Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence

Memorandum by National Express Group PLC (TYP 20)

  National Express Group is a leading public transport group. We carry over one billion passengers a year worldwide through our bus, train, tram and express coach operations. We hold leading market positions in the United Kingdom, the USA and Australia. Within the UK, we operate buses, trains and coaches. Further background information on the Group and our individual subsidiaries can be found via

  The 10 Year Plan was generally welcomed by the Industry, at the time of its publication, being the best attempt by any recent government to provide a workable plan for transport. In this Memorandum of Evidence, we prefer to concentrate on a few issues where there have been important changes or developments since publication, preferring not to revisit the whole of the plan after such a short period. These issues include:

    —  The environment for road space allocation, and the pace of implementation, particularly at local level.

    —  Progress with Local Transport Plans.

    —  Issues concerning railway maintenance and investment, in the light of the Hatfield Accident.

    —  The balance between private and public investment in the rail industry.

  The first point we would make relates to policy on road space allocation. Since the publication of the Plan, TfL has continued to make good progress in developing its plan for the introduction of a charging cordon around Central London, but nothing else is as well developed in the rest of the country. Meanwhile, the EU has published its White Paper on Transport, in which the central theme is the levelling of the playing field between differing transport modes, and one of the key issues is the allocation of space on economic principles. However, we sense that the overall mood in the UK is one of doubt and scepticism. We continue to believe that the country's transport policy will not be seen as successful unless road congestion is significantly alleviated, and that the 10 Year Plan needs to deliver in this area. Congestion charging is only one approach, and in the West Midlands, where our TWM subsidiary carries the vast majority of bus users, we advocate the prior use of alternative measures including further bus lane development and control of city centre parking spaces. We believe that the government needs to be seen to be doing much more to promote the development of road space allocation schemes, and to be encouraging local authorities and highway authorities to move forward more quickly.

  More generally on local transport issues, the Plan rightly concluded that local problems need local solutions. It was envisaged that the Local Transport Plans would kick-start major improvements to the local infrastructure. Whilst the Government has kept its commitment to increase funding for local schemes, very little progress is apparent on the ground. Instead, considerable time and expense has been spent considering possible interactions between local transport issues and Regional Strategies whereas in fact such interactions are rare. Local Authorities and Passenger Transport Executives have been very slow in producing the companion "daughter" documents to the 10 Year Plan, such as Bus Strategies, Ticketing Strategies and Passenger Information Strategies, whilst appearing to use the delay in the production in their reports as a reason that they cannot proceed with implementing schemes. It is inevitable that relatively little progress has been made towards implementing the 25 light rail schemes set out in the Plan, and apart from Manchester, it seems unlikely that many schemes will actually be operational before 2010. Whilst fully supporting the Government's commitment towards the Light Rail strategy, we believe that more immediate emphasis should be given to bus based improvements, which given the local political will, can be implemented within 2-3 years. We suggest that the Government needs to signal to Local Authorities that far more urgency and action needs to be given to the delivery of Local Transport Plans and to the spending of the increased allocation of funds, to the benefit of users. We also suggest that the Government uses its review of the planning system to look at options for adjusting the TWA system to facilitate the possibility of fast-tracking appropriate schemes, including Light Rail. The Sub-committee might usefully have a look at this area as well.

  The third point relates to rail maintenance and investment. Clearly, the additional renewals and maintenance which are now believed to be necessary in the wake of the Hatfield Accident cannot have been taken into account (since Hatfield was some months after the Plan); however, there is a widespread belief within the rail industry that the inputs to the Plan took no account of a number of other factors which have since been shown to be significant. These include the costs of making stations compliant with the requirements of the Disability Discrimination Act ("DDA"), the costs of implementing the findings of the Cullen/Uff reports, and the costs of implementing EU requirements on interoperability. We have no particular insight on either the make-up of the Plan costs, or the additional provisions, which will be needed for the above factors. But the numbers circulating within the industry suggest that the Plan could have omitted necessary expenditure of the following order:

Infrastructure maintenance and renewals £3.8 billion
Cullen/Uff£3 billion to £5 billion
DDA£1 billion
EU Interoperability£1.5 billion

  These numbers are so significant that they cannot be ignored; they would cause the Plan to fail unless the issues are addressed. We believe that the Government must revise the Plan to take account of these factors. The options for doing so all have significant downsides, but would appear to be as follows:

    —  Revisit the need for incurring spending, commissioning suitable expert advice as needed,

    —  Adjust the Plan financial inputs to accommodate some or all of the items,

    —  Adjust other Plan Outputs (eg the national coverage of the growth targets).

  The last key point we would comment on is the balance between public and private capital investment in the rail sector. The key numbers within the Plan are private investment £34.3 billion and public investment £14.7 billion. We believe it is realistic to assume that private capital will continue to be available at competitive rates for the financing of new rolling stock and, indeed, the refurbishment of existing stock. However, we now doubt whether private capital will wish to commit to rail infrastructure investment on anything like the scale previously envisaged. This is for a number of reasons:

    —  Firstly, the whole question of asset condition risk has been highlighted recently, and it is unlikely that investors will be prepared to take on this risk until the proposed asset condition register has been up and running for some while, and been shown to be reliable.

    —  Secondly, the placing of Railtrack plc into railway administration has created uncertainty as to the institutional framework of the nation's rail infrastructure. Until it is clear what risks and rewards are likely to be involved in investing into railway infrastructure, the market is unlikely to put significant capital into play.

    —  Thirdly, doubts over the adequacy of government funding of the 10 Year Plan (as described above) will themselves add to the concerns of the private sector in contributing its share.

  At National Express, we have done some work on developing an SPV methodology for infrastructure investment, but the (relatively small) size of schemes we have been dealing with did not appear to support this approach. However, other TOC owners who have reached preferred bidder status for franchise replacement bids would appear to be having some difficulty in making the concept work even for much larger schemes. We believe that the government needs to review the circumstances in which significant private sector investment can be attracted into rail infrastructure schemes.

  As a final "postscript", we would add a comment on Fuel Duty Rebate ("FDR") for coaches. The 10 Year Plan includes the extension of fuel duty rebate to more community transport services, but does not mention coaches. We are trying to convince the Government that its extension to long distance scheduled coach operations would assist with the achievement of a number of Plan Outputs, such as reduction of social exclusion, reduction in road congestion levels, and reduction in air pollution and CO2 emissions. The Sub-committee may like to consider the point.

  In conclusion, we regard the Sub-committee's enquiry as very timely, and as a useful intervention which should prompt the Government to review particular aspects of its 10 Year Plan; this will enable the Plan to retain its credibility overall, and provide the conditions for successful implementation.

January 2002

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