Examination of Witnesses (Questions 40
WEDNESDAY 30 JANUARY 2002
40. You are indicating that there might be an
internal departmental line of progress; is that confidential to
the Department, or is it something that we should know about,
or should be publicly available?
(Mr Rickett) I think, once Ministers have taken a
view on that, I can give you an answer, if I can put it that way.
41. What you are actually doing, Mr Rickett,
is booking yourself a permanent appearance at this Committee for
the next 12 months.
(Mr Rickett) Oh, I am confident of that.
42. Can I ask if Mr Rickett can give us some
idea of when that is likely to be?
(Mr Rickett) We are doing the review of the Plan,
as we said we would, as part of the Spending Review; the focus
is very much on delivering against what we promised, rather than
changing direction, because we want a stable framework. We will
be aiming, I think, to publish a document in the summer that tries
to give more detail on what has actually been delivered and what
has been decided since the Plan, and slightly more analysis about
the sorts of issues that you are addressing, about how we monitor
progress, and how you would be able to monitor progress, too,
because that is important.
43. I would like to put it to you, Mr Rickett,
that, if there is a Plan, which there is, and if it is over ten
years, which, of course, it is, and welcome, I may say, it is
of significant public interest that progress towards the objectives
in that Plan is available.
(Mr Rickett) Yes. One point I might make is that we
have been developing our model so that it gives us what we hope
is better and more detailed forecasts; so one part of the work
programme, essentially, is to redo all the forecasts that we made
as part of the 10 Year Plan.
44. So that Lord Birt can have more models to
(Mr Rickett) Your words; yes.
45. Congestion and workplace charges, Mr Rickett.
You will be aware of the conclusion of the Committee in previous
reports on the 10 Year Plan, that we thought that, if congestion
charging and workplace charging were to be introduced and were
to be workable and, most importantly, understood, if not necessarily
fully accepted, by the public, there would have to be concomitant
improvements in public transport. One of the points we made was
that, in that situation, the Government should look to provide
resources up front, so that, in local areas, improvements to public
transport could take place at the same time and not some years
afterwards, in terms of workplace charging and congestion charging.
Is that a view you would support, and, if so, what representations
are you making to the Treasury, accordingly?
(Mr Rickett) I think it is what we have done, first
of all. We have given a very large increase in allocations to
local authorities for their Local Transport Plans, so they have
resources to put in place a wide range of public transport, and
indeed local transport, improvements, including walking and cycling
and other important modes, so they have resources to put in place
significant improvements. If you are asking a more complicated
question about can they, in some sense, sort of draw down on the
revenue from congestion charging, or something like that, that
is a slightly different issue. The Government is intending to
legislate, when time allows, to introduce prudential limits for
local authority borrowing, rather than the current system of control,
and under such an arrangement it would be perfectly open to a
local authority to borrow against future charging streams, if
it could convince lenders that such streams of income were to
be forthcoming. No doubt they can also enter into private finance
arrangements to achieve the same sort of end. But, as I said,
we think we have given a large increase in local transport allocations,
which should enable significant improvements in local transport.
46. I see. I would like to ask my final question
then, as a direct consequence of that response, and this concerns
bus travel. The Plan target is for a 10 per cent increase, but
we are looking at something like a 50 per cent increase within
the London area. My basic mathematics suggest to me that, if the
50 per cent increase takes place in the London area, we are looking
at decreases elsewhere in the country. If I can bring my questions
together, rather than coming back; in spite of the Quality Assurance
Agreements, or whatever they may be, with bus operators, I think
the experience outside London, certainly in the area I represent,
is, we are seeing cuts in services and the inability, due to resource
problems, of local authorities actually to counter that. We are
finding that tendered bus services are increasing by something
like 21 per cent, in terms of costs. That is an example of the
problems that are being faced. So how do you square this particular
circle, Mr Rickett; do you agree that, if the target is 10 per
cent and it is going to be 50 per cent increase in London, we
are looking at cuts elsewhere? And, secondly, should we strengthen
the arrangements with bus operators to make them Quality Agreements
and Contracts, rather than arrangements? And, thirdly, what about
the increase in tendered bus prices, and the effect that is having
on bus services?
(Mr Rickett) We will need to review the bus target;
it was set about a year before the Mayor's Strategy set a target
of a 40 per cent increase. And, as you say, that would imply a
continuation of the sort of trends we have seen over the last
ten years, where we have seen increases in London offset by reductions
elsewhere, with the reductions elsewhere perhaps beginning to
bottom out, but a strong regional variation, in that, I acknowledge.
We are also developing our model to give us a bit more information
about forecasting bus journeys, rather than the sort of very aggregated
information it was giving before. So we will want to review the
target, so that we are sure it is sufficiently ambitious.
47. So what is a reasonable target?
(Mr Rickett) I am not going to commit myself to that
until we have done the analysis; and partly because, as you say,
the bus industry is facing challenges.
48. It is difficult, really, to produce a model
that makes sense, if you have not got any possible idea of the
targets, is it not?
(Mr Rickett) The model tells us what might happen
on certain assumptions, or, at least, it gives us an indication
of the likely direction of change on certain assumptions.
49. Precisely; so we have to have some idea
of the assumptions you are making before we can (work it out ?)?
(Mr Rickett) Yes; the input assumptions that we can
make, which tend to be about levels of resourcing, and so on.
But, just to answer the other questions, I am not quite sure where
to start, but, I suppose, first, to start with withdrawals; yes,
we have seen increased withdrawals, the withdrawal of services,
partly because costs have been rising, particularly labour costs,
and, indeed, there have been labour shortages. It is not quite
as bleak as it was portrayed in the newspapers yesterday, which
referred to services accounting for two million passenger journeys
being withdrawn; that is about one in 1,500 of the journeys that
are made on buses in a year, because there are 2,950 million bus
journeys in Great Britain outside London, so that is a relatively
small number. But, yes, costs are going up; yes, local authorities
are having to spend more, after years in which they were able
to get the same level of bus services for less, as costs came
down after deregulation. We have given local authorities more
resources to provide bus priority measures, which are important
because congestion is a difficult problem for buses, it reduces
the reliability of services, and that is something that passengers
worry about. We have given them enough to put in 4,500 kilometres
of bus priority routes. We have given targeted resources for rural
bus services and deprived urban areas. I believe the Rural Bus
Subsidy accounts for an additional 17 million passenger journeys
a year, to compare with the two million of withdrawals. We have
given what we consider to be generous local authority revenue
settlements, and local authorities, as I say, have been giving
more priority to buses, as costs rise: and we have given the local
authorities new powers. I am not sure the answer lies in immediately,
only very shortly after introducing the Transport Act, moving
from an emphasis on statutory Quality Partnerships to statutory
Quality Contracts, which imply taking commercial services back
into local authority control, but we will want to keep under review
how the Transport Act regime is working.
Chairman: Mr Rickett, you have been very helpful,
but I think we are going to need shorter answers, and certainly
we are going to need shorter questions.
50. What actual mechanisms are you going to
use to restrict fare increases in public transport, in both road
and rail; what is the mechanism?
(Mr Rickett) Fares on buses, which we have just been
discussing, are set largely by commercial bus operators, because
over 80 per cent of bus services are commercially operated, and
we rely on competition and contestability to keep fare levels
down. In terms of rail, as I said, we are assuming that the regulated
fares continue to fall, in real terms, and that the unregulated
fares, again, partly through competition with domestic air services
and other alternatives, are kept in line with prices. That was
the assumption made in the Plan.
51. What is the basis for that assumption holding
(Mr Rickett) The regulation is a requirement; the
other assumptions are based on an assessment of trends.
52. Have you taken into account the trend of
Virgin, on the West Coast Main Line, Liverpool to London fares,
increases of over 100 per cent, over a relatively short time,
and the rail regulator refusing to conduct an investigation, and
taking 18 months to say he refuses to have an investigation? Is
there anything you have got in this Plan that would make a situation
like that unable to happen again?
(Mr Rickett) I think it is quite difficult just to
say that rail fares have risen by 100 per cent, because of the
fairly complicated structure of rail fares.
53. Yes, but you made a statement, Mr Rickett,
that you had an assumption based on trends. Now I am asking you,
what is the basis for your assumption that you do not need any
additional powers, or any additional regulations, to keep the
increases down, in the way you suggested?
(Mr Rickett) I do not think I accept your assertion
of the level of increase on rail services, when you look at the
fares that are provided for those who book in advance, which is
the policy that those operators have been moving towards. I am
sure you have heard all this before.
54. No. I am talking about fares that commuters
are called upon to pay. Now are you saying, do I take it, from
the comment you have just made, that, when you are talking about
the increases that you think will happen in the future, that is
actually related to very limited areas of travel and it is not
going to apply to all journeys; so does it have any meaning?
(Mr Rickett) London commuting fares are capped, and,
indeed, will have fallen by 1.4 per cent in the last year.
55. No, I am not talking about London. I do
not wish to get into more detail.
(Mr Rickett) That is where most of the rail journeys
56. So you do not have a concern outside London;
is that the Department's view?
(Mr Rickett) No; as I said, the SRA are reviewing
fares in the rail industry, and I think we should wait perhaps
till they have finished their review.
57. But you have the 10 Year Plan here, there
are assumptions here about public transport, congestion, private
transport, all those things are interrelated; is it good enough
just to assume somebody else will solve the problem that has been
highlighted, and one you do not seem to want to recognise?
(Mr Rickett) I am not saying I do not recognise the
issue. As I said at the beginning, we have a Plan that is based
on a significant fall in road user prices, and a continuing increase,
in line with prices, of public transport fares, and that is one
of the underlying assumptions in the Plan.
58. But if public transport fares continue to
rise, and rise in a way that you had not predicted in drawing
up this Plan, will not that have an impact on private driving
and on congestion?
(Mr Rickett) If fares rose faster than our assumptions
then it would have an effect on our predictions, and we would
need to take that into account in our Plan, yes. I think that,
ten months into the Plan, it is a bit early to assume that the
assumption over ten years is going to be wrong.
59. But what mechanisms do you have to assess
what is actually happening, and outside of London, unless the
Department really believe that London is the only place that matters?
(Mr Rickett) No, I did not say that the Department
believe that at all. Well, fares are a matter of public record,
one can do surveys of what levels there are.