Memorandum by National Express Group PLC
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 www.nationalexpressgroup.com.
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
|Cullen/Uff||£3 billion to £5 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
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
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.