WEDNESDAY 6 MARCH 2002
Mrs Gwyneth Dunwoody, in the Chair
Mr Brian H Donohoe
Examination of Witness
RT HON STEPHEN BYERS, a Member of the House, Secretary of State for Transport, Local Government and the Regions, Department for Transport, Local Government and the Regions, examined.
Chairman: Secretary of State, we have a small piece of housekeeping to perform. Declarations of interest?
Mr Stevenson: George Stevenson, member of the Transport & General Workers' Union.
Chairman: Gwyneth Dunwoody, Rail, Maritime & Transport Union.
Mr Donohoe: Member of the Transport & General Workers' Union.
Mrs Ellman: Louise Ellman, member of the Transport & General Workers' Union.
Miss McIntosh: Anne McIntosh, interests in Railtrack, First Group, Eurotunnel, BA, BAA, and the RAC.
(Mr Byers) I am Stephen Byers, Secretary of State for Transport, Local Government and the Regions. Can I thank you for agreeing to take my evidence at 4 o'clock. As I explained to you, I have a long-standing engagement at 6 o'clock and that will enable me to discharge that obligation as well as giving evidence before your Committee.
(Mr Byers) If I could because I do think the 10 Year Plan is very significant as far as the Department is concerned. When it was published just over 18 months ago the 10 Year Plan for Transport was widely acknowledged as a fundamental change in the way in which we invest in transport. It is not only a major increase in funding but an end to the decades of feast and famine, an approach which had produced short-term thinking and shoddy services. The 10 Year Plan brought in a new long-term integrated planning framework. The greater certainty and the sustained extra investment the Plan embodied have been widely welcomed, including by your Committee. I am determined to maintain that approach and to hold to the objectives and the commitments contained in the Plan. That is not to say that the Plan is set in stone. Any long-term plan needs to be flexible enough to take account of new pressures and new developments, developments such as the recent events in the rail industry and the difficult changes that we have had to make. That is why the Plan has built in a provision for regular reviews and it is why the first of these will take place this summer, as was always envisaged, in conjunction with the cross-government public spending review. The review will allow us to update the Plan and to take account of new developments as well as reporting on progress made to date in delivering on the Plan itself. We have some difficult challenges ahead in delivering the transport system that we all want to see. On the railways we have to improve performance and bring in the extra private investment. I know that Richard Bowker, the Head of the Strategic Rail Authority, has confirmed to you that he is confident that this can be done. Indeed, in the last few weeks we have seen some £470 million of private investment committed through the new Chiltern franchise and the two-year extension awarded to GNER on the East Coast Mainline. Certainly the much needed changes that have been made over the last few months give me every confidence that in railways we have begun to turn things round. Some other early actions are also beginning to have an effect. The doubling of funding for local authorities' transport plans has meant that literally thousands of smaller local schemes and many major ones as well have now started across the country, and nearly a dozen new light rail schemes are now at various stages of planning. It is, of course, still very early days in the life of the Plan. Funding under the Plan started to flow in April of last year so we are still less than one year into the 10 Year Plan, but I am convinced that the 10 Year Plan continues to represent the right way forward for transport. In July I shall announce the outcome of our review and I look forward to the Committee's report to inform our thinking.
(Mr Byers) I do believe we are - to the targets set down in the 10 Year Plan. I do believe it is still very early days but I am confident that with the measures that we are putting in place, whether in railways or in other parts of the transport system, we will be able to meet those ambitious and challenging targets that are contained within the Plan. I will be reporting in July about the progress we have made. If there are any areas where we might be slipping behind I will want to report on the action we want to take to make sure that we make up lost ground, if there is lost ground, and that we meet the targets which have been set.
(Mr Byers) I want to report in July on the progress we have made in the targets in the 10 Year Plan.
(Mr Byers) The strength of what I want to do in July, if it has a strength, will be to report on progress towards the targets set out in the 10 Year Plan, so it will be an opportunity of assessing the progress that we have made, reflecting on new developments, considering any assumptions that may have been built into the Plan which a year on may not be as strong as perhaps they were when the Plan was first put together, and then saying publicly how we intend to move on as far as the Plan is concerned.
(Mr Byers) We will be stating the progress that we have made towards all of the targets contained within the 10 Year Plan which can then be judged accordingly. Some will be very positive. Some, as I say, may not be moving as quickly as we would like and we then need to say what steps we intend to take to achieve the targets set in the Plan.
(Mr Byers) Which is not a flexible date?
(Mr Byers) It will be July 2002.
(Mr Byers) No, it is July 2002, not July 2003.
Chairman: How kind. Mr O'Brien?
(Mr Byers) We have very much left it to the local authorities themselves to come forward with congestion charging schemes. We know that in London the Mayor has decided to go ahead with the scheme that he wants to introduce from 17 March next year in London. We have no power to disapprove that. There is no veto over the scheme itself. With other local authorities they do have to obtain the approval of the Secretary of State before they can go ahead. I think where we are at is that many of those local authorities are standing back and waiting to see how the London scheme progresses and what difficulties the London scheme might identify. I get that feeling just in conversations I have had with those local authorities that certainly earlier indicated they would be thinking about the introduction of some congestion charging policy.
(Mr Byers) I am not aware of any detailed studies which have been carried out but I am more than happy to check to see if there is detailed work on this. The important point about urban regeneration is that effective transport systems - and that will mean reducing congestion - is one of the positive contributions that can be made in terms of improving the competitive position of business. I know it is one of the complaints that I am sure members have heard- I have certainly heard it as Secretary of State - that as far as London is concerned there is a view that the level of congestion is now getting to such a pitch that it is affecting the competitive position of businesses in the City of London, which is why we do need to move ahead with the investment that we want to see. There are real issues to do with urban regeneration where the transport infrastructure is going to be a key part in improving the situation as far as those areas are concerned.
(Mr Byers) As far as the cities are concerned, I do think it is right to leave it to local authorities to come forward with their own proposals.
(Mr Byers) There is an assumption that there will be some congestion charging schemes introduced but the assumption is that it will be in the life-time of the Plan itself, not in the next two, three, four or five years. If the London scheme starts as is proposed in March of next year, it is going to be very much the litmus test. Lots of local authorities are looking to see how that scheme operates. If it is a success I think we will see a number bringing forward their own proposals. There is an issue which is the responsibility of my Department directly, which is in relation to the motorway system in particular and the congestion we are seeing there. Part of that is a road-building programme in a sensitive way, which the Committee will be aware of, but also about managing the network far more effectively. We do not run the network. We build the roads and then we leave them and we do not manage the network. I think we can do a lot more in terms of managing the road network. We had an example a couple of weeks ago where there was a very serious accident on the M3. The consequence of that was that there was total grid-lock for about eight hours because the incident was not effectively managed and the road was not cleared as quickly as it could have been. There are lessons to be learned and we have got some pilot projects operating at the moment to see how we can manage the network far more effectively and efficiently than we do at the moment. That might be one way in which we can relieve congestion.
(Mr Byers) By running the network I mean, for example, on the M25 if there is an accident, hy does it takes four hours to clear it?
(Mr Byers) I was not thinking beyond that in the context of what I have just been saying, Chairman.
(Mr Byers) There can be targeted road improvements that will help but I do also believe that the challenge that we face is to look at how we manage the motorway network system more effectively than we do at the present time.
(Mr Byers) No. I can understand the motives behind those that have written the letter. I have to say, and I think Richard Bowker confirmed this when he gave evidence before the Select Committee, there is no indication that the private sector is shying away from the Public-Private Partnership approach to transport projects. Most of them do make a clear distinction between the contractual relationship that the private sector has with the government in relation to a PPP partnership as opposed to the situation that is applied with Railtrack where you had a company which was quoted on the stock market in a quite different situation.
(Mr Byers) We are confident that the investment that we believe will come from the 10 Year Plan as far as the private sector is concerned will still be there. As I have said, since the turn of the year in relation to two specific franchise, a renewal in relation to Chiltern and an extension in relation to GNER, the Strategic Rail Authority calculate that something like £100 million of private investment will come linked to the GNER two-year extension. I think they are projecting something like £370 million potentially of private investment on the Chiltern franchise, so there is £470 million in the last eight or nine weeks coming from private investment in just two franchises. There is no indication that the City and financial institutions are walking away from transport PPPs.
(Mr Byers) As I say, there is no sign that that is the case and that is why we are confident that the sums which have been mentioned in the 10 Year Plan will be achievable. I was concerned about some of the comments contained in the newspapers today about the view of the Strategic Rail Authority in relation to private investment, and I reminded myself that in the Strategic Plan published by the Strategic Rail Authority, page 25, states very clearly: "The total amount of private sector investment leveraged by this Plan is expected to be very similar to that envisaged in the 10 Year Plan" - and that is £34 billion. I also because of comments made from the Strategic Rail Authority spoke to Richard Bowker who made the following comment which I am allowed to quote publicly. "It is rubbish to say that I found the Secretary of State's funding estimates to be wildly optimistic. The SRA's Strategic Plan contains sufficient results to deliver the 10 Year Plan targets, subject to the clear assumptions made. Many people seem intent on talking the railway down, suggesting that the private sector is not interested in investing in the railway. Look at the facts. The private sector has invested in the Chiltern franchise and in the East Coast franchise. Private investor interest in major infrastructure upgrades is growing. I know that because I am in daily discussions with them." So it is very clear from the comments which have been made by the Strategic Rail Authority and by the Chairman Richard Bowker that there is no indication that the City is walking away from investing in the railways or indeed elsewhere in the transport system.
(Mr Byers) The Special Purpose Vehicles are a new entity that we want to use particularly for the upgrades that we want to see on the network, and they will be in place when we are ready to move as far as the upgrades are concerned. On the original plan we were never going to be in that situation in the period that we are now at, so there has not been a delay as far as they are concerned. It is worth reminding the Committee that Railtrack in administration is not just sitting there doing nothing. Railtrack in administration is actually in the last few months doing a far better job of running the railway network than was the case in the autumn of last year when we had management in charge - senior executives, the Chief Executive and the Chairman - who, understandably, were interested in securing shareholder value and arguing the case for shareholders. They have now moved to Railtrack Group where they can pursue that particular objective, but we have been able to move in engineers who know about railways to head up Railtrack plc. As a result of that, certainly anecdotally talking to train operating companies, there has been a dramatic improvement since the turn of the year as far as the performance of Railtrack is concerned. Railtrack in administration is not lost time. It has provided the opportunity of focusing on the day job of getting the network running effectively as well as making sure - and this is the responsibility of the Administrator - that when Railtrack comes out of administration there is a strong vehicle that will be focused on putting the interests of the travelling public first.
Q: Could that tempt you to keep Railtrack in administration for a little longer than necessary?
(Mr Byers) No. I think for reasons that I am sure the Committee would understand I personally would like to get Railtrack out of administration as soon as possible. However, there is a proper process that has to be completed by the administrator because the period of administration and the task of the administrator is not just to make sure that we have a strong successor to take over from Railtrack - that is the part of the administrator's responsibility - but it is also to make sure that the shareholders get the value in Railtrack to which the shareholders are entitled, and that is a clear responsibility on the administrator and he will want to make sure over the next few months that, whatever happens, he secures the best deal that he can for those shareholders. So he will want to take time to do that, although I think the administrator as well recognises that it is in everybody's interests to get Railtrack out of administration as soon as is possible, bearing this mind his legal obligations to shareholders and, also, to have a strong successor to Railtrack.
(Mr Byers) From when he gave evidence?
(Mr Byers) He certainly indicated to myself as Secretary of State that September this year would be the time at which he would hope to be out of administration.
Chris Grayling: Mr Byers, you just said that special purpose vehicles would be there when they were needed, and that they would be according to plan, if I understood correctly. I spoke to two senior executives in franchises this morning who told me the opposite. They told me of one specific project that is timetabled within the Strategic Rail Authority's plan that is running at least two years behind schedule --
Chairman: Could you give us their names? If you are going to quote, I think you should make it clear who they are.
(Mr Byers) The question I think the record will show was in relation to Railtrack being in administration being the cause for delays in the SPVs and, if they are already two years behind schedule, I do not think that could be put down to Railtrack being in administration.
(Mr Byers) As I say, I think the particular question was in relation to Railtrack being in administration and the delays to SPVs as a result of that. There is no secret, because I think this may be evidence I have given to this Committee before, that the Strategic Rail Authority was struggling to set up the concept of SPVs, and this may be a reflection of that. I think the Committee has heard from me before about the delay that there has been in establishing special purpose vehicles which is regrettable. The work is now going on but the specific question I think, if I am correct, and the record will show this, was in relation to Railtrack being in administration delaying SPVs yet further and I do not think that is the case.
(Mr Byers) I would not because it assumes that no work is being done at the moment: that somehow everything is being put on hold until Railtrack comes out of administration. I think it is worth reminding ourselves that the Strategic Rail Authority is now taking a lead role in developing the concept of SPVs to a far greater extent than perhaps they were before. So Railtrack, or its successor, will clearly have a key part to play and it will be one of the parties in a special purpose vehicle, most probably. It does not have to be the case but most probably will be, but that does not stop the detailed financial and legal work going on at the moment - and, indeed, that work is going on. As we have heard from Mr Grayling, there are quite detailed discussions going on with some of the existing franchise holders, or some groups to whom an in principle agreement has been made to award a renewed franchise, where they are talking in detail about using an SPV for the future. They may be going rather more slowly than we would like, but the work is going on.
Chairman: But you could give us a timetable?
(Mr Byers) There are discussions going on at the moment, commercial discussions, with various franchise holders about using SPVs as far as they are concerned. It is on-going, so this is happening whilst Railtrack is in administration, so we do not have to hold back until Railtrack comes out of administration. As we have heard from Mr Grayling, that is the case, so there is work going on at the present time.
(Mr Byers) I honestly do not think it is crucial and dependent on Railtrack coming out of administration. I think it is dependent on the parties concerned (1) reaching a commercial deal that they are all satisfied with and (2) special purpose vehicles are far more difficult than people originally thought they would be --
(Mr Byers) Some people thought they were going to be the solution to all of the problems of investment in the railways and I think you, Chairman, will know who I have in mind when I say that. They are proving to be far more difficult in terms of the legal complexity, the financial arrangements and so on. They have to be worked through and that is what is happening at the present time. There are one or two commercial negotiations which are going on at the moment based on the SPV model; some of them are going very slowly - some of them apparently are making better progress; and I think we will have to let the commercial negotiations take their course
(Mr Byers) You are right to say that we have already allocated some of the unallocated provision that was contained within the Ten Year Plan. Some of that, as the Committee will be aware, has been allocated to provide additional funds for the railway network.
(Mr Byers) Well, I think there are issues to do with railways that need to be addressed, to be honest, and I think we need to get on with the job, and I hope the Committee got a memorandum this morning showing the spend in this year, the first year of the ten year plan, showing that we are looking to spend something like half a billion pounds, £562 million pounds more than we had originally planned in the first year. That is because, if the Ten Year Plan is going to be a success, we need to frontload the spending because there are real issues that have to be tackled very quickly if we are to hit those targets in ten years' time, and that is why we need to get the money going out sooner rather than later. If that does mean making an allocation early on in the Ten Year Plan that is something we have to be prepared to do, bearing in mind that we will probably see something like another three or four spending reviews completed before the Ten Year Plan reaches its final conclusion. So there are always opportunities to revisit the assumptions, the needs and the aspirations contained within the Ten Year Plan.
(Mr Byers) We are confident, as I said, that the £34 billion we are talking about for railways from the private sector will be secured. We calculate that something like £3 billion of public sector investment will be needed to underpin that private sector commitment, and that is one of the reasons why we net off £3 billion from a total figure so there is not a double count as far as £3 billion is concerned. We are confident that, with that level of public sector investment, we will be able to secure the £34 billion. On the specific issue of the projects mentioned in the Ten Year Plan, they are contained on page 47 of the Ten Year Plan. There is only one of those projects which, in fact, is not committed within the Strategic Rail Authority's strategic plan and, even then, they do talk about the up-grading of the Great Western Main Line possibly being brought within the Ten Year Plan - if at all possible. So the difficulty that perhaps Mr Stevenson is referring to is not as great as some commentators have perhaps stated.
(Mr Byers) It is looking at the risk that is attached and at the levels of investment that might be achieved from the private sector; it is looking at the extent to which public sector provision will underpin and lever in that additional private sector investment. Do not just hear it from me but hear it from Richard Bowker who is dealing with these issues every day and talking to people who will have to make these investment decisions, and his view is that, as far as railways is concerned, that level of private investment - £34 billion - will be achieved.
(Mr Byers) Within the Ten Year Plan?
(Mr Byers) We have done some work on the profile of the Ten Year Plan and it might be helpful if I could send the Committee a note.
(Mr Byers) It will be a long letter, Chairman!
Chairman: I like getting letters from you, Secretary of State.
(Mr Byers) I think it varies on the franchise itself. We have looked very carefully at the whole franchising regime, and the Committee will know I made some comments last summer about changes to the franchising regime which were slightly misinterpreted. The point I was trying to make - and the policy is I hope now one which people understand - is that it is really looking at the nature of each franchise, whether there needs to be a major up-grade in the line concerned, whether there needs to be changes to rolling stock and to reliability and so on, and on the basis of that deciding what would be the most appropriate period. The Strategic Rail Authority under Richard Bowker have given some very detailed consideration to the period of franchises to be awarded, and they are minded to go for a model which is basically a 15-year franchise but broken up into three sections of five years each, to be renewed after each five-year period. Now that has the benefit of having the security of a longer term, 15 years, but not tying the hands of the Strategic Rail Authority so they do not have any control during that 15-year period, because there will be the renewal periods after five and ten years, and I have to say that that is a model that, to me, looks very attractive and has the potential of both securing the longer term investment with rights and guarantees and so on, and also delivering gains very quickly. As far as the East Coast Main Line is concerned, the attraction I think of the two-year extension is we will see some quick gains as far as the East Coast Main Line is concerned, particularly an increased frequency to Leeds, and that will also take pressure off the line going through Newcastle up to Scotland, because there will be people at the moment who use that line to change at York or Doncaster to go elsewhere in Yorkshire who will go straight through to Leeds because of the increased frequency of the service, so there will be improvements in terms of capacity on the other part of the East Coast Main Line as well. But the real benefit of a two-year extension to the franchise is that will allow us to work out in detail the up-grade that will be needed on the East Coast Main Line. That had not been done before we had to decide whether or not to award the franchise last summer. That work is now going on: decisions will be taken about the nature of the up-grade over the next few years during the lifetime of the new franchise when it is awarded; and that will form an important part of the franchise negotiations, because what we would like is for the new franchise holder to be involved financially in the up-grade of the East Coast Main Line.
(Mr Byers) I have no doubts and I think the issue will be whether we use SPVs to support a big up-grade like the East Coast Main Line or a more traditional form of funding, but I do believe - and this is in conversations I have had with the train operating companies - that they recognise that they have a financial and commercial interest in putting their own money behind an up-grade in the line for which they have the franchise and I think, increasingly, we will see train operating companies and people who want to take over the franchise being very interested in being involved in investing in the improvements --
(Mr Byers) No. I think vertical integration is a different issue and, as I think the Committee will be aware, the Strategic Rail Authority is now looking and talking to the industry about the benefits or otherwise of vertical integration. The difficulty we have when we talk about vertical integration is that it means different things to different people. For some people it does mean controlling wheel and track: for others it just means taking a financial interest in the track rather than controlling it themselves and there is a whole variety of different types of vertical integration which are around. What has to happen, and this is why we welcome very much the initiative taken by the Strategic Rail Authority, is we have to find out exactly what people mean by vertical integration and then try and identify the benefits, if any, that can come from such an approach. It may well be that a pilot project somewhere with one franchise might be an interesting way forward. The Chairman may not agree!
Chairman: Mr Donohoe will want to know which one.
(Mr Byers) To be honest I think it would depend on the nature of any accident that might occur and the circumstances or the reasons for the accident occurring, so I think it would not be helpful and would be scaremongering to try and respond in a definite way to that question. It would depend on the nature of any accident that might happen.
(Mr Byers) I saw these reports and I think they do not accurately reflect the situation. What the Highways Agency is looking at at the moment is the idea of effectively almost parcelling together a number of road improvements within a geographical area and asking a contractor to tender for that work, so rather than have individual roads going out to tender, one might do it on a more geographical basis so that you get better co-ordination, you get work being done at different times on different roads so you do not have some of the problems we have witnessed over the last few years where one contractor begins work at the same time as someone else begins on a road that you would normally take to get round the problem which is being caused by the works being carried out --
(Mr Byers) At the moment, the plan that the Highways Agency has got - and this is not going to start until 2004 - will be to co-ordinate the work more effectively. It is not a question of the Highways Agency somehow privatising the road system, which was a headline I saw in a newspaper two weeks ago. That is not the proposal that the Highways Agency has got. It is better management, ensuring better co-ordination, and also getting better value for money for the taxpayer by dealing with it in a co-ordinated manner.
(Mr Byers) I think the system we are developing with the Highways Agency is one that I am perfectly relaxed and happy about.
(Mr Byers) I did not say that --
(Mr Byers) That is far more difficult!
(Mr Byers) I think we are developing, and the Highways Agency is developing, an approach which I think is one which will bring benefits to motorists because it will reduce disruption and also to the taxpayer because it will achieve better value for money.
(Mr Byers) We always look at programmes and initiatives that take place elsewhere within the UK and see if we can learn from them. I am sure in relation to what has been happening in Scotland we will learn from that, and it will inform any decisions that we take as far as England and Wales are concerned.
(Mr Byers) I think we will learn from the Scottish experience, from the benefits and disadvantages that might be there.
(Mr Byers) It certainly would not be helpful.
(Mr Byers) Specifically on the local transport plan, we have put in significant additional resources, much of it coming from the public sector, to really boost the amount of money going into our very important local initiatives, and I do not think there is a particular problem as far as the local transport plans are concerned where we have seen a big injection of public money going in.
(Mr Byers) In relation to local transport plans, what we have said to local authorities is that they should look at involving the private sector to see if they can get better value for money in so doing, but there is no compulsion on them to do so. It really is a simple value-for-money test. If a local authority, as part of their local transport plan, decides they will not get a better return or better value for money by involving the private sector, there is no requirement for them to do so.
(Mr Byers) I think it depends on how we move forward within the 10 Year Plan. The Committee will be aware that the Strategic Rail Authority is conducting a review of fares on the railways at the present time, at the structures and pricing, to see what outcome they will bring forward there. We are looking very closely as a Department at the bus network in particular; I am very concerned that we are putting more money into buses but I do not think we are seeing the improvements many of us would want, and I think that is something we need to be concerned about. I am conscious that in London the Mayor has adopted a policy of effectively not seeing real terms increases as far as fares on buses are concerned, and we have seen a big increase in ridership --
(Mr Byers) We have not passed the buck to local authorities. I think we are saying to local authorities that this is a power they have if they feel it is appropriate in their own areas, and that is quite different. I was going to make the point that we are looking at the whole costs of rail travel through the SRA review of fares; at the whole question of the level of charges as far as buses are concerned; but what I am not prepared to do is somehow artificially put a burden on motorists to try and put them in a situation where they are paying more so you force people to use the bus or railways. I do not think that is appropriate. One of the things we have been able to do in government is to see the cost of motoring go down in the 10 Year Plan for two principal reasons: (1) there will be further improvements as far as fuel efficiency is concerned - something which, for environmental reasons I would hope the hon. gentleman would welcome but they will reduce costs - and (2) we will continue to see the price of new vehicles going down quite dramatically. The price of new cars has gone down by about 12 per cent over the last 15 months - that has made a big difference. If the European Commission move on their block exemption then we will see even further cuts in the price of new vehicles in the United Kingdom.
(Mr Byers) The other option, as I think I said when I gave evidence before the Committee before, is to take the steps that we are talking now to lay the foundations for improving the public transport system, and whether it is in terms of rail or bus network we have to take those steps and we are doing that. That is one of the reasons why I want to see the 10 Year Plan, the money spent in a way which sees more money coming upfront, so that during the course of the 10 Year Plan we can see those improvements coming in to the public transport system so that motorists will have a genuine choice as to whether or not they drive their car, get the bus or the train.
(Mr Byers) There is no doubt that what has been happening in relation to freight coming in from France has distorted the figures considerably and, if that was to continue, then it would have a severely detrimental effect on achieving that target.
(Mr Byers) We are pointing out to the French authorities that they have a real responsibility to secure the boundaries to allow freight to go through in a way which is compatible with their obligations, and also to ensure that we do not see people using it as a way of illegally entering our country. The French have given certain commitments about the steps they will take; we have to hold them to that and we have to make sure that, when a fence is constructed it is constructed in such a way that it is strong and cannot be pulled down, but by a few - 50 or so - people, and it has to be properly policed.
(Mr Byers) They do, yes.
(Mr Byers) I share the frustration of the Committee about the failure of the French authorities to address this in an effective way. They have the means: they have the ability to deal with it: for whatever reason they have failed to treat this as seriously as they should --
(Mr Byers) And there are firms up and down the country facing those difficulties so we need to make sure the French authorities recognise their responsibility. This will be raised - and is being raised - at the highest levels to make sure that the French take this seriously, and we will continue to do that. I share the frustration of the Committee and this has taken a lot of my time, and it has taken some of the Prime Minister's time, to get the French authorities to look at this seriously, and they have a responsibility and I think most of us --
(Mr Byers) It has taken too long, to be very frank, but we will continue to make representations to the French authorities so that they will see that they have to act and take this matter seriously.
(Mr Byers) I understand and I am agreeing with Miss McIntosh about the problems that we have. We are making representations to the French authorities, pointing out the obligations that they have and the need for action to be taken quickly to address this particular issue.
(Mr Byers) There is a factually accurate statement in the fact that there is a French company who would like this business. Whether the conclusion then to draw is that the French authorities are reluctant to act because they want to secure the position for the French authorities is clearly the view that Mr Bennett has expressed, but we are clearly aware --
(Mr Byers) I am not sure there is conclusive proof that that is the motive behind the way the French have responded to this, but I think we are all aware of the French interests in freight coming through the tunnel into the UK.
(Mr Byers) I think the difference is we would ensure that the security around the entrance is maintained.
(Mr Byers) We shall continue to make representations to the French authorities to get them to discharge their responsibilities.
(Mr Byers) It depends which sort of particular investment you are referring to. There is £100 million of additional private investment going in as a result of the two-year extension. You are right to say, in terms of the up-grade of the East Coast Main Line, that is not possible until we get a clear specification of the improvements that we want to see. One of the great weaknesses, and this was the impossibility of having to award a franchise last summer, was we were not comparing like with like. What we had was a proposal from Virgin and a proposal from GNER to operate the new franchise but because they were basically given a blank sheet of paper and were told to put in whatever they liked in terms of what they could offer, it was legally very difficult to award a franchise. If we had awarded a franchise for the period that was originally proposed, whoever was unsuccessful would almost certainly have legally challenged that decision because there was no rational basis on which you could award one against the other. When we come up to the franchise being awarded for the East Coast Main Line, which probably will be in line with the model the SRA are now developing, the 15 year franchise, which I think will be welcomed by most of the interested parties, there will be the opportunity of securing focused improvements as far as the East Coast Main Line is concerned without constraining people. There does need to be a degree of flexibility - if there are ideas about innovation and different ways of doing it then a franchise bidder should be able to express those - but there has to be a core delivered through any franchise, and that is what we need to be working out and, also, within the context of the specific improvements of the up-grades that we want to see delivered on the East Coast Main Line during the period of the new franchise which is likely to be awarded.
(Mr Byers) I did not hear the Prime Minister say that. The issue will be that in every negotiation that takes place there will obviously be a desire on the part of the financial institution to lower the risk and to raise the level of return that they get - that is the nature of the negotiations that will take place. What we have to make sure of in the discussions we have is that we secure the best possible deal for the taxpayer - both in terms of the financial arrangements but also in terms of the benefits we can deliver to the travelling public. As I have said, there is no indication, and I think the words from Richard Bowker are very clear on this, that post the decision we took in relation to Railtrack there has been a view in the private sector that they do not want to be involved in transport projects. Most of them make a very clear distinction between the arrangements that apply to a body like Railtrack which was quoted on the stock market as opposed to Public-Private Partnerships. It was very interesting - I heard an interview on the radio at lunchtime with one of those who had signed the letter that was in The Times this morning, and he made the following comment: "Don't forget this was an investment" - talking about the investment in Railtrack's shares - "where private investors and pension funds and all other category investor felt they had a contract with the Government". The important thing to remember about Railtrack is it was not a contract with the government: it was buying shares which were quoted on the stock market. So this is not a Public-Private Partnership. Railtrack was a private company quoted on the stock market so there was no contract with the government. Buying shares in a private company is not making a contract with the government, which is why the government said - and the Committee has heard me say this before - on 2 April last year, when we entered into the agreement with Railtrack, and we made it very clear: "The Government stands behind the rail system but not behind individual rail companies and their shareholders who need to be fully aware of the projected liabilities of the companies in which they invest and the performance risks they face". Nothing could be clearer than that, so I think for some people to argue that by buying shares in Railtrack they had a contract with the government is fundamentally misunderstanding the nature of the relationship.
(Mr Byers) I would pray in aid the words from Richard Bowker on the £34 billion we believe we can secure for private sector investment in the railway network - there is no reason to think that because of the actions we have taken in relation to Railtrack we are not going to secure that level of investment. If I can, on this point about RenewCo, the April agreement is very clear that it would be best endeavours to be used as far as RenewCo is concerned.
(Mr Byers) It will depend on the nature of the deals which are entered into, and there will be a variety of different arrangements that can be secured. What we do believe is that something like £3 billion of that will be direct public sector support for private investment, which is why we net off £3 billion from the overall figure, because if we were to add £33.5 billion of public money and the £34.3 of private money that we expect to secure - it is actually a little over both - we would with rounding up come to £67.9 billion, and some people have made the mistake of just bringing those two figures together saying there is then £67.9 billion of investment, public and private, in the railways. That is not accurate because there is a double count there of £3 billion so we have to net off £3 billion which is this public sector support for private investment. So it is £3 billion that we expect to use for that particular purpose.
(Mr Byers) I think that would not be an accurate way of putting it because that is not looking at both public and private funding that would go into the railway network, and I do not think the travelling public worries too much about whether it is public or private - they want to see levels of investment. I think what is important is that over the period of the 10 Year plan we will secure this £64.9 billion of extra investment going into rail. That is the important objective.
(Mr Byers) It will vary during the course of the 10 Year Plan because it is a flexible document.
(Mr Byers) Yes.
(Mr Byers) As we sit here today that is a statement of where we are at. However, one of the reasons why we have reviews of the 10 Year Plan is to make sure we are working and going to achieve the objectives we have stated, so there will be no difficulty in reordering our priorities if we felt that was right. We still have £8 billion or so of unallocated provision within the 10 Year Plan, so there are possibilities within it to secure additional resources if that is what we want, and it may be in the context of the spending review that the Chancellor may think that a priority should be attached to railways.
(Mr Byers) But, with all respect to Mr Bowker, on the day when The Times has published a letter from a large number of city institutions calling into question the commitments that the private sector is willing to put into the rail infrastructure in the current situation, what you are saying is that the improvements in the 10 Year Plan for the rail industry depend almost entirely - and we are talking about almost 90 per cent of the finance available to spend on infrastructure projects - on the private sector?
(Mr Byers) That is not quite right because you are discounting the full £18.5 billion we will be putting in. Some of that will secure private investment. The Channel Tunnel Rail Link is a very good example of a very high level of private sector investment which will be achieved as a result of some of the £18.5 billion we are putting in --
(Mr Byers) It is important to remember the benefits we get from the franchising regime. What we have seen is that a franchising regime which is effectively operated will secure levels of investment from the private sector. I think Mr Grayling is right to point out that, within the 10 Year Plan, there is a fixed amount of money coming from the public purse - it is £33.5 billion in total of public money. I believe we will secure the £34 billion or so of private sector involvement as a result of that, and part of it will not just be the under-pinning that comes from the public provision but also deals done as part of the franchising operation. One of the key criteria laid down in the new franchising approach is the level of investment we will get from the private sector. What we have seen with just two franchises - the two-year extension on GNER and the Chiltern franchise - is nearly half a billion pounds coming as a result of those two franchises, so the franchising process will be another vehicle by which we will secure major private sector investment. So I think it would be a mistake to look at the public money under-pinning and levering in private sector provision; we also have to look at other initiatives like the new approach to franchising and the difference that will make.
(Mr Byers) It is a matter for the bid team. I have nothing to do with the bid team, so it would be wrong of me to comment on that. They will make a bid --
Chairman: I want to move on because I am very anxious to get to the PPP.
(Mr Byers) As I say, that will be a matter for the bid team. I am sure they will be aware, as we all are, of the timescale that the administrator is working to.
(Mr Byers) It should do and I am very keen, when we look particularly at the bus network, that we look very carefully at how we can use that in a far more positive way than we have so far.
(Mr Byers) I think I indicated earlier that I was not terribly happy with the way the bus network has been handled, and I want to look at new ways of perhaps focusing on that and using some of the powers we have under the Transport Act 2000 in a positive way. I also think we need to be looking very carefully when we do the review at this whole issue of social exclusion - or social inclusion is a more positive way of putting it. Without giving away too many secrets about what might be in the review when we announce it in July.
(Mr Byers) Yes.
(Mr Byers) On both of those areas there is work going on in the Department and, as I may have indicated to the Select Committee last time I gave evidence, there is an indication that the trend, for example, for children being driven to school may well have peaked and we do seem to have more children who are now walking or cycling to school. That is obviously a very beneficial change and we need to see that continue and develop in the years ahead.
(Mr Byers) I think that is true. What has been interesting from some of the figures I have is that, although we talk very much about bus ridership developing very quickly in London and we are all aware of that, it is worth noting that in Greater Manchester last year there was a 3 per cent increase in bus ridership and in West Yorkshire there was a 5 per cent increase, so it is not just Londoners beginning to see an increase.
(Mr Byers) I am sure you would, because that is, I think, the lesson of what has happened in London. There has not been an increase in real terms and people are more inclined to go to the --
(Mr Byers) Not necessarily, I do not believe
(Mr Byers) I think you are right in pointing out that new technology does not seem to have really hit many of the bus operators, and they are still using the old style of collecting cash and issuing a ticket. There must be better ways of doing it and, in discussions we have with the bus operators, we will draw their attention to that proposal.
RT HON PAUL BOATENG, a Member of the House, Financial Secretary, HM Treasury, and MR CLIVE MAXWELL, Head of the Environment and Transport Taxes, Saving Incentives Team, HM Treasury, examined.
(Mr Boateng) Good afternoon, Mrs Dunwoody. I am Paul Boateng, Financial Secretary for the Treasury, and I am accompanied by Mr Clive Maxwell who is Head of the Environment and Transport Taxes Team in the Treasury.
(Mr Boateng) Only how glad I am, Mrs Dunwoody, to have this opportunity to give evidence before the Committee on my specific responsibilities in the Treasury for tax.
(Mr Boateng) My responsibility, Mrs Dunwoody, is to ensure that in terms of the taxation of transport and the use of transport, the various issues around the environment, around social inclusion, revenue raising - all those - are balanced, in order that a judgement can be arrived at as to how best to secure a policy objective. In relation to the Transport Plan, environmental considerations, considerations of social inclusion, considerations of revenue raising, all influence and impact on the successful implementation of the Plan.
(Mr Boateng) No, because what the Transport Plan envisages is a situation in which there is a degree of investment in the transport system, considerable investment, public investment in excess of £140 billion, which is designed to address certain objectives.
(Mr Boateng) Those objectives relate to congestion, those objectives relate to the environment, those objectives also relate to social inclusion. So if you take, for instance, the issue of road haulage, which is a specific responsibility that I have and the consultation document that we have put forward in relation to that, that is designed to address issues of congestion, it is designed to address issues of fairness in terms of revenue-raising, so that external road haulage companies from outside the United Kingdom have to operate on a level playing field with our own road haulage companies, and it is also designed to address environmental considerations. The concern that Government has is to make sure we arrive at an outcome in relation to that consultation that balances those various interests.
(Mr Boateng) Mr Donohoe, at the moment in terms of the levels of taxation we are I think eighth in the European Union, so we are about in the middle. What we have to be concerned to do in relation to taxation is to make sure that we achieve a balance of the objectives I have sought to outline for the Committee. It is the achievement of that balance rather than a particular position in a league table which has to be the objective.
(Mr Boateng) The fuel protests in September 2000 arose from a perception on the part of a section of industry that we had got that balance wrong. What we sought to do, and what we have always sought to do, is to get the balance right. The response from the industry subsequently, and also the impact of the price of oil, has in fact shown that that balance currently is about right.
(Mr Boateng) It is a combination of a variety of factors and undoubtedly the price of oil is one of them.
(Mr Boateng) That is an assumption that is made taking into account the level of the price of oil and also taking into account the concerns that we have to have about competitiveness and productivity in relation to the industry and industry as a whole, and the impact of a variety of measures we have taken in relation to the taxation of vehicles which are designed to achieve environmental objectives, which are designed to ensure that we seek wherever possible to tax the bad and promote the good in terms of objectives. So you want to have a tax system which encourages people to use more fuel-efficient cars; you want to have a tax system which incentivises green fuel, and we make certain assumptions on the basis of the impact of those policies on the price of fuel.
Mr Donohoe: Do you not think then if you, as you are saying, want to be on the side of the motorist, it would be better to hypothecate the tax raised ----
Chairman: I am sorry, Minister, I must adjourn the Committee automatically when a division is called.
The Committee suspended from 6.11 pm to 6.20 pm for a division in the House
Chairman: Minister, thank you very much indeed. Mr Donohoe?
(Mr Boateng) I am not sure that is fair, Mr Donohoe, because my understanding is that an announcement was made in 1999 that any future real terms increases in fuel duties would go into a ring-fenced fund to be spent on modernising the road network and improving public transport. That is the understanding that was shared at that stage. Indeed, the Government has announced that revenue from local congestion charges and work-place parking will in fact be ploughed back into local transport schemes in order to increase desirable behavioural outcomes and encourage local authorities to make their contribution to the sort of transport objectives which we would all share as being desirable ones. So I do not think it is a blanket opposition to hypothecation. Indeed, if you look at the way environmental taxation has developed generally across the piece, for instance in relation to the climate change levy, it is revenue-neutral and the money is ploughed back in ways which are designed to promote the achievement of the Kyoto Protocol targets.
(Mr Boateng) That is something that you would say, I would not ----
(Mr Boateng) I can comment but I would not necessarily share that view, but then we come at this from different perspectives obviously, I as a Treasury Minister, you as an inquisitor on this Committee.
(Mr Boateng) I think it is fair to say that post-1920s there was a move away from hypothecation. What I can share with you in terms of our approach to environmental and transport taxation today, on the basis of what I share with you in terms of the 1999 announcement and in terms of the way we have approached environmental taxation generally, is that the line as it were against hypothecation in the way you have described is not as hard as it was before. I think that is fair.
Chairman: Minister, I think we are going to have to ask you for briefer answers. We love you dearly but I do not think you want to stay with us for the rest of the evening.
(Mr Boateng) As a matter of principle it is for the Chancellor to set the levels of fuel taxation in accordance with the judgment he makes of the economic interest of the United Kingdom. So by definition the European Union and the Commission have only a limited role in that respect, although obviously an interest traditionally in minima as opposed to maxima.
(Mr Boateng) Our concern has to be that balance that the Chancellor is required to make in terms of his judgment of the levels of taxation. Those judgments go to revenue, those judgments also go in this field to those wider objectives around the environment, around social inclusion, and around congestion ----
Chairman: Yes, I think we have got the general idea; you have told us several times.
(Mr Boateng) That is a suggestion that we would refute.
(Mr Boateng) Yes.
(Mr Boateng) Our position is very clear, Mr O'Brien. We believe - and I hesitate to incur Mrs Dunwoody's wrath -----
(Mr Boateng) I know, based on experience, Mrs Dunwoody! I would reiterate the points that I have made before about the Chancellor's judgement and his need to make his decisions in the light of the national interest as he sees it.
(Mr Boateng) The money required to upgrade -----?
(Mr Boateng) I am afraid I am not able to assist you on matters that properly belong in the province of the Secretary of State and, indeed, in relation to spending priorities and the Comprehensive Spending Review, of the Chief Secretary. My concern and my ability to assist relate specifically to issues of taxation. So I am quite happy to get the Chief Secretary to drop you a memo if there are particular issues that fall to him on the Comprehensive Spending Review, but I am unable to assist.
(Mr Maxwell) As the Financial Secretary explained, I am the Head of the Environment and Transport Taxes Team in the Treasury.
Chairman: I see.
Mr Stevenson: I wonder if I could ask this: is the Minister prepared to assist us in getting his colleague to come to the Committee?
(Mr Boateng) Mrs Dunwoody, I am sure you and your Clerk will address any appropriate invitation to my colleagues in the Department.
Chairman: We as a Committee are so fond of the Treasury that we send you almost weekly invitations, and you all say no. I cannot think why, since you interfere so much in transport!
(Mr Boateng) I have no doubt that the Chief Secretary will pay very careful regard to all matters that emanate from this Committee.
(Mr Boateng) To all matters, Mrs Ellman.
(Mr Boateng) It is undoubtedly the case that it will be for local authorities to make the decision, and the power that they were given was an enabling rather than a prescriptive one, as to whether or not they will wish to go down the route of congestion charges. The advantages for them are clear, because it makes available to them additional resources for their own transport purposes, but they would need to make the judgement.
(Mr Boateng) Decisions for the next Spending Review are a matter for the Chief Secretary. That applies both in relation to transport and matters that you were subjecting the Secretary of State to questioning on, and in relation to the Local Government Finance Settlement, but these are clearly matters that he would wish to consider and no doubt will consider in terms of the operation of the Comprehensive Spending Review in 2002.
(Mr Boateng) The proposal always was - the understanding was - that this was additional revenue, and that is the attraction to the local authority concerned. I cannot stress sufficiently, this is something on which local authorities themselves have to arrive at a judgement. The legislation is there. They have the power to levy such charges, and clearly they will consider that in terms of their own proposals.
(Mr Boateng) That is very much a matter for the Secretary of State and, indeed, for the Minister for Local Government, it is not a matter for the Treasury.
(Mr Boateng) That is really, Mrs Ellman, something that I am not able to assist the Committee on. That is a matter for the Chief Secretary and, indeed, for the Chancellor.
(Mr Boateng) I think that what has been made clear, and what is clear, from the 10 Year Plan is that there is envisaged a level of public investment which is enumerated here. That investment is delivered within the context of successive Comprehensive Spending Reviews.
(Mr Boateng) The level of spending and the level of investment is quite clearly laid out and, indeed, it is considerable, because if you look at the Plan -----
(Mr Boateng) Indeed. I was merely directing the Committee's attention to the enhanced level of investment that is anticipated. That is a real commitment.
(Mr Boateng) Dr Pugh, I am not going to go down this particular line. It is extremely tempting, but I am not going to do it.
(Mr Boateng) I hear what you say.
(Mr Boateng) I am not going to go down that road.
(Mr Boateng) Dr Pugh, with the utmost respect, I am not going to go down that road. I was invited before the Committee, and happily accepted, to talk about taxation. That is my responsibility.
(Mr Boateng) Dr Pugh, can I just finish. I am not going to be able to assist the Committee in relation to PPPs. If the Committee has any specific issues which it wishes to raise on PPPs with the Treasury, it knows how to go about doing that, and it will make the necessary queries and issue the necessary invitations. It will then be for the Chief Secretary to respond as he sees fit.
(Mr Boateng) Quite so.
(Mr Boateng) Mrs Dunwoody -----
(Mr Boateng) I am sure it would, and I can answer yes, but what I am not going to do is to go on from that and to discuss with you the contents of those guidelines.
(Mr Boateng) Because, Mrs Dunwoody, as you well know, that is a matter for the Chief Secretary, it is not a matter for me.
(Mr Boateng) It is not a matter for the Financial Secretary, but I am very happy to answer questions that you have on taxation issues. That is what I am here to do. That is the basis upon which we accepted your kind invitation.
(Mr Boateng) It is not a complex question, it is a very clear question, and my response to you must be of course I am aware there are guidelines issued by the Treasury on a range of issues. If the Committee wishes to explore issues in relation to the PPP and London Underground, then they must do that through the appropriate ministerial channel, which is the Chief Secretary and not myself.
(Mr Boateng) I will make sure that the Chief Secretary is aware of these proceedings and the questions you have raised with me.
Chairman: Thank you very much indeed.
(Mr Boateng) I suspect you will not, Dr Pugh.
(Mr Boateng) I am not in the slightest bit embarrassed.
(Mr Boateng) You can invite me and I will decline, for exactly the same reason as I declined to answer the last question.
(Mr Boateng) I am afraid, Mrs Dunwoody, I am not going to be able to assist the Committee in that regard because that is a matter which, quite frankly, does not fall within my area of responsibility within the Treasury.
(Mr Boateng) If I can finish ---
(Mr Boateng) Mrs Dunwoody, what you asked and what I am afraid you have got is a minister who is only too happy to talk to you about taxation issues but is unable to assist you in relation to PFI and PPP. It is as simple as that. I understand, with the utmost respect, the Committee's concerns and I will convey them to the Chief Secretary but it is only fair to point out that you asked us to talk to you about ----
(Mr Boateng) ---- the Transport Plan and taxation. That is the basis upon which we accepted your invitation.
(Mr Boateng) I fear so.
Chairman: Mr Grayling, do you want to have a go?
(Mr Boateng) What we have embarked upon is a consultation on road user charging in relation to road haulage. We have issued a consultation paper, it contains a number of options both in relation to distance and in relation to time, the industry have responded, we will reflect on that and we will come forward with a specific proposal. I should stress that this is related specifically to road haulage, it is not a general proposition, we are aware of the debate obviously about general vehicle charges and I think the position has been made clear that that is an area where there is a need for further research, that research is being undertaken, and in due course obviously it will be a matter that Government and indeed the Committee will want to consider.
(Mr Boateng) The Government's position on inter-urban road charging is set out in the Transport 10 Year Plan. We highlighted the fact that further research was needed before any such inter-urban road user charge could be proposed. The Commission's recent report is a useful addition to that. It itself recognised there was a need for more work in the area, we think it is important that that work should continue in order that a fully informed decision can be made on what is required to deliver the better transport system that we all seek. But that is not going to happen in the short-term in terms of any such proposal. The 10 Year Plan does not envisage it occurring, and the assumptions are not there it will occur in the lifetime of that Plan, but clearly there is a debate, the Commission's contribution to it has been important, this Committee's contribution to it is going to be important, and we are going to need to do more work on it and we are happy to do that.
(Mr Boateng) I did not say that. I do not know. I said that it is very clear from the Plan, and you will have sensed and read that that is the case, there is not an assumption that such road user charging will be introduced in the lifetime of the Plan. But the work is of value, the research is taking place. There will be undoubtedly - and this Committee will make a contribution to it, as will others - a national debate about the role that such a proposal might play in the delivery of a better transport system for all.
(Mr Boateng) Undoubtedly it can.
(Mr Boateng) Our policy is to recognise the role that fiscal policy can play in changing behaviour for the good, to seek to utilise fiscal policy, to support the good and to drive out the bad, but to recognise that there is a real balance to be struck between, for instance, issues around the environment, issues around congestion and issues around social inclusion. If you take rural areas, for instance, a car there will be very important in terms of social inclusion and therefore we would not want to use a crude price mechanism to drive people out of their cars. But, undoubtedly, pricing plays a part.
(Mr Boateng) It is a given, and I would be very surprised if the role of pricing was not accepted by that Department. Indeed, there is every indication it is.
(Mr Boateng) I have no doubt in terms of arriving at a balanced interest in relation to public spending and the various desirable outcomes that you have outlined, that is a factor that the Chief Secretary and the Chancellor will take into account in terms of the up-coming Spending Review.
(Mr Boateng) Yes, indeed.
(Mr Boateng) It is a rebate and therefore part of a public spending scheme. It has implications for public spending. As I indicated earlier on, there are a number of issues which have to be balanced, one of them is revenue, another is the environment, congestion, and the important point you have raised, and which I accept, around social inclusion. How that balance is struck is obviously one of those matters that both the Chief Secretary and the Chancellor take into account both in relation to public spending decisions and in relation to decisions they have to make in terms of the Budget. But I hear what you say and undoubtedly that is a factor which will be taken into account.
(Mr Boateng) That is true.
Chairman: We shall try, because we are by nature optimistic, to continue with the questions.
(Mr Boateng) Yes. Indeed, if you look at the Transport Plan and the steps that have been taken in terms of encouraging good practice by employers in that regard, the role of that sort of incentive is recognised - for instance, in relation to the specific concessions in relation to bike-to-work days and tax concessions around those days. So undoubtedly in terms of the judgements that have to be made in the budget-making process, that is one of them. There are some good examples, in terms of the travel plans and the fiscal policies that underpin them, of that happening.
(Mr Boateng) It is a modest sum. To give an example -----
(Mr Boateng) I will send you a memo with the exact figures.
(Mr Boateng) I think that certainly in relation to the work that is being done to underpin with fiscal incentives travel plans, that has the potential to make a contribution. I think too in relation to the cost of using a vehicle in relation to VED, for instance, and rural areas, that can make a contribution, and similarly in terms of the tax on fuel. All of those have a potential. If the question is, should we be doing more, then what I think I would want to say is that there may well be other things that we can do by way of fiscal incentives to encourage that sort of desirable objective. Certainly in terms of what we are doing to reduce pollution and the changes that we have made in relation to fuel duty, the green fuel challenge and the like, all of those have a capacity to improve the urban environment and the quality of life.
(Mr Boateng) That is an issue over and above the specific issue of transport.
(Mr Boateng) Yes.
(Mr Boateng) Sure, and I think it is undoubtedly the case that amongst the range of options to be considered in relation to -----
(Mr Boateng) I think there has been some progress, but I do think that again - and I know it may well not be what the Committee wants to hear, but I do think it is the truth - a balanced judgement has to be made, and it takes into account -----
(Mr Boateng) No, I am afraid it is. It is a question of a judgement.
(Mr Boateng) I think what I would say is this. All decisions around changes in levels of taxation require a balanced judgement. That is something -----
(Mr Boateng) The changes proposed and being implemented in relation to stamp duty and to deprived areas, the changes proposed and being implemented in response to Lord Rodger's recommendations, all of those have the potential to contribute to the wider objectives outlined in this 10 Year Plan.
(Mr Boateng) I will certainly write to the Committee to give the figures. They will indicate that some progress has been made. No doubt there is more progress which could be made. The scale of that progress and its rapidity will depend on the balance judgment to which I have referred the Committee.
(Mr Boateng) We are on target to meet our Kyoto obligations.
(Mr Boateng) It is the answer I am giving. We are on target to meet our Kyoto obligations. I do believe that you will find in relation to any audit, and it is early days yet, of the steps we have taken in relation to the green fuel challenge, the steps we are taking in order to address issues of congestion and the environment, that in all those areas there will be some progress made. If your question is, is there more we can do, my answer is yes.
(Mr Boateng) I am not sure I can give you a set of graphs but Mr Maxwell can refer you to a table.
(Mr Maxwell) Table 7.2 of the PBR for November 2001, but also previous Budget and PBR documents, sets out the environmental impact of different tax measures. The point that is useful is that it is not just the level of the tax, it is often the structure of it. Take company car tax or vehicle excise duty, for example, it is possible to restructure those taxes to create extra incentives for more efficient vehicles which would have CO2 benefits and also benefit local areas.
(Mr Maxwell) Table 7.2 gives a list of measures introduced most recently.
Chairman: Thank you, Mr Maxwell, that was almost a constructive answer.
(Mr Boateng) I can give you these figures. For the last year, 2001-02, on fuel duties, £22.5 billion; on vehicle excise duty, £4.5 billion; on company cars and the revenue we raised from that, £2.36 billion. That compares, going back to 1998-99, to £21.6 billion, £4.7 billion and £2.18 billion respectively.
(Mr Boateng) It certainly is not revenue-neutral. There is not any direct read-across and there never has been any pretence that there was.
(Mr Boateng) The commitment is absolutely clear.
(Mr Boateng) The commitment is absolutely clear. The commitment is for that level of public investment over that period. If you ask me to anticipate the read-across between that and what we raise in revenue from those duties that I have just outlined to you, there is not any direct read-across, because it is not dependent on that. There is a clear public spending commitment contained in this 10 Year Plan that is not dependent on the levels of those revenues, but as you yourself have appreciated, it does in fact need to be, because those are not hypothecated revenues.
(Mr Boateng) I am not going to -----
(Mr Boateng) I am not going to seek to provide a commentary on the Secretary of State's evidence.
(Mr Boateng) If there is a shortfall, that will be a matter that will need to be picked up in successive Comprehensive Spending Reviews. It is not linked to the amount of revenue that is raised with fuel duty, vehicle excise duty and company cars.
(Mr Boateng) Yes, but the one is not dependent upon the other.
Helen Jackson: I think they are.
(Mr Boateng) Financial Secretary.
(Mr Boateng) I do not think you ever do that, Mrs Dunwoody, any more than I forget who you are!
(Mr Boateng) I am sure you will.
(Mr Boateng) "Entertaining" is the word you want!
(Mr Boateng) Quite so, Mrs Dunwoody.
(Mr Boateng) Thank you very much.
Chairman: The Committee stands adjourned.