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

Memorandum by the CBI (TYP 50)


  1.  The CBI welcomes the opportunity to submit evidence to the Transport Sub-committee on the Government's 10 Year Transport Plan. Business believes an efficient transport system is essential to maintaining the competitiveness of the UK economy. The CBI has long campaigned for sustained and higher levels of investment in transport. We therefore welcomed the Government's 10 Year Plan which broadly matched the value of investment CBI believes is necessary to bring our transport system up to the sort of standards enjoyed by much of Europe today.

  2.  The CBI believes it is vital the Plan meets its core targets in order to reduce both congestion on our roads and pollution. Published last July the CBI conducted its own assessment of the Plan's progress in the first year since it was published. Our report entitled "Transport 2010: On-track or off-target" identified a number of barriers that, if not tackled, risked throwing the Plan off course even before it gets going. Generally there is the need to turn the Plan itself into a costed and prioritised programme of work with a timetable for delivery. Progress has been made with the Highways Agency roads strategy and more recently the SRA's Strategic Plan but there is still more "flesh to be put on the bones" to turn it into an instrument for delivering real improvements to our transport system.

  3.  Our principal concerns centred around:

    —  the ability of the railways to meet its 10 Year Plan targets;

    —  the need to put in place the right structures to deliver private sector investment (especially for rail);

    —  serious skills shortages in all areas of transport operation and provision of infrastructure; and

    —  delays to major projects caused by the planning system.

  4.  These issues remain to be tackled but since our report developments, in particular on the railways following the decision to out Railtrack into Administration have only served to underline the impacts of the problems we highlighted and increased the difficulty and complexity of their resolution.


  5.  The CBI report had already identified that the current state of the railways was a serious impediment to achieving the 10 Year Plan targets. The industry faced two fundamental problems. Firstly, the lack of a clear strategy and direction for meeting its core targets of 50 per cent growth in passenger usage and 80 per cent for freight. Secondly, the need for the right structures to be put in place to encourage the private sector to deliver the £34 billion of investment to enhance rail infrastructure. The subsequent decision to put Railtrack into Administration has created greater uncertainty and instability within the industry and increased the difficulty of attracting private sector investment.

  6.  Despite this, the CBI believes the private sector can deliver the amount identified but Government and the industry will have to work hard to create greater certainty within the industry and restore investor confidence.

  7.  The recent publication of the SRA's own Strategic Plan is an important first step to achieving this. It rightly prioritises the need to restore stability to the industry, improve network performance and gears the balance of projects and investment to meet the 10 Year Plan's core rail targets.

  8.  However, raising such a large amount of capital will be hugely challenging and there are still many practical issues that need to be resolved if the private sector money is to become a reality. A key question is whether rail can generate enough revenue from the forecast growth in passenger and freight use to fund such a large investment. Government may have to examine the need for more direct Government involvement with the private sector in underwriting the finance of railway enhancement projects.

  9.  Other key issues the SRA and the Government must work to tackle include:

    —  establishing a clear timetable for a successor to Railtrack, the outcome of which must be a company that can operate and maintain the network efficiently and safely;

    —  a programme to resolve the deep seated structural problems of the industry;

    —  streamlining the regulatory regime with greater clarity between the respective roles of the Government, SRA, ORR and HSE;

    —  greater contractual certainty for the private sector with clear output specifications and certainty of payment;

    —  better information to allow investors to make informed decisions, costings and assess risk eg an accurate and up to date register of railway assets;

    —  establishing the true cost of running the railway-operation and maintenance (this may require more public spending support); and

    —  accounting for the expenditure impacts of the EU Interoperability and Noise Directives, additional safety and Disability Discrimination Act requirements.

  10.  Many of the above issues could have clear public spending implications with more money being required. However, if so, this should be financed through additional transport expenditure within the context of the forthcoming CSR and not shifted from other modes within the 10 Year Plan returning to "stop-go" investment programmes of the past.


  11.  The Highways Agency in general has made a good start in setting out how it intends to deliver its part of the Plan. However, the CBI is concerned over the slow progress and quality of the Multi-Modal Study (MMS) programme. Delays are raising fears amongst contractors of a hiatus in work after 2002 when the contracts for the bulk of the targeted programme will have been let. This uncertainty may see contractors reluctant to invest in the necessary resources needed to deliver the Plan, further magnifying the skill shortage problem. Ministers will need to make swift decisions upon receiving recommendations from regional planning bodies.

  12.  Initiatives from the EU, Treasury, Highways Agency (Dartford), and individual MMSs, suggest that inter-urban tolling may be back on the agenda. The Government needs to clarify the role it sees, if any, for inter-urban tolling as part of the 10 Year Plan, and consider it within the context a general review of road user taxation/charging.


  13.  There has been a welcome increase in local authority capital funding, continuing with the recent local transport settlement. The 2002-03 settlement was worth £1.58 billion, compared to £1.36 billion in 2001-02. However, this is allocated within a single capital pot whereby there is no guarantee all will be spent on transport. There will need to be robust monitoring of local authority expenditure and greater transparency to ensure money earmarked for transport is not siphoned off for other uses.

  14.  Further concerns also exist over the mix of capital and revenue spending. While capital spending is increasing, revenue spending is not increasing at the same rate. This means that local authorities may not be able to afford some of the necessary preparatory work for new schemes, or their subsequent maintenance, which are funded from revenue expenditure. There is therefore a danger that some of this capital expenditure might not be spent on transport and could, under the single capital pot, be diverted. Work is needed to establish to what extent this is a problem for local authorities.


  15.  The CBI believes that under the right conditions congestion charging schemes can play a role in reducing congestion but remain opposed to workplace place levies as an ineffective means of tackling congestion which simply add to business costs. The Mayor's proposed congestion charging scheme for London is the first such scheme in the UK and it appears many local authorities are waiting to assess the outcome of the London scheme (should it finally go-ahead) before bringing forward their own proposals.

  16.  However, possible complications and delays to London scheme could mean that the other twenty congestion charging and workplace parking levy schemes anticipated in the Plan might not be brought forward, at least within the ten year timescale. This will have clear implications for the Plan's congestion reduction targets and revenue forecast, and Government should assess now the potential affects should the expected number of schemes not take place.


  17.  It is clear that, currently, the skills and capacity of the industry are currently not available to deliver the Plan. The issue is whether the private sector, local authorities, highways authorities and rail companies are able to recruit the necessary personnel as increased work comes on stream. Government have recognised that this is a serious barrier to delivery and is working with the CBI and others to address this problem.

  18.  The issue is particularly acute for the railways with shortages in specialist areas such as signalling and overhead line equipment engineers causing problems completing existing projects let alone future commitments. For many local authorities the skills shortages is a bigger barrier to delivering their LTPs than lack of money. A recent Steer Davies Gleave survey found that 90 per cent of local authorities agreed there were skills shortages. These were highest in areas such as traffic management and monitoring, travel behaviour, marketing and promotion, and most importantly project management.


  19.  The delivery of infrastructure enhancements to both road and rail may be seriously undermined by the planning system that currently can take decades between the conception of a project and completion. The Government has recognised this as a problem and have published a series of proposals in their document "Major Infrastructure Projects: Delivering a fundamental change". The CBI welcomes the proposal to increase the role of national government in approving in principle projects of national significance, although we await Parliament's views on what type of process this might take.


  20.  The CBI continues to support the objectives of the 10 Year Plan. For too long our transport system has suffered due to stop-go investment and uncertainties over funding. Sustained government commitment to the Plan is essential if confidence it to be generated and these uncertainties overcome. The CBI looks forward to working with the Government in the months and years ahead to help ensure that the Plan stays on target and the key barriers to delivery are addressed.

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