on this? Further to the details you have provided on the procurement of rolling stock by Southern Railway, (a) are the carriages being bought outright by Southern or leased and (b) is DfT’s contribution of over £80 million being made as one or more capital payments in 2011–12 as shown in Table 2.3 of the Autumn Statement or, alternatively, by increased annual revenue payments from DfT to Southern? Could you explain why the Government is offering to part-fund procurement of rolling stock for Caledonian Rail? Has the DfT prepared an economic appraisal of the case for a financial contribution and, if so, what is the estimated benefit:cost ratio? Finally, on the decision to return to the RPI+1% formula for regulated rail fares for 2012: (a) is it still Government policy to increase regulated fares by RPI+3% in 2013; (b) what do you estimate will be the effect of the decision to return to RPI+1% in 2012 on the overall subsidy for rail; and (c) how is the cost of restraining fare increases for rail and TfL’s tube and bus network (£345 million in Table 2.1 of the Autumn Statement) divided between national rail and TfL? I would be grateful if you could reply by 30 January. January 2012
Reply from Rt Hon Justine Greening MP to the Chair, 3 February 2012 Thank you for your letter of 16 January 2012, following up on my appearance at your Committee on 14 December 2011 to discuss the implications of the Autumn Statement. You asked about HM Treasury’s work to secure investment from pension funds in major infrastructure projects. The Autumn Statement announce that Government: — had signed a Memorandum of Understanding (MOU) with two groups of UK pension funds, and will work together with them over the coming weeks to unlock investment in infrastructure; — was establishing an infrastructure investors’ forum with the Association of British Insurers (ABI) to explore ways that insurers could provide further debt finance for infrastructure projects; and — was targeting up to £20 billion of investment from these initiatives. HM Treasury is continuing to engage with the two pension fund groups and the institutional investor forum led by the ABI as these groups identify their investment objectives and the priorities to unlock further investment in infrastructure. HM Treasury is maintaining a dialogue with my Department and other Departments with an interest in these initiatives as discussions develop. With regard to your next question, Southern undertook a procurement exercise for additional rolling stock and selected Bombardier as the manufacturer for these carriages. Southern will be leading a re-financing project later this year, so it is anticipated that there will be a new owner of the carriages in due course and that they will be made available to other train operators when the Southern Franchise ends in 2015. With regard to DfT’s support, the terms of the Franchise Agreement entitle me to vary the contract to require Southern to run extra and longer trains on the basis that the financial terms of the contract are rebalanced through the contract’s Financial Model. The adjustment to franchise payments represents the costs to Southern of procuring the trains, as taken account of in the Financial Model. The introduction of extra train carriages is part of the Government’s High Level Output Specification initiative, which is progressively introducing more capacity onto some of the most over-crowded parts of the rail network. The Department is adjusting the franchise payment profile in January, February and March 2012 to reflect that Southern has made a payment, and to reflect operational costs associated with the introduction of those vehicles. The franchise payment profile is expected to be changed after the successful completion of the financing competition for both the rentals and other operating costs until the end of the franchise term. Turning to your question on the Caledonian Sleeper service, the Caledonian Sleeper is operated by First ScotRail as part of their franchise. This franchise is entirely devolved to Transport Scotland and officials and ministers in my Department have no involvement in the decision to fund additional vehicles for the sleeper service as part of the Growth Review. Finally, with regard to your questions on fares, our agreed fares policy for 2013 and 2014, as set out in the Comprehensive Spending Review, is an average rise of RPI+3% on regulated fares in both years, returning to Ev 36 Transport Committee: Evidence
RPI+1% thereafter. Over the long term we are committed to reducing the cost of railways and ending the era of above inflation fare increases. The additional £345 million funding allocated to this item in table 2.1 of the Autumn Statement includes the “Barnett consequential” funding for Scotland arising from this decision to incur additional expenditure. The amount received by the DfT was £190 million (see para 1.91 of the Autumn Statement). Of the £290 million, £136, was given to Transport for London to enable it to implement this policy. The remaining £154 was the Department’s best view at the time of the impact of reverting to RPI+1% in 2012 on the overall subsidy for rail. I hope that this information is helpful. February 2012
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