BRIEFING PAPER
Number 7177, 14 May 2015
Transport 2015
By Louise Butcher
Alex Meakin, Tom
Rutherford
Inside:
1. Introduction
2. 2015 election manifesto
commitments
3. Policy focus 1: devolution
4. Policy focus 2: local bus
services
5. Policy focus 3: rail
franchising
6. Policy focus 4: cycling
7. Policy focus 5: airport
expansion
8. Statistical Appendix:
transport trends since 2010
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Number 7177, 13 May 2015
Contents
Summary
5
1.
Introduction
6
2.
2015 election manifesto commitments
Conservative Party
Green Party
Labour Party
Liberal Democrats
Plaid Cymru
Scottish National Party (SNP)
UK Independence Party (UKIP)
9
9
10
12
13
16
17
17
3.
3.1
Policy focus 1: devolution
What’s the issue?
Scotland and Wales largely devolved
Northern Ireland has its own transport powers
The English regions want more control over transport
The EU and other global players take an increasing number of decisions
Why devolve transport policy?
Local accountability
The ‘North/South divide’
Where are we with devolution of transport policy?
Scotland
Wales
England
What about funding?
Barnett
Central Government
Raising money locally
What might devolved transport policy and planning look like in England?
Issues for the 2015 Parliament
What kind of devolution are we going to get?
Does devolution create cross-border transport problems?
Is devolution irreversible?
Is the EU ‘a problem’?
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19
19
20
21
23
24
24
25
26
26
26
27
28
28
29
30
31
33
33
34
34
35
Policy focus 2: local bus services
What’s the issue?
Local bus travel is in long term decline
Buses are overlooked in policy-making
Bus travel is expensive
Deregulation has been a failure
What is deregulation and why was it introduced?
What did the bus market look like before the 1980s?
White Paper on buses, 1984
Legislation
Minor subsequent changes by the Conservative Government -1997
38
38
38
38
40
41
42
42
43
45
45
3.2
3.3
3.4
3.5
3.6
4.
4.1
4.2
Contributing Authors:
Louise Butcher & Alex Meakin, Transport
Policy
Tom Rutherford, Transport Statistics
Cover page image copyright: Westminster Bridge by Joe Dunkley. Licensed under
CC BY 2.0
2
3
Transport 2015
4.3
4.4
4.5
4.6
4.7
5.
5.1
5.2
5.3
5.4
5.5
5.6
6.
6.1
6.2
6.3
The exception: London
Sale of municipal bus companies
What happened after deregulation?
Service levels and costs
Labour’s changes
Why do people think deregulation is broken?
A free market, not a public service
Lack of on-the-road competition
Subsidies
Who supports deregulation and why?
What is the alternative?
Quality Contract Schemes
Partnership schemes
What powers would the metropolitan areas outside London like to have?
Issues for the 2015 Parliament
Why are bus routes being cut?
Is bus funding fit for purpose?
Would regulation improve services and cut costs?
What do we do about the bus pass in England?
46
49
49
49
51
52
52
53
53
55
56
57
59
60
61
61
63
64
66
Policy focus 3: rail franchising
What’s the issue?
Rail travel is expensive
Privatisation has been a failure
What is privatisation and why was it introduced?
What did the rail market look like before the 1990s?
Policy decision by the Conservative Government
Railways Act 1993
What happened after privatisation?
Service levels and costs
Railtrack
A lack of continuity
West Coast re-let 2012
Who supports privatisation and why?
What are the alternatives?
Nationalisation
Public sector franchisees
More privatisation and ‘proper’ competition
Issues for the 2015 Parliament
Why is rail travel so expensive?
Are the rail management and governance structures fit for purpose?
Why are there so many ‘Direct Awards’?
Can anyone ‘guarantee’ a public sector operator under the current system?
Should franchising be devolved?
Do EU rules prevent nationalisation?
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76
76
78
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85
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87
90
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94
94
96
99
100
101
104
Policy focus 4: cycling
What’s the issue?
Cycling is on the increase
Government is keen to encourage more cycling
There are too many barriers to cycling
What has happened since 2010?
Fatalities
External pressure driving cycling up the political agenda
Funding has increased
What do cyclists want?
Safer cycling infrastructure
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Number 7177, 13 May 2015
6.4
6.5
7.
7.1
7.2
7.3
7.4
7.5
8.
Reformed ‘rules of the road’
What about other road users?
Pedestrians
Motorists
HGVs and buses
Issues for the 2015 Parliament
Will cycling remain a political priority?
Should government provide more funding?
Is cycling just a London issue?
Should local authorities have cycling targets?
115
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116
117
119
120
120
120
121
124
Policy focus 5: airport expansion
What’s the issue?
The UK needs more airport capacity
The local noise impacts of aviation are significant
What is the Airports Commission?
Why was it set up?
What has it done?
When will it report?
Will the recommendations of the Airports Commission be implemented?
Political parties not committed
Parliament has a limited role
Onus is on the airports to put in application for a DCO
Local opposition
What else has happened since 2010?
LHR had a plan ready to go in 2010 and withdrew it
Air Passenger Duty
Airspace change
Airport failures, closures and nationalisations
Issues for the 2015 Parliament
What is the role of the National Policy Statement for aviation?
How much is a new runway in the South East likely to cost the taxpayer?
Is new runway capacity compatible with environmental commitments?
How do we support regional connectivity?
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132
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133
138
138
138
139
139
139
140
140
141
143
145
146
146
147
148
150
Statistical Appendix: transport trends since 2010
Overall Modal share
Transport Expenditure
Aviation
Road Traffic
Vehicle registrations
Driving Licences
Concessionary Travel
Road Accidents
Trams and Light Rail
Rail Performance
Conclusions
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4
5
Transport 2015
Summary
The political profile of transport as a policy area has increased since 2010, in large part
due to the coincidence of decisions (taken or still being discussed) on a number of big
infrastructure projects. These included High Speed 2; the ongoing lack of a decision
over a new airport runway in the South East of England; the ‘London 2012’ effect on
cycling; and the knock-on impacts of cuts to central and local government budgets,
particularly affecting local transport such as buses.
In 2010 there was broad agreement across the main parties on many aspects of
transport policy. Only on airport expansion did views diverge significantly. Going into
the 2015 election, however, manifesto commitments were much more diverse,
particularly as regards the involvement of the state (in one guise or another) in running
public transport. Labour and the Greens (especially) both supported more public
ownership and operation of buses and trains than did the Conservatives, UKIP and the
Liberal Democrats. While all parties agreed that more transport powers should be
exercised ‘closer to the passenger/commuter/individual’ there was no real consensus
on whether revenue raising powers should be devolved at the same time.
Also of more public interest in this election has been the prominence of the nationalist
parties in Scotland and Wales. Likely transport changes in those countries were largely
set out by the Smith and Silk commissions respectively, before the election, though the
SNP may push for further devolution now they have a sizeable Commons presence.
This paper provides an overview of the transport commitments given by the main
political parties in the run up to the 2015 General Election; a broad summary of
transport trends over the course of the 2010 Parliament; and looks at some of the
possible transport ‘hot spots’ post-2015, specifically devolution; local bus services;
cycling provision; rail franchising; and airport expansion.
The big decisions facing the new Conservative Government are about whether and
where to make further spending cuts; whether to give the go ahead to transport
schemes such as Crossrail 2 and High Speed 3; how to keep costs down for bus and
rail passengers; how to ensure that train services improve; and whether to approve any
planning application for a new or extended runway at Heathrow or Gatwick. It will also
have to honour commitments made prior to the election about devolving more power to
Scotland and Wales and deal with the ‘English question’ insofar as it relates to the
devolution of transport powers and budgets. Finally, it will have to have an eye to the
long term – on healthy, liveable cities and sustainable, green transport including
automated and carbon-free private cars.
Their policies may even have to reach much, much further than that. If entrepreneurs
like Sir Richard Branson and Elon Musk have their way, human commercial spaceflight
might not be as far off as we imagine, and perhaps we might all one day be sharing
Musk’s vision of a rocket re-fuelling station on Mars…
Number 7177, 13 May 2015
1. Introduction
The 2010 General Election resulted in a Conservative-Liberal
Democrat Coalition Government, the first time the UK had been
governed by a formal coalition for over fifty years. Following
Conservative leader David Cameron’s “big open and comprehensive
offer” to the Liberal Democrats in May 2010 the Conservatives and
the Liberal Democrats went into government together.1 The
foundation of that government was the Coalition Agreement, drawn
up in May 2010 following the post-election negotiations.2 It set out the
two parties’ joint ambitions for government and in most areas
represented a compromise between the commitments made in the
two parties’ manifestos for that election.3
Overall patterns of travel and transport usage have not changed
significantly over the past five years. The long-term trend for the
overall distance travelled within the UK to rise continually was
reversed during and immediately after the 2008-09 recession, but the
overall pattern since then has been of a return toward previous levels
of travel. Car travel remains by far the dominant mode of transport
within the UK, although trends in rail use and cycling have been
increasing at a significant rate.
The defining characteristic of the 2010 Parliament was the
Government’s policy to reduce public debt and borrowing, which had
soared following the financial crisis. The Department for Transport
(DfT) saw its budget cut by 17.7% between 2010 and 2015; but at the
same time, capital spending on transport infrastructure projects
increased from £7.7bn in 2010/11 to £10.1bn in 2015/16 – a 31%
increase.4 At the time of the publication of the first National
Infrastructure Plan in October 2010 the Chancellor of the Exchequer,
George Osborne, explained his decision to spend on infrastructure:
Tackling this budget deficit is unavoidable. The decisions about
how we do it are not. There are choices, and today we make
them. Investment in the future, rather than the bills of past
failure: that is our choice. We have chosen to spend on the
country's most important priorities: the health care of our
people; the education of our young; our nation's security; and
the infrastructure that supports our economic growth. We have
chosen to cut the waste and reform the welfare system that our
country can no longer afford.5
Unlike previous administrations, the Coalition Government showed
little enthusiasm for ‘integrated transport strategy’ policy making,
preferring instead locally decided initiatives to deliver improvements.
“Election: Cameron makes offer to Lib Dems on government”, BBC Election 2010, 7
May 2010; “David Cameron and Nick Clegg pledge 'united' coalition”, BBC
Election 2010, 12 May 2010
2 HMG, The Coalition: our programme for government, May 2010
3 for more information on this see section 1 of HC Library research paper RP 11/22, 2
March 2011
4 HMT, Public Expenditure Statistical Analysis 2014 (PESA), Table 5.4
5 HC Deb 20 October 2010, c949; the NIPs for 2010-2014 can be found on the
Gov.uk archived website
1
6
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Transport 2015
Minister after minister was pressed on the question of ‘joined up’
multi-modal policy making in appearances before the Commons
Transport Select Committee over the course of the Parliament and
the Department was issued with a number of recommendations
urging it to look at a more integrated or joined-up strategy. In
response to one early recommendation in this vein in early 2011 the
DfT responded:
The Department has set out its objectives for transport
spending in the Business Plan. The Department's vision is for a
transport system that is an engine for economic growth but is
also greener and safer and improves quality of life in our
communities. The Business Plan clearly sets out how we are
going to deliver this, including the development of a new highspeed railway, tackling carbon and congestion on the UK's
roads and promoting sustainable aviation.
[…] In respect of local schemes, communities should be free to
decide what their priorities are and will be able to set their
budgets according to local - not national - priorities. For
example, the move from twenty six grant streams to just four
maximises local flexibility and minimises bureaucracy. The
Government believes that this is the most effective way to
increase the sustainability of local transport systems.6
In response to a July 2014 recommendation the Department said:
We recognise that getting the most out of this significant
investment means making the whole system work as well as it
can.
However, we need to be realistic about the best way of
integrating transport planning and decision-making on
investment and delivery. Previous top-down attempts at
integrated, multi-modal transport planning have been big on
rhetoric, but in practice have failed to improve or speed up the
planning and delivery of real improvements for transport users.
Bottom up approaches have often descended into huge
multimodal studies, consuming large amounts of time and
resources, producing vast quantities of analysis but rarely
delivering commensurate or timely improvements in
infrastructure or transport outcomes.
We also need to be realistic about the extent to which different
modes can provide genuine, sensible and proportionate
alternatives to solving specific transport problems, where the
best solutions may depend on the local circumstances,
including the location of existing transport networks and the
extent to which journeys can switch between modes. In many
cases, individual projects have demonstrated the potential for
effective integration between national and local transport
networks where decisions are taken in a joined-up way.7
One could argue that there is less of a need for a comprehensive
strategy in a more fragmented governmental environment: extensive
transport powers are devolved to Scotland, Wales and Northern
Ireland, London and the major English cities and all levels of local
Government response to the Committee’s Third Report of Session 2010–12 (Fourth
Special Report of Session 2010–12), HC 962, 6 May 2011, pp4-5
7 Government Response to the Committee's Fifteenth Report of Session 2013–14
(Fourth Special Report of Session 2014–15), HC 715, 24 October 2014, p6
6
Number 7177, 13 May 2015
government. At the other end of the spectrum, transport is one of the
policy areas where the European Union (EU) and other transnational
bodies have a great deal of influence on national law and its
application. This is examined in more detail in section 3, below.
A further, noteworthy trend over the 2010 Parliament was not
transport-specific, rather it was the growth in social and other
electronic media and portable electronic devices that enable people –
from constituents to commentators – to scrutinise the work of
government in far more detail than has been possible in the past.
Government has largely embraced these trends and the connected
issue of how it can use the data generated by social media to inform
its policy decisions.8
This paper provides a high-level overview of transport trends over the
2010 Parliament and picks out five policy areas which are likely to be
particularly prominent during the 2015 Parliament. These are:
devolution, local bus services, rail franchising, cycling and airport
expansion. By only choosing five areas there are of necessity some
important transport issues that are not considered; these are covered
in other briefings available on the Transport Topic pages of the
Parliament website.
One of these is HS2, the controversial high speed rail project
between London and the north of England, via the West Midlands.
This is covered in detail in a number of HC Library briefings available
on the Railways Topic page of the Parliament website. It was not
included in this paper because although it remains contentious
outside Parliament there is a broad consensus in its favour across the
two main parties, as well as amongst the SNP and the Liberal
Democrats.
8
“Social media presents a growing body of evidence that can inform social and
economic policy”, LSE blog, 2 October 2013
8
9
Transport 2015
2. 2015 election manifesto
commitments
The election manifestos of the seven main parties standing in Great
Britain at the 2015 General Election were published between 13 and
20 April. The transport commitments contained in those documents
are set out below, by party, in alphabetical order.
Where the Conservative and Labour parties published more detailed
policy announcements in the areas discussed in the rest of this paper,
these are discussed therein.
Conservative Party
The Conservative manifesto, Strong Leadership, A Clear Economic
Plan, A Brighter More Secure Future, included the following
commitments:9
By connecting up the North with modern transport links, we will
enable its great cities and towns to pool their strengths. We will
invest a record £13 billion in transport for the North. We will
electrify the main rail routes, build the Northern Hub, and
provide new trains for the North. We will upgrade the A1, M62,
M1 and A555 link road. And that is on top of our £50 billion
commitment to build High Speed 2 – the new North-South
railway linking up London with the West Midlands, Leeds and
Manchester – and develop High Speed 3 to join up the North.
[p11]
To help attract growth and new businesses we will improve
connections to the South West with major investment in the
M5, A358, A30 and A303, and the electrification of the Great
Western Main Line – bringing new fast trains on the route. [p11]
We will make the Midlands an engine of growth. We will back
business by investing a record £5.2 billion in better transport,
upgrading the M1 and M6, and electrifying the Midland Main
Line from St Pancras to Sheffield – putting the Midlands at the
centre of a modern, inter-connected transport network for the
UK. [p13]
We will improve rail connections to East Anglia, delivering
‘Norwich in 90 minutes’ and ‘Ipswich in 60 minutes’ and
upgrade key roads like the A11 and A47. [p13]
We will devolve far-reaching powers over economic
development, transport and social care to large cities which
choose to have elected mayors. [p13]
We will deliver on our National Infrastructure Plan and respond
to the Airports Commission’s final report. [p14]
We will invest £38 billion in our railway network in the five
years to 2019. Electrification of the railways is a key part of our
investment programme, with work already underway across the
North, the Midlands, and South Wales; there are plans to go
further in the rest of the country, including East Anglia and the
South West. [p14]
9
Conservative Party, Strong Leadership, A Clear Economic Plan, A Brighter More
Secure Future: The Conservative Party Manifesto 2015, 14 April 2015; emphasis
added
Number 7177, 13 May 2015 10
In addition to rolling out our national high-speed rail network,
with High Speed 2 and High Speed 3, we will complete the
construction of the new east-west Crossrail across Greater
London, and push forward with plans for Crossrail 2, a new rail
route running through London and connecting Surrey and
Hertfordshire. [p14]
We will support a fairer deal for taxpayers and commuters: we
will keep commuter rail fares frozen in real terms for the whole
of the next Parliament – regulated fares will only be able to rise
by Retail Price Inflation, and train operating companies will not
have any flexibility to raise ticket prices above this. We will also
introduce smart ticketing and part-time season tickets and
require train companies to improve compensation arrangements
for passengers when trains are more than a few minutes late.
[pp14-15]
We will invest £15 billion in roads. This will include over £6
billion in the northern road network, with the dualling and
widening of the A1 north of Newcastle and the first new transPennine road capacity in over 40 years. We will take action to
tackle some of the most notorious and longstanding problems
on our road network, including improvements to the A303, A47
and A27. We will add 1,300 extra lane miles to our roads,
improve over 60 problem junctions, and continue to provide
enough funding to fix around 18 million potholes nationwide
between 2015 and 2021. [p15]
Our aim is for almost every car and van to be a zero emission
vehicle by 2050 – and we will invest £500 million over the next
five years to achieve it. [p15]
We want to double the number of journeys made by bicycle and
will invest over £200 million to make cycling safer, so we
reduce the number of cyclists and other road users killed or
injured on our roads every year. [p15]
We will continue to support local shops and residents in tackling
aggressive parking enforcement and excessive parking
charges, and take steps to tackle rogue and unfair practices by
private parking operators. [p53]
We will build new roads and railways in a way that limits, as far
as possible, their impact on the environment. This includes
investing £300 million in cutting light pollution from new roads,
doing more tunnelling, building better noise barriers and helping
to restore lost habitat. We will also replace locally any
biodiversity lost in the construction of High Speed 2. [p55]
We will maintain all the current pensioner benefits including …
free bus passes … for the next Parliament. [p67]
We will clarify the division of powers between Wales and the
UK Government. We will: … implement other recommendations
of the second Silk Report where there is all-party support as set
out in the St David’s Day Agreement; this will include devolving
to the Welsh Assembly important economic powers over ports.
[p70]
Green Party
The Green manifesto, For the Common Good, included the following
commitments:10
10
Green Party, For the Common Good: General Election Manifesto 2015, 14 April
2015; emphasis added
11 Transport 2015
Extend free local public transport to young people and
students, spending up to £4 billion a year. [p28]
Keep the pensioners’ bus pass. [p30]
Support 20 mph zones, cycle schemes and public transport to
make our streets safe and useful for older as well as young
people [p30]
Reintroduce the fuel duty escalator, raising £2.2 billion in 2015
and an additional £2.2 billion in each successive year through
the Parliament. [p52]
Put aviation on a level playing field with other modes of
transport by making it subject to fuel duty and VAT, raising £16
billion in a full year. If outdated international law makes this
impossible, introduce a flight tax dependent on distance and
aircraft type that has the same overall economic effect. [p52]
Allow local authorities to run local public transport … entirely
as they wish, including using publicly owned and run services
and employing social enterprise and voluntary sector
organisations. [p59]
The Green Party is committed to bringing rail services into
public ownership and control … making them belong to you and
me, run by rail workers for passengers. [p64]
We would not support HS2 (the proposed high-speed network).
The money to be spent on this hugely expensive project …
would be much better spent on improving conventional rail
connections between various major cities, improving the
resilience of the existing network to climate change and
reopening lines and stations that have been closed. [p65]
End the wasteful and destructive national major roads
programme, saving £15 billion over the Parliament [and spend
it on] improving and subsidising public transport, with an
average fare reduction of 10% costing £8 billion over the
Parliament, fixing potholes in existing roads and investing in
walking and cycling. [p65]
Support walking and cycling. In particular, we would ensure
that pedestrians and cyclists get their fair share of road space
and would spend at least £30 per head on them every year over
the Parliament. [p65]
Support the re-regulation of bus services to provide a better,
more reliable service. [p65]
Stop airport expansion, in particular no new runways at either
Heathrow or Gatwick, and ban night flying. [p65]
Invest in electric vehicle charging points for buses and taxis,
and for cars where there are gaps in the network of public and
community transport. [p65]
Develop regional smart payment systems with integrated
ticketing, like the London Oyster system. [p65]
Work for a road transport system that results in zero deaths or
serious injuries by systematically reducing sources of danger
on the roads … enforce speed limits with speed cameras and
policing … Motor vehicle drivers should be presumed liable for
injuries to pedestrians and cyclists … Reduce the alcohol limit
for drivers to as close to zero as possible. Require newly
manufactured lorries to be equipped with best practice
technology to make sure that drivers are fully aware of the
Number 7177, 13 May 2015 12
presence of all pedestrians and cyclists … Reduce lorry activity
and road freight volume by improving rail freight services,
reducing the number of empty or partially loaded trips, and
using cargo bikes for last minute deliveries to replace some
white van trips. [p66]
We need to rescue our towns and cities from traffic and turn
them back into places where we want to be. The Green Party
support and Active Travel Bill for England in order to achieve
this … Help schools and workplaces to support active travel to
and from work, and encourage local authorities to assist this by
linking their public health and transport functions … introduce
road pricing schemes such as the London congestion charge
and road-user tolls for heavy lorries. Begin consultation with a
view to developing a framework for the progressive elimination
of diesel exhaust emissions … Introduce Ultra Low Emission
Zones … Reduce parking spaces in new developments …
Eliminate pavement parking …Provide cycle parking throughout
towns and cities at locations where there is demand and invest
in on-street secure cycle storage is residential streets. [p66]
Make sure that rural areas are not neglected when transport
budgets and planning for our cities and city regions are under
discussion. Develop networks of community and public
transport to provide regular links to onward transport networks.
Introduce speed limits of 20 mph in villages and 40 mph on rural
roads. [p67]
Labour Party
The Labour manifesto, Britain can be better, included the following
commitments:11
Nor will we raise VAT, and we renew our pledge not to extend it
to … public transport fares. [p18]
We will continue to support the construction of High Speed
Two, but keep costs down, and take action to improve and
expand rail links across the North to boost its regional
economies. We will support long-term investment in strategic
roads, address the neglect of local roads, and promote
cycling. [p19]12
Following the Davies Review, we will make a swift decision on
expanding airport capacity in London and the South East,
balancing the need for growth and the environmental impact.
[p19]
Labour will reform our transport system in order to provide more
public control and put the public interest first. We will review the
franchising process as a priority to put in place a new system
and avoid a repeat of the Conservatives’ franchising fiasco. A
new National Rail body will oversee and plan for the railways
and give rail users a greater say in how trains operate. We will
legislate so that a public sector operator is allowed to take on
lines and challenge the private train operating companies on a
level playing field. [p26]
11
Labour Party, Britain can be better: The Labour Party Manifesto 2015, 13 April
2015; emphasis added
12 the figures involved are reportedly an extra £89 million for cycling and walking and
£300million to fix an additional six million potholes to be funded by delaying
upgrades to the A27 and the A358 [see also below] and an additional £89 million
for local active travel projects and infrastructure schemes [“Labour Party makes
£300m General Election pledge to end Britain’s ‘pothole crisis’”, The Mirror, 20
April 2015]
13 Transport 2015
Rail fares will be frozen next year to help commuters while we
implement reforms. A strict fare rise cap will be introduced on
every route for any future fare rises, and a new legal right for
passengers will be created to access the cheapest ticket for
their journey. [p26]13
City and county regions will be given more power over the way
buses are operated in their area. They will be able to decide
routes, bear down on fares, drive improvements in services,
and bring together trains, buses and trams into a single network
with smart ticketing. [p26]
… there will be no … changes to … bus passes for pensioners.
[p49]
We will embark on the biggest devolution of power to our
English city and county regions in a hundred years with an
English Devolution Act … This will include control over local
transport systems so that in future, local bodies can integrate
trains, buses, trams and cycling into a single network. [p64]
We will take forward proposals from the Silk Commission to
extend the power the people of Wales have over their elections,
transport and energy. [p66]
Liberal Democrats
The Liberal Democrat manifesto, Stronger Economy. Fairer Society.
Opportunity for Everyone., included the following commitments:14
Devolve more economic decision-making to local areas,
building on the success of City Deals and Growth Deals,
prioritising the transfer of transport, housing and infrastructure
funding, skills training and back-to-work support. [p26]
Set out 10-year rolling capital investment plans [for transport].
[p30]
Develop a comprehensive plan to electrify the overwhelming
majority of the UK rail network, reopen smaller stations,
restore twin-track lines to major routes and proceed with HS2,
as the first stage of a high-speed rail network to Scotland. [p30]
Invest in major transport improvements and infrastructure
[including] the Transport for the North strategy to promote
growth, innovation and prosperity across northern England …
more modern, resilient links to and within the South West
peninsula to help develop and diversify the regional economy
… East-West rail, connecting up Oxford and Cambridge and …
London’s transport infrastructure. [p30]
Work to encourage further private sector investment in rail
freight terminals and rail-connected distribution parks. We will
set a clear objective to shift more freight from road to rail and
change planning law to ensure new developments provide good
freight access to retail, manufacturing and warehouse facilities.
[p30]
Ensure our airport infrastructure meets the needs of a
modern and open economy, without allowing emissions from
aviation to undermine our goal of a zero-carbon Britain by 2050.
13
this would reportedly be funded by delaying upgrades to the A27 and the A358
[“A27 and A358 road cash to fund rail fare freeze, Labour says”, BBC News, 13
April 2015]
14 Liberal Democrats, Manifesto 2015: Strong Economy. Fairer Society. Opportunity
for Everyone., 15 April 2015; emphasis added
Number 7177, 13 May 2015 14
We will carefully consider the conclusions of the Davies Review
into runway capacity and develop a strategic airports policy for
the whole of the UK in the light of those recommendations and
advice from the Committee on Climate Change. We remain
opposed to any expansion of Heathrow, Stansted or Gatwick
and any new airport in the Thames Estuary, because of local
issues of air and noise pollution. We will ensure no net increase
in runways across the UK. [p31]
Ensure new rail franchises include a stronger focus on
customers, including requirements to integrate more effectively
with other modes of transport and a programme of investment
in new stations, lines and station facilities. [p31]
We will continue the Access for All programme, improving
disabled access to public transport. [p31]
We will encourage Local Authorities to consider trams
alongside other options, and support a new generation of light
rail and ultra-light rail schemes in towns and cities where local
people want them. [p31]
We will retain the free bus pass for all pensioners. [p47]
Ensure rail fares rise no faster than inflation over the
Parliament as a whole. [p50]
Work to introduce a new Young Person’s Discount Card, for
young people aged 16–21, giving a 2/3rds discount on bus
travel, as resources allow. [p61]
Review access to transport for students and apprentices in
rural areas where no scheduled services may be available.
[p61]
Pass a … Green Transport Act to cut air pollution [… to
include] a statutory target of 2030 by which time all major,
regularly used rail routes will need to be electrified … a
requirement that every new bus and taxi is Ultra Low Emission
from 2030 and every car on the road meets that standard by
2040 … the creation of Low Emission Zones as part of a
national air quality plan, including a legal requirement for the
most polluted towns and cities … a new statutory framework
that all new rail franchises include a stronger focus on
customers … [and] updates to roads regulation to promote
innovation in transport like driverless cars and personal electric
vehicles. [pp76&91]
Our National Air Quality Plan for consultation will include: a
legal requirement targeted at the most polluted towns and cities,
to create Low Emission Zones; new incentives for local
schemes that cut transport-related pollution, and encourage
walking and cycling; a review of the MOT process, to see
whether changes could be introduced to cut emissions from
existing vehicles [and] support for new EU proposals on air
quality targets. [p87]
Support ambitious EU vehicle emission standards, and reform
Vehicle Excise Duty to drive continuous reductions in
greenhouse gas and other pollutants from the UK car fleet and
return revenues to levels projected in 2010. This will include
introducing separate banding for new diesel cars. [p87]
Encourage the market for electric vehicles, including with
targeted support for buses, taxis and light freight, and early
requirements to use low emission vehicles in the public sector.
We will set a target of 2040 for the date after which only Ultra-
15 Transport 2015
Low Emission vehicles will be permitted on UK roads for nonfreight purposes. [p87]
Work with industry to accelerate the commercial introduction of
zero emission fuel cell electric vehicles, and facilitate the UKwide introduction of hydrogen fuelling infrastructure. [p87]
Review the best way to keep our regulatory framework updated
to permit use of driverless and personal electric vehicles. [p87]
Support options for an intercity cycleway along the HS2 route,
within the overall budget for the project. [p87]
Implement the recommendations of the Get Britain Cycling
report, including steps to deliver a £10 a head annual public
expenditure on cycling within existing budgets. [p88]
Carry out a review of bus funding and bus policies and
introduce a five-year investment plan to give the industry and
Local Authorities certainty and help plan investment. We will
support local areas that want to bring forward plans for
regulating the bus network in their area. [p88]
Give new powers to Local Authorities and communities to
improve transport in their areas, including the ability to introduce
network-wide ticketing like in London [and] support the
expansion of smart ticketing systems. [p88]
Continue funding for local economic and sustainable transport
infrastructure through the Local Growth Fund. [p88]
Help bus companies trade in older, more polluting buses and
coaches for newer, low emissions ones, helping develop the
market for low-carbon buses. [p88]
Continue the fuel discount scheme for remote areas
implemented by Liberal Democrat Ministers and work with the
European Commission to extend it to further remote areas with
high fuel costs. [p89]
Work with Local Authorities to integrate transport networks in
rural areas, building on the work of Liberal Democrat Ministers’
Total Transport pilot. [p89]
Update planning law to introduce the concept of ‘landscape
scale planning’ and ensure new developments promote
walking, cycling, car sharing and public transport and improve
rather than diminish access to green spaces. [p97]
Make it easier to get around by: making more stations
wheelchair accessible and giving wheelchair users priority over
children’s buggies when space is limited … bringing into effect
the provisions of the 2010 Equality Act on discrimination by
private hire vehicles and taxis … improving the legislative
framework governing Blue Badges … building on our successes
in improving wheelchair access to improve accessibility of
public transport for people with other disabilities, including
visual and auditory impairment … [and] setting up a
benchmarking standard for accessible cities. [p109]
We will consider the work of the Government’s review on
devolution of Air Passenger Duty (APD), with a view to
devolving long-haul APD [to Wales] … [transfer] powers from
the UK Parliament to the National Assembly over … transport
… [devolve] funding of Network Rail in relation to the Wales
network … [and] we will abolish the economically distorting tolls
on the Severn Bridge once the debts are paid off. [p134]
Number 7177, 13 May 2015 16
Plaid Cymru
The Plaid manifesto, Working for Wales, included the following
commitments:15
We will improve Welsh town centres by attracting people back
to the high street, improving public transport. [p9]
We support the public ownership of railways in which profits
are reinvested into better services, and the transfer of powers
over railways to Wales, including the transfer of full funding for
railway infrastructure. We will work with Network Rail to deliver
this. [p41]
We support the electrification of railways in Wales, with the
aim of all major lines being electrified by 2034 and will ensure
electrification of the North Wales Main Line in the next Control
Period [and] we will make best use of stock by increasing the
number of services in diesel-operating areas so that there are
more services in West Wales, mid-Wales and north Wales.
[p41]
We support a South Wales Metro around the Cardiff Capital
Region, which will link with economically developing Valleys
and coastal communities. [p41]
… we will fund a feasibility study for re-opening former railway
lines, particularly between Carmarthen and Aberystwyth and
we will support the maintenance of the Cambrian Coast Line.
[p41]
The next franchise in Wales should include the introduction of a
Welsh transport Smart Card compatible with other forms of
transport. [p41]
We support the ‘Blue Route’ M4 improvements. [p41]
We will bring the Severn Bridges into Welsh public ownership,
cutting the tolls and re-investing any profits into Welsh transport
infrastructure. [p41]
We will push for improvements to the A55, including the
construction of a third Menai Bridge, and we will improve roads
between north and south to improve access to all parts of
Wales. [p41]
We will create a fuel duty regulator to prevent sudden spikes
in fuel prices. We will also seek European agreement for fuel
price reductions in rural areas, recognizing the additional
costs of living in rural parts of Wales, as already introduced in
the Highlands and Islands of Scotland. [p41]
We will introduce additional electricity charging points in
Wales to encourage the use of electric vehicles. [p41]
We will keep free bus passes. [p41]
We will protect bus services in all parts of Wales and ensure
early morning and late evening services for workers. [p41]
We will expand Traws Cymru into a dedicated Welsh national
coach company, linking our towns and cities with regular
services, especially where train links are not an option. [p41]
We will extend the Bwcabus scheme currently running in South
Ceredigion and North Carmarthenshire into other rural areas to
15
Plaid Cymru, Working For Wales: 2015 Westminster Election Manifesto, 16 April
2015; emphasis added
17 Transport 2015
connect communities across Wales where traditional bus
services are not viable. [p41]
We support the transfer of powers over air passenger duty,
both short and long haul, to the Welsh Government and we will
support Cardiff Airport in creating an improved freight and
passenger development strategy. [p41]
We will not support the creation of a major new UK airport to the
east of London. [p41]
We will develop a ports and freight strategy for Wales, using
European funding to improve infrastructure. [p41]
We will ensure funding for urban cycle paths and between
communities, particularly in travel to work areas. [p41]
We will ensure that the Welsh Transport Commissioner is
based in Wales, unlike at present. [p41]
We will work with local authorities to ensure that all Blue Badge
holders have access to free parking. [p57]
Scottish National Party (SNP)
The SNP manifesto, Stronger for Scotland, included the following
commitments:16
We will … seek adequate transport infrastructure investment,
with a particular aim of improving transport and communication
links across the north of these isles. That includes connecting
Scotland to HS2 as a priority, with construction beginning in
Scotland as well as England, and a high speed connection
between Glasgow, Edinburgh and the north of England as part
of any high-speed rail network […] High Speed Rail should be
constructed both from the north down and from the south up.
[pp10&12]
We will continue to support older Scots, by retaining key
policies such as the free bus pass. [p16]
We will press the UK government to reinstate an emergency
towing vehicle on the west coast of Scotland and to ensure
that delays in recruitment don’t leave vital coastguard stations
understaffed. [p21]
As the Scottish Government, we are consulting on measures to
reduce emissions in Scotland, including looking at the creation
of Low Emission Zones. [p32]
UK Independence Party (UKIP)
The UKIP manifesto, Believe in Britain, included the following
commitments:17
Save £4 billion a year in capital expenditure by scrapping the
HS2 vanity project, which will benefit the few at the expense of
many. [pp8&37]
We will invest £200 million to make parking at English
hospitals free for patients and their visitors. [p17]
The final report of the Davies Commission into airport capacity
and connectivity in the UK will be published later this year. UKIP
will consider its recommendations and then take a position on
the basis of what we genuinely believe to be in the long-term
16
17
SNP, Stronger for Scotland: SNP Manifesto 2015, 20 April 2015; emphasis added
UKIP, Believe in Britain: UKIP Manifesto 2015, 15 April 2015; emphasis added
Number 7177, 13 May 2015 18
best interests of the country. However, we firmly believe that
part of the solution to address the lack of airport capacity in the
South East is to re-open Manston Airport. [p37]
UKIP will only allow installation of speed cameras when they
can be used as a deterrent at accident black spots, near
schools and in residential areas where there are specific
potential dangers. We will not permit speed cameras to be used
as revenue-raisers for local authorities. [p37]
We will remove road tolls where possible and let existing
contracts on running road tolls expire … UKIP opposes ‘pay-asyou-go’ road charging schemes and attempts to introduce them
by stealth. [p37]
From October 2015, the EU will require all new cars to be fitted
with the ‘eCall’ system. Ostensibly a road safety measure, this
system tracks vehicles using GPS and reports back to a central
database. This capability would enable introduction of a
Europe-wide road pricing system, on a miles travelled basis,
which the EU Transport Commissioner is keen to introduce. We
will scrap mandatory fitments of eCall and allow owners who
already have eCall installed to disable it on their vehicles. [p37]
The Driver Certificate of Professional Competence (DCPC)
is an expensive second-tier requirement, which is causing job
losses, because of the added administration and expense to
hauliers. We will scrap the DCPC for professionally licensed
drivers. [p37]
After leaving the EU the [HGV road user] levy would cease to
apply to UK vehicles, but the Vehicle Excise Duty on UK
vehicles would be adjusted by the equivalent amount to make
this aspect of the change revenue neutral for both UK hauliers
and the government. The current levy tariff will then be doubled
to a maximum of £2000 per annum and only apply to foreign
registered HGVs … It will achieve exactly the same effect as
UKIP’s original ‘Britdisc’ proposal. [p37]
To help protect the enduring legacy of the motor industry and
our classic and historic vehicles, UKIP will exempt vehicles
over 25 years old from Vehicle Excise Duty. [p37]
We will push every local authority in the country to offer at least
30 minutes free parking in town centres, high streets and
shopping parades, to encourage shoppers into our town centres
and boost local business. [p44]
19 Transport 2015
3. Policy focus 1: devolution
3.1 What’s the issue?
Whether we are talking about devolution to lower tier government in
England and devolved governments in Scotland, Wales and Northern
Ireland, or about decision-making being taken at the trans-national
UN or EU level, the proportion of transport policy decisions taken at
Westminster has likely never been lower.
The Labour and Coalition governments devolved many transport
responsibilities to the administrations in London, Edinburgh, Cardiff
and Belfast. The UK Government in Westminster develops the policy
and provides the bulk of the funding for local transport in England,
including: buses, walking, cycling and local transport (highways and
rail) more generally; in other parts of the UK this is provided by the
relevant devolved administration. Westminster retains reserved
powers for ‘national’ transport, such as aviation and maritime policy,
and strategic road and rail.
The EU legislates across all transport modes, but in particular the UK
must follow its lead in terms of infrastructure standards, market
liberalisation and harmonisation in areas such as driver and vehicle
licensing and testing, transport safety and security, and railway
interoperability. Northern Ireland has long managed its own road, rail
and bus systems. Scotland specifies and lets its own rail franchise,
manages its own highway network, sets its own speed limits and
drink drive limits, provides its own bus passes and other concessions
and manages its own parking. Wales is also looking forward to letting
its own rail franchise: it already manages its own highway network,
provides its own bus passes and other concessions and manages its
own parking.
In England a great deal of responsibility rests on the shoulders of the
various tiers of local government as well as on Local Enterprise
Partnerships, the Integrated Transport Authorities in the metropolitan
areas outside London and on the elected Mayor and Transport for
London in the capital. These entities can impose road, workplace and
parking charges, provide concessions, plan and finance local
infrastructure projects like roads and railways and they have
responsibility for accessible and sustainable transport such as
cycling.
Taken together, these represent a significant shift of power away from
Westminster – and more is likely to come.18
Scotland and Wales largely devolved
Some parts of the transport system have long been separated
between England and Wales on the one hand and Scotland on the
18
this section incorporates work by HC Library colleagues Paul Bowers (devolution)
and Mark Sandford (local government); information about Northern Ireland
contributed by Des McKibbin from the Research and Information Service (RaISe)
of the Northern Ireland Assembly
Number 7177, 13 May 2015 20
other. For example, much of the Highways Act 1980 which applies to
England and Wales is mirrored in the separate Roads (Scotland) Act
1984.
But in more recent times, it was the decision by the Labour
Government in 1997 to provide for new devolved legislatures and
governments in Scotland and Wales that led to the devolution of
significant transport powers. This was initially achieved in Scotland by
the Scotland Act 1998 and in Wales by the Government of Wales Act
1998.19 This has led to significant amounts of transport legislation
becoming the responsibility of the Scottish and Welsh Governments,
leaving the Department for Transport in Westminster primarily
responsible for aviation, shipping and infrastructure as well as
transport generally in England.
Northern Ireland has its own transport powers
The devolution of powers relating to transport in Northern Ireland was
legislated for in the Northern Ireland Act 1998. Devolution followed
the Belfast/Good Friday Agreement in 1998 and also led to the
establishment of the North-South Ministerial Council (NSMC), a body
intended to address matters of mutual interest, one of which is
transport. The NSMC Transport Sector meets in order to make
decisions on common policies and approaches in areas such as cooperation on strategic transport planning, including road and rail
infrastructure, public transport services and road and rail safety.
The Department for Regional Development (DRD) has overall
responsibility for transport policy and planning in Northern Ireland.
These policies are delivered by TransportNI, a business unit within
the DRD which is, in effect, the roads and public transport authority in
Northern Ireland. Currently the Department for the Environment (DoE)
has responsibility for vehicle registration, road safety and Driver and
Vehicle Agency (DVA) functions. However, the Stormont House
Agreement of 23 December 2014 included a commitment to reduce
the number of Government Departments from 12 to nine in time for
the 2016 Assembly election. Assuming this goes through, a new
Department for Infrastructure will exercise the existing responsibilities
of DRD, but will also take on transport-related functions currently
exercised by the DOE.20
Local authorities in Northern Ireland have no statutory responsibilities
with regard to transport policy or planning. However, they are
expected to have a prominent role in the production of local transport
plans as these emerge following the commencement of local
government reform.
Responsibility for aviation and shipping matters remains reserved.
However, issues around air connectivity and the impact this has on
the Northern Ireland economy has led to calls for a separate air
transport strategy for Northern Ireland to take account of the region’s
19
for more information on transport devolution to Scotland and Wales see HC Library
briefing papers SN3192 and SN3156 respectively
20 Northern Ireland Assembly, 2 March 2015
21 Transport 2015
unique position within the UK whereby it is almost entirely reliant on
air transport for, in particular, business and leisure travel. The
Northern Ireland Affairs Select Committee conducted an inquiry on
this topic in 2012, examining issues such as the devolution of Air
Passenger Duty (APD) and the importance of maintaining links
between Northern Ireland and London.21
The vast majority of public transport services are provided by the
subsidiary companies of the Northern Ireland Transport Holding
Company (NITHC) - a statutory body (public corporation) established
by the Transport Act (Northern Ireland) 1967 to oversee the provision
of public transport in NI. The three subsidiary companies, Citybus
(which operates Metro bus services), NI Railways and Ulsterbus,
have operated under the overall brand-name of Translink since 1996,
although the companies are separate legal entities.
The 1967 Act remained the primary transport legislation in Northern
Ireland for over 40 years until it was updated by the Transport Act
(Northern Ireland) 2011. The purpose of this legislative change was
twofold: to facilitate an improved and more accessible public transport
system and also to take account of the modern operating
environment including requirements to comply with European
legislation.
The Northern Irish parties all published manifestos for the 2015
General Election containing a range of transport commitments.22
The English regions want more control over transport
Local and regional authorities of one sort or another, supported by
various commissions, pressure groups and think tanks, have been
calling for more powers to plan, fund and manage transport in their
areas for decades. Successive governments have legislated to reform
local and regional transport delivery, sometimes through more
general machinery changes but also via specific transport-related
initiatives.
Over the past couple of years there have been a slew of reports
looking at this issue. One of the first was the ‘City Centred’ campaign,
launched by leaders of London and the UK's Core Cities in
September 2013,23 calling for more devolution, including fiscal
powers, from central government. In July 2014 Lord Adonis published
his Growth Review for the Labour Party, recommending the setting up
of more city and county region Combined Authorities, to take direct
21
NIA Committee, An air transport strategy for Northern Ireland (first report of
session 2012–13), HC 76, 30 November 2012; APD is further discussed in
section 7.4, below
22 in alphabetical order: APNI, Step Forward, Not Back: Manifesto for 2015:
Westminster Election, 16 April 2015; DUP, Westminster Manifesto 2015, 21 April
2015; SDLP, Prosperity Not Austerity: Westminster Manifesto 2015, 15 April
2015; Sinn Fein, Equality Not Austerity: 2015 Westminster Election Manifesto, 20
April 2015; UUP, One Day, One Vote, One Chance for Change: Westminster
Manifesto 2015, 17 April 2015; note: Lady Sylvia Hermon stood and won as an
independent in North Down
23 the ‘Core Cities’ are Birmingham, Bristol, Cardiff, Glasgow, Leeds, Liverpool,
Manchester, Newcastle, Nottingham, and Sheffield
Number 7177, 13 May 2015 22
responsibility for transport and other economic functions, on a similar
basis to the Mayor of London.24
In September 2014 the Passenger Transport Executive Group (pteg)
argued that cities outside London should have more powers over their
bus networks and ‘meaningful’ devolution of local rail services, which
together would allow them to deliver ‘Oyster-style’ smart and simple
ticketing;25 single, integrated transport networks and a clearer
interface with the public, local businesses and investors on service
delivery and development.26 This was echoed by the RSA City
Growth Commission in October 2014, which recommended that there
should be ‘accelerated connectivity’ between metropolitan areas in
the North and Midlands to “create larger economic powerhouses, to
encourage complementary poles of growth in relation to London and
the South East”. Over the medium to longer term, the Commission
believed that connectivity between these and other major
metropolitan areas would be a key economic driver. It also
recommended an ‘Oyster card for the North’ (see section 3.5 below
for further information).27
Also in October 2014 the Campaign for Better Transport (CBT) called
for more powers for cities outside London to allow for the introduction
of smartcards and integrated transport networks; the creation of new
multi-authority ‘transport consortia’ outside the big cities to join up
different councils and deliver smart tickets and other transport
improvements; and regional groupings to manage strategic roads and
local rail services.28
In March 2015 the Coalition Government and the leaders of Northern
councils published a report announcing the establishment of a body
called Transport for the North (TfN), under the leadership of an
independent Chair, to bring together ‘all the relevant parties’ to work
in partnership to establish a “clear, long-term, strategic transport
vision for the North of England that is shared by all parties and allows
the North to speak with a single voice and execute that vision”. It
would be tasked with developing strategic, prioritised transport
investment opportunities and the Government would provide financial
certainty via a “clear future budget envelope to be agreed at the
Government’s Spending Review in 2015”.29
At about the same time IPPR North published a report on transport in
the North of England, calling for further devolved and integrated
transport powers to be delivered in three phases between 2015 and
2025. This would involve extending the powers of TfN, devolving rail
franchising and strategic road network powers, smart ticketing, and
24
Lord Adonis, Mending the Fractured Economy, July 2014, p8
when people say ‘Oyster-style’ they mean an integrated, contactless payment
system or similar which enables users to easily switch between modes of
transport across a region (as in the London Oyster Card)
26 pteg, Policy Futures - Urban Transport outside London, September 2014
27 City Growth Commission, Unleashing Metro Growth, October 2014, p34
28 CBT, Making Transport Local: devolution for transport in England outside London,
October 2014
29 HMG, The Northern Powerhouse: One Agenda, One Economy, One North, March
2015, p39
25
23 Transport 2015
the setting of five-yearly budgets fully devolved from the Treasury to
TfN.30
The EU and other global players take an increasing
number of decisions
Generally speaking, the EU acts on transport issues where there is a
transnational element – such as on almost all aviation and maritime
issues, type approval of road vehicles, licensing, transport networks
etc.31
The EU’s authority to act on transport policy ultimately derives from
Article 4(2)(g), Title VI (transport), and Title XVI (Trans-European
Networks) of the Treaty on the Functioning of the European Union
(TFEU).32 Specifically, it provides for:




common rules applicable to international transport to or from the
territory of a Member State or passing across the territory of
one or more Member States;
the conditions under which non-resident carriers may operate
transport services within a Member State;
measures to improve transport safety; and
any other appropriate provisions.
EU action on transport really only gained momentum in the mid1980s after the European Parliament (EP) took the Council to the
European Court of Justice (ECJ) for its failure to act in adopting the
common transport policy under Article 90.33
A ‘common transport market’ has largely been achieved, apart from
rail transport. It essentially involves opening transport markets to
competition and creating fair conditions in which that competition can
flourish. This has involved the harmonisation of national legal and
administrative regulations, including the prevailing technological,
social and tax conditions. The successes of this model have been
falling prices and increasing patronage since the 1980s across the
EU as a whole. However, this is increasingly off-set by concerns
about how to safeguard ‘fairly priced and efficient mobility for people
and goods’ and minimise external costs (mainly environmental and
health-related).
The most recent White Paper from the Commission was published in
2011. It set out an ambition to reduce greenhouse gas (GHG)
emissions by at least 60 per cent by 2050 compared with 1990
without curbing transport growth or impairing mobility. The Paper set
30
IPPR North, Transport for the North: A blueprint for devolving and integrating
transport powers in England, March 2015, summary
31 further information on EU transport policy can be found in a suite of briefing papers
produced by the European Parliament and available on its website [accessed 8
April 2015]
32 the EEC or ‘Common Market’ was established in 1957 by the Treaty of Rome and
came into being in 1958; the European Community, which replaced the EEC in
1993, formed one part of the European Union or EU; the EU was the over-arching
structure, comprising the Community and two inter-governmental ‘Pillars’; the
Treaty of Lisbon, which entered into force in December 2009, changed this
structure, and we now have only the European Union or EU; for more information,
see: HC Library briefing paper SN3689
33 Case 13/83, 22 May 1985
Number 7177, 13 May 2015 24
out ten objectives for transport to 2030 (e.g. shifting a third of road
freight to rail or waterborne modes; and tripling the length of the high
speed rail network). It also provided details of the measures required
to deliver these objectives, the most fundamental of which were the
Single European Sky, Single European Railway Area; a ‘Blue Belt’ in
the seas around Europe; opening markets in combination with quality
jobs and good working conditions; improved security and transport
safety; better guarantees of passenger rights across all modes of
transport and better accessibility of infrastructure. It also posited that
in future transport users would have to pay a larger proportion of
costs, and cites in particular would face higher energy taxation and
emission trading systems.34
Other notable international bodies that have a significant impact on
UK transport policy formation are the UN’s shipping and aviation
agencies – the International Maritime Organization (IMO) and the
International Civil Aviation Organization (ICAO) – and the UN
Economic Commission for Europe (UNECE). IMO and ICAO are the
international fora in which the global frameworks regarding safety and
security in those sectors are established; the treaties signed under
their auspices usually form the foundation of both EU law and that of
the UK. UNECE is particularly influential when it comes to road
transport as its vehicle regulations form the basis of EU and UK law
on vehicle design and construction.
3.2 Why devolve transport policy?
Local accountability
In opposition all major parties tend to agree that decisions should be
taken at the lowest practical democratic level. They do not always
uphold this principle when they are in government; or rather their
rhetoric does not always match the reality.
Labour and the Coalition when in Government devolved, or have
proposed to devolve, significant powers to Scotland and Wales,
though not enough for some. The argument for this sort of devolution
is simple enough in practical terms and is not so different from those
arguments put forward for lower-level decision-making in England:
that people feel most ownership of and accountability for policy if it is
made at a closer level to their daily lives. There is also a more
profound political argument, based on principle, made particularly
vocally by the Scottish and Welsh nationalist parties, that Englishdominance of policy making for other countries within the UK has
repeatedly resulted in the policies of parties elected with a majority in
England but not in Scotland or Wales being undemocratically
enforced in those countries.
In terms of England, since 1997 there has been a plethora of changes
to how local transport is planned and funded: tiers of government
have come and gone, agencies, quangos and partnerships have all
34
EC, Roadmap to a Single European Transport Area, COM(2011) 144 final, March
2011
25 Transport 2015
featured as vehicles for the planning process, and funding has usually
been short term and has fluctuated year-on-year. Capital funding has
tended to be in the gift of central government and has been doled out
through various funds in response to bids from local authorities and
other bodies. Revenue funding is provided on a biannual basis. There
is a long running debate about the true extent of devolution within
England. While decision-making powers have certainly devolved, it is
debatable how local bodies can make the most of those powers when
they still overwhelmingly rely on the largesse of the Treasury.35
The ‘North/South divide’
One of the tropes that we heard much of, particularly in the latter half
of the 2010 Parliament, was the imperative to ‘close the North/South
divide’ in England.36 One of the policy areas put forward as a means
by which to achieve this aim is transport, in particular in terms of
spending per head on local infrastructure.
On the basis of GVA (gross value added),37 we can get a broad
picture of where the UK’s economic output is being produced. The
most recent official figures show that in 2013 London and the South
East together accounted for 38 per cent of UK GVA. This was more
than the Midlands and North of England combined (33 per cent). GVA
per head in London went from 60 per cent above the UK average in
1997 to 72 per cent above it in 2013 – the fastest growth rate of any
region. Over the same period, GVA per head in both the East and
West Midlands region fell from 10 per cent below the UK average to
17 per cent below – the worst performing regions since 1997 on this
measure.38
In terms of transport, there has long been disquiet about the
disproportionately large amount of transport funding that London
receives as opposed to the rest of the UK. The argument goes that
London is in part successful because it is better connected and that if
other parts of the country (e.g. Manchester) had the sorts of powers
and amount of funding allocated to London they could grow more
vigorously and would be better placed to resist recessions. The most
recent figures show that in 2012-13 transport spending per head in
London was £4,529, compared to £1,876 in the North West (the next
highest) and £554 in the North East (the lowest); in Scotland the
figure was £2,866.39
If we look at transport spending alongside GVA we can see that the
areas that produce the most benefit for the country also receive the
most investment.
35
details of what the Labour and Coalition governments did in terms of devolution
within England are set out in two HC Library briefing papers: SN4351 and
SN5735, respectively
36 some include Scotland when talking about this issue, but not always
37 GVA is GDP excluding taxes and subsidies on production (e.g. it does not include
VAT)
38 for further information see HC Library briefing paper SN5795
39 op cit., Public Expenditure Statistical Analysis (PESA), table 9.8(e)
Number 7177, 13 May 2015 26
3.3 Where are we with devolution of transport
policy?
Scotland
The most recent proposals for further devolution are a consequence
of a commitment made by the three main unionist party leaders prior
to the Scottish independence referendum in September 2014, in the
event of a No vote. After the referendum, which did deliver a No,
Prime Minister David Cameron set up a Commission under Lord
Smith of Kelvin (the Smith Commission), to reach an agreement
among all the parties in the Scottish Parliament. The Smith
Commission published its final report in November 2014.40 In terms of
transport, it recommended permitting a public sector operator to bid
for the Scotrail franchise; giving the Scottish Government the power
to set speed limits in Scotland and to make its own road signs;
devolving the functions of the British Transport Police; and giving the
Scottish Government a formal consultative role on the Maritime and
Coastguard Agency and the Northern Lighthouse Board, with respect
to their activities in Scotland.41
In January 2015 the Government published a command paper
responding to Smith, which included draft clauses. This was to
demonstrate what legislative proposals might be contained in a final
Bill (published sometime after the 2015 General Election and thus
subject to change by the new government, of whatever composition).
Clauses 26-30 and 35-37 relate to transport matters and cover those
recommendations made by Smith in November 2014.42
Wales
The most recent proposals for further devolution are a consequence
of the second report of the Commission on Devolution in Wales,
chaired by Paul Silk (the Silk Commission), published in March 2014.
This recommended moving the devolution settlement in Wales onto a
‘reserved powers’ footing (the model used with regards to Scotland).43
In terms of transport, it recommended further devolution of powers on
rail, ports, bus and taxi regulation, speed and drink drive limits, and
the functions of the Traffic Commissioner in relation to buses. It
further stated that whilst inter-city cross-border rail franchises should
remain reserved, the Welsh Government should have a greater role
in the appointment of a new franchise operator. On roads, it did not
recommend any changes in powers but did say that there should be
closer co-ordination between the two Governments to “ensure a more
40
Smith Commission, Report of the Smith Commission for further devolution of
powers to the Scottish Parliament, November 2014
41 ibid., pp19&21
42 HMG, Scotland in the United Kingdom: An enduring settlement, Cm 8990, January
2015, chapter 7
43 Silk Commission, Empowerment and Responsibility: Legislative Powers to
Strengthen Wales, March 2014; the first report of the Silk Commission resulted in
the Wales Act 2014, which includes enhanced powers to the Welsh Assembly
and Welsh Government over elections and taxation
27 Transport 2015
strategic approach and good quality cross-border routes, both eastwest and north-south”.44
In February 2015 the Coalition Government published proposals for
further devolution to Wales as part of the St David’s Day Agreement,
based on the second Silk Commission report, the knock-on effects of
the Smith Commission recommendations in Scotland and further
proposals regarding fiscal devolution. On transport it pledged to take
forward Silk’s recommendations in full, excepting devolution of the
funding of Network Rail in relation to the Wales network and drink
drive limits.45
In their 2015 manifestos the Labour and Conservative parties both
committed to implementing the Silk recommendations.
England
Devolution within England is in many ways more complex than that to
Scotland and Wales, where there is broad (though not universal)
agreement on what should be devolved, how and when. In order to
understand the various proposals for transport organisation and
devolution at the local and regional level it is important to provide a
brief word on how the broader governance arrangements currently
work.46
English local government is divided in some areas into county
councils (the upper tier) and district councils (the lower tier). The two
tiers have distinct functions, though they overlap in some matters. In
other areas, ‘unitary authorities’ carry out all local government
functions. There are 353 local authorities in England, of which 27 are
county councils, 201 are district councils, and 125 are unitary
authorities, of which 32 are London boroughs and 36 are metropolitan
boroughs.
The Greater London Authority (GLA) exercises a range of functions in
transport, policing, planning, fire and rescue, housing and economic
development. It is not a local authority for most purposes. In other
parts of England, central government manages some of the functions
that the GLA undertakes for London.47
Five Combined Authorities (CAs) have been established in England
under the Local Democracy, Economic Development and
Construction Act 2009. These are not local authorities but joint legal
bodies through which groups of authorities can work together. The
CAs in Greater Manchester and Sheffield have been offered
additional powers by the Government.48
Overlaid on this structure are Local Enterprise Partnerships (LEPs).
The first cohort of LEPs were announced in late 2010; they are non44
ibid., p74; for full details see chapter 7 of the same document
HMG, Powers for a Purpose: Towards a Lasting Devolution Settlement for Wales,
Cm 9020, February 2015, chapter 2.5
46 for a fuller explanation of the various components there are a number of briefings
available on the Local Government topical page of the Parliament website
47 for further information on the GLA see HC Library briefing paper SN5817
48 for further information on combined authorities, see HC Library briefing paper
SN6649
45
Number 7177, 13 May 2015 28
statutory bodies which have assumed many of the responsibilities of
Regional Development Agencies (RDAs) and have responsibility for
Enterprise Zones.49 There is also a patchwork of transport authorities,
including county and unitary councils, Integrated Transport Authorities
and city-wide entities like Transport for London (TfL) and Transport
for Greater Manchester (TfGM). The Government has also proposed
a new body called Transport for the North (TfN). These bodies all
have different responsibilities for transport planning and funding.
Proposals for English devolution vary between political parties.50 As
set out above, in their manifesto the Conservatives committed to
devolving “far-reaching powers over economic development,
transport and social care to large cities which choose to have elected
mayors”; to a pilot to allow local councils to retain 100 per cent of
growth in business rates; and to devolve further powers over skills
spending and planning to the Mayor of London.51
3.4 What about funding?
Barnett
The non-statutory Barnett formula is part of the mechanism used to
determine the budgets of the devolved administrations. It has long
been subject to some controversy. As the devolved administrations
have limited revenue raising powers their spending is largely funded
through grants from the UK Government. These grants are commonly
referred to as block grants. Annual changes in the block grants are
determined by the Barnett formula. 52
There are three elements to the Barnett formula calculation:



the change in planned spending in England by UK Government
Departments covering devolved matters;
the comparability percentage; and
the population proportion in each country.
The comparability percentage captures the extent to which
spending by a UK Government Department is comparable with the
equivalent services carried out by the devolved administration. For
example transport has a comparability factor of 100% or close to
100% for Northern Ireland and Scotland, where transport is largely
devolved. In Wales, where some elements of transport remain
reserved, transport has a smaller comparability factor of around 75%.
The population proportions used depends on the coverage of the
UK Government Department concerned. In most cases, this is
England only, so the proportion of the English population is used.
The Barnett formula works by multiplying these three factors together.
For example, if the change in spending by the Department for
Transport was £100 million, the increase for Scotland would be:
49
for further information on LEPs see HC Library briefing paper SN5651
for further information on detailed proposals see HC Library briefing paper SN7029
51 op cit., Strong Leadership, A Clear Economic Plan, A Brighter More Secure Future:
The Conservative Party Manifesto 2015, p13
52 for further information on Barnett, see HC Library research paper RP 07/91
50
29 Transport 2015
£100m x 98% [transport comparability percentage for Scotland] x
10%53 [Scotland population percentage] = £9.7m
Figures calculated via this method are sometimes referred to as
‘Barnett consequentials’.
This calculation is carried out for each relevant department and the
sum of these results is the net increase in the devolved
administration’s budget. The devolved administrations have discretion
over how to spend the funds that are allocated to them under the
Barnett formula. For example, there is no requirement that they spend
the Barnett consequentials from increased spending by the
Department for Transport on transport.
Critics of the Barnett formula argue that it produces an unfair
distribution of public spending in the different parts of the UK and that
it fails to provide financial accountability or give the devolved
legislatures any tools of economic policy, such as control of tax rates.
There is particular concern in Wales about how Barnett applies to that
country in comparison to Scotland. The IFS recently reported:
Analysis of the 2010 and 2013 Spending Reviews suggests that
Scotland and Northern Ireland have benefited significantly from
the fact that the Barnett formula has passed on only a small
fraction of the large cuts to the CLG:LG [local government]
budget, but fully passed on the protection of NHS and
education spending in England. Calculations suggest Scotland
and Northern Ireland benefiting to the tune of £600 million and
£200 million a year in 2015–16. This has allowed them to
deliver substantially smaller cuts than required in the rest of the
UK, which is arguably unfair to the people in England and
Wales.54
Central Government
Local authorities currently receive a proportion of their funding in the
form of central government grant. The majority of this is allocated
annually by the Department for Communities and Local Government
(DCLG), with some grant programmes administered by other
departments. Most of the DCLG grant can be spent as local
authorities see fit, though a small number of items are ring-fenced,
i.e. they can only be spent on particular matters. Currently, central
government revenue and capital grant funding is fixed on an annual
basis in the Government’s Local Government Finance Report. In
recent years, indicative funding levels for a second year have been
provided by the Government.
There have been a number of proposals for local authorities to have
additional flexibility over budgets, and for a reduction in central
government’s role in the annual grant-making process. The two most
significant are:

53
54
Single or ‘pooled’ budgets, based on the idea that public
services can be more efficiently provided by local integration
based on mid-2013 population estimates
IFS, Business as usual? The Barnett formula, business rates and further tax
devolution, IFS Briefing paper BN155, November 2014, p43
Number 7177, 13 May 2015 30

between, for instance, health, employment, housing, transport
and skills policies; and
Multi-year budgeting, where government provides for example a
five-year revenue (and possibly capital) budget running the
length of a Parliament so that local authorities could move funds
between years to facilitate forward planning and flexibility.
As indicated above, both major parties support further fiscal
devolution to Scotland and Wales, including income and corporation
taxes. It remains to be seen if London, Manchester and other English
cities will see any further fiscal devolution.
Raising money locally
There are different ways in which local authorities could be allowed to
raise money locally to pay for their own transport schemes and
services (as well as much else). The two most often discussed are
borrowing and property taxes.55
The purpose of proposals to increase local authority borrowing
powers is to allow authorities to invest in infrastructure. Local
authorities cannot borrow to meet revenue spending requirements.
The majority of proposals of this kind relate to housebuilding, though
the same principles could apply to other forms of infrastructure too.
Tax increment financing (TIF) schemes enable local authorities to
borrow to invest in infrastructure, and repay the loan from increased
tax revenues resulting from the investment. ‘Earn back’ is a principle
whereby a local authority is given a sum of money in respect of a
particular, centrally-set policy for a fixed number of years. The
authority is then permitted to spend the funds as it sees fit on
delivering that policy, and if it saves any of the funds allocated, to
retain a proportion of the saving.
In terms of property taxes, London and other metropolitan (large
urban) areas of England have recently argued for the devolution of
full control over business rates and council tax, plus stamp duty,
annual tax on enveloped dwellings, and capital gains tax. However
this would not be suitable for all: some parts of England have smaller
tax bases – meaning less capacity to raise additional tax revenue –
than other parts. If areas with larger tax bases were able to retain
their own tax revenues, less funding would be available for
redistribution to other areas. There have also been proposals to
devolve elements of the Government’s role in the council tax system
to local authorities, including a power for local authorities to introduce
more bands or revalue in their area, and to allow local authorities to
retain more of their business rates.
There are also suggestions for a number of powers to impose
additional levies, or to localise control over other types of charge,
such as assigning a proportion of revenue from specified taxes to
local government. The proportion(s) would be specified in advance,
meaning that local authorities could be assured of receiving their
55
further information on all the schemes discussed below can be found in HC Library
briefing paper SN7046
31 Transport 2015
share of revenue. In principle, assigned revenue systems can be
used to give local authorities incentives to increase tax revenues
through their policies, as they would benefit directly from the
increased income. Suggested tax areas where this policy could apply
are fuel duty, exploitation of energy resources (e.g. fracking) and VAT
on soft drinks, fast food and confectionery.
As regards local transport authorities, Transport for London (TfL) has
probably gone furthest in terms of a mix of funding. TfL is funded by
fares income (approximately 40 per cent of all funding); grant funding
from the Department for Transport (DfT) and the Greater London
Authority (GLA) (about 25 per cent); other income, including
advertising income, property rental and income from the Congestion
Charge; Crossrail funding; and borrowing and cash movements.56
There is one other commonly-discussed income-raising measure
specific to transport: raising money via bonds. This was discussed
widely about 15 years ago when the then Mayor of London, Ken
Livingstone, proposed a bond option to raise money to invest in the
London Underground. Many people at the time considered that
lessons could be learned from the way the New York Metropolitan
Transportation Authority (MTA) had been restructured. They
suggested that TfL could be granted the authority to establish a
capital budget that would be separate from the operating budget, and
to issue bonds that would be secured by pledged revenues.57
3.5 What might devolved transport policy and
planning look like in England?
A ‘one size fits all’ approach to devolution of transport powers seems
both unlikely and undesirable. The ‘London model’, for example, is
one approach and the proposals for Greater Manchester are different
again. Outside of the main metropolitan areas, the ‘elected mayor’
model with attendant consolidated transport powers may not be the
best option, particularly for more rural or geographically diffuse areas
where public transport is sporadic and the populace is largely cardependant.58
The ‘London model’ is now about 15 years old. Under the Greater
London Authority Act 1999, London's buses, trains, Underground
system, traffic lights, taxis and river transport, were devolved to a
single institution, Transport for London (TfL). The Mayor of London
was given responsibility for policy and a duty to produce an integrated
transport strategy for London. All statutory duties rest with the Mayor.
TfL implements the Mayor's transport strategy and oversees transport
services on a day-to-day basis. The London Assembly approves the
integrated transport strategy and the transport budget, scrutinises the
56
TfL, How we are funded [accessed 14 April 2015]
for further information on bond financing in relation to the London Underground,
see section 6 of HC Library briefing paper SN1307
58 information on difficulties experienced in these areas can be found in a recent
report by the Transport Select Committee, see: Passenger transport in isolated
communities (fourth report of session 2014-15), HC 288, 22 July 2014
57
Number 7177, 13 May 2015 32
performance of TfL and the Mayor, and is able to conduct wider
investigations of transport issues.59
In terms of London railway services, there is a duty on the Secretary
of State and TfL to co-operate on rail matters, including a requirement
that the Secretary of State must consult TfL before issuing a rail
franchise Invitation To Tender (or when entering a franchise
agreement for which an ITT has not been issued) for railway
passenger services to, from or within London. There are also relaxed
contractual restrictions on TfL, limiting the prohibition on TfL to enter
into agreements with rail franchisees without the consent of the
Secretary of State. Finally, TfL, as part of the franchise specification
process, can propose and pay for extra train services or
improvements to stations on a number of ‘inner suburban’ routes (TfL
is required to consult with local transport authorities in the affected
areas beyond the boundary and London TravelWatch before it does
this).
On roads, the 1999 Act created a network of key roads for which the
Greater London Authority (GLA) would be the highway authority;
these are called ‘GLA roads’. The initial GLA roads were designated
by order by the Secretary of State and when trunk roads became
GLA roads they ceased to be trunk roads (i.e. a highway for which the
Secretary of State, rather than a local authority, is the highway and
traffic authority). TfL is the traffic authority for GLA roads. For roads in
Greater London that are not GLA roads or trunk roads, the traffic
authority is the relevant London borough or the Common Council. TfL
may place traffic signs on nearby roads (for which the relevant
London borough council is the traffic authority) in connection with a
GLA road. The signs may be placed on any structure on that road,
whether or not the structure belongs to TfL. TfL may carry this out in
connection with traffic regulation and experimental traffic orders and
in other circumstances, provided they consult the relevant borough.
Finally, TfL assumed the Secretary of State's statutory functions for
traffic control systems in Greater London for all roads other than trunk
roads.60 TfL also has some responsibilities for road safety and traffic
reduction.
In November 2014 the Chancellor, George Osborne, and leaders of
the Greater Manchester Combined Authority (GMCA) signed a
devolution agreement, which is intended to result in new powers and
responsibilities being devolved to Greater Manchester, and Greater
Manchester adopting a directly elected mayor for the city-region.61
The transport offer, which forms part of the deal, compares with
London’s powers as follows:
59
for further information on transport governance in London, see HC Library research
paper RP 08/36
60 traffic control systems can be defined as electronic systems which provide
regulation, instruction, information or guidance to road users and to authorities
from installations on or adjacent to the highway (e.g. traffic signals and signalled
pedestrian crossings)
61 HMT, Devolution to the Greater Manchester Combined Authority and transition to a
directly elected mayor, 3 November 2014
33 Transport 2015




Funding is on a comparable basis to how TfL’s multi-year
budget is currently set;
Bus powers have the potential to be the same as in London, if
this is what the GMCA decides it wants; provision for devolved
funding for the bus system including the Bus Service Operator
Grant and the statutory concessionary travel scheme are the
same as those of TfL/the Mayor in London;
Rail powers appear broadly the same as TfL/the Mayor’s rail
powers in London (though the devil will be in the detail and at
the current time it is not possible to see where any differences
may lie). Further, there is no mention of penalty fares (where
London has separate powers) or of an independent body to
monitor GMCA and represent passengers (e.g. as London
TravelWatch does); and
In terms of roads, the agreement states that the Government
and Greater Manchester will “deliver the proposals on roads on
joint working with the Highways Agency on operations,
investment and maintenance”. While not entirely clear, this does
seem to be different to (and less than) London’s road powers in
that there is no mention of GMCA becoming a highway authority
in the way that TfL is; nor is there any mention of other powers
currently undertaken at a county/unitary or borough level
becoming the responsibility of GMCA as they are of TfL (e.g.
taxi licensing).
3.6 Issues for the 2015 Parliament
What kind of devolution are we going to get?
In their 2015 manifestos all major parties committed to further
devolution for Scotland and Wales and some sort of devolution for
England.
In terms of Wales and Scotland, both major parties are committed to
implementing the recommendations of the Silk and Smith
commissions respectively. This would appear to give some certainty
moving forward. However, it may be that the large number of MPs
from the SNP could mean changes to or extensions of these powers
beyond what is currently being proposed.
Although the words used are often similar, there is no clear
agreement what devolution in England might look like. While the UK
now has a Conservative Government, it is worth looking at the
differences in emphasis between the Conservative and Labour
proposals made before the election.
In their manifesto, the Conservatives said that they would “devolve
far-reaching powers over economic development, transport and social
care to large cities which choose to have elected mayors”.62
Specifically, this would involve the devolution of ‘powers and budgets’
with a view to the creation of a directly elected Mayor for Greater
Manchester; a pilot allowing local councils in Cambridgeshire, Greater
Manchester and Cheshire East to retain 100 per cent of growth in
62
op cit., Strong Leadership, A Clear Economic Plan, A Brighter More Secure Future:
The Conservative Party Manifesto 2015, p13
Number 7177, 13 May 2015 34
business rates;63 further powers over skills spending and planning to
the Mayor of London; more ‘bespoke’ Growth Deals with local
councils, where locally supported; and ongoing support for Local
Enterprise Partnerships.
Labour said that they would “embark on the biggest devolution of
power to our English city and county regions in a hundred years with
an English Devolution Act … This will include control over local
transport systems so that in future, local bodies can integrate trains,
buses, trams and cycling into a single network”.64 Labour were also in
favour of allowing city and county regions to retain 100 per cent of
additional business rates raised from growth in their area; restore ‘fair
funding’ across England; and introduce longer term multi-year
budgets.
However, as set out in section 3.3, above, none of this explains
whether new structures and financial powers would replace or
supplement what currently exists; whether any existing tiers of local
transport planning or finance will be replaced, or how different
arrangements in different localities will rub along together ‘at the
edges’.
Does devolution create cross-border transport
problems?
Great Britain is an island with no land borders with other states. For
this reason it is easy for travellers, particularly vehicle drivers, to
understand transport laws as they have long been the same across
Great Britain. Northern Ireland of course has a land border with the
Republic and the two countries have had to work out a
comprehensive system of cross-border co-operation to ensure that
transport across the border is smooth and that travellers are well
informed of the different laws that apply either side of the border.65
In theory travel between Scotland, England and Wales where there
are different laws in place (e.g. regarding speed limits and drink
driving limits) should be no more difficult than driving in France or
Ireland: the onus is on the traveller to make themselves aware of the
law in the country they enter. However, where changes to the law are
recent and there has not been adequate publicity, there could be a
danger of those crossing a border finding themselves unwittingly
subject to criminal penalty. For example, a BBC report in December
2014 found concerns about a lack of signage about the lower drink
drive limit in Scotland for those entering the country from England.66
Is devolution irreversible?
The government in Westminster is the government for the whole of
the United Kingdom and, as has been seen with Northern Ireland in
63
already committed to in Budget 2015, see: HMT, Budget 2015, Cm 1093, 18 March
2015, p38, para 1.111
64 op cit., Britain can be better: The Labour Party Manifesto 2015, p64
65 Centre for Cross Border Studies, Your guide to North/South and cross-border
transport co-operation, October 2006
66 “What do those on Anglo-Scottish border think of drink-drive change?”, BBC News,
3 December 2014
35 Transport 2015
the past, any powers devolved to a Parliament in Scotland, Wales or
Northern Ireland, or to any locality within England, could in principle
be returned to Westminster. However, this would be likely to require
primary legislation.
Taking NI as an example, direct rule was restored in 2000 by means
of primary legislation. Section 1 of the Northern Ireland Act 2000
suspended the NI Assembly so long as the section was in force.
There were powers to restore – and to re-suspend – by Order
bringing section 1 in and out of force. That Act is now repealed, so to
reintroduce direct rule, a government would have to create another
Act that gave it the power to do so. Such an Act could work in the
same way, or by a simpler mechanism whereby the Act itself could
suspend the Assembly and restoration would be by Order. To abolish
the Assembly altogether one would need an Act of Parliament to
repeal the Northern Ireland Act 1998. Naturally all that would do is
remove the Assembly – the laws it had passed would remain.
If there were a specific problem, e.g. a disagreement over a detail of
policy, there are other options: the UK Parliament retains the right to
legislate on all matters, even devolved ones, or it could redefine a
matter as non-devolved.67 In any case, this would be a less draconian
alternative to complete abolition.
So practically devolution is reversible, but there is a more
fundamental issue of whether it would be politically possible. Unless
there were a crisis of some sort, possibly involving national security, it
is difficult to see any circumstances in which a UK Government would
be able to persuade a majority of MPs to reverse devolution. Indeed,
concerns that have been expressed about the principle of devolution
have tended to be on the side of it leading to complete separation,
rather than the reverse.68
Is the EU ‘a problem’?
There is much to be said for trans-national arrangements in some
areas of transport. Aviation and shipping clearly lend themselves to
this sort of agreement, as the international nature of those industries
mean that common rules on safety, security, aircraft and ship design
and passenger treatment and compensation are generally more
appropriate than dozens of differing national rules. One could also
make a case that Europe as a continent of nations, where movement
of people and goods by road and rail across borders is continually
increasing, benefits from common rules on infrastructure, vehicle and
driving standards – up to a point.
However, it is self-evidently the case that over the past twenty years
or so the European Union, usually in the form of the European
Commission, has begun to legislate in ever more areas with ever
more complexity. This has led to concerns that the ‘balance of
67
the details of this might vary according to how the matter became devolved in the
first place (e.g. if it was by Order, that Order could simply be repealed)
68 see e.g. Michael Ancram’s speech at Second Reading of the Scotland Bill: HC Deb
12 January 1998, cc35-47
Number 7177, 13 May 2015 36
competencies’ between the Commission and Member States has
tilted too far in the former’s favour. In its February 2014 report on this
issue the UK Government found general support from stakeholders
for liberalised free trade in the EU, and a desire for this to go further
(e.g. in aviation) and frustration where this aspiration had been held
back by ineffective implementation or lack of enforcement of existing
regulation. Stakeholders also recognised the value of common
operating and technical product standards (e.g. in rail
interoperability), but there was some concern at the perceived use of
common standards in other fields (e.g. safety) to ‘claw back market
freedoms’ and allow the potential imposition of national barriers,
possibly in a protectionist way. There was a broad welcome for EUlevel action internationally where that can open world markets, but
there was also frustration:
… particularly in maritime transport, over EU initiatives to
legislate in areas where, in their view, regulation at United
Nations agency level would be preferable because of the need
for global standards to ensure a level playing field across
the world.69
While stakeholders supported EU action where transport crossed
borders between Member States, there was a feeling that in some
cases EU action failed to take account of the distinct circumstances of
Member States with peripheral geographic locations, such as the UK:
It imposes the same cross-border rules on local and domestic
transport which operates solely within the UK and so does not
affect the Single Market. While the concept of the single market
in transport services is generally strongly supported, so too are
the principles of subsidiarity and proportionality.70
The review looked at future options and challenges under two broad
headings: improving the Single Market; and better regulation. In terms
of the former, stakeholders broadly wanted the EU to focus on
implementing the existing laws underpinning the Single Market (e.g.
in rail where there was concern at the failure of some Member States
to open their domestic rail markets). Regarding the latter, there was a
general view that the European Commission should focus less on
making proposals for new legislation and concentrate more on
enforcement of existing legislation. Furthermore, stakeholders felt that
before making proposals for legislation, the Commission should
undertake more openly evidenced impact assessments setting out
clearly the potential costs and benefits and generally “legislate with a
less heavy hand, or not at all, when it comes to non-intraEuropean
issues and to allow greater scope for national handling of purely
domestic issues”.71
In terms of powers that should revert to Member States, some (e.g.
those representing recreational aviation and motorcycle training
interests) suggested delegating responsibilities back to a national
69
HMG, Review of the Balance of Competences between the United Kingdom and
the European Union: Transport, February 2014, executive summary
70 ibid.
71 ibid.
37 Transport 2015
level where they felt that recent EU action had harmed essentially
local interests with no significant Single Market dimension.
Generally, the evidence received from transport stakeholders
reflected a broad consensus that:
… the single market in transport services is at the core of the
EU’s transport policy, that it has driven growth and prosperity in
the UK and in other Member States, and that it should continue
to do so.
However, the evidence suggested that much further
liberalisation is possible and that barriers, both formal and
informal, remain. There was a general view among
stakeholders that the way to achieve further liberalisation was,
in many cases, through more effective implementation and
enforcement of existing legislation rather than through
continually seeking new legislation. 72
The question is often asked: what would happen if the UK were to
leave the EU? This question became more pertinent after the
Conservative victory in the 2015 General Election, as the Party has
committed to holding an in-out referendum on the UK’s EU
membership before the end of 2017, after negotiating “a new
settlement for Britain in Europe”.73
In transport terms, if the UK left the EU, it would remain a member of
the UN and its attendant agencies, and it is thus unlikely that the
broad framework of our law on aviation and shipping would change;
similarly we would also likely apply those vehicle rules set down by
the UNECE. One could also envisage the UK and the EU agreeing to
maintain common rules on driver and vehicle licensing to ensure
continued free movement across the continent. It may well be that the
UK would then negotiate an agreement with the EU in the same way
that other countries such as Russia and the US have, on air routes,
safety and security etc. There would likely be some areas (the
aforementioned general aviation and motorcycling perhaps being two)
where the UK would liberalise the arrangements agreed to across the
EU. However, it is important to note that this is merely speculative
and it would of course depend on the Government of the day and its
priorities.
72
73
ibid.
op cit., Strong Leadership, A Clear Economic Plan, A Brighter More Secure Future:
The Conservative Party Manifesto 2015, p72
Number 7177, 13 May 2015 38
4. Policy focus 2: local bus services
4.1 What’s the issue?
Local bus travel is in long term decline
Bus travel has been in long term decline since the 1950s: current
levels are less than half of those seen in the immediate post-war
years.74
Deregulation in the mid-1980s was intended in part to address this
problem both in terms of the number of routes and the number of
passenger journeys. As set out in section 4.3 below, there has been
mixed success.
In its 2006 policy paper the Labour Government said that after 2010,
on current trends, it expected bus patronage, particularly outside
London, to resume its long-term decline. This in turn would put further
pressure on supported services and local authority expenditure,
creating a risk of an on-going spiral of declining services and rising
subsidy taking hold in more local communities.75 It illustrated this with
the following graphic:
Buses are overlooked in policy-making
Buses have often been referred to as a ‘Cinderella service’ in that
they are neglected in the round of transport policy. Buses are by far
the most popular form of public transport – in 2013/14 there were
more than three times as many bus journeys as rail journeys76 – and
yet they command a relatively small proportion of attention from
central government. Bus travel would also appear to be overlooked
by politicians – over the 2010 Parliament there were 11 debates on
buses in the House of Commons (including Westminster Hall), as
opposed to 20 on railways (excluding HS2). Furthermore, of the 56
reports published by the Transport Select Committee over the
74
DfT, Local bus passenger journeys (BUS0101), 17 March 2015
DfT, Putting passengers first, December 2006, p32
76 HMG, Transport Statistics Great Britain 2014 (TSGB), 11 December 2014, Table
TSGB0102
75
39 Transport 2015
Parliament, four were about or had a significant element on buses,
compared to 13 reports on rail-related issues (three of which were
specifically on HS2).77
Buses have had an unglamorous reputation for many years now.78 In
its 1997 transport White Paper the Labour Government said: “people
will not switch from the comfort of their cars to buses that are old,
dirty, unreliable and slow. Too often buses have been treated and
seen as 'second class' transport. It doesn't have to be like this and is
certainly not the case in many other European countries”.79
This is a far cry from the early days of the motor omnibus. An
advertisement placed by the London General Omnibus Company in
The Times in July 1914 read:
Very shortly the whole country will be mapped out into motoromnibus service areas, which, though in each case selfcontained, will be so arranged and overlap in such a manner as
to render it possible to establish direction connexions from one
end of the country to the other. It will then be possible for those
who do not possess motors of their own to enjoy the luxury,
hitherto the prerogative of the rich, of motor touring at a merely
nominal cost.
[…] Next to possessing a touring car of one’s own, there is no
more pleasurable experience on a fine day – and though it may
not be believed by the foreigner, the climate of England
provides a very large number of days upon which out-door
driving may be enjoyed – than that of travelling on the top of a
well-built motor-omnibus or in one of the magnificent char-abancs specially built for pleasure touring purposes. There is no
cheaper and healthier form of enjoyment, and this is being
rapidly discovered by the millions who love the open air, and
who also love the beauty of the English countryside.
Recognizing this phase of the British character, and confident in
the experience already gained with certain types of chassis,
motor-omnibus companies are springing into existence and
undertaking the exploitation of practically the whole country
from one end to the other.80
77
for a full list, see the Transport Committee website, note not every inquiry resulted
in a report [accessed 23 April 2015]
78 this was memorably captured in a remark likely mis-attributed to former Prime
Minister Baroness Thatcher, that: "A man who, beyond the age of 26, finds
himself on a bus can count himself as a failure" [for information on attribution, see
Wikiquote: Margaret Thatcher, accessed 14 April 2015]
79 DETR, A new deal for transport: better for everyone, Cm 3950, July 1998, para
3.14
80 “The All-conquering Motor-Omnibus”, The Times, 20 July 1914; reproduced by
kind permission of Transport for London
Number 7177, 13 May 2015 40
Bus travel is expensive
The average bus fare in England rose by 143% between 1995 and
2014.81 However, this disguises significant regional variation: fares in
London rose by 131% over the same period, compared to a rise of
167% in the other metropolitan areas outside London and 142%
across England (outside London) as a whole. Fares in Scotland over
the equivalent period rose by 113% and in Wales by 135%.82
Between 1997 and 2010 fares across England as a whole (including
London) rose by 84%; between 2010 and 2014 fares rose by 20.7%.
Fares in Scotland over the equivalent period rose by 66% and 16%
and in Wales by 91% and 16%.83
However, there is evidence that increases have been slowing. Since
2009 the TAS Partnership has published a bi-annual National Fares
Survey, which seeks to benchmark bus fares within Great Britain. The
most recent survey, published in 2013, showed that the average
median single fare increased by 5% between 2011 and 2013,
compared to an average increase in mean and modal fares of over
11% over the same period. The distribution (or spread) in single fares
increased between both surveys, showing a wide variation in fare for
a typical three-mile bus journey:


The minimum fare was £0.80 (up from £0.70 in 2011);
The average (median) fare was £2.00 (up from £1.90 in 2011);
and

The maximum fare was £5.00 (up from £3.85 in 2011).
The average ticket value for day and weekly tickets also increased
between the 2011 and 2013 surveys.84 TAS further noted that:
81
1995 is the earliest year for which comparable figures are available
DfT, Costs, fares and revenue (BUS0405A), 17 March 2015
83 ibid.
84 TAS Partnership, TAS National Fares Survey 2013, February 2014, p3
82
41 Transport 2015
Whilst the cost of a median single bus fare may have risen by
over 5% (two years) and 11% (four years), the increase is less
than two national economic indicators (RPI of 7.3% and CPI of
5.4%). The increase is also less than comparable figures for
national rail fares and motoring costs (particularly diesel cars)
during the same period.
A national correlation can be seen between the lowest fares,
population density and greatest bus use, particularly in the PTE
areas [metropolitan areas outside London], with Scotland and
North West England being exceptions. In addition, a northsouth divide emerges between car ownership and estimated
bus use, with those in south GB having greater car ownership
and using the bus less than their northern counterparts.85
Overall, TAS concluded that whilst the average cost of bus travel
increased between 2011 and 2013, the increases were, on average
“less than those experienced in the wider national economy and in
comparable modes (diesel car and rail)”.86
Deregulation has been a failure
Almost since the moment it was introduced in October 1986 there has
been a sizeable number of people and organisations consistently
asserting that deregulation has been a failure leading to cuts in
services, higher fares and profiteering by bus companies.
Deregulation, they say, has led to a ‘free for all’.
Critics of deregulation argue that the introduction of commercial
operators into local bus markets has failed to substantially improve
competition and has caused a diminution in levels of service. There is
a general acceptance that commercial operators cannot now be
forced out of the market and that there can be no return to the
municipal bus model that existed before the mid-1980s. However,
critics argue that commercial operators should be compelled to
deliver a better service than is currently the case and that there
should be some democratic accountability via control by local
authorities or other locally elected transport bodies.
The twentieth anniversary of bus deregulation in October 2006
prompted several reviews of how the industry stood and whether it
was fit for purpose.87 In particular, the Transport Select Committee
published a report heavily criticising the deregulated system and
calling for the Government to make it easier for local transport
authorities to take control of bus services in their areas.88 There are a
number of reasons why some PTAs, local authorities and passenger
groups take issue with the deregulated system and many of them
come down to the same basic issue – deregulation has not benefitted
the passenger. The industry is dominated by the ‘big five’ operators –
Arriva, First, Go-Ahead, National Express and Stagecoach – who
85
ibid., p5
ibid., p5
87 for example: Public Accounts Committee, Delivery chain analysis for bus services
in England (Forty-third report of session 2005-06), HC 851, 23 May 2006; and
NERA, The Decline in Bus Services in the English PTE areas, August 2006
88 Transport Committee, Bus services across the UK (eleventh report of session
2005-06), HC 1317, 26 October 2006
86
Number 7177, 13 May 2015 42
effectively run monopolies in many areas. Even where two or more of
the ‘big five’ operate in the same area, this has not always (or often)
led to streamlined, co-ordinated services and cheaper fares.
4.2 What is deregulation and why was it
introduced?
What did the bus market look like before the 1980s?
The regulation of passenger-carrying motor vehicles was introduced
by the Road Traffic Act 1930. The Act established a system of road
vehicle licensing controlled by regional Traffic Commissioners. This
covered quality regulation – of the operators, vehicles and drivers –
and quantity regulation of the number and types of services operated.
It provided for the award of licences to operators to run a service
defined by a route and timetable with a specified fare scale. Once
granted, a licence in effect conferred local monopoly rights on the
operator, particularly where local services in urban areas were
concerned. Such services were developed on a comprehensive basis
and provided a co-ordinated network, parts of which were usually
dependent on cross-subsidy. Ownership of the local services was
predominantly public.
The structure of the bus industry changed little over the 50 years to
1980, but the market in which it operated altered dramatically with the
increased use of the private car and bus patronage halved between
the 1960s and 1980s.89 Concomitant with this, operating costs, fares
and levels of subsidy were on the increase. Almost all companies
suffered from a shortfall between revenue from fares and their
operating costs and local authorities played an increasing role in
sustaining public transport through revenue support payments. To
retain the network of services and maintain fares at acceptable levels,
local authorities were asked to make good the losses by subsidy
payments. The level of support provided varied considerably from
area to area. Because of the extent of cross-subsidy between routes,
it was often difficult to assess the value for money obtained. Bus
services in large parts of rural Britain, together with many commuterbased rail and bus networks in the conurbations, continued in
existence only because of public subsidy.
At the time the bus industry was dominated by public sector
companies. In the six English metropolitan counties and Greater
Glasgow the vast majority of urban bus services were planned,
funded and operated by Passenger Transport Authorities (PTAs). A
number of other cities and towns had, by historical precedent,
municipal bus companies under the control of the relevant district
council in England and Wales, or the regional council in Scotland.
Most of the remaining urban services and a high proportion of interurban and rural routes were operated by subsidiaries of the state
owned National Bus Company (NBC) in England and Wales, and by
the Scottish Bus Group (SBG) subsidiaries in Scotland.
89
op cit., Transport Statistics Great Britain 2014 (TSGB), Table TSGB0102
43 Transport 2015
White Paper on buses, 1984
These trends provided the background to the changes introduced by
the Conservative Government after 1979. That government was
strongly in favour of bringing private investment and management into
public transport. It argued that this would improve the passenger
experience by making buses and trains more efficient. It therefore
developed policies to reduce subsidies to buses, to reduce the role of
local government in planning and controlling bus systems and to
increase competition between bus companies. It decided that the way
to deal with the decline in bus services, rising costs and increasing
subsidies was to deregulate the industry and allow services to be
subject to competition. The basic argument was set out in the 1984
buses White Paper:
For 50 years from 1930 to 1980 local bus services were subject
to a highly restrictive licensing system. Within this system the
belief grew up that the way to provide comprehensive public
transport is to protect the existing operators so that their profits
from popular routes can cross-subsidise services for which
there is less demand. The result of these worthy intentions has
been to maintain a pattern of services developed for a different
age and to neglect the best parts of the market. There has been
too little incentive to develop markets, to woo the customer.
Operators have been hampered by a philosophy that is
defensive and inward-looking.
[...] There is good evidence that services could be improved and
costs reduced if we went about it in a different way. Without the
dead hand of restrictive regulation fares could be reduced now
on many bus routes and the operator would still make a profit.
New and better services would be provided. More people would
travel. This is not idle speculation. In 1980 the Government
removed regulation from the long-distance coach services. As a
result fares have come down, new services have been
provided, the number of people travelling has gone up, new
vehicles with greater comfort compete for custom. Competition
has done all this – and the customer is the beneficiary.
If the customer has the final say, bus operators will look keenly
to see where and when people want to travel. If one operator
fails to provide a service that is wanted, another will. 90
The White Paper and its associated consultation documents
provoked an enormous response from interested organisations and
from the general public. Much of the response was hostile. Thus,
when the implementing legislation was published, the Department of
Transport took the unusual step of issuing an accompanying
document to respond in detail to its critics and explain the differences
between the White Paper and the Bill.91
There was support from The Economist, Public Money92 and the then
director of the right-of-centre think tank, the Social Affairs Unit, Digby
Anderson, who argued that the introduction of a ‘contestable market’
90
DoT, Buses, Cmnd 9300, July 1984, paras 1.4-1.6
DoT, Changes to the Government's proposals following consultation, January 1985
[HC DEP NS 1315]
92 “Buses: the Freedom Road”, The Economist, 14 July 1984; “A management buyout for National Bus?”, Public Money, Volume 4, Issue 3, September 1984
91
Number 7177, 13 May 2015 44
was essential, so that “new entrants can come into the bus business
and that the existing companies should be uncomfortably aware of
that”. He also took on the issue of whether buses should be a public
service:
There are those who do not want buses to be an efficient
transport service but an inefficient social service. They advocate
a vast nationalized system because it enables the profit-making
routes to subsidize loss-making routes and the town services to
subsidize the country. While the rich in society should help the
poor, this is a silly and perverse way to go about redistribution.
It is not the rich who use and pay for profit-making routes but,
often, the poor, and the loss-making routes are well used by the
rich.93
These arguments in favour of a free market were not, on the whole,
endorsed either by the industry itself or by most other commentators.
The Financial Times said that the White Paper overstated the case
for complete deregulation of local bus services and warned that no
other industrialised country had ever tried anything of the kind on a
comparable scale. The results might be “a return to the chaos of the
1920s ... The danger is that in his rush towards unfettered
competition Mr. Ridley [Nicholas Ridley, then Secretary of State for
Transport] may have overlooked some attractive half-way houses that
would constitute a better interim solution”.94 The Conservativecontrolled Association of District Councils said that the plans showed
“an apparent lack of understanding of the way in which municipal
buses operate and have done so efficiently for many years” and that
while they had no objection to forming private bus companies, they
did object to this being “foisted upon them by edict”.95 The Labourcontrolled Association of Metropolitan Authorities said the proposals
would “lead to a bleak future for the travelling public [and] destroy the
properly planned, integrated services that are absolutely vital to the
conurbations”.96 The Bus and Coach Council [now the Confederation
of Passenger Transport] said that the proposals in the White Paper
would in practice have ‘an unduly adverse effect on the public’.97
On publication of what became the Transport Act 1985 (see below),
The Times described it as: “the most characteristic of all the bills the
Government has brought forward this session” and that it represented
“a major act of faith in the market and its ability to meet the actual
needs of consumers more satisfactorily than a system of provision
planned from above can ever do”. While it acknowledged that
deregulation was “a leap into the unknown”, it also argued that the Bill
was far from “a reckless jettisoning of all controls regardless of
consequences”.98 The Guardian predicted that the Bill would
“inevitably be fought out in ideological primary colours” and predicted
that:
“Let buses pull out all the stops”, The Times, 25 July 1984
“Buses running out of control”, Financial Times, 18 July 1984
95 “Tory councils attack Ridley bus proposals”, The Guardian, 14 July 1984
96 Association of Metropolitan Authorities press notices, 14 September 1984 & 14
November 1984
97 BCC press notice, 25 July 1984
98 “Setting free the buses”, The Times, 2 February 1985 [editorial]
93
94
45 Transport 2015
… services will be sacrificed to savings all along the line. Any
merit in, for example, the encouragement of shared taxis and
minibuses will be swept aside in the unremitting cost cutting
logic which is at the heart of the Bill. It gives carte blanche to
the lowest bidder. This means that even the existing profitable
services will be slashed to the bone, leaving a skeletal network
of peak hour services running on Mondays to Fridays only
throughout those parts of the country where there is still
sufficient economic activity to just them.99
Legislation
Legislation to deregulate the industry outside London was introduced
in the Transport Acts of 1980 and 1985. The former dealt with
express coach services and the latter with the traditional, ‘local’ bus
service. The Secretary of State for Transport at the time, Nicholas
Ridley, stated that the aim of deregulation was "to halt the decline
that has afflicted the bus industry for more than 20 years".100
Part I of the 1985 Act abolished road service licensing in Great
Britain, except in London, from October 1986. It replaced the
licensing system with a system of registration and removed the duties
of local authorities to co-ordinate public passenger transport in their
areas. Thus, a bus company could register any service that it chose
to operate on a commercial, i.e. unsupported, basis.
The licensing authorities (the Traffic Commissioners) lost many of
their former powers. Once the Act was implemented, any licensed
bus operator merely needed to register its intention to set up a
service with the Commissioner responsible for the area, giving at
least 42 days' notice. The operator was then obliged to run the
service according to the specification in the registration.101 Individual
bus operators were responsible for the timetable and the introduction
of new services depended on the operator's opinion of the demand
for it and its commercial viability. There was no requirement in the
1985 Act or its consequent regulations for the commercial bus
operator to consult before making changes to the timetable and the
position of bus stops. The criteria for registration did not include any
reference to public demand or to existing services and objections
could no longer be made by other operators or local authorities.
Local authorities were given powers to secure, using subsidy, socially
necessary services which were not provided by the commercial
market and to specify fare levels, type of bus and so on for these
services, on the condition that they went out to open tender.
Minor subsequent changes by the Conservative
Government -1997
The 1985 Act resulted in dramatic changes to both the operating
environment and the pattern of ownership in the bus industry but
“A bus that may run over Mr Ridley”, The Guardian, 2 February 1985 [editorial]
HC Deb 12 February 1985, c192; information on the changes to coach services
under the 1980 Act can be found in section 2.1 of HC Library briefing paper
SN1534
101 Public Service Vehicles (Registration of Local Services) Regulations 1986 (SI
1986/1671), as amended
99
100
Number 7177, 13 May 2015 46
there was criticism about predatory behaviour and the powers of the
regulatory authorities. The conflicts between rival operators
highlighted the absence of a regulatory framework, leaving an ad hoc
policing arrangement to the competition authorities, the Office of Fair
Trading and the Monopolies and Mergers Commission.102
Following a consultation exercise on local bus services in 1993, the
then Transport Minister, Roger Freeman, ruled out major changes to
the legislation but announced a package of minor rule changes.103
These included clarifying the powers of the Traffic Commissioners to
make it clear that they could regulate the number of buses used in
providing a service and control the use of duplicate buses.104 In
January 1996 the Government further announced measures aimed at
improving bus performance and service stability, including: high
quality accessible vehicles; convenient waiting areas; ticketing
schemes; good passenger information; and traffic management
measures.105
The exception: London
Buses in London were not deregulated in the 1980s with those in the
rest of Great Britain. The reasons for this are complex and highly
political.
In the 1980s there was a fundamental disagreement between the
then Labour-run Greater London Council (GLC) and the Conservative
Government. The GLC was created in 1963 and took control of
London transport in 1970 when a London Transport Executive (LTE)
was set up. The GLC was responsible for the general policy of the
LTE and part-funded it via grant (the rest coming from fares). The
Conservative Government in the early 1980s had concerns about two
aspects of transport in London: the GLC’s ‘fare’s fair’ policy (which
was in direct conflict with the Government’s policies to contain the
size of the public sector and local authority spending) and the general
decrepit nature of the public transport and roads systems in
London.106 The GLC was ultimately abolished in 1986.
In July 1983 the Government published a command paper on reform
of public transport in London. This painted an excoriating picture of
transport provision in the capital; highlighting poor organisation and
services, see-sawing fares and a general ‘shabbiness’ that needed to
be rectified. It announced the Government’s intention to transfer
control of the LTE from the GLC to the Secretary of State for
Transport, where it would be reconstituted on the pattern of a small
102
now merged as the Competition and Markets Authority (CMA)
press notice, “Freeman to act on results of bus consultation”, 16 November
1993 [PN 93/455]
104 DoT press notice, “Freeman to introduce new measures to help ease bus
congestion”, 19 July 1994 [PN 94/264]
105 DoT press notice, "Norris announces measures to improve bus performance", 8
January 1996
106 this paper does not go into detail about ‘fare’s fair’, but the legal case and
controversy about the scheme ultimately came down to how it was funded; for
further information see the Commons debate that followed the legal judgement:
HC Deb 22 December 1981, cc889-929; and Philip S Bagwell, The Transport
Revolution 1770-1985 (1988), pp408-409
103DoT
47 Transport 2015
holding company, with its bus and Tube operations established as
separate subsidiaries. The holding body would be renamed London
Regional Transport (LRT).107
The paper also outlined the Government’s plans to reform buses in
London:
At present local bus services may be operated in Greater
London only by London Transport or with their agreement.
Road service licences are not required for such services. LRT
will be responsible for approving services and changes in
services by its own subsidiaries and by other operators who
have entered into an agreement with it to provide services.
Road service licences will still not be required for these
services. Bus operators who wish to run bus services in Greater
London without entering into an agreement with LRT will in
future be enabled to apply for road service licences from the
Traffic Commissioners. These arrangements will avoid the
bureaucratic procedures which would be entailed if all services
in Greater London were brought under the control of the Traffic
Commissioners, while providing for the licensing of competing
bus services under the same conditions as apply in the rest of
Great Britain.108
What this meant in effect was that LRT would plan and regulate bus
services but that private operators could, if they wished, run additional
services to provide on-road competition.
The London Regional Transport Act 1984 achieved these changes by
transferring responsibility for the bus network from the GLC to LRT
and requiring London Transport to set up operating subsidiary
companies to run bus and Underground services. This was followed
by the buses White Paper in July 1984 which announced that the
Government did NOT intend to completely deregulate the London bus
market ‘for the time being’:
The need to take a grip on subsidy has led the Government to
take over responsibility for the London Transport Executive from
the GLC and reconstitute it as London Regional Transport, with
new powers and duties. The London Regional Transport Act
1984 requires changes in the way London’s buses and tubes
are run, requires LRT to contract out work whenever suitable
and provides for greater involvement by the private sector in the
provision of services both as contractors to LRT and in
competition with them. In particular, LRT is required by the act
to invite tenders from private firms to carry on certain of their
activities and to accept satisfactory tenders where this would
save costs.
In addition, for the first time bus operators will be able to apply
to the traffic commissioners for a road service licence to run
local bus services in London rather than having to depend, as
formerly, on obtaining and agreement from London Transport.
These are major changes which will bring a measure of
competition into the provision of London bus services. The
Government has decided, in these special circumstances, to
107
108
DoT, Public Transport in London, Cmnd 9004, July 1983, para 16
ibid., para 24
Number 7177, 13 May 2015 48
defer deregulation in London while the changes, so recently
instituted, bear fruit.109
Subsequently, in 1985 London Buses Ltd was formed as a whollyowned subsidiary and in late 1993 the Government announced that it
would defer the previously intended deregulation of buses in London,
although privatisation of the bus operating subsidiaries of London
Transport would proceed.110 This was achieved in 1994.
Bearing all the above in mind then, since 1985 the system in London
has been and remains one of competitive tendering of bus
operations, in effect ‘regulated competition’ – competition for the
market rather than the ‘on the road’ competition of deregulation.
Part IV of the Greater London Authority Act 1999 transferred
responsibility for London's bus services from LT to Transport for
London (TfL). TfL now decides which local services are required for
the purpose of providing "safe, integrated, efficient and economic"
transport services in Greater London and plans the detailed pattern of
bus services, known as the London Bus Network. Only TfL, its
subsidiary or someone with an agreement with TfL, may provide a
service on the network. London Buses, as part of TfL, plans the bus
network and controls fares. At present, London Buses uses a routebased tendering system which groups routes into discrete tranches.
This allows neighbouring routes to be tendered together and hence
for discounts to be achieved for letting a group of routes to one
operator. This also allows review of the service structure of each
small network prior to tendering.
The bus network is kept under continuous review with up to 20 per
cent of the total 700 route contracts re-let each year. In the five years
to 2013 TfL reported that real bus subsidy had been reduced by 40
per cent, with London buses requiring a third less subsidy per
passenger than other metropolitan areas.111
This system also allows TfL to, for example, specify accessibility and
environmental standards. In terms of the former, London’s 8,700
buses are wheelchair accessible and low-floor, with audio visual
announcements and it has forecast that by 2016 95% of bus stops
will meet the required standard.112 As to the latter, over 10% (about
900) of London’s buses use hybrid technology; TfL expects this to
reach 20% (1,700) by 2016. TfL is aiming to reduce nitrogen oxide
(NOx) emissions from the bus fleet by 20% through the fitting of
selective catalytic reduction (SCR) equipment to Euro 3 engine buses
and the introduction of ultra-low emission Euro 6 engine vehicles by
the start of 2016.113
In terms of funding, TfL’s financial plan for London Buses from
2014/15 to 2020/21 shows that when everything is taken into
109
op cit., Buses, para 4.18
DoT press notice, “Delivering the best bus services for London”, 8 November
1993 [PN 93/437]
111 TfL, Business Plan 2013, December 2013, p73
112 ibid., p25
113 ibid., p60
110
49 Transport 2015
consideration, running the London bus network is not cheap and it is
projected to run at an annual operating deficit of between £530 million
and £630 million. In contrast London Rail is projected to be in the
black by 2019/20; London Underground will have an annual deficit by
the same date of about £360 million.114
Sale of municipal bus companies
Part III of the Transport Act 1985 required the sale of the National
Bus Company (NBC) subsidiaries to the private sector. The company
reorganised its services into 72 separate companies and these were
all sold to the private sector or to management and/or employee buyouts by April 1988.115 Forty of the companies were bought by
management or employee teams and many of the sales included
provision for employee share schemes or profit-sharing schemes.
Section 75 of the Act gave local authorities the power to dispose of
their bus undertakings, subject to the Secretary of State's approval.
Portsmouth City Council was the first municipal bus company to sell
its bus operation in June 1988 and by 1997 only about seven per cent
of passenger services were attributable to the municipal bus
companies.116
London Transport sold its 10 bus companies between September
1994 and January 1995 under the auspices of the London Regional
Transport Act 1984. Sale of the Scottish Bus Group (SBG) was
concluded in October 1991.
Gross proceeds of the NBC privatisation amounted to £323 million,
resulting in a net surplus to the Government of £89 million after all
debts and privatisation expenses had been accounted for.117 The 10
London bus companies were sold for £233 million (£218 million
net).118 The Scottish Bus Group (SBG) was sold for £90 million.119
4.3 What happened after deregulation?
Service levels and costs
In 1985, three-quarters of bus turnover was in the hands of the public
sector; by 1997, this amounted to approximately seven per cent.
Many of the more dubious businesses that took advantage of
deregulation to run substandard vehicles on profitable routes were
squeezed out and those that remained were committed to modern
fleets and long term investment. By 1996 the four largest bus
operators (Stagecoach, First Bus, Cowie, and West Midlands Travel
114
TfL, Business Plan 2014, December 2014, table 9 (p79) and table 13 (p84)
HC Deb 18 April 1988, cc355-57W
116 HC Deb 28 November 1997, cc691-92W; section 71 of the Local Transport Act
2008 removed the requirement to seek the Secretary of State’s approval for such
a sale and at time of writing there are very few council-owned bus companies in
existence – one press report from mid-2009 put the number remaining at just 13
117 HC Deb 25 January 1989, c575W
118 NAO, The sale of London Transport's bus operating companies (session 199596), HC 29, 14 December 1995, paras 2.41 & 2.43
119 NAO, Sale of the Scottish Bus Group (session 1992-93), HC 884, 23 July 1993
115
Number 7177, 13 May 2015 50
owned by National Express), accounted for half or more of industry
turnover.120
Much of the case for deregulating the buses was made in contrast to
how they operated at that time and to what was then seen as the
successful deregulation of the coach industry four years previously.
The main claims were that: fares would go down; it would be cheaper
to run services; there would be more choice for passengers; there
would be more jobs in the industry; and overall patronage would
increase. It also claimed that, over time, competition would end noncommercial cross-subsidy, which in turn would reduce fares and end
‘perverse effects’.
It is possible, in some limited circumstances, to compare statistical
evidence about these claims (comparing 1986/87 to 2013/14).
Fares
Data shows that on a local bus fares index, fares across the whole of
England increased by 270% between 1986/87 and 2011; in London
the increase over the same period was 203%; in the English
metropolitan areas it was 340% and in England, excluding
metropolitan areas and London, 220%.121
Passenger journeys
The number of passenger journeys on local bus services across
England as a whole has increased since deregulation, but only
because of an increase in journeys in London; in other areas the
number of journeys has declined.122 In 1986/87 across England as a
whole there were 4.54 billion passenger journeys on local bus
services per annum; by 2013/14 that had increased to 4.7 billion
journeys. In London the number of journeys doubled from 1.16 billion
to 2.38 billion; in the metropolitan areas the number fell from 1.81
billion to 1.01 billion; and in England (ex-metropolitan areas and
London) the number fell from 1.56 billion to 1.3 billion.123
Subsidies and financial support
In regard to subsidies/support, comparable data prior to 1996/97 is
not available. There is some limited information for 1980/81 to
2001/02, but this is not directly comparable with later data.124
Estimated net public transport support paid by central and local
government for local bus services, concessionary travel and bus
service operators’ grant (BSOG) for the period 1996/97 to 2013/14
120
OFT, The Effectiveness of Undertakings in the Bus Industry, Research Paper 14,
December 1997, p4
121 op cit., Costs, fares and revenue (BUS0405A)
122 note: there was a change in the way passenger journeys were recorded in the
official figures in 2004/05 resulting in a reduction of about 100 million in the
figures for journeys in England, outside London
123 DfT, Local bus passenger journeys (BUS0103), 17 March 2015
124 DfT, Transport Statistics Bulletin: A Bulletin of Public Transport Statistics: Great
Britain 2002 Edition, tables 19-21
51 Transport 2015
shows a total increase in funding across England from £797 million
per annum to £2.2 billion.125
Government support per passenger journey for local bus travel
between 2004/05 and 2013/14 shows a total net increase from 41.6
pence per mile to 46.9 pence per miles across England. This
disguises the fact that BSOG and net public transport support
decreased over this period while concessionary fare support
increased dramatically (during this period free local bus travel for
older and disabled people was introduced).126
Jobs in the bus industry
DfT has data on staff employed by bus and coach operators from
1965. Two tables are available: one shows staff employed by all bus
and coach operators (since 1965), the other shows staff employed by
local operators (since 2004/05). There were 167,000 employed in the
industry in 1986/87, by 2013/14 this had decreased to 124,000.127
Labour’s changes
During its 13 years in office between 1997 and 2010 Labour never
seriously considered reregulating bus service en-masse. Instead it
proffered some statutory schemes whereby local authorities who
chose to could exert more influence on or control over bus services in
their local areas. Few local areas have considered using this
legislation since it was introduced in 2001, for a number of reasons
discussed in section 4.6, below.
The Labour Party Manifesto for the 1997 General Election stated that
the key to efficient bus services was “proper regulation” at a local
level in the form of partnerships between local councils and bus
operators, coupled with improved provision and enforcement of bus
lanes.128 The transport White Paper, published in July 1998,
estimated that car traffic would grow by more than a third in the
twenty years to 2018, and the success of the Government's
integrated transport policy would rest largely on the increased use of
buses. Without it, the paper argued, pollution and congestion would
inevitably increase with a corresponding damage to both the health of
the population and the economy. In order to address this problem,
more people should be persuaded to take more journeys by public
transport and fewer by private car.129
More detail of how this could be achieved was given in the
subsequent buses policy document, published in March 1999.130 This
set out Labour’s overall bus policy and included proposals to give
local authorities franchising-like powers to implement what are known
as Quality Contract Schemes (QCS). The paper also proposed
125
DfT, Subsidies and concessions (BUS0502), 16 December 2014
ibid., Subsidies and concessions (BUS0503)
127 DfT, Employment (BUS0701), 23 September 2014; note: there was a change in
the way the figures were estimated in 2004/05, which resulted in an increase in
the number of platform staff
128 Labour Party, New Labour: Because Britain Deserves Better, April 1997, p29
129 op cit., A new deal for transport: better for everyone, paras 3.13-3.25
130 DETR, From workhorse to thoroughbred: a better role for bus travel, March 1999
126
Number 7177, 13 May 2015 52
statutory Quality Partnership Schemes (QPS): an arrangement
whereby local authorities and bus companies enter into mutual
agreements to provide services and infrastructure. Quality
Partnerships and Quality Contracts formed the centrepiece of
Labour’s changes to bus policy, legislated for in Part II of the
Transport Act 2000.
In December 2006 the Labour Government published a paper setting
out its proposals to reform bus services. They undertook this reform
in the light of the failure of any local authority or ITA to implement a
QCS. Its proposals included an enhanced QPS, and a reduction in
the burden on local authorities wishing to introduce a QCS.131 These
changes were legislated for in what became the Local Transport Act
2008.132 Further information QCS and QPS can be found in section
4.6, below.
4.4 Why do people think deregulation is
broken?
A free market, not a public service
As set out above, some have always maintained that deregulation in
principle was bound to fail because it turned the bus market from a
public service where income from profitable routes was diverted into a
wider socially necessary network into a free market where
unprofitable routes were left to wither on the vine. In practice, some of
those routes have been maintained by local authorities through
subsidy (see below): for some, this is evidence enough that
deregulation has ‘failed’.
It has long been the case that for many rural and isolated
communities the bus is the only form of public transport, but those
services are often ‘unprofitable’ and have suffered the brunt of local
authority cuts to subsidised services over the past five years. Linked
to this is the fact that some routes are dependent on passengers who
are also subsidised – through the concessionary bus pass for older
and disabled people. Often there is a correlation between those rural
and isolated communities and high numbers of subsidised
passengers (particularly older people).133
The Campaign for Better Transport (CBT) ran a high profile campaign
over the course of the 2010 Parliament to highlight cuts to local
subsidised bus services.134 A CBT survey showed that 46 per cent of
local authorities reduced their expenditure on subsidised bus services
during 2013/14; pteg (the Passenger Transport Executive Group)
131
op cit., Putting Passengers First, p7
details can be found in HC Library briefing papers RP 08/18 and RP 08/49
133 for further information on the difficulties faced by those living in rural and isolated
communities, see: Transport Committee, Passenger transport in isolated
communities (fourth report of session 2014–15), HC 288, 22 July 2014
134 CBT, Save Our Buses [accessed 15 April 2015]
132
53 Transport 2015
predicted a reduction in annual expenditure of £500 million over the
four years from 2010, allowing for inflation.135
Lack of on-the-road competition
In December 2011 the Competition Commission published a report
on local bus competition which found that head-to-head competition
in the supply of local bus services was uncommon, despite delivering
significant benefits to customers where it was found. It raised
concerns that some operators were in effect dividing areas up
between them to avoid competition and that this might be more
widespread than the Commission had been able to determine. Four
features of local bus markets effectively made head-to-head
competition uncommon and limited the effectiveness of potential
competition and new entry. These features were:




high levels of concentration (that is, the dominance of a small
number of operators);
barriers to entry and expansion;
customer conduct in deciding which bus to catch; and
operator conduct (by which operators avoided competing with
other operators in ‘Core Territories’, i.e. certain parts of an
operator’s network which it regarded as its ‘own’ territory,
leading to geographic market segregation).
On local authority tendered services, it found that, in most cases, the
market worked well. However, in some cases the process of
competition was impaired by the way local transport authorities
designed tenders and the limited number of potential bidders in some
local areas.
Overall, the Commission found that the detriment to consumers and
taxpayers as a result of the adverse effects of competition (AECs) in
the operation of local bus services (both commercial and tendered
services) and the tendering of supported services was considerably in
excess of £70 million a year and was likely to be between £115
million and £305 million a year.
The Commission made a number of recommendations to remedy
these problems, such as market-opening measures to reduce barriers
to entry and expansion; measures to promote competition in relation
to the tendering of contracts for supported services; and changes to
the wider policy and regulatory environment, including emphasising
compliance with and effective enforcement of competition law.136
Subsidies
Grants and subsidies perform a variety of functions in the bus
industry and in the provision of services. Some, like Bus Service
Operators’ Grant (BSOG), effectively subsidise bus travel for
everyone because they go to all bus operators, irrespective of the
type of service they run (commercial or local authority-supported).
Others, like concessionary travel grants, reimburse operators for
“Cuts to tendered bus services – is there another way?”, CBT blog, 17 March
2015
136 CC, Local bus services market investigation, December 2011, summary
135
Number 7177, 13 May 2015 54
carrying certain types of passenger at a discounted or nil fare and are
administered via local authorities. Finally, at the most fundamental
level there are direct subsidies for specific services from local
authorities to bus operators; these tend to help people who live in
isolated areas or in places which, for one reason or another, are not
able to sustain a commercial bus service.
Subsidies account for around 45 per cent of all bus operators’
revenues. The overall net level of Government subsidy (i.e. public
transport support, BSOG and concessionary fare reimbursement) for
bus services increased dramatically after 1997, rising from
approximately £774 million in 1997/98 to approximately £2.2 billion in
2013/14.137 Total expenditure excluding concessionary fares on bus
services in England in 2013/14 was £1.17 billion. Of this, £597 million
was spent in London, and a further £210 million in the metropolitan
areas.138
The main grant sources of funding from central government are
BSOG, the Green Bus Fund and the Better Bus Areas Fund.139 The
largest and most contested of these is BSOG. It has been reformed
by successive governments both in terms of the absolute amount
paid and who actually pays it. BSOG is a grant paid by the
Department for Transport (DfT) to reimburse bus operators for some
of the excise duty paid on the fuel consumed in operating an eligible
bus service. It was formerly known as the Fuel Duty Rebate (FDR). In
around mid-2002 the Labour Government renamed the rebate the
Bus Service Operators’ Grant.
The DfT generally pays BSOG to eligible bus operators; this definition
was further tightened in 2013 to exclude services which are intended
to operate for less than six consecutive weeks; are operated primarily
for the purposes of tourism or because of the historical interest of the
vehicle; rail replacement bus services; or services for which the fare
includes a special amenity element (e.g. bus services between airport
terminals and car parks).140 However, due to recent reforms there are
two significant exceptions to this: Transport for London/the Greater
London authority receive a grant from DfT for bus services operated
under franchise to TfL, making TfL the payment authority for these
services (this would also apply to any area that adopted a QCS in the
future – see above).141 English local authorities administer BSOG to
tendered bus services in their areas, this includes school services run
on a tendered basis.
All eligible bus operators receive BSOG.142 There are variations in the
rebate. For example, in Better Bus Areas (BBAs) – currently parts of
the cities of York, Nottingham and Sheffield, Merseyside and the
137
op cit., Subsidies and concessions (BUS0502)
ibid.
139 information on the GBF and BBA can be found in HC Library briefing paper
SN1522
140 DfT Letter to local authorities on BSOG reform, 5 July 2013
141 DfT, Bus Subsidy Reform Consultation Analysis, July 2013, pp6-7
142 DfT, Conditions of Eligibility (PSV360) for Bus Service Operators Grant, October
2008
138
55 Transport 2015
greater Bristol area – BSOG is paid at 75 per cent of the national rate
for any eligible services running within these areas. This will
eventually be reduced to zero.143 Other variations are the result of
additional or incentive payments; there are two of these: for
smartcard and GPS/automatic vehicle location and Low Carbon
Emission Buses (LCEBs).144
4.5 Who supports deregulation and why?
The bus industry believes that deregulation has generally been a
success and has delivered significant investment and service
improvements since 1986. In its September 2014 manifesto for buses
the Confederation of Passenger Transport UK (CPT) set out what it
believed to be the industry’s successes:
The commercial market has stemmed the decline in bus
patronage and provided passengers with greater choice.
Passengers in the biggest towns and cities outside London are
benefitting from frequent, good value bus networks, with smart
and integrated ticketing options, new ways of purchasing
tickets, high investment by commercial operators in bus fleets,
all giving passengers more choice. Where bus services are
under the control of cash-strapped local authorities, fares are
higher, the market is less stable, services are being lost, and
passenger satisfaction rates are lower.145
In terms of particular achievements it cited the following: improved
passenger information and assistance; smart ticketing using a variety
of platforms; and contributing to the economy through employment
and investment (the bus industry provides 124,000 direct jobs in the
UK).
In terms of subsidy, CBT stated that in 2012/13 almost 90 per cent of
the bus network outside London was run commercially with no
subsidy from public funds, an increase of 4.6 per cent over the
previous five years, and that while mileage on subsidised services fell
by 16.5 per cent between 2006/7 and 2012/13, commercial mileage
fell by only 1.7 per cent over the same period.146
Deregulation has also been supported by a number of think tanks
such as the Adam Smith Institute and the Institute for Economic
Affairs. The case was perhaps put most forcefully by the late Prof.
John Hibbs, one of the architects of deregulation, in a November
2005 pamphlet for the IEA. He argued that “after twenty years of
comparative freedom the bus industry today has become a
commercial success”:
Despite failings in some sectors there are many examples of
proactive response to the market, with increased investment
143
DfT, New Better Bus Areas, 10 October 2013
DfT, Bus Service Operators Grant – new incentives for the use of smartcards and
Automatic Vehicle Location equipment, March 2010 and Certification of a low
carbon emission bus, July 2010; a list of operators claiming one or more of these
incentive payments as of May 2013 can be found on the Gov.uk website
[accessed 9 April 2015]
145 CBT, Making buses better together, September 2014, p1
146 ibid., p4
144
Number 7177, 13 May 2015 56
and some remarkable developments in man-management and
consumer sensitivity. The central importance of costing and
pricing for the market has been better understood than ever
before and the provision of real-time information is making a
new breakthrough in marketing. Some of the small firms
snapping at the heels of the larger companies provide poorquality vehicles which give a poor impression to the public, but
the value of open access is recognised by some of the leading
figures in the industry, while many small operators offer a high
standard of customer care along with lower prices. While the
overall proportion of bus travel continues to fall, there are many
examples of substantial growth; restructuring of services in
Cambridge has led to an increase in patronage of 45 per cent
over three years.
What has been sadly lacking ever since 1985 has been a
positive attitude on the part of highway authorities. To provide
services buses need their own track, like trains. This has to be
shared with cars and goods vehicles, but cars are singularly
inefficient users of road space and in the absence of road
pricing it should be the responsibility of local government to deal
with the problem. […]
The real problem facing the passenger and freight transport
industry, whether by bus, car or train, is the prospect of falling
overall motoring costs and rising fuel prices forecast over the
coming decade. Subsidy, which is an inevitable consequence of
franchise, can be no answer to this. Only an industry made up
of professional, profit-seeking businesses can hope to meet the
challenge, supported and respected by local government
planners.147
4.6 What is the alternative?
A number of organisations, including the Labour Party and the
Passenger Transport Executive Group (pteg) have proposed that the
legislation should be changed to enable local areas outside London to
adopt ‘London-style bus powers’. There are some differences in
emphasis as to what this would mean in practice. This section sets
out the current arrangements for Quality Contract Schemes (QCS)
and different forms of partnership working.148
It is also probably worth noting that had Labour won the 2015 General
Election is was planning significant reforms to local bus services. As
indicated above, the specific pledge in the Labour manifesto for the
2015 General Election was to give city and county regions “more
power over the way buses are operated in their area. They will be
able to decide routes, bear down on fares, drive improvements in
services, and bring together trains, buses and trams into a single
network with smart ticketing”.149 This was a substantial change
compared to Labour’s policy in Government before 2010.
147
John Hibbs for the IEA, The Dangers of Bus Re-regulation, November 2005,
pp65-66; see also: John Hibbs and Matthew Bradley for the ASI, Deregulated
decade: ten years of bus deregulation, 1997
148 a fuller explanation is given in HC Library briefing paper SN624
149 op cit., Britain can be better: The Labour Party Manifesto 2015, p26; see also:
“Michael Dugher: Time to tackle power of the bus barons”, Yorkshire Post, 4
February 2015; and Michael Dugher Speech to CBT, 11 March 2015
57 Transport 2015
The Conservatives have indicated that they would be prepared to
allow some local bus re-regulation in certain circumstances, i.e. as
part of a wider city devolution package involving an elected mayor (as
in London). This is discussed in section 4.7, below.
Quality Contract Schemes
Quality Contract Schemes (QCS) have often been referred to as
franchising or ‘re-regulation’ by another name. In practice however, in
order to implement a QCS a local authority, Integrated Transport
Authority (ITA) or Combined Authority (CA) has to jump through a
number of hoops set out in the legislation. This has meant that since
QCS was put on the statute books in 2000, not one has ever been
implemented, despite the obvious desire of many authorities to have
more control of their bus services.
The question of what a QCS is and whether it is franchising by
another name, is a good one. In its 1999 consultation paper on bus
reform the Labour Government stated that QCS are “on similar lines
to what is sometimes known as ‘franchising’” and “local authorities
outside London would be given similar powers to grant exclusive
operative rights on defined routes or within a defined area”. It set out
the benefits of a ‘contracted’ bus network (network stability, local
authority control of fares, service quality and quantity, interoperability
with other modes, and cross-subsidy) and the possible disadvantages
(less responsiveness to the customer, reduced flexibility, less
incentive to innovate, a squeeze on smaller operators, a ‘race to the
bottom’ in terms of staff wages and conditions, and costs to local
authorities).150
In light of this, the Labour Government stated that it saw “a potential
role for [QCS] in some areas, where a case can be made in the light
of special local circumstances”. To that end, the onus would be on
local authorities “to demonstrate, as part of a local transport plan, that
the benefits in terms of modal shift or environmental improvements
would not be met by other means, and that any extra costs involved
would be offset by other benefits”.151
QCS were legislated for under sections 124-134 of the Transport Act
2000.152 The legislation included the requirement that making a QCS
must be “the only practicable way” of implementing the policies set
out in the relevant authority’s bus strategy and that a QCS would
implement those policies in a way which was economic, efficient and
effective. A QCS required approval from the Secretary of State in
England, the Scottish Government or the Welsh Assembly.
In the years following the implementation of the 2000 Act there was a
debate about why no QCS was ever applied for, let alone
implemented. This resulted in a December 2006 policy paper from the
Labour Government proposing to make QCS a realistic option, while
150
op cit., From Workhorse to Thoroughbred: A better role for bus travel, chapter 6
ibid.
152 introduced by the Transport Act 2000 (Commencement No. 7) Order 2001 (SI
2001/3342) on 26 October 2001
151
Number 7177, 13 May 2015 58
“ensuring that these schemes can only be brought forward where the
benefits are sufficient to justify them, and safeguarding the legitimate
interests of bus operators”.153 Consequently, sections 19 to 45 of the
Local Transport Act 2008 made changes to the arrangements for
QCS in England (with some changes also applying to Wales).154 The
main changes were the replacement of the requirement that a
scheme must be the "only practicable way" of implementing the
policies in the local authority's bus strategy with a new set of criteria;
abolition of the requirement for schemes in England to be approved
by the Secretary of State; a new right of appeal for bus operators; and
employment protections for affected workers.
The North East Combined Authority (NECA) is furthest along with a
QCS proposal. At its meeting on 21 October 2014 NECA resolved to
refer the proposed QCS for Tyne and Wear to the QCS Board (see
below) for its consideration. NECA subsequently wrote to the QCS
Board, requesting it to begin performance of its functions.155 There
has been speculation that the first QCS would be challenged in court
by any major bus operator currently running services in the area. If a
QCS proceeds in the North East, it remains to be seen whether this
would happen: Stagecoach, which runs about 40 per cent of the
services there, has said: “We believe we're on very strong ground
legally. We would take whatever steps are necessary to protect the
future of a business we've invested millions in”.156
As noted above, going into the 2015 General Election Labour was
proposing to reform the legislation on QCS so that specific groups of
local authorities with particular local governance arrangements could
implement them more easily. Presumably this would have involved
the removal or lowering of the hurdles that have to be cleared in order
to implement a QCS. It did not appear to be a proposal to abolish
QCS and provide for re-regulation in primary legislation. Though this
was also an option and may have ended up being the logical
consequence.
For example, primary legislation providing for re-regulation might
replicate much of what is in the London-specific legislation as it
relates to bus services, and could provide that it applied only to areas
designated in an Order made by the Secretary of State under that
Act. The obvious advantage of such an approach is that it could
ultimately mean that local areas could have franchising as and when
they were ready/requested it. On the downside this might create
uncertainty in the existing market and there would have to be some
153
op cit., Putting Passengers First, p7
they came into force in January 2010 under four statutory instruments: SI
2009/3243, SI 2009/3244, SI 2009/3245 and SI 2009/3246
155 further information can be found via their bus strategy website [accessed 15 April
2015]
156 “Bus test case looms as Tyne & Wear seeks to wrestle back routes”, The
Guardian, 2 September 2013; this has always been one of the likely stumbling
blocks to a QCS with no authority willing to be the first to have to fight a
potentially expensive and protracted court case against a well-funded bus
operator
154
59 Transport 2015
provision to prevent private operators from withdrawing prematurely
from areas scheduled for franchising.
Partnership schemes
There are two sorts of partnership scheme: statutory Quality
Partnership Schemes (QPS) and non-statutory voluntary partnership
schemes (VPS).
A QPS is essentially a formal agreement between a local authority
and one or more bus operators whereby the former provides
particular facilities at specific locations along the routes used by local
bus services, e.g. priority measures, bus stations and shelters, and
the latter (who wish to use those facilities) agree to provide services
of a particular standard through, e.g. new, green vehicles and staff
training. There might also be joint measures for the benefit of
passengers such as real-time passenger information.
In its 1999 consultation paper, the Labour Government was pretty
clearly in favour of partnerships rather than QCS. Much of this
enthusiasm was on the back of notable local partnership successes in
the 1990s in e.g. Aberdeen, Birmingham, Brighton, Bristol, Ipswich,
Edinburgh, Leeds Nottingham and Oxford.157
Sections 114-123 of the Transport Act 2000 legislated to put QPS on
a statutory footing.158 This allows local authorities to set quality
standards for the partnership facilities that they provide such as bus
lanes, or access to high-quality shelters with real-time passenger
information. Buses that do not meet the standards can be excluded.
This gives local authorities extra scope for influencing bus quality,
whilst providing operators with the confidence to invest and to decide
about service provision and innovation. Compliance with the quality
standards in a partnership scheme are enforced through the bus
registration system, overseen by the Traffic Commissioners who have
powers to impose financial penalties and restrictions on an operator's
licence.159
In its December 2006 paper on reforming bus services the Labour
Government set out the criteria underpinning successful partnership
working: political will at the local level to support bus transport;
commitment from local bus company management to making
improvements; and the right environment in which to prosper (i.e. bus
priority measures, robust parking measures and effective
enforcement).160 It also noted that while a number of VPS existed,
(although outcomes to date were mixed), the QPS provisions in the
157
op cit., From Workhorse to Thoroughbred: A better role for bus travel, chapter 4;
not everyone agreed with this rosy portrayal, see e.g. ETRA Committee,
Integrated transport white paper (ninth report of session 1998-99), HC 32, 31
March 1999 and Audit Commission, All aboard: a review of local transport and
travel in urban areas outside London, 1999
158 introduced by the Transport Act 2000 (Commencement No. 7) Order 2001 (SI
2001/3342) on 26 October 2001
159 further information on the bus-related powers of traffic commissioners can be
found in HC Library briefing paper SN1523
160 op cit., Putting Passengers First, p30
Number 7177, 13 May 2015 60
2000 Act had not been used.161 The reasons given for this were that
frequencies, timing and fares could not be included in a QPS.
Sections 13 to 18 of the Local Transport Act 2008 made changes to
remedy this – within limits.162
One of the main considerations with partnership schemes is their
compatibility with competition law. The competition authorities stated
in 2003 and 2011 that there was no evidence of partnership schemes
posing a threat to competition.163
CBT cites particular successes with partnership working in South
Yorkshire.164 This is echoed by pteg which states that the most recent
Sheffield Bus Partnership has grown the number of fare-paying
passenger bus journeys by nearly 10 per cent.165 The Brighton &
Hove Bus Company is also often cited as a successful example of a
bus company that dominates a local market working in a constructive
partnership with the local authority: it says that it has “successfully
grown the market for local bus travel by an average 5% each year
since 1993, something which is unique in the bus industry”.166
What powers would the metropolitan areas outside
London like to have?
In their July 2014 Policy Futures paper on buses the Passenger
Transport Executive Group (pteg)167 called for a simplification of the
QCS regime and a “more supportive approach from DfT to those
Local Transport Authorities who decide to use it”. This would involve
removing the QCS Board and the right of bus operators to appeal to
the Transport Tribunal from the process; and modifying the Public
Interest Test.168
The QCS Board is a specially convened body under the chairmanship
of a Traffic Commissioner, which considers the QCS application and
judges whether it has met the relevant statutory requirements, in
particular the Public Interest Test. The Board can make
recommendations to the applicant authority if it does not think these
requirements have been satisfied. Authorities have to respond to
these recommendations but they do not have to implement them.
However, a decision to do that would likely lead to an aforementioned
appeal to the Tribunal. pteg has argued that the Board represents an
unnecessary delay to the QCS process and that “the introduction of a
QCS by a transport authority [should be] treated in the same way as
161
ibid., p38
set out in the Quality Partnership Schemes (England) Regulations 2009 (SI
2009/445), which came into force on 6 April 2009
163 OFT, The Transport Act 2000 ...: Guidance on the Competition Test (OFT 393),
October 2003, p15; and op cit., Local bus services market investigation, para
15.388
164 op cit., Making buses better together, p4
165 pteg, Bus regulation: myths and facts, February 2015, p8
166 BHBC, All About Us [accessed 15 April 2015]
167 the umbrella organisation which represents he six strategic transport bodies for
the six Metropolitan areas in England outside London - Greater Manchester
(Transport for Greater Manchester), Merseyside (Merseytravel), South Yorkshire
(SYPTE), Tyne and Wear (Nexus), West Midlands (Centro) and West Yorkshire
(West Yorkshire Combined Authority)
168 pteg, Policy Futures paper – Buses, July 2014
162
61 Transport 2015
any other act of a transport authority under the law i.e. reviewable
under the inherent jurisdiction of the High Court in judicial review”.169
As regards the Public Interest Test, pteg proposed that it be revised
so that a transport authority “must believe that the introduction of a
QCS would ‘assist in the realisation of policies set out in the transport
authority’s local transport plan’”. This is in contrast to the current fivefold test, which requires that the authority be satisfied that a proposed
QCS would:





result in an increase in the use of bus services;
bring benefits to persons using local services by improving the
quality of those services;
contribute to the implementation of local transport policies;
contribute to the implementation of those policies in a way
which is economic, efficient and effective; and
limit any adverse effects on operators to those which are
proportionate to the improvement in the well-being of persons
living or working in the relevant area and to the achievement of
the four aforementioned objectives.
pteg also proposed a series of supplementary measures to ease the
transition period to a first QCS and from a first QCS to a second QCS
and a parallel power for the Secretary of State to deliver a QCS on
the same (modified) process as local authorities. They proposed that
the SoS could describe the areas where they triggered the QC
process as ‘Deregulation Exemption Zones’.170
4.7 Issues for the 2015 Parliament
Why are bus routes being cut?
When we ask this question we are really asking why subsidised or
‘socially necessary’ bus routes are being cut. These are the services
that are not deemed commercially viable by private operators and
have been supported by local authorities as a result. As discussed
above, the viability of these services depends on local authorities
having the funds to support them. In England, the National Audit
Office (NAO) estimated that there was a 37% real-terms reduction in
central government funding to English local authorities between
2010/11 and 2014/15. The Welsh Local Government Association
(WLGA) estimated that real terms funding for local government in
Wales fell by 6% in real terms between 2009/10 and 2014-15. The
latest figures from Audit Scotland show an 8.5%.real-terms reduction
in local authority funding from the Scottish Government to Scottish
local authorities between 2010/11 and 2013/14.171
169
ibid., p7; for more information on the role of the QCS Board, see: DfT, Local
Transport Act 2008 - Quality contracts schemes: statutory guidance, December
2009
170 ibid., pp8-9
171 due to differences in services and funding, direct comparison with the position of
councils in each of the three nations is not possible; furthermore, in England the
range of responsibilities financed by local authorities varies from year to year
making direct comparison between 2010 and later years difficult [sources: NAO,
Financial sustainability of local authorities 2014 (session 2014-15), HC 783,
Number 7177, 13 May 2015 62
It has therefore been for local authorities to decide where those
spending cuts or savings must be made across the whole spectrum of
their services. As set out in section 4.4, above, many local authorities
have chosen to cut subsidised bus services.
While it is probably true that without overall central government cuts
to local authority budgets most if not all of these services could have
been saved, that is not necessarily the case. One can see this by
looking at the question in reverse: if local authority budgets were to
increase over the 2015 Parliament, would that mean more subsidised
bus services or would local authorities find other priorities on which to
spend the new money?
The only certain way to improve and increase subsidised services
would be for central government to allocate specific amounts of
money for the purpose and to legally require that the money be spent
on subsidised bus services. At a time when the two major parties
seem determined to devolve more power to local authorities to take
their own decisions, the trend has been away from this sort of
‘hypothecation’, or ‘telling councils what to spend their money on’.
That said, behind this is the bigger question of why subsidised bus
services are needed at all. Since deregulation bus companies have
been able to drop any services or routes that are not, in their view,
commercially viable. As noted elsewhere, many local authorities
argue that if they were able to regulate their bus services they could –
as is the case in London – ‘bundle together’ lucrative and loss-making
services and use the cross-subsidy involved in this process to provide
what would otherwise be non-existent or subsidised services.
The Conservatives have indicated that they would be prepared to
allow some local bus re-regulation in certain circumstances, i.e. as
part of a wider city devolution package involving an elected mayor (as
in London). Manchester is considering these powers.172 Further, in a
November 2014 debate in the House of Commons the Secretary of
State for Transport, Patrick McLoughlin, intimated that he was
seeking the best local solutions for bus service provision – in some
places this could involve franchising or reregulation of some sort. He
said:
I would like to have a mosaic of transport systems. What is
applicable in certain areas will not be applicable in others, but I
am willing to have discussions with leaders in other areas and
with people who would put an alternative view of how we best
approach these matters. It is important not to get obsessed with
one-size-fits-all regulation; a common-sense approach is best
for each community.173
November 2014; WLGA, Welsh Government draft budget proposals for 2015-16,
November 2014, p9; and Audit Scotland, An overview of local government in
Scotland 2015, March 2015]
172 HMT press notice, “Manchester to get directly elected Mayor”, 3 November 2014
173 HC Deb 5 November 2014, c904
63 Transport 2015
Is bus funding fit for purpose?
As indicated above, there are several different ‘streams’ of bus
funding. What we generally mean when we use this term is the Bus
Service Operator’s Grant (BSOG), the Green Bus Fund and the
Better Bus Areas Fund.174 The largest and the most contentious of
these is BSOG. It has been reformed by successive governments
both in terms of the absolute amount paid and who actually pays it,
but one may well perceive that there is more to do.
There are two obvious questions to be asked about BSOG: why does
this subsidy for commercial bus operators exist at all and how does it
relate to the fuel price (i.e. can it be used to pass on fuel price cuts to
passengers)?
The fundamental question of why BSOG exists at all, or more
specifically why it exists for commercial bus services, is a good one. It
was introduced in 1964 by the Labour Government to cover the
increased cost of local stage services, following an increase in road
fuel duty of 6d: operators had claimed that the increase in fuel duty
would have an injurious effect on the provision of services as they
faced a declining market and shrinking profit margins.
Traditionally the rebate has been kept and increased to help keep
fares down and to help provide services that might not otherwise be
viable.175 A review by the Labour Government in 2008 stated that
BSOG allowed bus operators to “run a wider network of services than
would otherwise be the case, and so arguably does incentivise
patronage increases. However, it is directly based upon fuel
consumption, and so is poorly linked to environmental objectives,
particularly climate change”.176 Further, it stated that “BSOG in its
current form offers good value for money. It is estimated that bus
patronage is around 6.7% higher, services are 7.1% higher and fares
are 6.5% lower than if BSOG was completely withdrawn”, but that
“the link of BSOG to fuel consumption is problematic given the
increasing importance of tackling climate change. This link weakens
the incentives for bus operators to invest in more fuel efficient and
environmentally friendly vehicles”.177 This led to the introduction of the
LCEB incentive payments mentioned above.
In its 2012 review of bus subsidies the Coalition Government also
indicated its ongoing support for BSOG but stated that as it was paid
on the basis of fuel consumed, it was ‘poorly targeted’ on the
Government’s objective to reduce carbon emissions from transport.178
This resulted in the devolution of payments to local areas, as set out
above.
174
information on the GBF and BBA can be found in HC Library briefing paper
SN1522
175 e.g. HC Deb 17 March 1998, c1109
176 DfT, Local Bus Service Support – Options for Reform Consultation paper, March
2008, p6
177 ibid., p11
178 DfT, Consultation on bus subsidy reform, September 2012, p4
Number 7177, 13 May 2015 64
Finally, on the link to the fuel price, the current rate of BSOG (dating
from 1 April 2014) varies by fuel type.179 The amount of BSOG an
operator receives is based on a basic calculation: Total km travelled
by one’s fleet/Litres of fuel used. Operators can also earn additional
or incentive payments (see above).
The actual ‘dollar amount’ is not linked to the fuel price at all. Rather it
is a policy decision by the Government of the day, linked to the duty
amount. It used to be the case that the maximum rebate the
Secretary of State could provide was set as the full value of excise
duty charged on oil and petrol. Full relief continued to be given up
until the November 1993 Budget, when the then Chancellor, Ken
Clarke, announced a three pence per litre increase in excise duty on
petrol and diesel fuels. In addition, he explained that rebate would be
frozen at pre-Budget levels. Since the level of rebate is paid under the
Secretary of State's discretion, no legislation was required for the
rebate to be frozen.180 This is how things have continued to the
present.
Under Labour BSOG was set at roughly 80 per cent of the duty paid
on fuel; the Coalition reduced that to about 60 per cent from 2012.
So, for example, the pence per litre subsidy for diesel was cut from
43.21 to 34.57.181
The sharp reduction in the cost of petrol since 2013 (by about 20 to
25 pence per litre) has caused some to wonder whether it might be
possible to link BSOG to the fuel price rather than the duty rate: this
would mean that when fuel became cheaper the subsidy would go
down. As BSOG is set annually and bus operators do not buy petrol
at the same rate or in the same way that individual consumers do,
this would probably be difficult due to within-year petrol price
fluctuations. That said, in principle there would be nothing preventing
the Government from reviewing the rebate level more regularly (it has
not changed since 2012), or, for example, looking at an annual petrol
price fall and reducing the BSOG rate by an amount that would mirror
that fall.
There is another question as to whether local authorities could ‘afford’
to franchise their bus services or enter into QCS. This is discussed
below. Concessionary fares are also dealt with separately, below.
Would regulation improve services and cut costs?
As indicated above, those in favour of regulation argue that it would
enable local authorities to plan proper bus networks and thus improve
services and to provide things like smart and integrated ticketing,
which would cut costs for passengers.
However, in terms of providing a regulated bus service it is more
debatable as to whether this would be cheaper for local authorities
than the current deregulated model. For example, on the London bus
network (which saw passenger numbers increase by more than a
179
DfT, BSOG rates from 1st April 2014, 3 July 2014
HC Deb 30 November 1993, c938
181 DfT, New BSOG rates from 1st April 2012, 2012
180
65 Transport 2015
million between 1997/98 and 2013/14)182 the total amount of subsidy
increased from £152 million in 1997/98 to £828 million in 2013/14.183
In 2011 the TAS Partnership looked at the subsidy figures for London
in some detail. In particular it stated that the one year in recent history
when there was no subsidy (1997/98) was only achieved by
depressed driver wages and reduced depreciation charges and that
during that year there was “a serious slippage in service standards
resulting from staff shortages, which resulted in the only fall in
passenger demand seen in London in the fifteen years to 2009”. Both
the London authority and operators “quickly concluded that this was
not a sustainable business model, and so attempts to break even
were abandoned”. TAS concluded that: “to pretend that their success
can be replicated elsewhere in the UK simply by changing the
regulatory system and at no cost to the public purse is, frankly, not
remotely credible”. 184
As discussed above, at present the only form of regulation available
is a Quality Contract Scheme (QCS). In its December 2011 report the
Competition Commission put the cost of implementing a QCS at up to
£1 million with annual running costs of approximately the same
amount.185 pteg has argued that the proposed QCS in the North East
(see section 4.6, above) is not predicated on additional subsidy. In its
2013 consultation on the proposed QCS Nexus (the Tyne and Wear
Passenger Transport Executive) stated that it would reduce public
expenditure on bus services by £7 million per annum from the
commencement of the QCS, “by both growing commercial fare box
income and by achieving better value through competitive tendering
of all bus services”.186
In their 2006 report on the bus industry, the Transport Committee was
told by pteg that in effect, a QCS was an unsatisfactory halfway
house between deregulation and franchising. What they wanted, in
effect, was: “a system similar to [the franchised system in London],
with the attendant increase in powers and funding, [to] improve bus
services and patronage in their own metropolitan areas”.187
It is probably worth asking what the difference is between franchising
in London and QCS. It essentially rests on three main pillars: London
spends more on its franchising system; Transport for London (TfL)
has a strategic transport role, including highways powers; and
therefore London can and has implemented extensive priority
measures and demand management for private vehicles in the form
of the congestion charge. As the Transport Committee reported, in
effect Integrated Transport Authorities (ITAs)188 could use a
182
op cit., Local bus passenger journeys (BUS0103)
op cit., Subsidies and concessions (BUS0502)
184 “Franchising and the cost of buses in London: some facts”, TAS blog, 29 July
2011
185 op cit., Local bus services market investigation, paras 15.450-51
186 Nexus, Proposal for a Quality Contracts Scheme in Tyne and Wear, July 2013, p8
187 op cit., Bus services across the UK, para 32
188 ITAs are what used to be called Passenger Transport Authorities; pteg continues
to speak for ITAs as a whole
183
Number 7177, 13 May 2015 66
combination of their existing powers and QCS to implement schemes
which would have similar effects as franchising in the capital.189 The
ITAs disputed this.190
In its August 2006 report for pteg, NERA stated, much as the
Transport Committee had, that while a QCS might be expected to
deliver the step-change in quality that could encourage increased bus
use, there were likely to be “significant public sector budgetary
implications from achieving this”. In addition, NERA took the view that
the success of Contracts or franchising would also require potentially
unpopular policies to control demand for the private car:
... greater controls on the use of the car in city centres, by
means of controls on city centre parking supply and pricing,
improved management of main radial traffic capacity with
priorities for buses and, where appropriate, increased provision
of park-and-ride schemes. Eventually, congestion-related
charging for car users would need to become part of the policy
implemented to increase bus use. It is difficult to see this
becoming possible without local authority control of the key bus
service and fare parameters. The full budgetary implications
would be dependent upon the degree to which other measures
were employed, notably the extent to which increases in peak
capacity were required and the commitment to raising revenue
from motorists.191
The ITAs had looked forward to the Competition Commission making
some sort of recommendation on franchising in its 2011 report. The
CC did not recommend franchising but it did acknowledge that:
... there is existing legislation enabling LTAs to introduce
franchising in England, Scotland and Wales [i.e. QCS] and we
would not wish to rule out its future application in particular local
markets where the respective legislative requirements are met.
We also note that LTAs have wider social and policy objectives
that are not relevant to this investigation, but which may
legitimately lead them to take a different view on the desirability
of introducing franchising in relation to the local bus markets for
which they are accountable.192
What do we do about the bus pass in England?
Note: provision of concessionary fares is devolved across the UK.
Scotland, Wales and Northern Ireland have their own schemes and
these are not discussed here.193
It costs approximately £1.17 billion per annum to provide the statutory
free local bus travel concession in England.194 This is an increase of
£117 million since the concession was introduced. In 2013/14 there
189
ibid., paras 32-33
ibid., para 34
191 op cit., The Decline in Bus Services in the English PTE areas, p38
192 op cit., Local bus services market investigation, para 69; the CC’s detailed
analysis as to why it did not recommend the introduction of franchising is given in
paras 15.343-15.470 of the report
193 for further information on these schemes see sections 6, 7 and 8 of HC Library
briefing paper SN1499
194 DfT, Concessionary travel (BUS0811), 16 December 2014
190
67 Transport 2015
were 9.73 million concessionary travel passes issued across
England, this puts the average cost at £120 per pass.195
In 2007 the Labour Government legislated to provide free local bus
travel for older and disabled people across the whole of England from
1 April 2008.196 It further legislated to increase the qualifying age for
the bus pass in line with the rising female state pension age from
April 2010 onwards.197 On current plans this would see it increase to
66 by 2020.
The bus pass is phenomenally popular amongst older and disabled
people: as of 2014 approximately four fifths of those eligible for the
bus pass take it up; in London take up is essentially universal.198 It is
clear that those in receipt of the bus pass highly value the freedom
and independence it gives them. It is also worth noting that across the
English local bus network more than one in five journeys is made
using a concessionary pass.199 It is not clear whether some of these
services could survive without this cohort of passengers.
There are those who argue that the universal bus pass is simply not
financially viable; that the universality of the bus pass is a waste of
resources and that the significant amount of money put aside for bus
passes could be better spent if older recipients were means tested.
The money saved from not providing the bus pass to those with
means to purchase their own bus tickets could be spent on other
things, for example a new concession for younger people in higher
education or those actively looking for work. In a December 2014
interview Martin Griffiths, chief executive of Stagecoach, said:
Are there some passengers who board our buses who could
probably afford to pay? Of course they could. As a voter, I want
to know bus services are going to be protected. They have to
decide what is the prioritisation. They can’t be dishonest just
because these people vote – 8 million of them, they all vote …
so ooh, don’t tamper with the concession scheme. Politicians
are being disingenuous with all of us.200
As indicated above, all major parties committed to protecting the free
bus pass for older people in their 2015 manifestos. However,
supporters of all three main parties have recommended that they look
at means testing so-called ‘middle class benefits’ such as the
statutory bus concession after the election.201 Support for the idea
195
ibid., Concessionary travel (BUS0811 and 0820)
Concessionary Bus Travel Act 2007; for information see HC Library briefing
papers RP 07/19 and RP 07/53
197 Travel Concessions (Eligibility) (England) Order 2010 (SI 2010/459)
198 op cit., Concessionary travel (BUS0820)
199 op cit., Concessionary travel (BUS0821) and Local bus passenger journeys
(BUS0103)
200 “Stagecoach boss: free bus travel comes at a cost”, The Guardian, 10 December
2014
201 see, e.g.: “Nick Boles is right to put universal benefits on notice”, Conservative
Home, 10 July 2012; “Ed should pledge to scrap ‘middle class benefits’”, Prospect
blog, 13 February 2013; and: “Nick Clegg: pensioners' benefits should be means
tested”, The Daily Telegraph, 4 December 2011
196
Number 7177, 13 May 2015 68
has also come from the Social Market Foundation and the Centre for
Policy Studies.202
202
SMF, Osborne’s Choice, February 2012, p29; and: CPS, 2012 Budget: 21 policies
for growth and wealth creation, March 2012, p2
69 Transport 2015
5. Policy focus 3: rail franchising
5.1 What’s the issue?
Rail travel is expensive
There are two aspects to this: the railway itself costs too much to run
(for a number of reasons) and the cost of rail travel for passengers
has been increasing year-on-year from an already relatively high
base.
Before the 2010 General Election the then Secretary of State for
Transport, Lord Andrew Adonis, announced that the Department for
Transport and the regulator would jointly sponsor a value for money
review of the rail industry, to be be undertaken by Sir Roy McNulty,
the former Chairman of the Civil Aviation Authority (CAA).203 Sir Roy
published his final report [the ‘McNulty Report’] in May 2011. He
concluded that the UK rail industry should be looking to achieve
efficiency savings of approximately 30 per cent by 2019 and
proposed recommendations that, together, could deliver cost savings
of between £700 million and £1 billion per annum by 2019. McNulty
found that there were ten principle barriers to efficiency in the rail
industry, including: fragmentation of rail industry structures and
interfaces; the way in which major players in the industry have
operated; roles of government and industry; nature and effectiveness
of incentives; legal and contractual frameworks; and relationships and
culture within the industry.204
McNulty identified a number of areas where the GB railway was
performing less well than those in other European countries. In
particular he highlighted that other European countries had obtained
significant cost reductions from the competitive tendering of services,
compared to a 17.1 per cent increase in the unit costs of franchised
services in GB (after allowing for changes in service frequency and
train length) between 1996/97 and 2005/06.205 He also highlighted an
efficiency gap between Network Rail (NR) and the top-performing
European railways of between 34 and 40 per cent.206 Work by
Infrastructure UK further revealed that:


203
an examination of seven high speed lines across Europe
showed that construction costs in the UK were significantly
higher, and when compared with the four most directly
comparable projects, HS1 costs were at least 23 per cent
higher;
comparisons of station development costs indicated that the UK
was 50 per cent more expensive, for example, than Spain; and
HMT, Pre-Budget Report, Cm 7747, December 2009, p110
ORR press notice, “Efficiency savings the key to substantial rail industry growth”,
19 May 2011
205 Sir Roy McNulty for DfT/ORR, Realising the Potential of GB Rail: Final
Independent Report of the Rail Value for Money Study, May 2011, p34
206 ibid., p32
204
Number 7177, 13 May 2015 70

total outturn costs that involve significant tunnelling were more
expensive than Europe, suggesting higher pre-construction and
indirect costs.207
In terms of the cost to passengers (i.e. ticket prices), the average cost
per passenger kilometre increased from £0.09 in 2001 to £0.14 in
2013/14; an increase of 54%. In real terms, the increase is 14%.208
Around 45 per cent of fares are subject to regulation. Between 2004
and 2013 annual rises in regulated fares were limited to an average
of RPI+1 per cent; since 2014 this limited has been set at RPI. In
addition, train companies have traditionally been able to apply the
‘fares basket’ or ‘flex’ rules, which permit them to vary their increases.
This has generally been limited to 5 per cent, but was reduced to 2
per cent for 2014 and was abolished for both 2010 and again for
2015.
This has resulted in wide variations – for example, in July 2009 the
RPI was – 1.4 per cent, so regulated fares for 2010-11 fell by an
average 0.4 per cent from January 2010; by way of contrast, in July
2011 the RPI was 5 per cent, so regulated fares for 2012-13 rose by
an average 6 per cent from January 2012. In January 2015 all fares
rose by an average of 2.2 per cent. This was less than the anticipated
2.5 per cent rise for regulated fares, based on a July 2014 RPI of 2.5
per cent. All other fares are set at a commercial rate by the train
operators.
Privatisation has been a failure
The most cogent case against privatisation has been made by the rail
unions. In their June 2012 research report, Rebuilding Rail,
commissioned by Aslef, the RMT, TSSA and Unite, Transport for
Quality of Life set out the case against privatisation. It argued that the
privatised railway is too expensive and too complex, leading to high
ticket prices, inefficiencies and a service run for the benefit of
shareholders rather than passengers. In summary, it said:
There is a widespread concern – shared across the political
spectrum – that we are not getting good value from the
substantial sums of public money that are invested in the
railways every year. Since privatisation, the cost to the public
purse of running the railways has risen by a factor of between
two and three times … Over the same period, the money going
into the railways from passenger fares has also increased in
real terms. Much of the increase in cost may be attributed to
fundamental problems with the complex privatised railway
structure created by the Conservative Government in 1994. Key
reasons for the increase in cost include higher interest
payments in order to keep Network Rail’s debts off the
government balance sheet; debt write-offs; costs arising as a
result of fragmentation of the rail system into many
organisations; profit margins of complex tiers of contractors and
sub-contractors; and dividend payments to private investors.
207
208
ibid., p33
DfT, Rail usage, infrastructure and performance (RAI0103) and Rail finance
(RAI0301), 11 December 2014; note: price per passenger km is the best
measurement because it takes out the effect of a different proportion of journeys
being taken on season as opposed to other tickets
71 Transport 2015
[…] The current structure of the railways affects passengers in
several ways. Britain has Europe’s highest commuter fares for
both day returns and season tickets. Ticket purchase is
excessively complex. When things go wrong, there is a lack of
clear accountability.
[…] [I]nnovation is discouraged by the complex and fragmented
structure of the privatised railway, and is more difficult now than
it was before the railways were privatised. The hoped-for
innovation has not materialised. Genuine at-risk private
investment (as opposed to private capital expenditure that is
underwritten by the Government) makes an insignificant
contribution to the railways, representing of the order of one per
cent of the total money that goes into the railway each year.
This is substantially less than the additional costs posed by the
privatised structure. Privatisation has also failed to increase the
efficiency of the railways. Notably, this appears to be due to
increased numbers of administrators and managers …
Fragmentation has produced duplication of functions in the
different private companies and new staff to deal with all the
interfaces between those companies.209
A 2013 report for the TUC by the Centre for Research on SocioCultural Change (CRESC) at the University of Manchester, stated
that the privatised rail network was “a serial shambles creating
artificial profits for the franchise holders and hidden costs for the
public”:
… the privatised rail system requires billions more in tax payer
subsidy each year … and has failed to bring in adequate private
investment in track or trains … so that average age of rolling
stock has actually increased … Rail privatisation created a
situation whereby risk and investment averse private companies
positioned themselves as value extractors, thanks to high public
subsidies. Government effectively took the operating risk,
covering operating deficits and supplying investment funds. 210
Compass, the left-of-centre pressure group, argued in 2014 that:
The figures, facts and experiences speak for themselves – rail
privatisation just hasn’t worked. It was both ill-conceived and
poorly executed. Trains are often either over crowded or empty
as they run alongside congested motorways. Pricing people off
trains is hardly a solution in a world in which connectivity is
increasingly both economically and socially essential. The
system is fragmented, bureaucratic and wasteful.
[…] The system is broken and it needs fixing, but it is more
than facts and figures that are wrong. What we are losing is
something equally precious – places and spaces in which we
aren’t just consumers of rail but equal citizens. Railways and
trains can’t just be sliced and diced, commoditised and
privatised without a great national sense of moral, cultural and
emotional loss. Stations and trains are one of the few places left
where we literally rub shoulders as equals.
Trains don’t just connect the country geographically but socially
and culturally. They help build a sense of national, regional and
local pride as well as collective identity. This experience should
be joyful and rich – not cheap and tacky. When we travel, in
public with others, the experience should profit our wellbeing
209
210
TfQL, Rebuilding Rail, June 2012, pp7-8
CRESC, The Great Train Robbery: privatisation and after, June 2013, p14
Number 7177, 13 May 2015 72
not just the bank accounts of those companies taking no risk
and making little, if any investment. No railway in the world
makes a profit. Pretending they do leaves us all feeling worse
off – financially and morally.
[…] The crux of the issue is that if you want a ‘public service
railway’ it will require public subsidy. Passenger revenue alone
will not fund a railway that meets social, environmental and
wider economic need. So a truly stand-alone commercial
solution is untenable, unless you ran a very small number of
lines at peak hours only. Given this, it would make sense to
maximise efficiency and value for money by retaining that
investment within the public service, without leaking public
money into private hands. If the private sector was adding
significant levels of investment, innovation and efficiency then
fair enough, but they clearly aren’t.211
5.2 What is privatisation and why was it
introduced?
The fundamental objective of advocates of privatisation was to free
the nationalised industries from bureaucracy and political intervention
and to replace these forces with the disciplines of the market, in the
expectation that this would lead to greater efficiency, lower unit costs
and a better allocation of resources. The corollary of this, usually
welcomed by management, was that enterprises were freed from
constraints on investment and on funding imposed as part of public
expenditure controls. It was also argued that the very process of
privatisation forced consideration of all the rights, duties and
constraints affecting an enterprise, which was the basis for a far
better identification of social objectives and their means of
achievement than the historic process of control of nationalised
industries.
Opponents of privatisation argued that it was primarily a convenient
way of abandoning the traditional social duties of the public
enterprise, and of renegotiating, to the disadvantage of employees,
their terms of employment. Further, the goals of reduced
bureaucracy, greater efficiency, lower unit costs and better allocation
of resources would not necessarily result from privatisation and could
be achieved by other means. 212
What did the rail market look like before the 1990s?
British Rail (BR) was a public corporation established under section 1
of the Transport Act 1962 as a successor to the rail and shipping
activities of the British Transport Commission.213 The British Rail
Board operated passenger and freight services within Great Britain
211
Compass, All on Board: A publicly owned railway for an interconnected world, July
2014, pp4-6
212 Transport Committee, Financing of Rail Services (third report of session 1986-87),
HC 383, 13 May 1987, para 232
213 the BTC was established under the Transport Act 1947 to provide "an efficient,
adequate, economical and properly integrated system of public inland transport
and port facilities within Great Britain for passengers and goods", excluding
transport by air and came into operation on 1 January 1948 when the various
interests in shipping, railways, hotels and road transport that were nationalised
73 Transport 2015
and was almost entirely vertically integrated, that is to say it owned its
own trains, infrastructure and carried out almost all track and train
maintenance itself. Under state control, the railways were expected to
run economically but also to cater for not always clearly defined social
needs. In compliance with European rules it also operated passenger
services on a non-commercial basis where so directed by the
Secretary of State.214 The Secretary of State paid BR a grant to cover
the cost of providing any loss-making services.
The Secretary of State for Transport exercised a number of controls
over the BR Board, such as appointment of the Chairman and Board
members; setting the external financing limit (EFL) and the public
service obligation (PSO) grant; determining the Board’s investment
allocation and approval of major investment projects; setting
borrowing limits; having the final say on station closures and service
cancellations; setting financial targets; and agreeing the business
plans. He also approved changes in the organisation of the Board;
extensions of BR's fields of activities; and the disposal of businesses
and assets. Many of the powers were procedural, or related to
financial propriety. The Secretary of State also had various safety and
regulatory powers under railways legislation.215
During the 1980s BR was encouraged to develop greater commercial
awareness. It did this by reorganising its business and objectives,
privatising its ‘non-core’ activities and encouraging private sector
involvement.216 These initiatives contributed to BR’s major
organisational transformation in the decade preceding its
privatisation. The Conservative Government's determination to
reduce the level of subsidy flowing to the public sector railway
stimulated a drive within BR for substantial efficiency improvements.
Central to these reforms was the partial replacement of the existing
structure based on regions by one formed around distinct rail
business sectors, each with managers meeting objectives in terms of
marketing, cost allocation and investment decisions. A further reform
came in 1991 with the launch of ‘Organising for Quality’. Completed
by April 1992, this initiative finally abolished the old regions (which
had continued to physically run the trains) and defined separate profit
centres within each of the business sectors.
In some respects the substantial reorganisation and the
accompanying efficiency improvements undertaken by BR in its final
decade generated the conditions that made privatisation a more
viable policy. The new business sectors formed at least part of the
basis for the privatised railway and showed that the system could be
operated as a series of relatively independent components, rather
than as a monolithic structure. The reorganisation also led to a
called ‘public service obligations’ (PSOs), made under State Aid rules; more
information on EU rail policy can be found in HC Library briefing paper SN184
215 powers derived mainly from the Transport Act 1962, Transport Act 1968, Railways
Act 1974, Transport Act 1980 and Transport Act 1981
216 for further information see HC Library briefing paper SN1157
214
Number 7177, 13 May 2015 74
marked reduction in the PSO payments paid direct to BR in support of
loss-making services.217
As a consequence of all these changes, by the late 1980s BR could
be said to be doing well, but after the good times of 1980s, BR's
finances collapsed in the early 1990s largely because of increased
expenditure on safety following the 1988 Clapham rail crash, the
costs of improving lines to the Channel Tunnel and perhaps above all
because of the recession, which saw usage fall by ten per cent.218
Policy decision by the Conservative Government
Privatisation of the railways had been discussed intermittently since
the 1960s and there was apparently an idea to float the Southern
Region of BR after the 1979 election, but this never went anywhere.
Mrs Thatcher finally agreed to the policy in late 1990, shortly before
she left office. John Major was initially more enthusiastic, though the
driving force behind the proposal appears to have been the Treasury.
There was later confusion between various models of privatisation
proposed by the Treasury and alternative suggestions or ‘hints’ from
the then Transport Secretary, Malcolm Rifkind and the Prime
Minister.219
At the Conservative Party conference in 1988 the then Secretary of
State for Transport, Paul Channon, announced his intention to look at
the future of BR to see whether privatisation might be a viable way
forward. Publication of a White Paper, promised for the end of 1991,
was delayed until after the 1992 General Election. The first indication
of the Government's intentions came therefore in the Conservative
Party manifesto for that election. This stated that:
… the best way to produce profound and lasting improvements
on the railways is to end BR's state monopoly. We want to
restore the pride and local commitment that died with
nationalisation. We want to give the private sector the
opportunity to operate existing rail services and introduce new
ones, for both passengers and freight […] Our plans for the
railways are designed to bring better services for all passengers
as rapidly as possible. We believe that franchising provides the
best way of achieving that. Long term, as performance
improves and services become more commercially attractive as
a result of bringing in private sector disciplines, it will make
sense to consider whether some services can be sold
outright.220
The 1992 Queen’s Speech promised that “legislation will be
introduced to enable the private sector to operate rail services”.221 On
7 May a ‘paving’ Bill was introduced to confer on the BR Board
“powers to participate in the implementation of proposals for the
transfer of their commercial activities to the private sector and
217
Transport Committee, Railway finances (fourth report of session 1994-95), HC
206, 5 July 1995, para 9
218 ibid., paras 16-20
219 Wolmar, Christian, Broken Rails: How Privatisation wrecked Britain’s railways
(2002), chapter 4
220 Conservative Party,1992 Conservative Party General Election Manifesto: The
Best Future for Britain, April 1992, p35
221 HC Deb 6 May 1992, c51
75 Transport 2015
proposals for the establishment of new arrangements with respect to
their other functions”.222
In July 1992 the Government published its White Paper outlining
proposals for privatising British Rail (BR).223 The core of the
Government's proposals was the greater involvement of the private
sector in the running of the railways through the sale of some of the
BR businesses and the progressive contracting out of the
management of passenger services. The principal organisational
means of achieving these objectives was the separation of
responsibilities for track and operations. The Railways Bill 1992-93
was published on 22 January 1993 and had its Second Reading on 2
February.224 The Bill was essentially an enabling measure, leaving a
large degree of discretion to the Secretary of State, the regulator, and
Franchising Director. Further, there was no mention anywhere in the
Bill of Railtrack – an indication of the sweeping nature of the powers
contained in Part II, which enabled the Secretary of State to
restructure BR in any way he thought fit.
The proposals excited much comment. The Transport Committee
published a report on the subject in April 1993 which concluded:
It is clear that in terms of previous international railways
experience, the form of privatisation adopted by the UK
Government is both novel and experimental (in the sense of
being untested). It is true that some elements of the
Government's proposals have been put into practice or
contemplated in various parts of the world. Yet in no country
with a rail system of comparable size and density of use is there
an example, either in operation or even under consideration, of
a complete scheme such as that contained in the Railways Bill.
This does not of itself mean that it cannot succeed. To take that
argument to its logical conclusion would mean that no
innovation ever took place. What it does mean, however, is that
because of the lack of previous experience to draw upon, the
risk that something could go badly wrong is that much higher.
To put it another way, the system of railway operation proposed
by the Government probably can work, but, in the words of one
witness, it may need to be made to work.
The onus lies firmly on the Government to demonstrate that its
plans will provide a better service to the travelling public. If all
the Government's assumptions are correct about such matter
as:
222

the prospects for investment;

the practicality of the relationship between Railtrack and
operating companies;
the British Coal and British Rail (Transfer Proposals) Act 1993 received Royal
Assent on 18 January 1993; the Secretary of State explained the purpose of the
Bill at Second Reading, see: HC Deb 18 May 1992, cc22-35
223
DoT, New opportunities for the railways: the privatisation of British Rail, Cm 2012,
July 1992; this was accompanied by a statement to the House on 14 July, see: HC
Deb 14 July 1992, cc971-72; there were further debates on the White Paper in
October 1992 (HC Deb 29 October 1992, cc1160-1222) and on an Opposition
motion opposing privatisation in January 1993 (HC Deb 12 January 1993, cc771869)
224 HC Deb 2 February 1993, cc156-255
Number 7177, 13 May 2015 76

the response of the private sector to the new
opportunities on offer; and

the feasibility of combining open access with franchising
then there may be the potential for an improved railway system.
Whether the Government is right in these assumptions is a
matter of political judgement. The final verdict will rest with rail
users. 225
Railways Act 1993
The Railways Act 1993 received Royal Assent on 5 November 1993.
Part I set out the respective powers and duties of the Secretary of
State, the regulator and the Franchising Director. It also specified line
closure procedures, conferred upon the High Court powers to issue
Railway Administration Orders in the event of default by independent
railway operators, and established machinery for consumer
representation. Part II related to the Secretary of State's powers to
direct BR to reorganise itself and to form companies for various
purposes, including franchising and disposal. Part III of the Act
contained miscellaneous provisions relating to safety, railway
heritage, the British Transport Police, pensions, freight, financial
assistance to BR staff in the preparation of management buy-outs or
franchise bids, and other matters. Many of the principal changes were
brought into effect on 1 April 1994.
The legislation radically changed the structure of the railway industry
by separating the responsibility for infrastructure and passenger
service operations. BR was divided into a body known as Railtrack on
the one hand, and a residual BR operating company to run all the
other services until they were sold or franchised. The Office of Rail
and Road (ORR) was set up to oversee the charges to be levied by
Railtrack for the use of the infrastructure.226
5.3 What happened after privatisation?
There were a number of problems with the railways in the five years
or so after privatisation – some to do with the actual privatisation itself
and others due to secondary factors that were not directly linked to
the structure of the industry after 1993. Some of these might have
been anticipated in the run up to and during privatisation and dealt
with but for one reason or another were not.
For example, it is debatable as to whether there was sufficient
discussion about the structure of the privatisation – Railtrack was not
mentioned in the 1993 Act and Ministers were not clear what form the
new infrastructure company would take; the requirement for
competition and open access was never seriously tackled; and the
question of continued public subsidy was largely overlooked. The
desire to complete the privatisation before the 1997 General Election,
225
Transport Committee, The Future of the Railways in the Light of the Government's
White Paper Proposals (second report of session 1992-93), HC 246, April 1993,
paras 523-524
226 this is the rail regulator, it changed its name on 1 April 2015 to include reference
to its new role regarding Highways England; for further information on the history
of ORR see HC Library briefing paper SN2071
77 Transport 2015
combined with Labour being so far ahead in the polls and committed
to renationalisation, led to confusion and issues with methods of sale
of the various parts of the industry.227 Privatisation itself involved
breaking up BR into around 100 component companies, introducing
complexity, and the powers available to the regulator were often
unwieldy. The relations between the component parts of the industry
were also perhaps over legalistic to the point of engendering
confrontation and antagonism rather than co-ordination and cooperation.
The privatised railway itself lacked a long term planning body with the
sort of strategic duties BR had and Railtrack arguably lacked
knowledge of its asset base, contributing to later problems (e.g.
dealing with the aftermath of the Hatfield crash). At the beginning
there was a lack of clarity about the roles of Franchising Director and
Rail Regulator, leading to confusion and there were shortcomings in
the range of ‘network benefits (e.g. ticket sales, National Rail
Enquiries and passenger compensation). More fundamentally there
was evidence of poor management particularly at Railtrack, which
appeared to be inept at estimating the costs of large projects and
managing its subcontractors while failing to reconcile its public
interest objectives with the interest of its shareholders to maximise
profits.228
That said, the railways in the immediate period after privatisation
were not all bad. Until the Hatfield crash in October 2000, there was
strong growth in both passenger and freight traffic; punctuality and
reliability were slightly better than in the final years of BR and safety
standards were gradually improving. The IPPR think tank wrote in
2002 that “privatisation arguably introduced some useful innovations,
notably competition in the delivery of passenger and freight services,
performance incentives linked to the passenger's charter, transparent
regulation, security of funding and access to private finance for
investment”.229
The rest of this section looks at developments subsequent to the
immediate aftermath of privatisation.
Labour’s May 1996 policy paper Consensus for Change: Labour’s Transport
Policy for the 21st Century, said: “Labour is committed to a publicly owned and
publicly accountable railway […] An incoming Labour government will use all the
levers at its disposal to halt the damage of privatisation, reintegrate the network
and generate higher levels of investment. On coming to office Labour will set in
place a structured programme to return the railways to an integrated whole. We
will build on what is left of British Rail to create a renewed publicly owned
company which will be charged with reintegrating the network, protecting the
public interest and organising public private partnerships to increase investment
[…] We will end the franchising process [and] give the powers of the franchising
director to British Rail, who will supervise the franchises which have already been
let and resume control of these lines when the contracts expire”. This was
significantly watered down in the Labour Manifesto for 1997 and the promise to
renationalise was removed
228 The Government's Response to the Environment, Transport and Regional Affairs
Committee's Report on the Proposed Strategic Rail Authority and Railway
Regulation, Cm 4024, July 1998
229 IPPR, Getting back on track, June 2002, executive summary
227
Number 7177, 13 May 2015 78
Service levels and costs
At first the railways seem to have performed reasonably well following
privatisation. More trains were running (around 1,700 more each day
than before privatisation); 30 per cent more passengers were being
carried in 2000/01 compared with 1994/95; the amount of freight lifted
had increased 40 per cent in the same period; and both punctuality
and reliability improved, although performance had declined since the
high point of 1996/97.230 Railtrack's initial share price of 380 pence
rose to 1,700 pence two years after privatisation, but by 2001 the
position was very different and on 1 October 2001 the share price
was 265 pence.
From 1997/98 to 1999/2000 performance was roughly stable, but it
experienced a sharp decline following the Hatfield accident in 2000.231
Railtrack
Railtrack was set up on 1 April 1994 under the 1993 Act to manage
the rail infrastructure (track, stations, etc.). It was sold to the private
sector in May 1996. Railtrack's main sources of revenue were the
charges it levied on train operators for track access and the lease
income it received for stations and depots. Until 2001 Railtrack did
not receive direct revenue subsidy from the Government although it
was indirectly dependent on the significant amount of public sector
support received by the train and freight operating companies.
Railtrack plc was put into administration on 7 October 2001 and came
out of it on 1 October 2002. Network Rail took over many of its
responsibilities on 3 October.232
Railtrack’s difficulties came about for a variety of reasons. Those
offered at the time included: lack of awareness about poor asset
condition; privatisation was overly ambitious and financially risky; the
complex contractual base of the privatisation; the extent and nature of
Government and regulatory intervention; and poor management.233
All of this meant that by October 2001 Railtrack was insolvent, even if
it was not bankrupt, and plans for some sort of restructure of Railtrack
had been around for some months. The four most widely talked about
at the time were:

renationalisation (consistently ruled out by Ministers as too
expensive);234
Railway Forum fact sheet, Britain’s growing railways (factsheet no. 1), 30 January
2001; and DfT, Rail usage, infrastructure and performance (RAI0101), 11
December 2014
231 DfT, Rail usage, infrastructure and performance (RAI0105), 11 December 2014
232 for more information on Railtrack and its administration see HC Library briefing
papers SN1224 and SN1076
233 taken from contemporary comment, articles and reports, e.g. Christian Wolmar,
Broken Rails: how privatisation wrecked Britain's railways, 2001; Lord
Cullen/HSC, The Ladbroke Grove rail inquiry: Part 2 report, September 2001;
"Cabinet simply watched as 'poll tax on wheels' went off the rails", The Times, 8
October 2001; "Disastrous round trip was marked by failure to maintain lines",
The Times, 8 October 2001; "Watchdog's severe targets skewed company's
judgement", The Times, 8 October 2001; and "Signal failure", The Sunday Times,
14 October 2001
234 because they would have had to buy the company shares at the full market value
230
79 Transport 2015



restructuring, whereby the Government would take an equity
stake in the company, suspend the regulator and fund the
company directly for a few years until it was in a better position
(this was the favoured option of Railtrack’s directors, referred to
as ‘Project Rainbow’);
converting the company into a not-for-profit entity of some sort
(‘Project Ariel’); or
breaking up Railtrack into regional businesses.
In the event the Government chose a variant of the third option; a
decision that was not without controversy, largely to do with the way
in which it chose to do it.235
On 7 October 2001 the then Secretary of State for Transport,
Stephen Byers, petitioned a High Court judge to put Railtrack plc into
‘railway administration’ under section 60 of the 1993 Act and
secondary legislation was discussed in Parliament the following
month. Shares were suspended on 8 October.236 In court, the
Government argued that Railtrack should be put into administration
because the company at the time was then likely to be in the near
future unable to pay its debts under section 60(2) of the 1993 Act (the
formal test for an Order to be made). The Secretary of State at the
time, Stephen Byers, said that he was not prepared to give Railtrack
any further financial support.237
The administrators from Ernst & Young were responsible for the
running of Railtrack during this period. Performance was not good
and in December 2001 it was announced that John Armitt would take
over as Railtrack Chief Executive. On 1 October 2002 a High Court
judge released Railtrack from administration. On 3 October Network
Rail took over its responsibilities. It had offered £500 million to
Railtrack Group, including a £300 million Government subsidy.238 It
also took on more than £7.5 billion debt and unquantified liabilities,
including any potential criminal or civil liability arising from past
accidents.239
Railtrack had about 256,000 shareholders holding approximately 520
million shares. According to the annual report, 82 per cent of the
shares were held by institutional shareholders at 1 May 2002
(compared with 42 per cent on 20 May 1996). Many of the remainder
were held by small shareholders who bought shares at privatisation
or were employees of the company.240 Mr Byers made it clear that
shareholders should have realised that the company was in dire
235
for the purposes of understanding the administration, please note that Railtrack
Group plc was the company in which shareholders had shares; its main operating
subsidiary was Railtrack plc, which was responsible for the management of the
national rail infrastructure and it was this company that was placed in
administration
236 the previous Friday they had closed at 280 pence a share, valuing the company at
£1.46 billion
237 HC Deb 15 October 2001, c955
238 HC Deb 25 March 2002, cc581-82
239 HC Deb 17 July 2002, c327W
240 Railtrack Group plc, Railtrack Annual Report and Accounts, Year Ended 31 March
2002, October 2002, p69
Number 7177, 13 May 2015 80
financial straits and that there would be no compensation.241 There
followed a legal battle after the Railtrack Private Shareholders issued
a writ in the High Court against the Government on 2 December 2003
alleging ‘misfeasance’, i.e. that the Government and the then
Secretary of State for Transport, Stephen Byers, acted within the law
but in bad faith, and a breach of human rights for confiscation of
assets. On 14 October 2005 the presiding judge dismissed the case
against the Government.
After the case was settled there was a wider debate as to the veracity
of the Government’s statements about Railtrack’s financial viability in
the petition to the High Court.242 In a debate in late 2005 the
Conservative Party laid a motion for debate on the Labour
Government’s conduct regarding the administration of Railtrack,
charging that it had deliberately driven Railtrack into administration to,
in effect, renationalise it for free.243
A lack of continuity
In addition to Railtrack, there were other changes to the railway in the
15 years or so following privatisation that caused uncertainty. There
was an almost constant complaint from the industry about
Government ‘meddling’ with rail structures. In a 2004 paper for the
Centre for the Study of Regulated Industries at the University of Bath
School of Management, Stephen Glaister, Professor of Transport and
Infrastructure, Imperial College London argued that Labour, having
chosen (or adopted from the previous government) a particular model
to deliver rail services, had a responsibility to maintain that policy
unless there were ‘good reasons’ for changing it. Further:
… whilst alternative models could have equally been made to
work, the government has acted to undermine the chosen
model - a competitive rail industry - without explicitly choosing
an alternative model. This is likely to achieve the worst of all
outcomes [that] acts as a cautionary tale for regulatory policy
and accountability in general.244
During its 13 years in power Labour published three major rail White
Papers, each proposing structural changes to the industry, during its
five years in power the Coalition published one significant review and
one White Paper. The biggest changes came about between 2000
and 2005, beginning with the Transport Act 2000 and ending with the
Railways Act 2005 and the legislative changes contained therein, but
this period also encompassed the collapse of Railtrack (see above),
which had long term knock on consequences for the industry.
241
HC Deb 15 October 2001, c955
questions were initially asked by the Opposition during a debate in late 2001, see:
HC Deb 13 November 2001, cc715-771
243 HC Deb 24 October 2005, cc30-31; for the Government’s rebuttal, see cc42-45
244 Stephen Glaister for the CRI, British Rail Privatisation: Competition destroyed by
politics, Occasional Paper 23, 2004, preface, see also pp53-54
242
81 Transport 2015
Two areas which demonstrate this lack of continuity are the creation
and abolition of the Strategic Rail Authority (SRA), all in the space of
five years, and the ever-morphing remit of the Regulator.245
Following privatisation there was a great deal of criticism of the
performance and reliability of the train companies, of Railtrack and
the amount it was investing in the infrastructure and in the safety
regime. Labour was particularly concerned about whether the
Regulator had sufficient powers to deal with the private sector
companies who ran the railways and about the supervision of public
funds. With that in mind, its 1998 transport White Paper stated that
the rail industry needed an element of stability and certainty if it was
to plan its activities effectively.246 Particularly, the Government was
concerned that there was “no focus within the privatised industry for
long term strategic planning”; that the Franchising Director's remit
was “too narrowly focused on the passenger railway”; that too many
key policy decisions on the future of the rail industry lay in the hands
of a statutorily independent regulator; that the sanctions available to
the regulatory authorities were ‘unwieldy’; and that investment was
not sufficiently prioritised.247 It therefore proposed setting up a
Strategic Rail Authority (SRA) to address these problems, asserting
that this would provide the rail industry with the strategic leadership
lacking since privatisation and the fragmentation of the sector. It
would ensure the railways were run in the public interest, would
promote their use and would ensure they were properly integrated
with other forms of transport.
The SRA would tell the TOCs what services and network benefits the
Government wanted to buy. It would ensure that the railway was
properly integrated with other forms of transport and that the railway
system was run as a network, not merely a collection of different
businesses, particularly when franchises were re-let or re-negotiated.
It would also ensure that the plans of freight operators were taken into
account in the planning of the network as a whole.
Part IV of the Transport Act 2000 gave statutory backing to the SRA
from 1 February 2001. It transferred the functions, rights and liabilities
of the Franchising Director and the residual functions, rights and
liabilities of the British Railways Board (including responsibility for the
British Transport Police) to the SRA. It set out its objectives and
functions and established its structure and procedures and the terms
and conditions of its members. The legislation also transferred the
Regulator’s responsibilities for consumer protection to the SRA and
the responsibility for railway closures to the Secretary of State.
245
further information on the SRA can be found in HC Library briefing paper SN1344;
information on the regulator can be found in SN2071
246 op cit., A new deal for transport: better for everyone, para 4.22
247 The government's response to the environment, transport and regional affairs
committee's report on the proposed strategic rail authority and rail regulation, Cm
4024, July 1998, paras 6-11; responding to: ETRA Committee, The proposed
strategic rail authority and rail regulation (third report of session 1997-98), HC
286, 18 March 1998
Number 7177, 13 May 2015 82
The SRA was set up to provide leadership for the rail industry but it
lacked the power to bring together the various elements of the
industry. It did have some successes. For example, it helped to get a
grip on major projects which were running out of control, such as the
West Coast Main Line route modernisation project; it developed and
implemented a strategy to upgrade the electricity supply for rail
services south of the Thames; it began the process of reforming the
franchising regime; and it promoted better use of the network through
its Route Utilisation Strategies (RUS). The SRA also developed a
stronger regional focus, working to promote community rail
partnerships and to promote joint working between the different parts
of the industry and to drive up performance.248
The problems in the rail industry, however, turned out to be greater
than realised in 2000 – there was the aftermath of the Hatfield
accident; increasing infrastructure costs; Railtrack’s entry into
administration; and the subsequent transfer of its responsibilities to
Network Rail. Consequently, the Regulator played a more pivotal role
during these years and the SRA found itself in an increasingly difficult
position. A leadership model based on influence and persuasion was
not strong enough.
As a result, the 2004 rail White Paper proposed that the SRA’s
strategic and financial responsibilities would pass to the Department
for Transport, as would its responsibility for awarding the passenger
franchises. The Secretary of State would take responsibility for setting
the national-level strategic outputs for the railway industry, in terms of
capacity and performance. Operational matters would remain the
clear responsibility of the industry. The SRA’s role in monitoring the
performance of the train companies and drawing up timetables would
be taken over by Network Rail.249 Section 1 and Schedule 1 of the
Railways Act 2005 abolished the SRA and transferred its powers to
the relevant bodies. This took place on 8 June 2005.250
The Regulator is responsible for a number of regulatory areas:
ensuring that the rail network performs smoothly and, where it does
not, to remedy any problems and hold those responsible to account. It
is responsible for safety regulation, the performance of, access to and
investment in the network. Its role has developed considerably since
privatisation. Initially the Regulator was that – a singular person
whose job was to issue and enforce the licenses held by the various
parts of the industry to operate; enforce competition law; determine
the track access charges paid by the train companies to Railtrack
(later Network Rail); and protect consumers.
The 2000 Act strengthened the power of the Regulator to require the
improvement and development of the railway, for example by
directing the owner of railway facilities such as stations and tracks to
improve or replace them. The 2000 Act also imposed a new duty on
the Regulator to have regard to "any general guidance from the
SRA press notice, “Britain’s railway ‘rehabilitated’”, 15 July 2004
DfT, The future of rail, Cm 6233, July 2004
250 Railways Act 2005 (Commencement No. 1) Order 2005 (SI 2005/1444)
248
249
83 Transport 2015
Secretary of State about railway services or other matters relating to
railways". Guidance was issued in September 2002 which
emphasised the importance of working with Network Rail and others
to secure a firm and sustainable financial foundation for the provision
of railway infrastructure services.251
In July 2004 the Regulator was replaced with an Office of Rail
Regulation (ORR) and in its 2004 rail White Paper the Labour
Government announced its intention to transfer safety responsibility
to the ORR. This was legislated for in the 2005 Act. The ORR
became both the economic and safety regulator for the rail industry
on 1 April 2006 when it took over the safety regulation responsibilities
of the HSE. These include the power to authorise a person to
investigate and make a special report on a major incident.
West Coast re-let 2012
Since privatisation the vast majority of passenger rail services have
been operated by franchisees who operate a contracted service on a
particular part of the rail network under licence from the Government
and the regulator. Franchising involves the Government setting out a
specification for what it would like a franchise to do over a set period
(level of service, upgrades, performance etc.). Companies then bid
for the right to operate a franchise to that specification. The
Government picks the company it thinks will deliver the best overall
package for the franchise and give the best value for money.
Franchise agreements include details of the performance standards
that franchisees must meet and arrangements for the termination of a
franchise in the case of failure to meet these standards.252
In 2012 the rail franchising system in England essentially collapsed,
causing systemic and long term issues for the future franchising of rail
services that will persist to the end of the decade. This was caused by
the failure of one particular franchise re-let – for the West Coast
franchise, run by Virgin Trains since 1997.
Following the usual competitive tendering process, the Government
awarded the West Coast franchise to First Group in August 2012. It
was intended that the franchise would run until spring 2026, with an
option to extend the franchise to the end of 2027.253 Following the
announcement, there was an unprecedented level of debate about
the award. Both First Group and Virgin discussed the franchise in the
media and both the founder of Virgin Group, Sir Richard Branson,
and the First Group chief executive, Tim O’Toole, appeared before
the Transport Select Committee after Virgin announced that it would
take the Department for Transport to Judicial Review over the
award.254
251
DfT, Statutory guidance to the Rail Regulator, September 2002
for further information on rail franchising and the events summarised in this
section, see HC Library briefing paper SN6521
253 DfT press notice, “New operator for West Coast rail passengers”, 15 August 2012
254 “Sir Richard Branson blasts 'flawed' bid system as Virgin Rail loses West Coast
Main Line franchise to FirstGroup”, The Independent, 15 August 2012; and
252
Number 7177, 13 May 2015 84
However, before the hearing could take place the Secretary of State
for Transport, Patrick McLoughlin, announced his decision to cancel
the award following the “discovery of significant technical flaws in the
way the franchise process was conducted”. The franchising process
would therefore be re-started. Mr McLoughlin also announced two
independent reviews: the first by Sam Laidlaw, Chief Executive of
Centrica, to examine what happened during the West Coast
procurement and why, and the second by Eurostar chairman Richard
Brown to examine the wider rail franchising programme. In the
meantime, the outstanding franchise competitions were ‘paused’
pending the outcome of the Brown Review, in order to ensure future
competitions would be “robust and deliver best value for passengers
and tax payers”.255
The Laidlaw Report was published in December 2012. The work of
the inquiry was focused on the calculation of the Subordinated Loan
Facility (SLF) for the West Coast franchise and the application of the
relevant guidance to that calculation.256 Laidlaw’s main conclusion
was that: “in seeking to run the complex and, in some respects, novel
… franchise process, an accumulation of significant errors ... resulted
in a flawed SLF sizing process. The responsibility for this flawed
process rests with the DfT, rather than with any of its external
advisers”.257 Laidlaw recommended a number of measures to help to
restore confidence in the DfT’s conduct in rail franchising and
procurement.258 The Department for Transport’s response to the
report was published on the same day. This stated that the Laidlaw
report made for ‘sombre reading’.259 Mr McLoughlin, said that the
Department would “ensure that all future franchise competitions are
delivered with a clear timeline, rigorous management and the right
quality assurance” and that it would create a simpler and clearer
structure and governance process for rail franchise competitions.260
The Brown Report was published in January 2013. Brown’s main
conclusion was that “the rail industry works, and that there is no
credible case for major structural change” but that “concerted effort is
required on a significant, though manageable, number of key areas,
from which lasting and tangible improvements will flow”.261 He made a
number of recommendations to achieve this end.262 Looking forward,
Brown urged that the franchising programme be restarted, but that
the Department should be mindful of what it and the market could
Transport Committee, Rail 2020 (seventh report of session 2012-13), HC 329-II, 7
January 2013, Ev 81+
255 DfT press notice, “West Coast Main Line franchise competition cancelled”, 3
October 2012
256 the SLF is the amount of money the DfT requires the parent companies of bidders
to put up to mitigate the risk of insolvency during the course of the franchise
257 DfT, Report of the Laidlaw Inquiry: Inquiry into the lessons learned for the
Department for Transport from the InterCity West Coast Competition, HC 809, 6
December 2012, para 3.1
258 ibid., para 3.13-3.14
259 DfT, Response to the Report of the Laidlaw Inquiry, 6 December 2012, para 2
260 HC Deb 6 December 2012, cc1018-19
261 DfT, The Brown Review of the Rail Franchising Programme, Cm 8526, January
2013, para 1.4
262 ibid., para 1.11-1.20
85 Transport 2015
resource, and seek to avoid ‘bunching’ franchises, increasing the
vulnerability of the programme to peaks and troughs in the economic
cycle.263
The Government responded to the Brown Report by announcing a
new franchising schedule that would provide “a more sustainable
schedule for rail franchising by delivering no more than 3 to 4
competitions per year, and staggering the 2 principal Intercity
franchises, West Coast and East Coast, so they will not be let at the
same point in the economic cycle”.264 The schedule has been
updated twice since then, most recently in October 2014.265 The
practical consequence of this is that there have been an increasing
number of ‘Direct Awards’ rather than fully competitive refranchising
of lines since 2013 [see section 5.6, for more information].
5.4 Who supports privatisation and why?
As indicated in the other parts of this section, since the early 1990s
there has been continued criticism of the privatised rail system, from
those who want to see more integration and public ownership to
those who want to see more private competition. However, the
existing system does have its supporters: notably the companies who
bid for and operate the rail franchises and who own the freight and
train companies. The Rail Delivery Group (RDG), set up in 2011 on
the back of the McNulty Report (see above), and made up of
representatives of all the industry’s main players, has said that the
success of the railways since they left public ownership is ‘inarguable’
in terms of annual growth:
The industry has plenty to be proud of over what it has
achieved in recent years. We have increased capacity not so
much by laying hundreds of miles of new track, but by using the
network much more intensively through a modest increase in
the size of a modernised fleet. We have seen reliability of the
network improved very significantly following the challenges
posed to us after the Hatfield incident back in the early 90s… 266
Sir Richard Branson, the founder of Virgin Group, which under its
Virgin Trains moniker operates services on the East and West Coast
main lines, praised the investment of previous private incumbents of
the East Coast long distance franchise when Virgin took over the
route in March 2015. He said: “since the bad old days of
nationalisation, there have been improvements under various
operators such as GNER, so we’re not starting from ground zero like
we were with the West Coast line [which Virgin took over in 1997 from
British Rail]”.267 He also criticised the recent interest in returning the
railways to public ownership: “I think even China has realised that
government-run businesses don’t work, and in Russia they are
beginning to realise that too, so it’s very strange to hear people
263
ibid., paras 1.21
HC Deb 26 March 2013, cc95-98WS
265 DfT, Rail franchise schedule, 10 October 2014
266 “Railroad to Recovery”, The House Magazine, 31 October 2014
267 “Leave Britain's railways alone, Branson tells Labour”, Daily Telegraph, 7 March
2015
264
Number 7177, 13 May 2015 86
talking about switching the clock back to nationalisation and all the
horrors that went with it”.268
Successive governments (Labour and Conservative-Liberal
Democrat) have all broadly backed the franchising system as a good
mix of public and private which has delivered benefits for passengers.
In its 2010 rail franchising review the Labour Government said: “as a
system, franchising is largely delivering well for both passengers and
taxpayers”, though “a greater emphasis on encouraging operator-led
improvements and removing current barriers to investment will help
rail meet passenger expectations in the coming years, while still
delivering good value”.269 A few months later in its rail franchising
review the Coalition Government looked at how to unlock further
benefits from the franchising model:
The Government believes that the existing system of rail
franchising has become too prescriptive at the point of bidding,
and lacks flexibility once operational. Arguably, the Government
now exercises more control over the railways than in the days
of British Rail. As set out in the Coalition Agreement, we believe
significant private investment could be released by granting
longer franchises, resulting in important benefits for passengers
[…]
We also need to move away from a system which sees
Whitehall specifying highly detailed and prescriptive inputs in
franchises. Instead, we want to see a stronger focus on the
quality of outcomes for passengers, giving more flexibility to the
professionals who run our railways to apply innovation and
enterprise in working out the best way to deliver those
outcomes.270
More recently, in the New Statesman, George Eaton reported a
Labour spokesman’s view that “the party recognised that there had
been some benefits from privatisation, for instance improved
customer service” and that it had “no ideological objection to the
public sector, we have no ideological objection to the private sector
either”.271
5.5 What are the alternatives?
There have been many suggestions for reforming the way the rail
network currently operates and dealing with its perceived failures.
These range across the spectrum from renationalisation to
‘privatisation plus’. Going into the 2015 election, the two parties that
formed the Coalition Government after 2010 broadly committed to
retaining the current system but driving for more efficiencies and
better performance. Labour proposed a slightly more radical
approach, including the introduction of a public service operator for
rail franchises.
268
ibid.
DfT, The Future of Rail Franchising, January 2010, p5
270 DfT, Reforming Rail Franchising, July 2010, p4
271 “Why Labour hasn't pledged to fully renationalise the railways”, The Staggers, 18
July 2014
269
87 Transport 2015
Nationalisation
As set out in section 6.1, above, there are some who believe that the
privatised rail network has been a failure and that it should be
renationalised and reintegrated. This is usually perceived as a
gradual process which would take a number of years – train services
would not be renationalised in a ‘big bang’ but taken back in-house as
they came up for renewal. Network Rail (which owns the
infrastructure) is already a public sector company. Some also
advocate the renationalisation of freight services and the rolling stock
companies that own the trains. Cost estimates for this vary –
advocates argue that overall the process would save the taxpayer
money. Renationalisation is broadly supported by the general public:
a May 2014 YouGov poll found that British people supported renationalising the railways by 60 per cent to 20 per cent. The main
reason given was that the railways should be accountable to
taxpayers rather than shareholders.272
The main proponents of renationalising the rail network are the rail
unions. Their 2012 policy paper, Rebuilding Rail, set out a possible
governance structure for a nationalised and integrated ‘GB Rail’,
derived from the Deutsche Bahn governance structure in Germany
but modified to give broader accountability:273
YouGov press notice, “Why the public want to nationalise the railways”, 11 May
2014
273 op cit., Rebuilding Rail, p72
272
Number 7177, 13 May 2015 88
In effect, the system they proposed was one where the existing
infrastructure manager, Network Rail (NR), would become GB Rail
Network & Operations, with its ‘essential functions’ of allocating and
charging for network capacity hived off to GB Rail Access, but
otherwise its current network operations could continue largely intact.
Thereafter, the organisational changes to NR would centre around
building its capacity to run train operations. It would also involve
changes to rolling stock (train) procurement, whereby GB Rail would
be able to procure new trains directly, using either government grant
or government-backed debt. The report argued that procurement of
rolling stock by GB Rail could be carried out in such a way as to
support UK train manufacturing industry.274
A slightly different model was proposed by the Centre for Research
on Socio-Cultural Change (CRESC) in 2013. They proposed a similar
scenario where the contracts of the train and rolling stock companies
were brought to an end and a new entity, ‘National Rail’ would be set
up to manage and operate trains and infrastructure, built around the
core of NR.275 However, ultimately it envisaged a more defuse,
regional model of rail provision to “provide a framework for political
accountability and financial cross-subsidy as long as the railway
system has to provide both an integrated national network and intra274
275
ibid., pp73-4
op cit., The Great Train Robbery: privatisation and after, p162
89 Transport 2015
regional services”. Further, it argued that if regional governments had
tax raising powers, in areas like Wales or the North East, some of the
regional requirement for subsidy and investment could be met by
locally raised taxes while the rest could be met by transfer from the
centre.276
Some sort of regionally or locally owned and run public railway has
received support from other sources. Compass has said that while a
nationally integrated system “is essential, accountability and
innovation is best practiced where people are closest to the system”.
Therefore, wherever possible, decisions should be made at the
lowest possible level of the rail system “to ensure the most effective
input of all stakeholders, whilst retaining the benefits of a nationally
integrated system”.277 In 2014 Alex Burrows wrote for Progress, a
‘mainstream’ Labour pressure group, that regional rail networks
should be set up and devolved from Whitehall to regional rail
authorities “who can better judge – and deliver – what is required for
their areas”.278
The Co-operative Party and Co-operatives UK have championed a
different sort of mutually-owned and run railway. Its 2011 policy
document began by arguing for:
276

Explicit ministerial encouragement for the principle of a
co-operative for a national train operating company
franchise with passenger and public membership.

A rapid investigation by ORR on how to reduce barriers
to new co-operative entrants and on how alternative
models of ownership and finance should be recognised in
the franchise process, such as making the
encouragement of passenger and employee ownership a
positive criterion in new franchises.

Introducing a system to allow for the letting of local microfranchises working through existing Passenger Transport
Executives, Local Enterprise Partnerships or their
equivalent.

Facilitating the entry of co-operative ventures as open
access operator, by reducing the bureaucratic and
financial hurdles they face.

Encouraging Network Rail to explore and consult on
different mutual options for its membership, with the goal
of opening up to a full co-operative membership structure
within three years.

Promoting a co-operative model for any integrated rail
companies covering both operations and infrastructure
that emerge from the current review of structural
changes.279
ibid., p159
op cit., All on Board: A publicly owned railway for an interconnected world, pp9-10
278 “Make rail regional”, Progress Online, 9 July 2014
279 Co-operatives UK, Co-operative rail: a radical solution, New Insight 6, 2011, p21
[written by Christian Wolmar, the noted transport commentator and a Labour
candidate for Mayor of London in 2016]
277
Number 7177, 13 May 2015 90
This was followed in 2012 with a proposal for a mutually-run railway
in Wales: a not-for-profit enterprise called Rail Cymru, with ‘strong’
representation from the Welsh Government, rail employees and
passengers, and other key stakeholders in Wales and the English
borders. Whilst it would not be a full co-operative, “its ethos would
fully reflect co-operative principles of social responsibility, democracy,
equity and service to the community”. It would operate as an armslength enterprise with ‘close and supportive relationships’ with the
Welsh Government (its principal funder), which would specify the
outputs required from Rail Cymru, and NR, which would remain the
infrastructure manager.280
Green MP Caroline Lucas brought forward a Railways Bill in both the
2013/14 and 2014/15 sessions of Parliament to require the Secretary
of State to assume control of passenger rail franchises when they
came up for renewal. Neither Bill proceeded beyond First Reading.281
Public sector franchisees
As set out above, in its 2015 manifesto Labour committed to “legislate
so that a public sector operator is allowed to take on lines and
challenge the private train operating companies on a level playing
field”.282 The Conservative Government does not support this policy in
England. However, under the proposals set out in the Smith
Commission and the subsequent draft legislation published before the
2015 General Election, public sector bidders would be permitted for
franchises let by the Scottish Government.283
Providing for a public sector franchisee would require primary
legislation. Under section 25 of the Railways Act 1993, as amended,
all public bodies are forbidden from bidding to operate a franchise.284
To change this one could repeal section 25 in its entirety, allowing
any public body to bid to run a franchise, or amend that section to
include within it an Order-making power allowing the Secretary of
State to designate certain public sector bodies as eligible franchisees
on an ad-hoc basis, as he or she saw fit and/or as bodies developed
and changed (including e.g. Transport for London, Transport for
Greater Manchester or other devolved entities). There might be other
related considerations, such as how a public sector body would meet
the “appropriate financial position” requirement under section 26(3).
In October 2014 Labour MP Andy Sawford brought forward a Ten
Minute Rule Bill in Parliament to provide for public sector rail
operators. The Bill passed on Second Reading by 196 votes to 38 but
did not proceed any further.285
Co-operative Party, Rail Cymru: A People’s Railway for Wales, November 2012
Railways Bill 2014-15 and Railways Bill 2013-14
282 op cit., Britain can be better: The Labour Party Manifesto 2015, p26
283 op cit., Scotland in the United Kingdom: An enduring settlement, pp71-2
284 this ban does not extend to train companies ultimately owned by foreign
governments, such as the Netherlands, Germany and France, see e.g. RMT
press notice, “Research shows three quarters of UK rail now foreign owned”, 13
October 2014
285 Railways (Public Sector Operators) Bill 2014-15; see also: HC Deb 29 October
2014, cc314-7
280
281
91 Transport 2015
Under this system of allowing public bodies to bid against private
bodies to run rail franchises, there would be no guarantee that any
public sector bidder would win a franchise. Furthermore, there would
be the question of ensuring that the Government of the day (in the
guise of the Department for Transport) was not unfairly favouring
public sector operators, which would be against EU competition law.
This could be addressed by establishing something along the lines of
a new independent Office for Rail Passenger Franchising (OPRAF),
as existed immediately after privatisation, to assess and award
franchises.
There could also be more wide-ranging effects: Martin Griffiths, chief
executive of Stagecoach, told the FT in July 2014 that this might deter
private sector companies from bidding for franchises. He said: “If you
start to think it’s not going to be a level playing field then you may
stop bidding and in that scenario we would be losing some of our
expertise we have built up over a period of time”.286
It is worth noting that public bodies have not always been banned
from bidding for franchises. During the Lords stages of what became
the 1993 Act the Conservative peer Lord Peyton proposed an
amendment to clause 22 (now section 25) allowing British Rail (BR)
(or a wholly-owned subsidiary of BR) to become a franchisee. The
amendment was agreed on the vote (150 to 112) and added to the
Bill.287
When the amended clause 22 came back to the Commons the
Government proposed its own amendments in lieu of Lord Peyton’s
amendment.288 This amendment became section 25(4-9) of the
original 1993 Act. It was repealed from 1 February 2001 by section
274 and Schedule 31 of the Transport Act 2000 and regulations made
under it. This was because of the wider changes to railways in that
Act, which abolished the Franchising Director and brought both his
responsibilities and the residual British Railways Board (all that was
left of BR by this time) within a new Strategic Rail Authority (SRA).
Thus, worded as it was, it became obsolete.
Originally, Labour intended to significantly broaden the power of what
became the SRA regarding ‘operator or last resort’ and to effectively
allow the SRA to run rail services as it saw fit. In the end, this did not
happen. A Railways Bill, published in mid-1999, contained a proposal
(clause 9) to give the SRA an express power to provide services for
the carriage of passengers and goods by railway as it considered
desirable. It could do anything it wished, apparently with no caveats,
including providing and operating rail services.
However, after Second Reading this Bill was referred to the
Commons Environment, Transport and Regional Affairs Select
Committee and as a result its provisions were amended and included
within the portmanteau Transport Bill, published later in 1999. The
“Stagecoach chief warns Labour rail reform would deter bids”, Financial Times, 9
July 2014
287 HC Deb 5 July 1993, cc1068- 1104
288 HC Deb 2 November 1993, cc214-18
286
Number 7177, 13 May 2015 92
original proposals in clause 9 of the Railways Bill were criticised by
the Conservative Opposition and by several witnesses who appeared
before the ETRA Committee. The Committee recommended in its
report that the Government amend the Bill to make it clear that the
SRA:
… may only operate passenger rail services in the event that no
satisfactory bid for a franchise has been received, or that a
service has failed. The Bill should also establish the principle
that the Authority may only directly operate services under
conditions of service equivalent to those that apply to private
sector rail companies, and that it should do so through a
subsidiary company which has accounts separate to those of
the Authority.289
This is the gist of the powers that ended up in the 2000 Act and were
subsequently transferred to the Secretary of State after the SRA was
abolished by the Railways Act 2005.
More privatisation and ‘proper’ competition
Some have argued that the failures of the current system – to deliver
cheaper fares and better services – are a result of a compromised,
‘imperfect’ privatisation and that proper ‘on the track’ competition
could rectify these problems. Stephen Glaister explained the problem
back in 2004:
The fundamental principle driving the British railways policy of
the 1990s was not change of ownership (privatisation). It was
the establishment of competition in every aspect of the business
in order to achieve cost efficiency and also transparency of
policy. The policy was designed so as to maximise the
opportunities for effective competition whilst catering for natural
monopoly in infrastructure and for the need to continue to pay
subsidy in order to preserve the scale of the industry. It was
successfully implemented and it started to produce some
remarkably good results.
We shall never know what the long term outcome might have
been if the policy, once implemented had been left alone. It
soon fell foul of, and was ultimately destroyed by, two
phenomena. First policy risk: the Treasury proved to be
unwilling to provide the public funds necessary to allow
competition for passengers to operate as originally envisaged.
Competition had to be ‘moderated’. There is doubt about
whether the degree of on-rail competition originally envisaged in
the white paper was even technically feasible. Also, a proper
competition was not held for the right to provide by far the most
important services to Railtrack, engineering, allegedly because
that might have reduced the privatisation sale revenues for the
Treasury. Finally, ministers were slow to make up their minds
about exactly what they wanted, and execution of policy was
unduly rushed because of a late decision to privatise Railtrack
in advance of an impending general election.
Secondly, political risk: governments proved, in practice, to be
unwilling to tolerate the criticism that they feared they would
attract if they had allowed the company failures which are
essential to an effective competitive processes. When train
289
ETRA Committee, Railways Bill (twenty-first report of session 1998-99), HC 827,
10 November 1999, para 78
93 Transport 2015
operating companies failed government bailed them out. When
Railtrack made a fatally bad investment and mismanaged its
information systems, government again rescued it for a while,
before intervening in a way that destroyed the normal
competitive market for corporate control. This greatly weakened
the mechanism whereby competitive markets deliver cost
efficiency - transfer of the risks of incompetence or paying too
much for inputs from the state to the private owners.
Perhaps because of this, or perhaps because of other
perceived political risks deriving from the special political
sensitivities in relation to railway workers, the single most
effective potential efficiency gain was not delivered. This would
have been the introduction of a competitive market for labour. It
had largely accounted for the success in previous privatisations
of British utility companies, but unit labour costs in railways
have run well ahead of average earnings.290
In 2011 Sir Roy McNulty summarised the main reason why
successive governments have been reluctant to encourage ‘on-rail’
competition:
The scope for expansion of on-rail competition is determined, to
a large extent, by the degree to which Government would
accept reduced revenues from franchise competition. It is
unlikely that the Government would be willing to see a large
expansion of on-rail competition while it continues to provide
such a large financial contribution to the rail industry.291
Most recently, the most comprehensive case for more and better
competition was put forward by Tony Lodge in a paper for the Centre
for Policy Studies (CPS) in 2014. He argued that the principles of the
1992 White Paper had “been betrayed” as “franchised rail operators
have an effective monopoly on the core long-distance routes,
restricting vital competition”. Further, in those few areas where rail
competition has emerged (primarily on the East Coast Main Line and
in rail freight):
… the benefits are clear: competition has led to new private
investment, innovation, new routes, lower taxpayer subsidies,
lower transparent fares, more journeys and happier passengers
[while] strong competition on the freight network has led to
significant investment in new rolling stock, high levels of
productivity and reduced costs to satisfy customer demand … A
small part of the passenger rail network is also open to some
competitive pressures. On the East Coast Main Line (ECML),
two non-subsidised “open access” operators – Grand Central
and First Hull Trains – compete with the franchise holder East
Coast. They have shown that competition leads to more
journeys, higher revenues for the train companies, lower fares,
more and happier passengers.292
To achieve this, the report recommended that the government place
“far greater open-access competition … at the heart of future
franchise agreements” and create a new Office of Rail Competition
290
op cit., British Rail Privatisation: Competition destroyed by politics, p53
op cit., Realising the Potential of GB Rail: Final Independent Report of the Rail
Value for Money Study, p281
292 CPS press notice, “Rail's Second Chance”, 25 March 2014; for the full report see:
Tony Lodge for the CPS, Rail’s second chance: Putting competition back on
track, 25 March 2014
291
Number 7177, 13 May 2015 94
and Utilisation (ORCU) “with a clear mandate [to] facilitate and drive
and deliver these new opportunities. Competition, not the protection
of monopoly, must be the guiding principle behind reform”.293
5.6 Issues for the 2015 Parliament
Why is rail travel so expensive?
Rail travel has never been (nor for a large portion of its history was it
seen desirable for it to be) subsidy-free, though one of the goals of
privatisation was to reduce overall government subsidy to the rail
industry.294 Indeed, in September 2011 the then Secretary of State for
Transport, Philip Hammond, admitted to the Transport Committee the
‘uncomfortable fact’ that “the railway is already relatively a rich man’s
toy - the whole railway. People who use the railway, on average, have
significantly higher incomes than the population as a whole. That is a
simple fact”.295 It is also true that some parts of the network require
more subsidy than others.296
As indicated above, passengers and politicians all seem to agree to
a greater or lesser extent that rail travel is too expensive and that the
costs for passengers should come down.
Parties have different policies for achieving this, generally they
involve the industry itself cutting overall costs and becoming more
efficient (e.g. under the McNulty recommendations and Network
Rail’s quinquennial Periodic Review) and costs for the passenger
coming down, both ‘naturally’ due to the above efficiency savings
being passed on in unregulated fare prices and more directly by the
Government controlling those regulated fare levels for which it is
responsible.
Others argue that the structure of the industry is at fault and that if the
railways were renationalised fares would come down as a matter of
course. Sir Roy McNulty did not believe this was necessarily the
case. His 2011 report said that while there had been “many barriers
to efficiency under the privatised structure, including the extent of the
fragmentation of structures and interfaces and increased Government
involvement”, that many of the arguments for renationalisation were
formed from the failings of the existing system. McNulty argued that
“much more can be gained by improving the performance of the
current system rather than embarking on a costly programme of
ibid., Rail’s second chance: Putting competition back on track, p40
this is discussed at length along with the immediate subsidy levels and costs of
then then partial privatisation in a 1995 report by the Transport Committee, see
op cit., Railway finances (fourth report of session 1994-95); more recently some
have argued for the complete abolition of subsidy, see e.g. “Why are rail
subsidies so high?”, IEA blog, 22 January 2013
295 Transport Committee, High Speed Rail (tenth report of session 2010–12), HC
1185-II, 8 November 2011, Ev 104, Q553
296 for financial support by train operating company, see: ORR, Government support
to the rail industry by TOC - Table 1.7 [accessed 5 May 2015]
293
294
95 Transport 2015
renationalisation, which is unlikely to lead to an overall reduction in
costs”.297
As indicated in section 5.5 above, proponents of some sort of
renationalisation believe that the transition costs need not be high
and that ongoing costs would, overall, be less than the current
system. The 2012 report Rebuilding Rail stated that the cumulative
quantifiable costs of the ‘privatised and fragmented’ railway system
were somewhere in the region of £11.5 billion.298 In its 2007 rail White
Paper the Labour Government said that between 1994/95 and
2004/05 the annual total ‘cost of running the railway’ doubled from
about £6.6 billion to £12.2 billion and that the biggest factor in this rise
was an increase in capital expenditure to “tackle a backlog of
previous neglect”, and capacity enhancements which suffered from
escalating costs.299
All that said, the key driver of higher fares over the past eight years or
so has been a policy decision by consecutive governments to shift the
burden of funding the railways from the taxpayer to the passenger.
This began in 2004 when the regulated fare cap was changed from
RPI-1 to RPI+1.300 In its 2007 rail White Paper the Labour
Government explained that “historically there has been considerable
(and often year-on-year) variation in levels of subsidy, from 50 per
cent of rail funding in 1992/93 to just 15 per cent in 1995/96, reflecting
the sales of assets as part of the privatisation process”.301 However,
after privatisation there was a consistent increase in the proportion of
rail costs funded by the taxpayer, and a pattern of 25–35 per cent
subsidy in the second half of the 1990s became 40–50 per cent after
2000. By 2005/06 taxpayers were paying a higher proportion than
fare payers. The White Paper stated that “this is clearly not
sustainable”302 and said that between 2009 and 2014 ‘cost
efficiencies’ would “allow the subsidy requirement to return closer to
historic levels”:
It has been the taxpayer who for the past several years has
funded expenditure increases … As Network Rail brings costs
back under control, it is right that the demands on taxpayers
should also ease.
The balance of the investment programme is met from debt
funding. Since the costs of servicing this debt will accrue over
the entire asset life of the enhancement, there is an element of
‘beneficiary pays’ to this approach. It would not be appropriate
to expect today’s taxpayers and fare payers to bear the entirety
of the up-front costs of new trains and new infrastructure which
will benefit future generations […]
The increasing ability of the rail industry to operate without a
high level of dependency on the taxpayer is welcome. However,
it is important to note that very few railways in the world operate
297
op cit., Realising the Potential of GB Rail: Final Independent Report of the Rail
Value for Money Study, p286
298 op cit., Rebuilding Rail, p18
299 DfT, Delivering a Sustainable Railway, Cm 7176, July 2007, p123
300 SRA, Fares review conclusions, June 2003, appendix C
301 ibid., p126
302 ibid., p126
Number 7177, 13 May 2015 96
wholly without subsidy. It is unlikely that Britain’s railway will be
an exception to this rule.303
In its 2012 command paper the Coalition Government stated its
intention to bring down taxpayer and fare payer funding for the
railway: “we will reduce and then put an end to above-inflation rises in
average regulated fares, as well as relieving pressure on taxpayer
funding”.304 Information published by the regulator in February 2015
showed that passengers have contributed an increasing proportion of
the rail industry's income relative to taxpayers over the past four
years – up from 55.6% in 2010-11 to 61.5% in 2013-14.305
Are the rail management and governance structures fit
for purpose?
There are three main areas of concern with regards to rail
governance: whether the Department for Transport has the capacity
and experience to properly manage rail franchising; whether Network
Rail, as currently structured, is ‘fit for purpose’; and whether the
regulator has enough ‘teeth’.
In his 2011 report on rail value for money, Sir Roy McNulty said that
the rail delivery framework was ‘complex’ and that, arguably, this:
… has adverse effects on attitudes and relationships, and
engenders significant additional costs in recording and
negotiating the various rights, remedies and compensations
provided for within it. These adverse effects are exacerbated by
… weaknesses … in terms of interfaces that do not work well,
incentives that are misaligned, and the relationships and culture
within GB rail.306
The Department for Transport (DfT) has come under particular
criticism for its capability. McNulty said in 2011 that the Government
(largely but not exclusively meaning DfT) should be clearer about its
rail policy, “harmonise between different strands of policy, and make
clear the links between the different levels of policy, objectives,
strategies and implementation”.307 Much of the recent criticism of DfT
came in the wake of the failed re-let of the West Coast franchise in
2012 (see section 6.3, above). In his January 2013 report on rail
franchising Richard Brown recommended that the key priority for the
DfT was to “rapidly strengthen its franchising organisation, including
bringing in a number of senior, commercially experienced people” as
there was “a sharp asymmetry between the experience and capability
of bidders and that of the Department’s franchising teams”.308
303
ibid., pp127-9
DfT, Reforming our Railways: Putting the Customer First, Cm 8313, March 2012,
p12
305 ORR press notice, “Rail regulator publishes industry financials report for 2013-14”,
16 February 2015
306 Sir Roy McNulty for DfT/ORR, Realising the Potential of GB Rail: Final
Independent Report of the Rail Value for Money Study – summary report, May
2011, p38
307 ibid., p40
308 op cit., The Brown Review of the Rail Franchising Programme, p7; the
Government agreed with and implemented these recommendations, see: DfT,
Government Response to the Brown Review of the Rail Franchising Programme,
Cm 8678, July 2013
304
97 Transport 2015
Brown, Laidlaw and the DfT all agreed post-West Coast that the
Department’s organisational structure was not fit for purpose and
needed to be restructured so that one senior individual be responsible
for specifying and procuring all rail franchises. This individual should
be supported by “a greatly strengthened programme management
capability” and, together, “the resulting franchising team should be
structured as a discrete organisational unit” within DfT.309
Furthermore, and in Brown’s view more profoundly, the capability and
experience of the people involved needed to be ‘substantially
strengthened’, to which end the DfT should bring in “a range of
experienced individuals, with senior level experience in areas such as
procurement and commercial negotiation, finance and programme
management”.310
In March 2015 the Public Administration Select Committee published
a report on Civil Service skills: it cited DfT post-West Coast as a
salutary example. Director General for Rail, Clare Moriarty, told the
Committee that one of the main lessons learnt by the Department
“was that we simply did not have the dedicated resource”, and that in
terms of change, every franchise competition “now has a franchise
project team leader at a senior level. We have fully staffed and
dedicated teams for each franchise competition. We have our
financial, legal and technical advisers in place”.311 However, while DfT
were publically expressing confidence in the corrective steps that they
had taken, PASC cited recent criticism from the National Audit Office
(NAO) on DfT capability to deliver Crossrail and procure trains. As a
remedy, PASC stressed the importance of “an honest appraisal of
where skill gaps lie” across the whole Civil Service, and
recommended that the Cabinet Office ask the NAO to carry out a Civil
Service wide skills audit on a regular basis to “ensure that results are
robust and based on an honest and realistic appraisal of current
departmental capabilities”.312
Network Rail (NR)313 was criticised by McNulty for its large size,
operation as a single unit and "heavily-centralised decision-making,
its often complex and rigid processes, together with a culture which
could at times seem arrogant and insufficiently concerned about the
needs of its customers”.314 McNulty supported NR’s plans to move
towards a more devolved and decentralised structure for its
operations while achieving economies of scale by maintaining some
central infrastructure management functions, such as procurement
and heavy plant. However, more fundamentally, McNulty did not see
why devolved infrastructure managers needed to be controlled by a
single company. He argued:
309
ibid., p55
ibid., p57
311 PASC, Developing Civil Service Skills: a unified approach (fourth report of session
2014–15), HC 112, 17 March 2015, para 22, p12
312 ibid., paras 25-7, p13
313 for further information on NR, see HC Library briefing paper SN2129
314 op cit., Realising the Potential of GB Rail: Final Independent Report of the Rail
Value for Money Study – summary report, p36
310
Number 7177, 13 May 2015 98
Indeed, there are many advantages to diverse ownership or
management. Most of NR’s current operating routes are
comparable in size and activity to many smaller European
networks, and the ability to benchmark the efficiency of
domestic comparators would further strengthen competitive
pressure for affordability and efficiency.
Accordingly, consideration should be given to the central NR
structure being more like a holding company, with route-level
concessions operated by its subsidiaries or managed by other
organisations [… and] that one route-level concession should
be let to an independent asset management company by
2014/15.315
In the event, NR was reclassified as a central government body in the
public sector; the main effects of this are that NR’s debt (estimated to
reach £50 billion by 2019) has moved onto the Government’s balance
sheet and the Government is able to exert more direct control over
pay and strategy. This took place on 1 September 2014. Prior to the
reclassification in 2014 there had been calls for NR’s corporate
structure to be overhauled. These largely date back to 2008; for
example ‘the People’s Rail’ campaign led by the Co-operative Party
called for NR Members to elect a Members Council which would
replace the role fulfilled by the Membership and questioned whether
the system was open to cronyism and institutional inertia;316 and the
Transport Select Committee repeatedly questioned how NR was
run.317
Before the 2010 election, both the Conservatives and the Liberal
Democrats had promised to reform NR in some way.318 The Coalition
Agreement, published in May 2010, stated the Government’s
intention to “make Network Rail more accountable to its
customers”.319 In the event, the Government’s March 2012 rail reform
command paper stated that the Government would continue to
encourage NR and the industry as a whole to develop governance
reforms which protect taxpayer interests; allow customers to hold NR
to account; promote the passenger interest; and support an ‘effective
remuneration policy’.320
Prior to the 2015 election Labour said that if elected it would “bring
Network Rail and a new passenger rail body together to coordinate
track and train operations, and look after passengers”.321
315
ibid., p48
Co-operative Party, The People’s Rail: a mutually run, publicly accountable
Network Rail, July 2008, executive summary
317 Transport Committee, The future of the railway (seventh report of session 200304), HC 145, 1 April 2004, para 59; and: Transport Committee, Delivering a
sustainable railway: a 30-year strategy for the railways? (tenth report of session
2007-08), HC 219, 21 July 2008, paras 63-64 & 66
318 see, e.g. Liberal Democrats, Liberal Democrat Manifesto 2010, April 2010, p78;
Conservative Party, Invitation to join the Government of Britain: the Conservative
manifesto 2010, April 2010, p24; and Conservative Party, Conservative rail
review: getting the best for passengers, February 2009, section 4.2
319 op cit., The Coalition: Our Programme for Government
320 op cit., Reforming our Railways: Putting the Customer First, para 4.54
321 Mary Creagh speech to Labour Conference, 23 September 2014
316
99 Transport 2015
Finally, for several years concerns have been expressed about the
power of the regulator322 to properly sanction NR. Specifically, what
real penalty it is to ‘fine’ NR when it is a public sector company (i.e.
money is moved from NR via a regulatory fine to the Treasury, which
in turn provides funding for NR). This came to the fore again in early
2015 when the regulator found that NR had breached its licence with
regards to the severe disruption to the network caused by
engineering overruns in December 2014 at King’s Cross and
Paddington stations but decided not to impose a fine.323
More broadly, McNulty recommended in 2011 a move towards a
single regulator for the rail industry as a whole, to provide greater
clarity between the roles of Government and the regulator:
… on the basis that the setting of policy direction and the
making of politically-sensitive trade-offs between high-level
objectives is clearly the role of Government, whereas the dayto-day regulatory decisions are made by the independent
regulator, the ORR.324
McNulty envisaged that the regulator might take on the regulatory role
in relation to franchises and possibly, at some point in the future, in
relation to fares, as well as regulating cross-industry outcomes,
general passenger-facing obligations, and reviews of outputs and
franchise contract changes for train operators. The DfT would
continue to handle procurement of franchises under this scenario. In
order to do this McNulty was of the view that the regulator have the
resources, skills and standing necessary to fulfil such a wider role.325
In the event, this never happened, though in April 2015 its remit was
extended from railways to cover strategic highways. To this end it
was renamed the Office of Rail and Road, retaining its ‘ORR’
acronym.
Why are there so many ‘Direct Awards’?
The current profusion of Direct Awards are a direct result of the failed
2012 West Coast re-let (see section 6.3, above). The nature of these
awards varies, but what they mean, in effect, is that the Government
negotiates directly with the incumbent operator; there is no
competition for the award. The former Rail Minister, Simon Burns,
explained the process in a May 2013 letter to the Chair of the
Transport Select Committee:
In negotiating and approving each direct award, the Department
uses a comparator to assess what is reasonable. For previous
direct awards, where the contractual terms remained broadly
the same as for the previous contract, the start point has been
the preceding contract and the outturn for costs and revenues.
The assessment of Value for Money in the Direct Awards that
form part of the overall franchising programme is therefore done
322
for more information on the regulator, see HC Library briefing paper SN2071
ORR, Office of Rail Regulation investigation report: Disruption caused by
engineering overruns on 27 and 28 December 2014 at King’s Cross and
Paddington stations, 12 February 2015
324 op cit., Realising the Potential of GB Rail: Final Independent Report of the Rail
Value for Money Study – summary report, p67
325 ibid., p67
323
Number 7177, 13 May 2015 100
on an increment/decrement basis against the current provision
from the existing operator.
We work with Technical Advisors to build a comparator model
based on the current and projected performance of the
franchise. The submissions from the incumbent for the Direct
Award are then compared to this model and challenged where
appropriate to bring them into an affordable and value for
money position.326
The DfT’s guidance gives further information. On the general
principles of making Direct Awards, it states:
The direct awards help to manage and sustain a realistic and
properly resourced programme of Franchise Competitions and
a healthy bidding market for those competitions. In entering into
such direct awards, the Department is conscious that the
commercial terms have not been tested through a procurement
competition. Domestic and European law helps in this by setting
out a specific legal framework for “public service contracts”
(which encompass rail passenger services) which is intended to
ensure that the terms are economically efficient so that the
taxpayer (and fare-payer) is not over-paying for services.
Should appropriate terms not be achievable, the Department
will call upon contingency measures rather than enter into a
Direct Award.327
The rail franchising schedule shows the proliferation of Direct Awards:
of the 16 franchises managed and let by DfT, to October 2014 the
Government had made seven Direct Awards and was anticipating
making six more between 2014 and 2020. This means that 12 of the
16 franchises would be subject to re-let without open competition
(Great Western counts twice).328
It seems unlikely that there would be any desire on the part of the
Conservative Government to move away from this and to retender
some of those franchises currently scheduled for Direct Awards. In
principle, though, this might be possible. There are four franchises
currently slated for Direct Awards that could be refranchised, though
the timetable on two of them is probably too tight: East Midlands
Trains in October 2015 and London Midland in April 2016; in the
longer term the Direct Awards for Cross Country (October 2016) and
South Western (February 2017) seem far enough away for a full and
fair refranchising process to take place. Whatever the Government
were to decide it would want to make a decision relatively quickly to
give clarity to the industry and allow it to plan for the long term.
Can anyone ‘guarantee’ a public sector operator under
the current system?
As indicated above, the Labour Party and others proposed
reintroducing the right of public sector bodies to bid for franchises.
They argued that this would provide a ‘public sector comparator’ for
the privatised industry. As indicated above, while this is now off the
326
Simon Burns letter to Louise Ellman, May 2013
DfT, Rail franchising direct awards process guide, 31 October 2014, p1
328 op cit., Rail franchise schedule
327
101 Transport 2015
agenda as far as England is concerned, it remains a proposal for
Scotland under the Smith Commission recommendations.
However, there is no obvious reason why allowing public sector
bodies to bid for franchises would result in one winning a bid and then
operating one. The barriers to a public body both practically (rather
than legally) being able to bid for, and then win, a franchise are
potentially very high. All we can say with any certainty is that a public
sector body could legally bid for a franchise, whether one could in
practice and second, whether it would have any chance of winning a
franchise, is another question and one we have no precedent for.
First is the question of the cost of bidding for a rail franchise – which
in the case of a public service operator would be borne by the
taxpayer: estimates vary from about £5 million to £14 million.329
According to Christian Wolmar bidding also requires the involvement
of around 30-40 professional staff, with around half a dozen
employed full time for the duration, which is unlikely to be much short
of a year.330 In order to qualify as a bidder for a rail franchise a body
has to specify certain criteria required under EU public procurement
rules (e.g. experience, health and safety and capital requirements).331
Wolmar says:
For any hope of success – indeed, even to prequalify – a
franchise bidder would be required to show that they had
secure financial backing, would need to ensure that the
government would agree to their selection as a shortlisted
bidder and would have to have an experienced team of
managers, both to deliver a winning bid and to establish a new
operating company.332
More fundamentally there is the issue of ‘Chinese walls’, i.e. ensuring
that where a state-owned company is bidding for a franchise against
private companies, that the body which awards the franchise is
sufficiently separate from the public sector bidder for the private
bidders to have confidence that the process has been free and fair.
This would likely be satisfied by a separation or ‘hiving off’ of one or
both of these functions to another Government department, agency or
body.
Should franchising be devolved?
As set out in section 3, above, there is a growing trend to devolve
transport decision-making and management to the lowest possible
level. This includes the letting and management of rail franchises.
However, progress in this area in England has been slow. Devolution
is already working in some areas – notably Scotland, London and
329
the higher figure was cited by Martin Griffiths, Co-Chair of Virgin Rail Group, when
he gave evidence to the Transport Committee on the fallout of the failed West
Coast re-let in 2012 (see above); in the same session Sir Richard Branson said
that Virgin had spent ‘over £50 million’ on four bids, two for the East Coast Main
Line and one each for CrossCountry, and the West Coast Main Line, from: Oral
Evidence: 10 September 2012, Ev 81 of HC 329-II, Qq477
330 op cit., Co-operative rail: a radical solution, p18
331 see, e.g. DfT, Rail Franchising: East Anglia Pre-Qualification Questionnaire,
February 2015
332 op cit., Co-operative rail: a radical solution, p19
Number 7177, 13 May 2015 102
Merseyside – but the question or how much further it will go is open
to debate and particularly in England it will depend on the appetite of
the Government not only to give regions franchising powers but to
reform how regional rail services are subsidised (some routes
currently receive a significant cross-subsidy from premium payments
made by other operators).333
In Scotland, the Scottish Government has responsibility for
specifying and letting the ScotRail franchise and the new Caledonian
Sleeper franchise (hived off from the ScotRail franchise in 2015).334
The Smith Commission (see above) proposed that the power to allow
public sector operators to bid for rail franchises funded and specified
by Scottish Ministers be devolved to the Scottish Government. In
practical terms, the Scottish Government has just let new franchises
for ScotRail and the Caledonian Sleeper to 2025 and 2030
respectively. Thus this power would in all likelihood remain unused for
the next decade (possibly sooner were a franchise to be terminated
early for some reason).
In Wales, the Welsh Government is a co-signatory to any franchise
that is a Wales-only service or includes ‘Welsh services’ (i.e. any rail
passenger service that starts in Wales, ends in Wales or makes at
least one scheduled call in Wales). In effect, this is only the Wales &
Borders franchise. The Welsh Government is responsible for
determining the priorities for local and regional services and setting
fares for them. It also has a greater role in developing facilities such
as stations and local lines and funding rail improvements. As
indicated above, the Silk Commission recommended that the Welsh
Government should have a greater role in the consultation process
for appointing a new franchise operator for the inter-city cross-border
rail franchises (Great Western, CrossCountry and Virgin Trains) and
that the Wales & Borders franchise be fully devolved (this might
require some redrawing of the franchise boundary and the services it
contains).335 In its St David’s Day Agreement the Coalition
Government confirmed this would proceed, with the Welsh
Government taking over procurement for the Wales & Border
franchise in 2018 and that “it is likely that services primarily serving
English markets will be placed into other franchises for which the
Secretary of State for Transport is the franchising authority”.336
In London, Transport for London (TfL) and the Secretary of State are
required to co-operate on rail matters, including a requirement that
the Secretary of State must consult TfL before issuing a rail franchise
Invitation To Tender (or when entering a franchise agreement for
which an ITT has not been issued) for railway passenger services to,
333
op cit., Government support to the rail industry by TOC - Table 1.7
full details can be found on the Transport Scotland website [accessed 28 April
2015]
335 op cit., Empowerment and Responsibility: Legislative Powers to Strengthen
Wales, pp70&73
336 op cit., Powers for a Purpose: Towards a Lasting Devolution Settlement for Wales,
p31
334
103 Transport 2015
from or within London.337 In July 2007 the DfT announced that TfL, as
part of the franchise specification process, would be able to propose
and pay for extra train services or improvements to stations on a
number of ‘inner suburban’ routes within the Greater London
boundary.338 More recently, the current Mayor of London, Boris
Johnson, stated that he would like to see TfL assume responsibility
for more inner suburban services in London, specifically two groups
of services: to the north-east of London, services that are part of the
Greater Anglia franchise, and in South East London, local services
that are part of the Southeastern franchise.339 In February 2015 the
Chancellor, George Osborne and Mayor Johnson announced that TfL
would take over rail services between Liverpool Street, Enfield Town,
Cheshunt (via Seven Sisters) and Chingford and gain control of most
of the stations servicing those routes.340
As to England, there have been proposals for regional devolution of
franchises for many years. Under the Railways Act 1993 the PTEs
were co-signatories to the franchises which covered their areas.
Labour made some changes in this area in 2005, following concerns
that PTEs were not directly exposed to the consequences of their
decisions on fares and service levels. Sections 13 and 14 of the
Railways Act 2005 gave PTEs greater flexibility to make a choice
between rail and other modes of transport in their areas if rail services
offered poor value for money; and removed the PTEs from being
direct parties to franchise agreements.341
In his 2011 report McNulty was of the view that there was still too high
a degree of central government involvement in rail franchising. He
recommended that there be greater localism, with more involvement
in England of local authorities and/or PTEs, with “local decisionmaking brought more closely together with budget responsibility and
accountability”.342 In his later 2013 report Richard Brown also
recommended further devolution of English franchises to the relevant
authorities.343
However, progress has been sluggish. In its March 2012 command
paper, the Coalition Government stated that it would look at devolving
more responsibility for English rail franchises to local areas and
published a consultation document to that end. It was limited in
TfL’s rail powers are set out in section 175 of the Greater London Authority Act
1999, as amended and sections 15-17 of the Railways Act 2005
338 HC Deb 18 July 2007, cc23-25WS; and DfT, Guidance on the role of Transport for
London in the Department for Transport's rail franchising process, July 2007
339 DfT, Rail Decentralisation - Devolving decision-making on passenger rail services
in England: Consultation Responses, November 2012, para 3.20
340 HMT press notice, “Long term economic plan for London announced by
Chancellor and Mayor of London”, 20 February 2015
341 for more information on the role of PTEs, see: DfT, The new system for the role of
English PTEs in the rail franchising process, July 2006; the Merseyside PTE,
Merseytravel, is in a different position, as the Merseyrail network was exempted
from the franchising requirements of the 1993 Act by Order, allowing
Merseytravel to let a concession to run the services (Merseyrail Electrics Network
Order 2002 (SI 2002/1946))
342 op cit., Realising the Potential of GB Rail: Final Independent Report of the Rail
Value for Money Study – summary report, p47
343 op cit., The Brown Review of the Rail Franchising Programme, paras 5.5-5.6
337
Number 7177, 13 May 2015 104
scope, arguing that DfT should retain responsibility for safety and
security, accessibility, performance on the strategic rail network;
national ticketing policy/strategy; and ‘connectivity enhancements
benefiting primarily strategic rail services’.344 It also argued that only
category E services (i.e. services linking smaller towns and rural
areas with larger towns, cities and the inter-city rail network) were
suited to decentralisation, possibly with a limited number of category
D services (i.e. local services conveying people into the major cities
and conurbations across the country).345
The paper envisioned this sort of decentralisation being delivered by
what it called ‘local transport consortia’, comprised of Local Enterprise
Partnerships (LEPs), local authorities and/or PTEs. These bodies
might end up being cosignatories to a franchise or they could buy
local enhancements to the base specification of the franchise. This
power currently exists but has been little used – probably because
these enhancements have to be locally funded in perpetuity.346
Responses to the consultation were published in November 2012.
They were broadly in favour of more local control of rail franchising.
The Department concluded that it remained “committed to seeking to
implement an appropriate form of decentralisation in those parts of
England where it is sensible to do so” and that it would therefore
“continue informal discussions with those bodies who have submitted
proposals or firm expressions of interest”.347 Nothing happened
between then and General Election 2015, although in 2014 reports
emerged stating that DfT had blocked a proposal by local authorities
in the West Midlands to take full responsibility for the management of
local rail services from 2017 or to award the local franchise as a
management contract or ‘concession’ (as in London and
Merseyside).348
Do EU rules prevent nationalisation?
There is a commonly-held belief that EU law ‘bans’ the
renationalisation of the rail network. This is a misconception: the
current laws do not prevent the state owning and managing the rail
infrastructure and (separately) operating train services – this model is
commonly employed in other Member States. There are currently
proposals being discussed to create stricter separation between the
two, but the Council and the Parliament do not agree on the direction
to take.
The relevant EU law is Directive 2012/34/EU. This is the recast First
Railway Package, agreed in 2012. The provisions therein that have
often been misconstrued as preventing renationalisation derive from
Directive 91/440/EEC, agreed in July 1991. These provisions require
that Member States grant rail companies independence from
344
DfT, Rail Decentralisation: Devolving decision-making on passenger rail services
in England, March 2012, para 4.4
345 ibid., paras 4.22-3
346 ibid., paras 4.36-4.47
347 DfT, Rail Decentralisation - Devolving decision-making on passenger rail services
in England: Consultation Responses, November 2012, section 4
348 “McLoughlin thwarts West Mids’ , Local Transport Today, LTT 644, 4 April 2014
105 Transport 2015
government and introduce commercial management techniques; and
separate the management of infrastructure from the management of
train services. They sought to introduce greater financial discipline
and more operational competition both nationally and across borders.
National railways were pressed to separate track infrastructure from
train operations or, at the very least, to produce transparent accounts
revealing the respective costs and revenues attributable to
infrastructure and to services.
The 1991 Directive did not require that infrastructure and services be
managed in different institutions, nor even in distinct divisions within
the same institution, but it did stress that this was possible. It was left
up to each Member State to decide how they wished to organise their
railways but it had to be possible to attribute costs. In the UK the then
Conservative Government decided to separate track and trains via
privatisation, putting both into the private sector; no other EU country
took this route.349
There was some expectation more recently that the European
Commission might push for a permanent and legislative separation of
infrastructure from services and mandate competition for services as
part of the Fourth Railway Package. This came about because the
Commission had some legal difficulties with those countries which, to
its mind, had not sufficiently separated infrastructure and services
provision, as required under the First Package. European courts
struck down this view, most recently in regards to Germany in 2012,
but also in Austria, Spain, Hungary and Portugal.350 Both Deutsche
Bahn and SNCF (the state-owned rail companies in Germany and
France respectively) queried whether further market liberalisation
would actually harm rail services. They argued that research into rail
markets outside the EU concluded that “common management of
railway infrastructure and exploitation (an integrated model) helps
improve rail performance”.351 Rail unions expressed similar
concerns.352
The Commission consequently acknowledged that it could “accept
that a vertically integrated or ‘holding structure’ may also deliver the
necessary independence, with strict ‘Chinese walls’ to ensure the
necessary, legal, financial and operational separation”, stepping back
from the position it took in bringing the cases above to court.353
The European Parliament subsequently diluted the ‘market pillar’ of
the Fourth Package: it endorsed the introduction of a right for
European railway undertakings to offer commercial domestic
349
for a summary of the infrastructure management of and private sector involvement
with other EU rail systems, see annexes 18 and 19 of: EC, Fourth report on
monitoring development in the rail market, COM(2014) 353 final, 13 June 2014
350 “Advocate-general says German model legal”, Europolitics, September 2012, [No.
241]
351 “Deutsche Bahn and SNCF fear a hasty decision”, Europolitics, October 2012,
[No. 242]
352 e.g. ITF press notice, “European Transport Workers’ Federation denounces
railway plans”, 26 September 2012
353 EC press notice, “European Railways at a junction: the Commission adopts
proposals for a Fourth Railway Package”, 30 January 2013
Number 7177, 13 May 2015 106
passenger services in all Member States as from 2019, but
postponed competitive tendering procedures for public service
contracts to 2023 and made them subject to ‘very significant
exceptions’. In the Commission’s view the EP amendments also
failed to ensure “an effective independence of the infrastructure
manager and financial transparency within vertically integrated
structures which are essential to ensure an equal and nondiscriminatory access to the network”.354 The Package has
progressed no further.
Most recently the then Secretary of State for Transport, Patrick
McLoughlin, reported to Parliament on the first Transport Council
under the Latvian Presidency in March 2015. There was a policy
discussion on the Fourth Package, during which Mr McLoughlin “set
out the great success of our liberalised market and urged Member
States to grasp the opportunity of the market pillar to develop a true
single market for rail and support a vibrant, competitive and
sustainable rail sector across Europe”. He also reported that on the
governance model, “I had strong support from a range of Member
States for the approach that a truly separated model was the most
effective remedy against potential discrimination by the infrastructure
manager towards the railway undertakings, and that additional
regulation was not required in such cases”.355
EC Press notice, “Transport: European Parliament adopts equivocal first reading
position on fourth railway package”, 26 February 2014
355 HCWS431: EU Transport Council, 20 March 2015
354
107 Transport 2015
6. Policy focus 4: cycling
6.1 What’s the issue?
Cycling is on the increase
The number of cyclists is increasing: more than 5.1 million people in
England cycle at least once a week.356 Government road traffic
estimates suggest that in 2013 the distance travelled by bike was
12% more than the 2005–2009 average.357
Government is keen to encourage more cycling
While there has been an increase in cycling, it still only accounts for
2% of all journeys.358 British Cycling report that, for most of the
country, the growth in cycling has been due to an increase in leisure
cycling, which is more likely to take place off-road, or on quiet roads,
rather than more people cycling to work.359 In the majority of local
authorities in England the numbers of working residents cycling to
work declined between 2001 and 2011.360
In 2013 Prime Minister David Cameron called for a “cycling
revolution”, building on the success of Britain’s cyclists at London
2012 to encourage “far more people” to take up cycling.361 The
Coalition Government argued that increasing cycling would mean
“healthier, fitter citizens, less congested cities, less pollution and a
more productive workforce”.362 The Cyclescheme organisation
estimated that the NHS would save £2.5 billion if 10% of journeys
now made by car were made by bike by 2025.363 The All Party
Parliamentary Cycling Group said:
Too many people in the UK feel they have no choice but to
travel in ways that are dangerous, unhealthy, polluting and
costly, not just to their own wallets but also to the public purse.
Urgent action is required to address Britain’s chronic levels of
obesity, heart disease, air pollution and congestion if we are to
catch up with other countries in the developed world.
There is an alternative. When more people cycle or walk, public
health improves, obesity reduces and roads become safer. By
changing how people travel, we can create places where
people want to live, work, shop and do business. We can make
people healthier, happier and wealthier. We can reduce costs to
our NHS.364
The Commissioner of Transport for London, Sir Peter Hendy, argued
that investing in cycling could alleviate the forecasted pressure on the
356
DfT, Walking & Cycling Statistics; Table CW 0112, April 2014
DfT, Pedal Cycle Traffic: Table TRA 0401, June 2014
358 DfT, How People Travel (Mode): Table NTS301, July 2014
359 British Cycling, Evidence to the Transport Select Committee inquiry “Cycling
safety” (CYS 043), January 2014
360 ONS, 2011 Census Analysis - Cycling to Work, 26 March 2014
361 HMG press notice, “Government shifts cycling up a gear”, 12 August 2013
362 DfT, Cycling Delivery Plan, October 2014
363 “NHS will save billions if more cycle to work”, The Times, 30 March 2015
364 APPCG, Get Britain Cycling, April 2013
357
Number 7177, 13 May 2015 108
capital’s Underground and rail network resulting from the predicted
growth in population to nine million by 2020.365
The 2010 Coalition Agreement pledged to “support sustainable travel
initiatives, including the promotion of cycling”.366 The official target of
the Coalition Government for increased cycling was to double the
proportion of stages of journeys carried out by bike - from 0.8 billion
to 1.6 billion - by 2025.367 Using the metric of journey ‘stages’ enables
the Government to measure cycling when it is not the main mode of
transport for the journey, for example where the main part of the
journey is made by train, but a bike is used for the journey from home
to the train station. At present only 1% of all stages are by bike, and
the number of stages travelled by bike has figure has fallen by 25%
since 1995/96: from 20 bicycle stages per person per year, to 15
stages in 2013.368
In October 2010 the Government announced that Cycling England an independent non-departmental public body with a budget of £60
million per year - would be abolished in 2011, as part of the wider
‘bonfire of the quangos’. Cycling England had been tasked with
“working to get more people cycling, more safely, more often”.369 The
then Transport Minister, Norman Baker, told Parliament that:
… the Government's move towards localism, and particularly in
this regard the nature of the new Local Sustainable Transport
Fund, for which all local transport authorities outside London
are eligible to bid and for which we expect bids for cycling
related projects, means that the rationale for a body like Cycling
England has weakened.370
The then Secretary of State for Transport, Philip Hammond, said that
the decision did not reflect a lack of support for cycling as the
Government did not believe that “setting up a quango and maintaining
a quango is a measure of your commitment to an agenda”.371 Others
did not agree. For example, in 2013 the then Shadow Transport
Secretary, Maria Eagle, said the abolition of Cycling England was the
first of “policy after policy” which had set back the progress made on
cycling by the previous Labour Government.372
In its January 2011 local transport White Paper the Government set
out its intention to “encourage sustainable local travel and economic
growth by making public transport and cycling and walking more
attractive and effective”.373 The public health benefits of cycling were
noted as “considerable”, citing the experience of the Cycling
Demonstration Towns, in which the public health benefits outweighed
Mayor of London & TfL, The Mayor’s Vision for Cycling in London, March 2013
Cabinet Office, Public Body Review published, 14 October 2010
367 op cit., Cycling Delivery Plan, p5
368 DfT, National Travel Survey: England 2013, 29 July 2014, pp 6-7
369 Cycling England Who we are [accessed 5 May 2015]
370 HC Deb 14 March 2011, c99W
371 “Philip Hammond: Fuel duty cut won’t stop government being the greenest ever”,
The Guardian, 25 March 2011
372 HC Deb 2 September 2013, c126
373 DfT, Creating Growth, Cutting Carbon, Cm 7996, January 2011, p12
365
366
109 Transport 2015
the cost of the programme by a factor of three.374 The White Paper
pledged the Government’s continued support for the Bikeability
cycling training programme until 2015.375
The White Paper accompanied the launch of the Local Sustainable
Transport Fund (LSTF) - a £550 million fund available for local
transport authorities outside of London with the aim of changing
patterns of travel behaviour, and increasing the use of sustainable
transport methods.376 In evidence to the Transport Committee in 2014
the Department for Transport stated that “94 of 96 Local Sustainable
Transport Fund projects” included cycling, and highlighted that these
projects accounted for £535 million of Government funding. In
2013/14 29% of the LSTF funds were used specifically for cycling.377
Previous governments have also set ambitious targets for increasing
cycling, e.g. in 1996 the National Cycling Strategy set an objective to
double the proportion of cycle trips by 2002, and quadruple this figure
by 2012.378 While the real amount of cycling journeys did increase, as
a proportion of total journeys the figure stayed the same.
There are too many barriers to cycling
The key factor cited for the failure to get more people on their bikes is
safety: British Cycling have claimed that there are 2.75 million people
who want to cycle more than they do, but do not, as they feel the
roads are too risky.379 Two-thirds of non-cyclists—and half of all
cyclists—say that it is too dangerous for them to cycle on the road.380
Women are significantly more likely than men to say that the roads
are too dangerous for cycling. The level of concern also increases by
age group: three-quarters of those 65 and over view the roads as too
dangerous for cycling, compared to just less than half aged between
18 and 24.381 While noting the safety concerns, the Coalition
Government argued that “the health benefits of cycling significantly
outweigh” the risks.382
A lack of cycling infrastructure is seen as one of the main reasons for
safety concerns.383 Many cyclists have been campaigning for
segregated cycle lanes and changes to junction design: research by
Professor Colin Pooley has suggested that “most non-cyclists and
recreational cyclists will only consider cycling regularly if they are
374
ibid., p41
ibid., p41
376 ibid., p30
377 DfT, Local Sustainable Transport Fund Annual Report 2013/14, February 2015,
p10; see also: CBT, Strategic Economic Plans review, June 2014; and “West
Sussex and the LSTF money – Albion Way”, As easy as riding a bike blog, 7 April
2015;
378 for further information see HC Library briefing paper SN1097
379 op cit., Evidence to the Transport Select Committee inquiry “Cycling safety” (CYS
043)
380 DfT, British Social Attitudes Survey 2013: Public attitudes towards transport, July
2014, p 11
381 ibid., pp 12-13
382 DfT, Creating Growth, Cutting Carbon, Cm 7996, January 2011, p24
383 Ashok Sinha, Chief Executive of London Cycling Campaign has argued that the
“greatest dangers” that cyclists faced on the road are from “the poor quality of
infrastructure”, see: op cit., Cycling safety, 24
375
Number 7177, 13 May 2015 110
segregated from traffic”.384 Where cycle lanes have been introduced,
their quality has been patchy: starting and stopping unexpectedly,
and failing to deliver a coherent, consistent route.385
Driver behaviour is also seen as a safety issue, whether behind the
wheel of a lorry, car or bus. The Transport Select Committee received
evidence that in over half of all serious collisions between a vehicle
and a cyclist, the key cause was the driver failing to look properly.386
Cyclists have reported hostility and dangerous driving from motorists,
with some suggesting that “the single biggest contributor to poor
cyclist safety” was “driver behaviour and attitudes”.387
6.2 What has happened since 2010?
Fatalities
In 2013 the number of cyclist fatalities in Great Britain dropped from
its highest level for five years.388 The number of cyclists experiencing
serious injuries increased for the eighth successive year.389 Media
coverage of the 2012 figures, and the deaths of six cyclists in London
in a period of just a fortnight in November 2013 led to widespread
concern about the safety of cyclists.390
The rise in the number of cyclists, however, means that the proportion
of cyclists killed or seriously injured has fallen in recent years,
reducing the likelihood of death or serious injury for each journey.391
The rate of fatalities per billion miles travelled has been on a
downward trend overall (with occasional increases) since the mid1960s: 392
384
ibid., para 24
for examples see ibid., para 26
386 Transport Committee, Written evidence to Cycling Safety inquiry from Richard
Armitage, David Hurdle, Adrian Lord and Alex Sully, transport consultants
(CYS0128), January 2014
387 Transport Committee, Written evidence to Cycling Safety inquiry from Mark
Goddard (CYS0140), January 2014
388 DfT, Reported Road Casualties 2013: Annual Report, September 2014
389 op cit., The Coalition: our programme for government
390 op cit., Cycling safety, para 7
391 op cit., Reported Road Casualties 2013: Annual Report, p31
392 op cit., Written evidence to Cycling Safety inquiry from Richard Armitage, David
Hurdle, Adrian Lord and Alex Sully, transport consultants (CYS0128)
385
111 Transport 2015
Andrew Gilligan, the Mayor of London’s Commissioner for Cycling,
told the Transport Committee that even with the November 2013
deaths, the fact that only one journey in every 320,000 ended in
serious injury in 2012, compared to one in every 299,000 in 2002
meant that it was safe to cycle in London.393
External pressure driving cycling up the political
agenda
Over the course of the 2010 Parliament media coverage of cycling
deaths and serious injuries led to lobbying for central government to
do more to improve the safety of cycling. The Times newspaper
launched its ‘Cities fit for cycling’ campaign in February 2012,
following the severe injuries suffered by Mary Bowers, a journalist on
the newspaper, when she was hit by a lorry (the driver was later
convicted of careless driving) while cycling to work in November
2011.394 The centrepoint of the campaign was an eight point
manifesto to improve safety:
1. Lorries entering a city centre should be required by law to fit
sensors, audible turning alarms, extra mirrors and safety bars to
stop cyclists being thrown under the wheels.
2. The 500 most dangerous road junctions must be identified,
redesigned or fitted with priority traffic lights for cyclists and Trixi
mirrors that allow lorry drivers to see cyclists on their near-side.
3. A national audit of cycling to find out how many people cycle
in Britain and how cyclists are killed or injured should be held to
underpin effective cycle safety.
4. Two per cent of the Highways Agency budget should be
earmarked for next generation cycle routes, providing £100
393
394
op cit., Cycling safety, para 7
“Court verdict an insult, says father of Mary Bowers seriously hurt by lorry”, The
Times, 14 December 2012
Number 7177, 13 May 2015 112
million a year towards world-class cycling infrastructure. Each
year cities should be graded on the quality of cycling provision.
5. The training of cyclists and drivers must improve and cycle
safety should become a core part of the driving test.
6. 20mph should become the default speed limit in residential
areas where there are no cycle lanes.
7. Businesses should be invited to sponsor cycleways and
cycling super-highways, mirroring the Barclays-backed bicycle
hire scheme in London.
8. Every city, even those without an elected mayor, should
appoint a cycling commissioner to push home reforms.395
Cycling campaigners also called for Ministers to commit to long-term
funding to improve infrastructure, and to coordinate policies across
the different Government departments, such as Health, Education,
and Communities and Local Government. British Cycling policy
adviser and former Team GB gold medal-winning cyclist Chris
Boardman said:
Political leadership is the key here. Governments in countries
such as Holland and Denmark, who were headed in the same
direction as us in the 1970s, said “no” and created transport
policies that put people first, making cycling and walking their
preferred modes of transport in towns and cities.
And—in less than 40 years—look at the difference. We need
our Government to do the same, otherwise what is the
alternative?396
In spring 2013 the All Party Parliamentary Cycling Group (APPCG)
held an inquiry on the state of cycling, led by MPs Ian Austin, Dr
Sarah Wollaston and Julian Huppert. The APPCG published Get
Britain Cycling in April 2013, setting out a vision of “the full potential of
cycling to contribute to the health and wealth of the nation, and the
quality of life in our towns and local communities”. The APPCG called
for people of all ages and backgrounds, in urban and rural areas to
cycle and for changes to the culture of roads and communities to
remove the fears associated with cycling.397 The APPCG
recommended a range of measures, including: a cycling budget of at
least £10 per person per year, increasing to £20; funding be allocated
from a plethora of bodies, not just DfT; more account be taken of
cycling when planning roads and communities; cycling along the
strategic road network be easier; speed limits be lower; HGVs be
made safer; traffic laws be properly enforced; and proper cycle
training for children.398
The House of Commons debated the report in September 2013.399
The Transport Select Committee published a report on cycling safety
in July 2014. It endorsed the APPCG’s recommendation for £10 per
“Cities fit for Cycling manifesto”, The Times, 28 March 2012
“The way we travel now is killing us. We’re the fattest people in Western Europe”,
The Times, 24 April 2013
397 APPCG, Get Britain Cycling, April 2013
398 ibid.
399 HC Deb 2 September 2013, cc66-134; and: APPCG press notice, ““Implement the
recommendations now” 100 MPs tell Parliament”, 3 September 2013
395
396
113 Transport 2015
head per year of Government spending on cycling infrastructure, to
be reached by 2020 and urged DfT Ministers to champion cycling
across Government.400
In October 2014 the Government published in draft a plan to increase
cycling and walking levels. While publication of the plan was
welcomed, particularly as it was a year behind schedule, its contents
were criticised for falling far short of the APPCG recommendations.
The primary complaint concerned the Government’s funding
‘aspiration’ of:
… working with local government, and businesses, [to] together
explore how we can achieve a minimum funding packet
equivalent to £10 per person each year by 2020-21 – and
sooner if possible.401
Paul Tuohy, Chief Executive of cycling charity CTC, described it as “a
derisory plan not a delivery plan”, and argued that the Prime
Minister’s plans for a ‘cycling revolution’ would be ‘going nowhere’
unless sufficient funding was secured.402 Sustrans, the sustainable
transport charity, criticised the ‘aspiration’ to achieve a funding level
of £10 per head, and called for the Government to commit to at least
this figure, to be delivered through existing funding arrangements.403
While out for consultation the draft cycling plan was superseded by a
grassroots campaign to amend what became the Infrastructure Act
2015, to require the Government to produce a Cycling and Walking
Investment Strategy for England, setting out not only the
Government’s ambitions, but also how they would be funded.
Although the Government resisted this throughout the initial stages of
the Bill, it changed its mind and inserted the provision into the Bill in
January 2015.404
The Bill received Royal Assent in February 2015, and as a result,
funding for cycling and walking will be allocated on the same longterm basis as currently applies for the railways and the motorways
and main A roads which make up the Strategic Road Network.
Funding has increased
The Prime Minister’s ‘cycling revolution’ pledge was accompanied by
what the Government described as “biggest ever single injection of
cash” for cycling: £148 million over a two year period.405 There were
further announcements of new funding for cycling; for example, the
Cycle City Ambition Grants; Bikeability schemes; and funding for
cycle parking at railway stations.
Cycling campaigners welcomed these schemes, but criticised cycling
funding overall as sporadic and insufficient. Chris Boardman told the
400
op cit., Cycling safety, para 62
DfT, Cycling Delivery Plan, October 2014
402 CTC, “Government cycling strategy ‘a derisory plan not a delivery plan’”, 16
October 2014
403 Sustrans, “Parliamentary cycling debate calls for investment to get Britain on
bikes”, 16 October 2014
404 HC Deb 26 January 2015, cc695-79; a letter from the then Transport Minister,
John Hayes, explained why the Government changed its mind [DEP 2015-0096]
405 HMG press notice, “Government shifts cycling up a gear”, 12 August 2013
401
Number 7177, 13 May 2015 114
Transport Select Committee in February 2014 that the funding
provided for cycling had been “very short term and as one-offs”.406
British Cycling estimated in 2014 that current spending on cycling by
the Government was just £2 per head: far lower than the £10 per
head that it viewed as necessary to increase cycling levels.407
6.3 What do cyclists want?
Safer cycling infrastructure
Ahead of the general election cycling campaign groups listed their
main priorities for political support. British Cycling’s #ChooseCycling
network a consortium of businesses including Santander, Sky,
GlaxoSmithKline and The AA set out four commitments it wanted
from the party leaders:
1. Fulfil the requirements of the Infrastructure Act to create an
adequate Cycling and Walking investment strategy with clear
and ambitious targets by 2016.
2. A commitment to invest 5% of Britain’s combined transport
spend every year into designing cycling back into our roads and
junctions.
3. Setting a meaningful target, to make cycling account for 10%
of all trips by 2025.
4. The creation and distribution of uniform design guidance –
put together in consultation with world experts - to be followed
by all local authorities by 2016.408
The CTC ‘Vote Bike’ campaign listed the key policies it asked
prospective parliamentary candidates to support:
Ambition: increase levels of cycling to 10% of trips by 2025 and
25% by 2050.
Funding: an average government spend of at least £10 per
person per year on cycling.
Design standards: create consistently high design standards for
cycling in all highway and traffic schemes, new developments
and planned road maintenance work.
Safety: Measures to improve cycle safety by strengthening road
traffic law and its enforcement and revising the Highway Code.
Positive promotion: support positive promotion of cycling,
including cycle skills training, for people of all ages,
backgrounds and abilities.
The Space for Cycling campaign was launched by the London
Cycling Campaign in 2013, and adopted nationally by the cycling
charity CTC in 2014. The campaign called for local councillors and
transport planners to enable people of any age or ability to travel
door-to-door in safe, convenient and enjoyable cycling conditions.
The campaign suggested six measures to help achieve this vision,
including protecting space on main roads; removing through-traffic in
406
op cit., Cycling safety, para 56
op cit., Evidence to the Transport Select Committee inquiry “Cycling safety” (CYS
043)
408 British Cycling press notice, “Major British businesses urge politicians to
#ChooseCyling”, 20 March 2015
407
115 Transport 2015
residential areas; lower speed limits; cycle-friendly town centres; safe
routes to school; and routes through green spaces.409
There were also calls for the Government to set a national design
standard for new cycling infrastructure. The Institute for Civil
Engineers called for “national direction and leadership … to be
provided on design guidance”, stating that, “the actions that local
highway authorities (and the Highways Agency) take stem directly
from the direction and leadership that they see emanating from
central government”.410 The Coalition Government rejected this
argument, stating that it wanted to: “encourage a combination of
measures aimed at ensuring good design - this includes, the sharing
of good practice designs which the Cycle Proofing Working Group will
take forward in delivering”.411
In evidence to the Transport Committee many cyclists argued that
where cycle lanes had been introduced by local authorities, they “very
rarely” conformed to the Department’s design guidance.412
Reformed ‘rules of the road’
British Cycling has sought changes to the justice system “to protect
and support vulnerable road users”.413 The ‘Road Justice’ campaign,
led by CTC and the Cyclist Defence Fund (CDF), has also called for
better policing of traffic collisions; better charging and prosecution;
and sentences that “reflect the severity of the offence and discourage
bad driving”.414
Cyclists have highlighted cases in which they believe one or more of
these factors has not been in place. The CDF, which provides
“support in legal cases which could clarify the law” relating to cyclists,
reported on the decision of a jury to clear a driver of causing the
death of an eighteen year old cyclist, Daniel Squire. The driver had
admitted using his phone shortly before the fatal collision, and the
CDF queried the decisions made in the case by the police and
prosecution.415 In a separate case, the CDF is supporting the family of
cyclist Michael Mason who was hit from behind by a driver in
February 2014 and died the following month. The Metropolitan Police
did not refer the case to the Crown Prosecution Service, in what Mr
Mason’s family described as a “travesty of justice”.416
Cycling campaigners have also highlighted a decline in the number of
prosecutions for death by dangerous driving, following the
introduction of the lesser charge, death by careless driving. Roger
Geffen, CTC Campaigns and Policy Director said:
409
CTC, Space for Cycling: A guide for local decision makers, 30 April 2014
op cit., Cycling safety, para 27
411 DfT, Response to the consultation on the Draft Cycling Delivery Plan, March 2015,
p11
412 op cit., Cycling safety, para 27
413 British Cycling, Time to #choosecycling, February 2014
414 Road Justice, The role of the police, June 2013, p2
415 “An incomprehensible travesty of justice”, CDF blog, 27 March 2015
416 “Family of cyclist killed in road crash hits out at police who gave false hope of
prosecution”, London Evening Standard, 19 March 2015
410
Number 7177, 13 May 2015 116
Although the newer offence allows for stiffer penalties in cases
which were previously treated as nothing more than “careless
driving” (i.e. with the death often not even being mentioned in a
magistrates court trial), it has also led to a massive decline in
the CPS’s willingness to prosecute for ‘dangerous’ driving
offences, exactly as CTC warned.417
However, one should note that one of the reasons for introducing the
causing death by careless driving charge was the evidential difficulty
of proving ‘dangerous’ driving. The hope was that this would allow
more successful prosecutions overall for a ‘causing death’ driving
offence.418
Separately, CTC called for employers and contractors to be held to
account when they employ unlicensed or unsafe drivers. In April
2015, Barry Meyers, an unlicensed HGV driver who had received five
driving bans, and had been convicted of drink-driving and driving
while disqualified, was found guilty of death by careless driving. Mr
Meyers had jumped a red light when he hit cyclist Alan Neve in
London in 2013.419 Cynthia Barlow of road safety charity RoadPeace
also called for people with repeated driving convictions to be banned
from driving HGVs.420
In the past, cyclists have also called for reforms to the Highway Code
to make cycling safer and changes to liability rules so that motorists
are automatically responsible for accidents involving cyclists.421
6.4 What about other road users?
Pedestrians
Policies for promoting cycling and walking are often presented
together by the Department for Transport under the banner of ‘active
travel’. However, there can be difficulties with this approach. One
difficulty posed by considering cycling and walking together is that
there can be a conflict between the two. Pedestrians report
frustrations with cyclists failing to stop at red lights, or cycling on the
pavement. The charity Living Streets (formerly known as the
Pedestrians’ Association) has noted that while cycling on the
pavement was often due to cyclists being too scared to cycle on the
roads, the behaviour caused “great distress in particular to older or
infirm pedestrians”, adding that:
In some cases, evidenced anecdotally by some of our
supporters in London, pavement cycling can result in
contributing to the isolation of some people as they may fear
Road.cc press notice, “CTC calls for corporate manslaughter prosecutions after
Alan Neve case”, 10 April 2015
418 for more information, see HC Library briefing paper SN1496
419 ibid.
420 “Lorry driver banned from the roads five times admits jumping red light and killing
cyclist”, London Evening Standard, 9 April 2015
421 for more information on these matters, see section 3.4 of HC Library briefing
paper SN2254
417
117 Transport 2015
being hit by a cyclist whilst walking down their street which
causes them to decide not to leave their home.422
In 2013 32 pedestrians were seriously injured as a result of collisions
with cyclists per billion kilometres cycled, compared with 17
pedestrians injured by collisions with cars.423 However, these figures
do not control for the different types of roads which cyclists and car
users travel on (i.e. the high percentage of car journey miles
undertaken on the Strategic Road Network where there are no
pedestrians, and the high use of pedestrian-heavy residential and
urban roads by cyclists).
Pedestrians and cyclists do, however, have shared concerns about
some aspects of road design and use. For example, many cycling
and pedestrian campaigners are united in support for an extension of
20 mph speed limits. Living Streets has argued that reducing vehicle
speeds on Britain’s streets would be “the single biggest measure to
transforming our streets into safe, people-centred streets”.424
Motorists
In December 2012 the BBC broadcast a documentary The War on
Britain’s Roads, which aimed to explore whether there was a conflict
between motorists and cyclists. The programme was criticised as
sensationalist, and for failing to reflect the behaviour of the majority of
cyclists.425 Throughout the 2010 Parliament, however, there were
frequent media reports of a ‘war’ between cyclists and motorists.426 In
April 2012 the Chairman of minicab firm Addison Lee, John Griffin,
criticised the increase in cyclists on London’s roads:
This summer the roads will be thick with bicycles. These cyclists
are throwing themselves on to some of the most congested
spaces in the world. They leap on to a vehicle which offers them
no protection except a padded plastic hat.
[…] The rest of us occupying this road space have had to
undergo extensive training. We are sitting inside a protected
space with impact bars and air bags and paying extortionate
amounts of taxes on our vehicle purchase, parking, servicing,
insurance and road tax.
It is time for us to say to cyclists, 'You want to join our gang, get
trained and pay up'.427
422
Transport Committee, Evidence to the Cycling Safety inquiry from Living Streets
(CYS 37), November 2013
423 DfT, Reported Accidents, vehicles and casualties, Table RAS 40004, September
2014
424 Living Streets, In favour of 20 mph [accessed 5 May 2015]
425 “BBC cycle film condemned as dangerous nonsense”, The Times, 3 December
2012
426 see, e.g.: “Why the war between drivers and cyclists?”, BBC News online, 22 May
2013; “Cyclists vs motorists: a phoney war between two tribes who should be on
the same side”, The Independent, 24 November 2013; “The road to hell: will the
war between motorists and cyclists ever end?”, Metro, 19 May 2012
427 “Addison Lee minicab boss’s criticism of cyclists angers bike lobby”, The
Guardian, 20 April 2012 [cyclists have criticised Mr Griffin’s use of the term “road
tax”, which was abolished in 1937]
Number 7177, 13 May 2015 118
In November 2012 the President of the AA, Edmund King, noted that
there had been a ‘two tribe’ mentality, fostered by both cyclists and
motorists and called for better behaviour by both groups:
We really must get past the dangerous ‘them and us’ mentality
that sours interactions between different groups (and even subgroups) of road users – be they pedestrians, cyclists,
motorcyclists or drivers of vehicles large and small.
Cycle campaigners often do themselves no favours in this
respect, and motorists can be just as bad. Motorists see cyclists
running red lights. Cyclists see motorists cutting them up.
We need better behaviour all round. We’re not yet like the
Netherlands, owning lots of cars, but moving around town by
bike. Yet the majority of motorists have bicycles at home and
the majority of cyclists have cars. When we release our grip on
the steering wheel or handlebars, the differences disappear.
We need to change things culturally, and I think this is
happening – slowly.428
Cyclists have suggested that one of the root causes of any hostility
with drivers has been the road infrastructure. Katja Leyendecker,
Chair of Newcastle’s Cycling Campaign, Newcycling, has argued that
improving the road layout would make cyclists’ behaviour clearer and
more predictable, and help reduce conflict between cyclists and
drivers.429 Carlton Reid, executive editor of BikeBiz magazine, argued
that a lack of road space caused ‘flashpoints’ between different user
groups.430
One such ‘flashpoint’ has been London. For example, Stephen
Glaister, then Director of the RAC Foundation, argued that the
proposed segregated cycle superhighway in London would cause
business costs to rise and deliveries put at risk.431 Roger Lawson of
the Association of British Drivers argued that the scheme favoured
cyclists over other road users, and had unfairly removed road
capacity from motorists.432 In November 2013 the Conservative peer
Lord James of Blackheath cited his experiences as a motorist and
argued that The Times’ campaign was “creating a new and separate
society in London, in which cyclists think they have a superior law and
control over everybody in a motor car. This is going to lead to some
catastrophic accidents very soon”.433
Successive governments have supported cycling safety through the
THINK! campaign, which aims to encourage safer behaviour to
reduce the number of people killed and injured on the roads. One of
the main premises of the THINK! campaign is that as 80% of cyclists
“Chain reaction”, The AA Magazine, Autumn 2012
op cit., Cycling safety, para 24
430 “The road to hell: will the war between motorists and cyclists ever end?”, Metro,
19 May 2012
431 “Mayor of London unveils segregated urban cycleways”, BBC News online, 3
September 2014
432 “Motorist group brands London cycling plan “bonkers”, BBC News online, 7 March
2013
433 HL Deb 20 November 2013, c992
428
429
119 Transport 2015
have driving licences, and 20% of drivers cycle regularly, cyclists and
motorists are often the same people.434
HGVs and buses
HGVs and buses are disproportionately more likely to be involved in
cyclist fatalities.435 For example, in all five cases of cyclists killed in
road traffic collisions in London between 1 January and 9 April 2015,
the cyclist was hit by an HGV.436 Across the country as a whole,
between 2008 and 2013 18% of cycling fatalities involved HGVs,
despite the vehicles only accounting for 5% of motor traffic.437
Transport for London (TfL) figures released in July 2014 found that
while HGV collisions had been responsible for a greater number of
cyclist deaths than collisions with buses, there had been a higher
number of serious injuries caused by bus collisions.438 Overall, the
number of cyclists killed or seriously injured (KSI) per kilometre was
higher for buses than HGVs.439
Cyclists and freight organisations have been lobbying at a European
level for changes to the design of HGV cabs to improve the visibility
of cyclists. The Department for Transport told the Transport
Committee in 2014 that civil servants had “negotiated improved
requirements in international (UN-CE) regulations for mirrors on the
passenger side of vehicles, which will mean that drivers have a better
view of the area adjacent to the cab, which should improve safety for
cyclists”, and that ministers had urged the Commission to implement
these changes. Further amendments to the design regulations for
HGV cabs were agreed by the European Parliament in March 2015,
increasing the size allowed for the cabs, improving the visibility of
cyclists.440 The amended regulations will not come into force until
2022.441
There have also been calls for better training for HGV drivers, and
cyclists, on cycle safety. The Metropolitan Police’s ‘Exchanging
Places Scheme’ has since 2007 seen more than 15,000 cyclists
taking the opportunity to sit in the cab of an HGV to understand the
driver’s view of the road, and learn the location of blind spots from the
cab.442 British Cycling has recommended making cycle awareness
training a mandatory part of the drivers’ Certificate of Professional
Competence (CPC) qualification.443
DfT press notice, “Driver and cyclists agree: “let’s look out for each other””, 20
September 2012
435 DfT, Reported Road Casualties 2013: Annual Report, September 2014, p39
436 Beyond the Kerb, UK Cycling Fatalities 2015 [accessed 9 April 2015]
437 op cit., Reported accidents, vehicles and casualties, Table RAS40004
438 GLA press notice, “News from Darren Johnson AM: Buses as dangerous as
lorries for cyclists, but less fatal”, 3 July 2014
439 ibid.
440 ECF press notice, “Safer lorry designs come closer though moratorium locked in
until 2022”, 10 March 2015
441 ECF press notice, “Bittersweet EU-decision on lorry design and cycling fatalities”,
24 March 2015
442 Met press notice, “New dedicated Met ‘Exchanging Places’ truck arrives”, 29
January 2015
443 op cit., Evidence to the Transport Select Committee inquiry “Cycling safety” (CYS
043); for more information on the CPC, see HC Library briefing paper SN3060
434
Number 7177, 13 May 2015 120
Some cycling groups have argued that changes to the design and
mirrors of HGV cabs, and greater training for HGV drivers would be
less successful in reducing cyclist fatalities compared to simply
separating cyclists and large vehicles or banning large vehicles
altogether.444
6.5 Issues for the 2015 Parliament
Will cycling remain a political priority?
As set out above, over the course of the last Parliament cycling rose
up the political agenda and there is no obvious reason why it would
decline in the 2015 Parliament.445 This is because it generally fits in
with wider trends that successive governments have seized on to do
with better public health and greener public spaces. As the Mayor of
London has argued: “helping cyclists will not just help cyclists. It will
create better places for everyone” through a reduction in congestion
and safer, more attractive, streets.446
The two main parties and the Liberal Democrats all expressed
support for cycling in their 2015 manifestos, although the level of this
support was criticised by some journalists (see below).447
Should government provide more funding?
As set out above, over the 2010 Parliament cycling groups called on
the Government to commit a sizeable increase in central funding for
cycling on a long term basis. The provision for a Cycling and Walking
Investment Strategy in the Infrastructure Act 2015 is a step towards
that, though it is far from guaranteed. Further, as successive
governments have moved away from hypothecation of funding (i.e.
specifying what a pot of money must be spent on), it seems unlikely
that any funding could be guaranteed if it came out of the general
‘local government funding’ pot (see section 2, above).
In terms of the two main parties, the Conservatives pledged that they
would “invest over £200 million to make cycling safer”, a figure which
The Times argued was only a fifth of the recommended funding level,
and only a third of the investment provided over the 2015
Parliament.448 Labour’s manifesto did not specify what funding would
be available for cycling, but it did make a separate announcement.449
Only the Liberal Democrats committed to the APPCG
444
op cit., Cycling safety, paras 38-39
see, e.g. “How cycling has gone up the election agenda in London”, BBC News
online, 1 May 2012; “Vote Cycling”, The Times, 30 October 2014
446 op cit., The Mayor’s Vision for Cycling in London
447 “Which party’s manifesto is strongest on cycling”, The Guardian, 18 April 2015;
“The #cyclesafe manifesto guide”, The Times, 15 April 2015
448 op cit., Strong Leadership, A Clear Economic Plan, A Brighter More Secure
Future: The Conservative Party Manifesto 2015, p15
449 op cit., Britain can be better: The Labour Party Manifesto 2015, p19; the figure
involved is reportedly an extra £89 million for cycling and walking [“Labour Party
makes £300m General Election pledge to end Britain’s ‘pothole crisis’”, The
Mirror, 20 April 2015]
445
121 Transport 2015
recommendation of £10 per head per year of Government funding for
cycling infrastructure in their manifesto.450
Responding to the manifestos Chris Boardman criticised the “shortsightedness” of the Conservatives and Labour for treating cycling as
a “marginal issue” and failing to “commit to giving cycling the
investment it deserves as a legitimate transport option”.451
Is cycling just a London issue?
Cycling has grown in London and has been a focus of policymaking
for the current and previous Mayor. However, London is not alone in
seeing cycle growth, nor in fact is it the leader.
In London, the number of people commuting by bike more than
doubled between 2001 and 2011 (from 77,000 to 155,000)452 and in
2013 there were more bikes than cars travelling over the main
bridges over the Thames, with cyclists accounting for a quarter of all
rush-hour traffic on all roads in central London.453 However, London
was not the only region to see more people cycling to work: similar
trends were seen in Brighton and Hove and the City of Bristol; and in
Cambridge 29% of all journeys to work were made by bike in 2011.454
Cambridge, Oxford and the Isles of Scilly also lead the way for the
proportion of the population cycling, as shown below:
450
op cit., Manifesto 2015: Strong Economy. Fairer Society. Opportunity for
Everyone., p88
451 “The #cyclesafe manifesto guide”, The Times, 15 April 2015
452 op cit., 2011 Census Analysis - Cycling to Work
453 GLA/Mayor of London press notice, “Bikes make up a quarter of rush-hour traffic
in central London, new survey shows”, 25 June 2013
454 op cit., 2011 Census Analysis - Cycling to Work
Number 7177, 13 May 2015 122
Generally, cycling has been more likely to grow in towns and cities,
with large professional or student populations. However, this may
mean that the dangers of rural roads, compared to urban roads, are
underestimated. Although only 40% of cycle traffic is carried on rural
roads, they account for more than half of all cyclist fatalities.455 The
Campaign to Protect Rural England (CPRE) criticised the
Government’s 2011 road safety strategy for failing to mention that
cycling was three times more dangerous on rural than urban roads, or
to propose specific solutions to the dangers of rural cycling.456
Claire Francis, head of policy at Sustrans, has argued that the rest of
the country has not followed London’s lead with investment in
infrastructure to make the roads safer for cyclists.457 There are,
however, good examples of cycling infrastructure being introduced
outside the capital. Segregated cycleways are being introduced in
Bristol, and cycle tracks installed on Oxford Road in Manchester; Hills
455
DfT, Reported Road Casualties 2013: Annual Report, September 2014, p40
CPRE, Written evidence to the Transport Committee’s Road Safety inquiry,
October 2011
457 “Pedal power: Why London is ahead of the pack on cycling”, The Guardian, 1 April
2015
456
123 Transport 2015
Road and Huntingdon Road in Cambridge; and Newarke Road,
Leicester.458 A year-long trial of a cycle-track on George Street in
Edinburgh will conclude in September 2015.459
That said, London has probably been the most high-profile in terms of
cycling; in part due to the legacy of the 2012 London Olympics.
Support from the Mayor of London, Boris Johnson, and his
predecessor, Ken Livingstone, has led to higher levels of investment
in cycling in London, compared to the rest of the country.460 The
March 2013 Mayor’s Vision for Cycling in London set out plans to
continue this trend, pledging “transformative change” for how cycling
is treated in the capital.461 It committed to £913 million to be spent on
cycling by 2023, more than treble the previously-planned levels.462
The Vision set out a clear standard for cycling infrastructure,
committing that:
We will segregate where possible, though elsewhere we will
seek other ways to deliver safe and attractive cycle routes.
Timid, half-hearted improvements are out—we will do things at
least adequately, or not at all.463
In February 2015 Transport for London approved the proposals from
the Vision for “a true Crossrail for the bicycle […] the longest
substantially-segregated continuous cycle route of any city in
Europe”. The plans include two new segregated cycle routes as well
as a segregated expansion of cycle superhighway 5, from Oval to
Pimlico, and upgrades to five other existing routes.
There was overwhelming public support for the proposals, with 84%
of the 21,500 people who responded to TfL’s consultation in favour of
the segregated superhighways.464 While some businesses opposed
the segregated superhighways, citing longer journey times between
Canary Wharf and Heathrow, many other businesses publically
expressed their support for the plans. Companies and organisations
such as Deloitte, Unilever, Allen & Overy and the CBI argued that the
new routes would increase the safety of their staff, and reduce
congestion on London’s roads and public transport.465 The CEO of
Microsoft UK, Michel Van Der Bel, wrote to TfL to call for the “vital”
new superhighways to be “delivered without delay”:
[…] As it stands, too many of those who commute by bike today
have had close calls where cycles and motor traffic mix. We
want the commutes of all our staff to be comfortable and safe
and the Cycle Superhighways will be a big step toward that
goal. […] Our network of offices in the capital will be knitted
together by the Cycle Superhighways, and our employees will
“Not just London: Five big UK cycling projects outside the capital”, Cycling
Weekly, 1 February 2015
459 ibid.
460 for further information see HC Library briefing paper SN1097
461 op cit., The Mayor’s Vision for Cycling in London
462 ibid.
463 ibid.
464 GLA press notice, “Mayor announces final build plans for “Crossrail for the Bike”
with traffic delays along route cut by 60 per cent over previous proposals”, 27
January 2015
465 CyclingWorks, All employers [accessed 18 April 2015]
458
Number 7177, 13 May 2015 124
benefit considerably once they are completed. We look forward
to using the protected routes to help us attract and retain the
people we need to continue to thrive.466
Should local authorities have cycling targets?
The Coalition Government generally took the view that local
authorities should not have to meet specific targets for delivering
transport outcomes, as priorities differ across localities. Rather they
believed it was up to those authorities to report successful outcomes
and learn from one another. Labour has generally tended towards the
view that targets do deliver outcomes as they incentivise local
authorities to prioritise policy areas where they might otherwise put on
the backburner, thus delivering better overall.467
In 2011 the then Transport Secretary, Philip Hammond, argued that
while central Government had an important role to play in road
safety, he believed this role should be based on making it easier for
road users to behave correctly “instead of resorting to more
bureaucracy, targets and regulation”.468 The Coalition’s 2011
Strategic Framework for Road Safety therefore rejected the road
safety targets of the previous Government, suggesting that such
“central diktats” could constrain local ambitions for road safety.469 The
DfT explained to the Transport Select Committee:
While we believe that previous road safety targets have been
useful we do not consider that over-arching national targets are
still necessary for road safety in Great Britain. This is because
we do not believe that further persuasion is needed on the
importance of road safety. We expect central and local
government to continue to prioritise road safety and continue to
seek improvements. Instead we need to move to more
sophisticated ways to monitor progress which is why we have
developed the Road Safety Outcomes Framework.470
The Committee noted that the only countries in the EU that did not
have targets as part of their road safety strategies were the UK,
Luxembourg and Malta.471 The Association of Chief Police Officers
(ACPO) warned the Committee that:
… when chief constables are looking at how they manage their
resources and deliver in terms of safety, they will not
necessarily look at roads policing because there are no national
targets.472
The Chartered Institute of Highways and Transportation (CIHT) has
argued that there was “solid evidence” that road casualty reduction
targets were successful in reducing road deaths and injury.473 Chris
CyclingWorks press notice, “Microsoft backs new London Cycle Superhighway
plans”, 30 October 2014
467 these arguments are rehearsed in more detail in HC Library briefing paper RP
11/22
468 DfT, Strategic Framework for Road Safety, May 2011, p5
469 ibid., p8
470 Transport Committee, Road Safety (second report of session 2012-13), HC 506,
18 July 2012, para 8
471 ibid.
472 ibid., para 9
473 Transport Committee, Written evidence from the Chartered Institute of Highways
and Transportation (CYS 57), November 2013
466
125 Transport 2015
Boardman criticised the Government in 2013 for the absence of
targets or monitoring of local authority activity. He called for a series
of targets, set nationally, and with accompanying timescales.474
There is a difference between targets for increased cycling, and
targets for reducing the number of cyclists killed or seriously injured.
The CTC has called for targets for increased cycle use and also
“national and local targets for improved cycle safety, measured both
in ‘rate-based’ terms (e.g. risk per mile or per trip) and in terms of
public perceptions of cycle safety”. The CTC warned that:
… simplistic casualty reduction targets can be even more
problematic than having no targets at all. These have in the
past created a perverse incentive for road safety officers not to
encourage cycling, for fear that more cycle use would
undermine those targets.475
In 2012 the then Transport Minister, Norman Baker, made a similar
point:
Targets are superficially attractive but can produce perverse
consequences. For example, any sensible target on the
reduction in number of deaths among cyclists would have to
take into account the number of cyclists out there and the
number of miles that they cycle. That is the relationship that
counts. It is the deaths per 100,000 miles or whatever way you
want to describe it. That is quite difficult to tie down. 476
Road.cc press notice, “Chris Boardman slams Government “apathy” on cycling &
calls for “commitment” to goals”, 21 January 2014
475 Transport Committee, Written evidence from CTC (CYS 53), December 2013
476 Oral evidence taken before the Transport Select Committee, HC 506, 24 April
2012, Q455
474
Number 7177, 13 May 2015 126
7. Policy focus 5: airport expansion
7.1 What’s the issue?
The UK needs more airport capacity
Even before the liberalisation of the European air travel market in the
early 1990s the policy of consecutive governments – Labour and
Conservative – was to encourage the growth of airport capacity in the
UK.477 This was the ‘predict and provide’ policy that subsequently
exercised those who argued that aviation should be managed rather
than encouraged, due to its environmental impacts. For example, in
its 1978 White Paper the Labour Government said that additional
airport capacity would be needed in the South East in the 1980s to
meet the forecast demand for air travel and because the scope for
diversion of passengers to airports outside the South East was
limited.478
In December 1979 the Conservative Government announced, on the
basis of the reports of the Study Group on South-East Airports and
the Advisory Committee on Airports Policy, its intention to provide
additional airport capacity, as the traffic developed, based on the
existing airports in the South East, particularly Heathrow, Gatwick and
Stansted. The then Secretary of State for Trade, John Nott, said:
We have considered whether it would be right to ignore the
likely demand so that traffic became increasingly stifled or
diverted to the Continent. Such a decision, or lack of a decision,
would lead to developing chaos at our existing airports. A
modern Western society, heavily engaged in international trade
and with a major stake in the airline business, can hardly fail to
provide for consumer demand, both for leisure and business.
But given the inherent uncertainty of any forecast, the solution
that we need is one that meets the demand in London and the
South-East only as it develops…479
In June 1985 the Conservative Government published its White
Paper on airports policy. This stated that it was the responsibility of
government to ensure that there were adequate airport facilities to
meet demand and that “failure to provide sufficient capacity will
reduce the scope for airline competition to the detriment of the
travelling public”.480 In 1990 the Government commissioned the
Runway Capacity to Serve the South East (RUCATSE) study; this
reported in July 1993.481 The then Secretary of State for Transport, Dr
Brian Mawhinney, gave the Government’s official response to
RUCATSE in February 1995. He said that RUCATSE's analysis
showed “a strong case for additional runway capacity in the south477
a history of failed expansion in the South East, including the Roskill Commission
and Maplin Sands can be found in HC Library briefing paper SN4920
478 Secretary of State for Trade, Airports Policy, Cmnd 7084, February 1978, para
154, p43
479 HC Deb 17 December 1979, c36
480 Secretary of State for Transport, Airports Policy, Cmnd 9542, June 1985, para
12.10, pp56-7
481 DoT, Runway capacity to Service the South East: a report by the Working Group,
July 1993
127 Transport 2015
east” but that more work was needed to inform decisions on any
proposals which operators might bring forward for that additional
capacity. Further, the then owner of Heathrow and Gatwick should
not consider bringing forward proposals for a third or second runway
respectively.482
The Labour Government’s first (and last) White Paper on aviation was
published in December 2003. Like its predecessors, it stated that air
travel had grown significantly in the past and was projected to grow
strongly in the future. It said that “simply building more and more
capacity to meet demand is not a sustainable way forward” while
acknowledging that there was “an urgent need for additional runway
capacity in the South East”. To this end it advocated building two new
runways in the South East, first at Stansted (by 2012) and then at
Heathrow (by 2020) “but only if stringent environmental limits can be
met”.483 A second runway at Stansted failed to receive planning
permission and was eventually withdrawn. In one of its last major
transport policy decisions before the 2010 General Election, the
Labour Government confirmed its support for a third runway and sixth
terminal at Heathrow.484
In practice, all the major airports in the South East continually
expanded from the 1960s onwards. In particular, after 1979 Heathrow
grew by two terminals, including the contentious Terminal 5.
However, the last major new runway built in Great Britain was the
second runway at Manchester in 2001.485
The question as to whether the UK, and particularly the South East of
England, needs new airport capacity rests largely on two points:
whether future increased demand would otherwise make travel
through existing airports impossible without more capacity and the
economic benefits of increased capacity to the UK economy. Aviation
is fundamentally an international market, and as the Airports
Commission (see below) made clear in its 2013 report, passenger
demand for air travel has been on a persistent upward trend since the
middle of the twentieth century, and has grown strongly since the
1970s, driven by economic growth, increasing affluence, and realterm reductions in air fares. Demand growth is increasingly coming
from emerging economies, particularly in the Asia-Pacific region,
which could see something like a three-fold increase in outbound trips
between 2010 and 2020.486
The Commission stated that these global developments had driven
significant changes in the UK aviation sector. In particular, the
consolidation around major hubs “has entrenched the dominance of
the London aviation market and particularly Heathrow, the UK’s
482
HC Deb 2 February 1995, cc859-60W
DfT, The Future of Air Transport, Cm 6046, December 2003, pp9&13-14
484 for further information on expansion at Heathrow, see HC Library briefing paper
SN1136
485 for further information on Manchester’s second runway, see HC Library briefing
paper SN101
486 Airports Commission, Airports Commission: Interim Report, December 2013, p41
483
Number 7177, 13 May 2015 128
largest airport”.487 Overall, the UK has the biggest aviation market in
Europe, and London the largest OD (origin and destination) market in
the world. Historically passenger demand for aviation has risen in line
with or faster than GDP since 1960:488
In light of this, the Commission stated that:
… problems are starting to emerge and are likely to get worse.
Heathrow is effectively full. Gatwick is operating at more than
85% of its maximum capacity, and is completely full at peak
times. Capacity constraints are making it more and more
difficult for airports and airlines to operate efficiently, lay on new
routes, and deal with resilience issues.
More intensive runway use also makes it harder to offer
appropriate and predictable respite from noise for people living
and working near airports.
The current approach of forcing ever greater volumes of traffic
through the existing infrastructure, if continued, would also have
increasingly detrimental effects on the national economy,
businesses, and air passengers.
The Commission’s analysis suggests that the costs of failing to
address these issues could amount, over a sixty-year time
period, to:
£18-20 billion of costs to users and providers of airport
infrastructure.
£30-45 billion of costs to the wider economy. 489
Heathrow has long been of special concern as it is considered to be
‘full’. The Commission explained:
Heathrow is subject to a planning cap of 480,000 ATMs per
annum, which broadly equates to the maximum achievable
487
ibid., p54
ibid., figure 3.1, p56
489 ibid., p55
488
129 Transport 2015
capacity from its two runways operating under segregated
mode. It has operated more than 470,000 movements – almost
98% of capacity – in six of the last ten years. Only in 2010,
when air traffic across Europe was affected by the Icelandic
volcanic ash incident, did average utilisation drop below 95%,
and even then by less than 2%. This rate of capacity utilisation
is well above the point at which high levels of reliability can be
maintained and delays avoided.490
The Commission also stated that Gatwick operates at over 85%
capacity over the course of the year and above 90% in the summer
peak season, and that almost no take-off or landing slots are unused
in the busiest hours of the day.491
The Commission concluded that based on demand projections,
without additional capacity, major London and South East airports
would be full by the 2040s, even with a carbon cap in place:492
The local noise impacts of aviation are significant
The negative externalities of air transport are significant and well
known, they include noise, air quality and wider environmental and
climate change impacts. This section focuses on local noise impacts;
with wider environmental question is addressed below in section 7.5.
There is a long-standing, ongoing debate about the relationship
between exposure to aircraft nosie and its effect or perceived effects.
The Coalition Government’s March 2013 Aviation Policy Framework
explains:
Although there is some evidence that people’s sensitivity to
aircraft noise appears to have increased in recent years, there
are still large uncertainties around the precise change in
relationship between annoyance and the exposure to aircraft
noise. There is evidence that there are people who consider
themselves annoyed by aircraft noise who live some distance
from an airport in locations where aircraft are at relatively high
altitudes. Conversely, some people living closer to an airport
seem to be tolerant of such noise […]
Average noise exposure contours are a well-established
measure of annoyance and are important to show historic
trends in total noise around airports. However, the Government
recognises that people do not experience noise in an averaged
490
ibid., p78
ibid., p78
492 ibid., figure 4.4, p112
491
Number 7177, 13 May 2015 130
manner and that the value of the LAeq indicator does not
necessarily reflect all aspects of the perception of aircraft noise.
For this reason we recommend that average noise contours
should not be the only measure used when airports seek to
explain how locations under light paths are affected by aircraft
noise. Instead the Government encourages airport operators to
use alternative measures which better reflect how aircraft noise
is experienced in different localities […]. 493
The Airports Commission’s July 2013 aviation noise discussion paper
attempted to give comparative figures for those affected by aviation
noise as opposed to other transport noise:
The number of people deemed to be affected by transport noise
will depend on the noise metric used […] However, to give a
sense of the relative numbers affected from each mode, the
strategic noise mapping that took place in England in 2006
estimated that 4.2 million people are exposed to road traffic
noise of 65 decibels (dB) (LDEN) or more, and found that the
corresponding figures for railways and aviation are 0.2m people
and 0.07m people, respectively.494
The Commission categorised the effects of noise by considering them
in three groups: health effects, amenity effects and productivity and
learning effects.495
In terms of health effects from aviation noise, the Commission stated
that the link between noise and hypertension was ‘fairly well’
established and that the 2008 European HYENA study, which
focused on a number of major European airports, found that night
time aircraft noise was associated with increased hypertension and
that aircraft noise events are associated with an elevation of blood
493
DfT, Aviation Policy Framework, Cm 8584, March 2013, para 3.14 & 3.19
Airports Commission, Discussion Paper 05: Aviation Noise, July 2013, para 2.6
495 ibid., fig 2.2., p10
494
131 Transport 2015
pressure.496 In January 2013 the CAA published a literature review on
aircraft noise, sleep disturbance and health impacts. It concluded that
findings were “not conclusive and are often contradictory, highlighting
the practical difficulties in designing studies of this nature”.497 Recent
EU research conducted around six European airports found that
exposure to aircraft noise at night for more than 20 years could
increase the risk of heart disease and stroke.498 A further study
published by the British Medical Journal looking at the health of
people living in the vicinity of Heathrow found those with the highest
exposure were 10 to 20 per cent more likely to be admitted to hospital
for stroke, coronary heart disease and cardiovascular disease. There
was also an increased risk of death from those diseases. A linked
study of the health of more than six million Americans over the age of
65 living around 89 US airports found that, on average, their risk went
up 3.5 per cent for every extra 10 decibels of noise.499
On amenity and quality of life the Commission stated that
‘annoyance’ is the most commonly used outcome to evaluate the
effect of noise on communities and cited previous studies that
showed “the proportion of people being ‘highly annoyed’ at a
particular exposure has increased”. In terms of sleep disturbance it
said that this was one of the impacts most commonly described by
those living with high levels of noise exposure, and one that “can a
have a substantial impact upon quality of life”. However, the
Commission stated that it was less clear to what extent and at what
level noise can cause harmful loss of sleep, and equally whether
lesser reactions to noise, which do not involve awakening, can affect
general well-being in similar ways.500
Finally, on productivity and learning effects the Commission stated
that the European RANCH study found that road traffic students
suffered impaired reading comprehension and recognition memory
from aircraft noise, likely because of the ‘transient nature’ of aircraft
movements, with short term peaks in noise affecting concentration
and providing distraction.501
Data from the CAA shows that the top fifteen airports in the UK
account for over one-third of the population affected by noise at the
European level using standard measurements, with Heathrow
accounting for more than a quarter.502 Indeed, the numbers affected
at Heathrow is an ongoing topic of debate and concern, particularly in
light of proposals to expand the airport. In 2006 there was a separate
survey of those living under the Heathrow flight path, commissioned
496
ibid., para 2.25
CAA, Aircraft Noise, Sleep Disturbance and Health Effects: A Review, ERCD
Report 1208, January 2013, p65
498 “Aircraft noise at night may lead to long-term health impacts”, Science for
Environment Policy, issue 363, 27 February 2014
499 “Aircraft noise may increase risk of heart disease, say researchers”, The
Guardian, 8 October 2013
500 op cit., Discussion Paper 05: Aviation Noise, paras 2.13 & 2.17
501 ibid., para 2.31
502 CAA, CAA Insight Note: Aviation Policy For The Environment, p22 [accessed 4
June 2014]
497
Number 7177, 13 May 2015 132
from ICM by the then Mayor of London Ken Livingstone. The survey
found that of the 1,001 residents surveyed503 40% were bothered by
aircraft noise during the day and 44% felt it had got worse over the
previous ten years.504
More recently, Heathrow and the Mayor of London have disagreed as
to the numbers of those affected by proposed expansion. Mayor
Johnson’s submission to the Airports Commission (more of which,
see below) stated that 1,097,200 people live within a 55 decibel noise
contour calculated to encompass a three-runway Heathrow; this
would be higher if future population growth is factored in). In contrast,
he argued that a little over 30,000 would be affected by a four runway
airport in the Thames Estuary. Heathrow claims that the number of
people impacted by noise would fall by 30 per cent if it is allowed to
build a third runway northwest of the existing airport (from 249,000 to
165,000 people based on a 57-decibel contour).505
In its December 2013 interim report the Airports Commission
recommended the creation of an Independent Aviation Noise
Authority to “provide expert and impartial advice about the noise
impacts of aviation and to facilitate the delivery of future
improvements to airspace operations”.506 The Commission made this
recommendation on the back of a lack of trust between the aviation
industry and local communities, in particular: “mistrust amongst local
communities in relation to the fairness and transparency of current
arrangements for reporting aircraft noise, and for the recording and
handling of complaints from members of the public”.507 The
Commission noted that such an authority could be well-placed to
undertake ‘consistent and regular surveying of attitudes to aviation
noise’, including its impacts on health and well-being.508 The
Government indicated that it would reserve judgement on whether to
proceed with the new authority until after the publication of the final
report.509
7.2 What is the Airports Commission?
Why was it set up?
On 7 September 2012 the Secretary of State for Transport, Patrick
McLoughlin, announced that he had asked Sir Howard Davies, the
former chairman of the Financial Services Authority, to chair an
independent commission tasked with identifying and recommending
to Government options for maintaining the country’s status as an
international hub for aviation.510 The Commission was tasked with
examining the scale and timing of any requirement for additional hub
503
from eight London boroughs - Richmond, Hounslow, Hillingdon, Hammersmith &
Fulham, Wandsworth, Lambeth, Kensington & Chelsea and Westminster
504 Mayor of London press notice, “Londoners need peace from aircraft noise,
according to poll”, 20 March 2006
505 “Heathrow noise ‘to affect a million’”, The Times, 19 May 2014
506 op cit., Airports Commission: Interim Report, p136
507 ibid., para 5.70
508 ibid., para 5.76
509 HC Deb 15 July 2014, c66WS
510 HC Deb 7 September 2012, c41WS
133 Transport 2015
capacity and identifying and evaluating how any need for additional
capacity should be met in the short, medium and long term. The
Commission was asked to report before the end of 2013 on:


its assessment of the evidence on the nature, scale and timing
of the steps needed to maintain the UK’s global hub status; and
its recommendation(s) for immediate actions to improve the use
of existing runway capacity in the following five years –
consistent with’ credible long term options’.
The Commission was asked to publish a final report no later than
summer 2015 on:




its assessment of the options for meeting the UK’s international
connectivity needs, including their economic, social and
environmental impact;
its recommendation(s) for the optimum approach to meeting
any needs;
its recommendation(s) for ensuring that the need is met as
expeditiously as practicable within the required timescale; and
to provide materials to support the government of the day in
preparing a national policy statement to accelerate the
resolution of any future planning applications for major airports
infrastructure.511
What has it done?
On 17 December 2013 the Commission published its interim report. It
concluded that there is a need for one net additional runway to be in
operation in the South East of England by 2030 and that there is likely
to be a demand case for a second additional runway to be operational
by 2050. The Commission announced that it would take forward, for
further detailed study, proposals for new runways at Gatwick and
Heathrow.
The two options for Heathrow are Heathrow Airport Ltd’s proposal for
one new 3,500m runway to the northwest and Heathrow Hub’s
proposal to extend the existing northern runway to at least 6,000m,
enabling the extended runway to operate as two independent
runways.512
The Commission’s forecasts indicate that a new runway at Heathrow
would be very well-used, with the expanded airport operating at
around 80 to 90 per cent of capacity by 2030 and at maximum
capacity by 2050.513 The Commission reported that many of the
features and impacts of the two Heathrow options are broadly the
same. The costs for each would be higher than those for most single
runway options considered at other sites, although less than those for
the south west runway option at Heathrow. Estimated as costing £13
billion to £18 billion by 2030 they are, however, “much lower than
most options with four or more runways, in many cases by several
orders of magnitude”.514
DfT press notice, “Airports Commission membership”, 2 November 2012
op cit., Airports Commission: Interim Report, for full details see chapter 6
513 ibid., para 6.88
514 ibid., para 6.91
511
512
Number 7177, 13 May 2015 134
However, each proposal has different, specific impacts, set out by the
Commission in its report. For option (a) – one new runway to the
north west – these are as follows:





a significant increase in capacity of up to 260,000 air traffic
movements (ATMs) per year;
‘roughly neutral’ impact on the number of people affected by
noise (the new runway would allow a portion of the airport’s
traffic to land and take off further to the west than the existing
configuration of runways, so those aircraft would fly at a higher
altitude over the most densely populated areas);
the spread of the noise impact would be over a larger area,
meaning that some people would be newly brought within the
57LAeq contour;515
no internationally designated sites would be directly impacted
by the proposal (the South West London Waterbodies
SPA/Ramsar site would lie within 2km of the expanded airport
site, with the potential for some indirect impacts); and
requirement for a ‘significant number of demolitions’, totalling
approximately 1,500 houses and including the loss of the village
of Harmondsworth, much of which is a conservation area. A
second conservation area in Longworth would also lose listed
buildings (around 30 listed buildings would be lost in total).516
For option (b) – extending the northern runway to the west – the
impacts are as follows:





a maximum additional capacity of 190,000 ATMs per year;
all night flights could use the western portion of the extended
runway, resulting in the population falling within the 55 LDen
contour, being more than 20,000 lower than for the north
western runway option;
could potentially encroach upon the South West London
Waterbodies SPA/Ramsar site;
direct effects on just eight listed buildings (none Grade I or
Grade II*) and only indirect effects on the Colnbrook
Conservation Area; and
relatively few demolitions, with a probable total of 720
properties estimated to be lost.517
The proposal for Gatwick is a new runway over 3,000 metres in
length spaced sufficiently south of the existing runway to permit fully
independent operation. The Commission stated that its current single
runway is already operating at a high level of utilisation and the
Commission forecast that it will reach capacity within less than ten
years. A second runway could generate more point-to-point
movements, possibly to new destinations, which could feed into a
‘hub’ network that might attract a network carrier (like, e.g. BA is at
Heathrow). The Commission put the cost of expansion at Gatwick at
between £10 billion and £13 billion over the period to 2030, which due
to the “relatively strong forecast demand at Gatwick” could “credibly
515
when a noise varies over time, the LAeq is the equivalent continuous sound which
would contain the same sound energy as the time varying sound – essentially the
average noise level
516 op cit., Airports Commission: Interim Report, paras 6.101-6.106
517 ibid., paras 6.107-6.111
135 Transport 2015
be financed”.518 The Commission estimates that impacts on protected
sites, landscape and heritage are limited and there would be no loss
of greenbelt land. The proposals would require the development of
some 900 hectares of greenfield site (not including road schemes),
but this is limited in comparison with some of the larger schemes. On
noise impacts, while the proposal “does not offer the same potential
to reduce overall noise impacts as a new hub airport”, the number of
people affected by noise in the Gatwick area “remain[s] relatively
low”.519
In November 2014 the Commission published for consultation its
assessment of proposals for additional runway capacity at Gatwick
and Heathrow. It invited public comment on its detailed consideration
of each proposal. This included analysis of the cost of each proposal,
the effect on communities of noise, property loss and construction,
and the economic benefits and environmental impacts. The purpose
of the consultation was to test the evidence base the Commission
had assembled; understand stakeholders’ views as to the accuracy,
relevance and breadth of the assessments it had undertaken; and
seek views on the potential conclusions that might be drawn from
them. There were three separate business cases and sustainability
assessments as well as information from the three scheme sponsors
(Gatwick Airport, Heathrow Airport and Heathrow Hub) and a number
of technical reports.520
The main headline in the consultation was the difference in cost: the
Commission projected that the Gatwick scheme would cost
approximately £2 billion more and the two Heathrow schemes
between £3 billion and £4 billion more than their sponsors originally
estimated. However, the consultation paper made it clear that the
differences between the sponsors’ estimates and the Commission’s
estimates were in large part a result of differing opinions on the
application of risk and optimism bias (and for Heathrow Hub/extended
runway some smaller differences of opinion on taxiway, land and car
parking costs).521
As regards Stansted, the Commission looked at two options for a
new hub airport at Stansted: a four-runway and a five-runway airport.
It rejected both of these in their own right but also largely in
comparison with the Thames Estuary/Isle of Grain hub option. For
example, although the £59 billion to £80 billion cost would be less
than the Thames Estuary option, Stansted would:


518
not offer the same potential to address noise impacts in the
south east of England;
have significant environmental and heritage impacts (over 150
listed buildings fall within the proposed footprint for the site,
including two Grade I and seven Grade II* buildings, as well as
four Scheduled Monuments and one Registered Park and
ibid., paras 6.73-6.76
ibid., paras 6.79-6.80
520 Airports Commission, Increasing the UK’s long-term aviation capacity, 11
November 2014
521 ibid., pp26-28, 47-48 [Gatwick], 65-66 [HAHL], and 81-82 [Heathrow Hub]
519
Number 7177, 13 May 2015 136

Garden and it would involve the loss of more than 2,000
hectares of high quality agricultural land and up to six villages);
and
come with significant risks associated with the level of additional
capacity which might be provided.522
In terms of expanding Stansted on a smaller scale (i.e. with a second
runway), the Commission did not think there was a strong demand
case as the airport is currently running at about half its permitted
capacity; costs would be greater than expanding at Gatwick and its
45-to-60-minute catchment area would be smaller.523
The Commission opted not to shortlist any options for Thames
estuary airports. While it acknowledged that such proposals had the
potential to reduce aviation noise impacts in the South East of
England and support economic development on the eastern side of
London, they presented many challenges and uncertainties. It also
cited expense as a negative factor: the Commission calculated that
the cost of an Isle of Grain airport (which it considered the most viable
of those presented) could cost up to £112 billion. There were also
significant environmental questions and economic uncertainties
caused by the fact that a new estuary airport would require Heathrow
to close. Taking all this into account the Commission announced its
intention to carry out additional analysis in respect of the Isle of Grain
option in the first half of 2014.524 On 2 September 2014 the
Commission announced its decision not to add the inner Thames
estuary airport proposal to its shortlist of options for providing new
airport capacity by 2030 on the grounds that the proposal had
‘substantial disadvantages’ that collectively outweighed its potential
benefits.525
Generally on regional airports outside the South East, the
Commission looked at whether it would be possible to solve the
capacity problem in London and the South East by incentivising, or
requiring, airlines to make greater use of under-utilised capacity
elsewhere. To assess the scope for redistributing traffic, the
Commission considered four potential policy levers: taxation (Air
Passenger Duty); changes to the slots regime; Traffic Distribution
Rules; and, restrictions on aircraft and services at congested airports.
It concluded that relatively little scope to redistribute demand
exists.526 Furthermore, on issues of surface access, the Commission
indicated that its resources and remit meant that it was not the
appropriate body to reach a view on many of the schemes proposed
for improving access to regional airports. It recommended that the
Government work with local authorities and Local Enterprise
Partnerships (LEPs) to “ensure that proper consideration is given to
522
ibid., paras 6.47-52
ibid., paras 6.56-6.57
524 ibid., paras 6.24-6.46
525 Airports Commission press notice, “Airports Commission announces inner
Thames estuary decision”, 2 September 2014; and full decision: Inner Thames
estuary airport: summary and decision
526 op cit., Airports Commission: Interim Report, chapter 4
523
137 Transport 2015
the needs of airport users when prioritising local transport
investment”.527
In terms of specific regional proposals, the Commission received two
long term proposals for airport expansion that would have had a
significant impact on Bristol Airport and Cardiff Airport – it
dismissed them both in the first sift. They were:


MSP Solutions suggested the construction of an airport in the
Severn estuary to replace Bristol and Cardiff airports. The
Commission said that the scale of the contribution of a new
airport in the Severn Estuary as presented in this proposal to
UK airport capacity was “not clear and would not appear to offer
additional capacity where the assessment of need identified the
demand (the South East)”. Given that Cardiff and Bristol
airports would close, any additional capacity benefit may be
small compared to the proposed cost; and
Severn24 proposed a new two-runway airport on a reclaimed
island in the Severn Estuary with road and rail links to the M4
and the Great Western Main Line near Newport. The
Commission said that whilst the proposal would provide
capacity to serve the South West of England and the south of
Wales, it was “not clear that this proposal would add
significantly to overall national capacity, given the almost certain
operational and commercial need for Cardiff and Bristol airports
to close, therefore the additional benefit may be small against
the proposed cost”.528
A third proposal affecting Cardiff – from Western Gateway Group –
was dismissed in the second sift. The Commission said that the
proposal had a high cost due to its high speed requirements and did
not deliver any significant additional capacity. Furthermore the “very
limited additional capacity it does deliver is in a region of the country
where it is not clear that unfulfilled demand exists. Therefore does not
meet the requirements identified in the assessment of need”.529
The Commission received one long-term proposal for expansion at
Birmingham – it was dismissed in the second sift. The Commission
said that significant distance from the key catchment area of London
makes it unlikely that Birmingham Airport would cater as well as more
proximate options. It would offer the largest catchment of people
within two hours of the airport of all options, but this is largely
dependent on the journey time assumptions of HS2, which also
makes the London airport system easier to access for passengers
from Birmingham’s core aviation market. It would also have significant
noise impacts. The Commission concluded that the “current demand
profile favours other airports”.530
The Commission also made recommendations about making best
use of existing capacity, including airport collaborative decision
527
ibid., p161; for more information on local transport planning and funding see HC
Library note SN5735
528 ibid., Appendix 2, pp16-17
529 ibid., p22
530 ibid., Appendix 2, p22
Number 7177, 13 May 2015 138
making; airspace changes supporting performance based navigation;
enhanced en-route traffic management; and time based separation.531
When will it report?
The Commission’s final report is expected in Summer 2015. In
evidence to the Transport Committee in March 2015 the Secretary of
State for Transport, Patrick McLoughlin, said that he would “expect
the report to be with the Secretary of State for Transport in July or
August—around that sort of time”.532
7.3 Will the recommendations of the Airports
Commission be implemented?
This is the big question and ultimately it will come down to the airports
themselves to take the initiative and put in a Development Consent
application for any expansion proposal. The Secretary of State for
Transport is likely to have the ultimate say, as set out below.
Political parties not committed
Perhaps unsurprisingly, before the 2015 General Election no political
party committed to implementing the Airports Commission’s
recommendations, whatever those might be. As indicated in section
2, above, the Conservatives said that they would “respond to the
Airports Commission’s final report”.533
Sir Howard Davies has repeatedly indicated his frustration with the
‘political’ aspects of his inquiry, and particularly the idea that after two
and a half years of detailed work, the Government of the day might
not heed his recommendations. In an interview with The Observer,
shortly after he was appointed, Sir Howard acknowledged that “he
‘can't be convinced’ that when he reports in 2015 the politicians will
actually listen”.534 More recently in December 2014 the media
reported on Sir Howard’s comments at an aviation conference where
one audience member suggested to him that the new Government
after May 2015 might not reach a decision on expanding either
Gatwick or Heathrow, “however thorough your recommendations will
be”. He replied:
Well, hey, what do you want me to say? Do you want me to
stand here and say, ‘hey guys, I’ve been wasting my f-----g time
for the last two-and-a-half years?’ If you start saying, ‘the
Government has looked at this for 40 years, they’ve never
decided before, and they’re not going to decide next time, then
you will get what you wish for.535
The reasons for this uncertainty are ultimately the same as those
behind the decision to appoint an independent commission in the first
531
ibid., pp12-13; full details in chapter 5
Transport Committee, Oral evidence: Work of the Department for Transport, HC
1109, 9 March 2015, Q24
533 op cit., Strong Leadership, A Clear Economic Plan, A Brighter More Secure
Future: The Conservative Party Manifesto 2015, p14
534 “Under pressure: the man who must rule on next UK airport”, The Observer, 3
November 2012
535 “City Diary: Government guru lets off steam over airports saga”, Daily Telegraph,
10 December 2014
532
139 Transport 2015
place: there are critical constituencies in the South East of England
where support for airport expansion is an electoral liability; similarly
there are others where significant numbers of people depend on
Heathrow or Gatwick for employment and opposition to expansion is
a liability. While this may have had an impact on how some decided
to vote in May 2015, as indicated below, ultimately no local MP will
have to vote for or against a new or extended runway at either airport.
Parliament has a limited role
One of the important things to note about this whole process is that it
is not a Parliamentary one. There will be no Parliamentary Bill, no
opportunity for MPs to vote a proposal through or vote it down, or to
amend the proposal in Parliament. However, Parliament will have the
opportunity to approve the Government’s National Policy Statement
on Aviation, which in all likelihood will have to be ‘designated’ before
a decision could be taken on any Development Consent application
put forward by Heathrow or Gatwick (see below).
There will naturally be extra-Parliamentary opportunities for MPs to
exert influence and express their views on any specific proposal.
Onus is on the airports to put in application for a DCO
Expansion at either Heathrow or Gatwick would be considered a
Nationally Significant Infrastructure Project (NSIP).
The Planning Act 2008 introduced a new Development Consent
process for NSIPs. NSIPs are usually large scale developments
(relating to energy, transport, water, or waste) which require a type of
consent known as ‘Development Consent’. An extension of the
regime in 2013 now allows certain business and commercial projects
to opt into this process.
A Development Consent Order (DCO) automatically removes the
need to obtain several separate consents, including planning
permission, and is designed to be a much quicker process than
applying for these separately. The DCO process starts when an
application is formally accepted by the National Infrastructure
Planning Unit and lasts approximately 12-15 months. The final
decision on granting a DCO rests with the Secretary of State for that
field, based on advice from planning inspectors – known as the
‘examining authority’.
Applications for DCOs are decided in accordance with National Policy
Statements (NPSs), which after a process of consultation and
Parliamentary scrutiny are formally ‘designated’ by Government.536
Local opposition
As we saw in 2007-09 when Heathrow was given approval for a third
runway, there is likely to be considerable local opposition to any
536
more detailed information on NSIPs and the DCO process can be found in HC
Library briefing paper SN6881
Number 7177, 13 May 2015 140
airport expansion at Gatwick or Heathrow. Local campaign groups
are well organised and supported by prominent individuals.537
Due to the new planning process for this sort of development (see
above) it is unlikely that campaigners will be able to delay the
planning process in a way that has been possible in the past.538
However, there may be more ‘direct action’ such as was seen in 2013
over plans to test drill for shale gas at Balcombe in West Sussex and
back in the late 1990s over Manchester’s second runway.539
Shortly after the granting of planning permission for the second
runway at Manchester in 1997 environmental campaigners built 25
tree houses in two camps to establish their presence before the
contractors secured the site.540 They were also claiming to have built
two tunnels. A Judge in the High Court in Manchester refused the
protesters a stay of execution on 10 May pending their appeal against
possession orders granted to the airport and developers at an earlier
hearing.541 There were also reports that bailiffs had admitted that
there were substantial obstacles in clearing the protesters from the
runway site. Several protesters who had previously been evicted had
set up camps on airport land nearby and five were hiding in a network
of underground tunnels, some as deep as 70ft.542 The additional cost
of policing the protests was put at over £270,000 in May 1997.
Protests renewed at various stages of construction, particularly in
1999 when Cedar’s Wood and Arthur’s Wood were cleared.
7.4 What else has happened since 2010?
LHR had a plan ready to go in 2010 and withdrew it
Before the 2010 General Election both the Conservative and Liberal
Democrat parties had indicated that they were opposed to a third
runway and a sixth terminal at Heathrow and had long campaigned
against it. When the then Labour Government announced in January
2009 its intention to invite BAA to put forward a planning application
for a third runway and a sixth terminal,543 the then Shadow Transport
Secretary, Theresa Villiers, said that the Conservatives would “fight
them every step of the way”.544 Subsequently, the Conservative Party
Manifesto for the 2010 election stated: “Our goal is to make Heathrow
airport better, not bigger. We will stop the third runway and instead
see, e.g. AirportWatch, HACAN, and GACC; on the ‘celebrity angle’, see e.g.
“Celebrities buy Heathrow land to delay third runway”, The Guardian, 13 January
2009
538 e.g. the planning public inquiry into Heathrow Terminal 5 took almost four years,
making it the longest in UK planning history; for further information see section 7
of HC Library briefing paper SN1136
539 for more information on shale gas and fracking see HC Library briefing paper
SN6073
540 "Protesters dig in as runway deal awarded", Financial Times, 11 February 1997
541 "Protesters lose eviction battle", Financial Times, 11 May 1997
542 "Bailiffs admit serious obstacles in runway battles", Financial Times, 28 May 1997;
the most famous of whom was ‘Swampy’
543 HC Deb 15 January 2009, cc357-358; the documentation published alongside the
Secretary of State’s statement, including a report on the consultation responses,
is available on the DfT archive website
544 HC Deb 15 January 2009, c360
537
141 Transport 2015
link Heathrow directly to our high speed rail network, providing an
alternative to thousands of flights”.545 Following the election and the
formation of the Conservative-Liberal Democrat Coalition
Government, the Coalition Agreement stated: “We will cancel the third
runway at Heathrow”.546
In May 2010, following the election of the Coalition Government, BAA
(now Heathrow Airport Holdings Limited), the owners of Heathrow,
announced that they would abandon their plans for a third runway
and a sixth terminal at the airport.547 However, there followed
concerted lobbying by the airport itself, the main airlines that use it
and by business to persuade the Government to look again at its
policy on Heathrow. This was a contributory factor to the appointment
of the Airports Commission.
Air Passenger Duty
Over the course of the 2010 Parliament there was a long-running
campaign to reform or abolish Air Passenger Duty (APD). Since the
Scottish Independence referendum in September 2014 there have
also been concerned expressed about the possible impact of
devolution of APD.
APD is essentially a departure tax on all passenger flights from UK
airports. The rate of tax varies according to passenger destination
and the class of passenger travel. The tax is estimated to raise £3.2
billion in 2014-15.548
Some commentators have argued that APD should be charged on
planes rather than passengers, to provide better incentives for
passengers and airlines to cut carbon emissions from aviation. In
January 2008 the Labour Government launched a consultation on just
such a change, but in November that year the then Chancellor Alistair
Darling announced that instead of a per-plane duty, APD would be
restructured: the tax would be based on four geographical bands set
at intervals of 2,000 miles, so that travellers flying farther would pay a
higher rate of duty.549 The new structure took effect from 1 November
2009, despite concerns about the impact of the new system for
passengers making long-haul flights, particularly those making
journeys to the Caribbean.550
During the 2010 election campaign both the Conservatives and the
Liberal Democrats argued for reforming APD, and alongside the 2011
Budget the Government published a consultation paper setting out
options for simplifying the rate structure as well as proposals to
extend the scope of the tax to flights on business.551 In December
2011 the Government announced that it would proceed with
545
Conservative Party, Invitation to join the government of Britain: General Election
Manifesto 2010, April 2010, p23
546 HMG, The Coalition: Our Programme for Government, May 2010, p16
547 BAA Heathrow press notice, “Heathrow updates local residents”, 24 May 2010
548 OBR, Economic and fiscal outlook, Cm 9024, March 2015, para 4.94, p121
549 HC Deb 24 November 2008, c499
550 for more details see HC Library briefing papers SN6426 and SN413
551 HMT, Reform of Air Passenger Duty: a consultation, March 2011, para 1.4
Number 7177, 13 May 2015 142
extending the tax to business aviation, with effect from 1 April 2013,
but that it would retain the current banding structure.552
Generally the Government has opposed cutting tax rates or
abolishing the tax on grounds of cost.553 However in his 2014 Budget
the Chancellor, George Osborne, announced that from April 2015 the
four-band structure of the tax would be replaced with two bands, with
all long-haul flights charged the same rate of tax.554 Since 1 May
2015, children under the age of 12 years on the date of the flight,
travelling in economy, have been exempt from APD.555 Children
under the age of 16 will be exempt form 1 March 2016.556
As to the potential impacts of devolution, there have been concerns
expressed about the cross-border impacts of any devolved – and
presumably lower – rate of APD in Scotland, particularly as it might
affect competing English regional airports such as Newcastle,
Durham Tees Valley, Liverpool and Manchester. Northern Ireland
provides an interesting example: in 2011 the Northern Ireland Affairs
Committee published a report on APD in which it recommended that
the tax should be abolished for flights both to and from airports in
Northern Ireland, because of competition from airports in the Republic
and the threat this posed to one particular transatlantic route.557 In
September 2011 the Chancellor announced that to maintain this
route, the Government would cut the rate of APD on long haul flights
using airports in Northern Ireland as “a response to the unique
challenge facing Northern Ireland and is designed to ensure local
airports remain competitive”.558
When the House debated the annual changes to APD rates at
Committee stage of the Finance Bill on 18 April 2013 there was
discussion of new clauses put down by the SNP and Plaid Cymru for
the devolution of APD to the Scottish and Welsh governments
respectively.559 As indicated in section 3, above, in November 2014
the Smith Commission report was published. This recommended that
APD be devolved to the Scottish Parliament, along with the power for
the Scottish Government to ‘make its own arrangements’ with regard
to the design and collection of any replacement tax.560
In terms of the possible regional impacts of this change, there has
been some pressure to look at devolving APD entirely, so that it could
be set on a regional basis. This may emerge more strongly in the next
year or so, depending on how the debate about English devolution
552
HMT, Reform of Air Passenger Duty: response to consultation, December 2011
HC Deb 23 October 2013, c403
554 HMT, Budget 2014, HC 1104, March 2014, paras 2.160-1
555 HMRC, Excise Notice 550: Air Passenger Duty, 27 February 2015, section 3.1.2
556 HMT, Autumn Statement 2014, Cm 8961, December 2014, para 1.223
557 NIA Committee, Air Passenger Duty: implications for Northern Ireland (Second
report of 2010-12), HC 1227, 8 July 2011, paras 5, 18-19
558 HC Deb 19 October 2011, c964W and HM Treasury press notice, “Chancellor
announces overhaul of Northern Ireland flight tax”, 107/11, 27 September 2011
559 HC Deb 18 April 2013, cc601-2; in the event both new clauses were negatived on
division
560 op cit., Report of the Smith Commission for further devolution of powers to the
Scottish Parliament, p24
553
143 Transport 2015
progresses. There was some debate on this issue in 2011/12 and in
its December 2013 interim report the Airports Commission (see
above) stated that: “Regional variations in APD could potentially give
rise to perverse incentives, for example to not use spare capacity in
London and the South East, as currently exists at Stansted and
Luton”. Indeed on devolution to Scotland and Wales it said:
“Devolving APD would do little to incentivise better use of existing
capacity at regional airports in England, and could potentially distort
competition between proximate airports on either side of a border,
such as Bristol and Cardiff, or Newcastle and Edinburgh”.561
Most recently, the Transport Committee called on the Government to
avoid any further devolution of APD to, for example, north-east
England or Wales that might ultimately “serve to extend a patchwork
of APD-derived market distortions across the UK and drive a race to
the bottom on regional APD rates”. Instead, the Committee
recommended that the Government “act strategically and in the
national interest” to address APD.562
Airspace change
Throughout Europe there is a move to simplify and harmonise the
way airspace and air traffic control is used through the Single
European Sky (SES) project. Processes are underway at a European
level to make modernisation a legal requirement for the UK and other
European states by 2020. The UK intends to address this through its
Future Airspace Strategy (FAS), which sets out a plan to modernise
airspace by 2020.
Any development of runways arising from the report from the Airports
Commission (see above) will eventually require further changes to the
airspace system. However, the development of runways does not
happen quickly; the report to be provided by the Commission in
Summer 2015 and any recommendation made will only be the start.
Adoption of any recommendations, design, assessment, planning
application and construction processes all take time; if/when a
decision is finally taken to progress new runway development it is
probably reasonable to assume that no new runway will be
operational before 2025.
A change to the use or classification of airspace in the UK can take
many forms and may be simple and straightforward to implement with
little noticeable operational or environmental impact. Conversely, a
change may be complex and involve significant alterations to existing
airspace arrangements and impact upon the various airspace user
groups and the general public. Changes to the use or classification of
airspace in the UK are managed in accordance with the Airspace
Charter and under the Airspace Change Process.563
561
op cit., Airports Commission: Interim Report, p119
Transport Committee, Smaller Airports (ninth report of session 2014-15), HC 713,
13 March 2015, para 18
563 further information on airspace change can be found on the website of the
aviation regulator, the Civil Aviation Authority (CAA) [accessed 29 April 2015]
562
Number 7177, 13 May 2015 144
Under its licence from the Civil Aviation Authority (CAA), National Air
Traffic Services (NATS) is required to make sure the UK airspace
system operates safely and efficiently. With that in mind it conducts a
rolling programme of airspace development. NATS follows the
airspace change process set out in the Airspace Charter. As part of
this process it consults with both airspace users and environmental
stakeholders who might be affected by the proposed changes.564
Over the 2010 Parliament the most noteworthy – and contentious –
airspace change proposal was that for what NATS calls ‘London
airspace’. This is something of a misnomer as it only refers to arrival
routes for Gatwick and London City airports above 4,000ft; some
departure routes at these airports to complement the changes to
arrivals above 4,000ft; all routes below 4,000ft in the immediate
vicinity of Gatwick (but not at London City); and changes to some
routes for traffic to/from London Biggin Hill and London Southend
airports that share some of the same airspace as London City Airport.
It does not include changes to the airspace around Heathrow.565
The changes relating to Gatwick caused the most concern. The
NATS consultation was followed by a second consultation published
by Gatwick Airport in May 2014.566 Gatwick was the first major airport
to consult on all levels of its airspace and all other airports will be
required to follow suit. Gatwick’s consultation was focused on
changes in noise contours; changes to or new noise preferential
routes; and rotating respite options. The Gatwick Area Conservation
Campaign (GACC) has been campaigning against not only the
content of these proposals but how the consultations were
conducted.567
Following this consultation Gatwick and NATS announced in
September 2014 their intention to “defer submitting any proposals to
change local airspace until more detailed work is done to better
understand the available options and next steps”. This does not affect
the wider duty to submit a proposal for implementation in 2020.568
Since then NATS and Gatwick have been developing detailed
designs taking into account the consultation responses. This work led
them to split the London Airspace Consultation project into two parts:
the first part focusing on changes designed to improve the efficiency
of London City flight paths; the second part on changes in the vicinity
of Gatwick.569
There were also a number of airspace trials at London airports over
the 2010 Parliament intended to improve operating efficiency. The
most notable were:
564
a list of recent consultations can be found on the NATS website [accessed 29
April 2015]
565 NATS, London Airspace Consultation, October 2013, Part A, para 1.4
566 LGW, London Airspace Change – Gatwick Local Area Consultation, May 2014
567 see, e.g. GACC, London Airspace Change Gatwick Local Area Consultation,
August 2014
568 LGW press notice, “Gatwick to delay changes to local airspace”, 30 September
2014
569 NATS London Airspace website [accessed 29 April 2015]
145 Transport 2015


A trial of extended simultaneous runway use and other
‘operational freedoms’ at Heathrow between November 2011
and February 2013. The airport and the CAA disagreed on the
outcome of the trial. Heathrow concluded that the trial “delivered
useful operational performance improvements in limited areas”
and that as a consequence three operational freedoms should
be integrated into standard procedures as soon as practically
possible.570 The CAA thought that the data from the trial was
‘inconclusive’ and that the benefits claimed by Heathrow in their
report had “not been statistically proven”; further, the
operational benefits of operational freedoms were offset by
some redistribution of aircraft noise among local communities,
and preliminary work had suggested some detrimental
impact.571
A trial of a departure route called ‘ADNID’ at Gatwick for six
months between February and August 2014. The route, which
was trialled on westerly departures from Gatwick, was tested to
gather data as part of wider work looking at how to use UK
airspace more effectively and efficiently, as well as how to make
the most of Gatwick’s single runway capacity (as part of FAS).
Gatwick intends to use the findings from the trial and
consultation to re-visit its airspace change proposal and route
designs in 2015.572 Press reports indicated that there was an
uptick in noise over some areas during the course of the trial.
Gatwick argued that this was not a direct result of the trial but
because of generally increased activity, which is partly seasonal
and partly to do with renewed economic growth.573
Airport failures, closures and nationalisations
Over the 2010 Parliament a number of smaller, regional airports
experienced difficulties, in some but not all cases as a consequence
of the earlier recession. Other factors to consider might be
competition between airlines and with rail and car, video conferencing
affecting business travel, and airspace closures caused by the 2010
Eyjafjallajökull eruption and consequent volcanic ash clouds.
For example, Plymouth City Airport was closed at the end of 2011
due to lack of business;574 Cardiff Airport was nationalised in March
2013 when it was sold to the Welsh Assembly Government for £52
million;575 and Glasgow Prestwick was nationalised in November
2013 when it was sold to the Scottish Government for a nominal
fee.576 Blackpool Airport closed to in October 2014, reopened on a
570
HAHL, Operational Freedoms Trial: Final Report, October 2013, pp2-3
CAA, Heathrow Airport Operational Freedoms Trial, CAP 1117, October 2013, p9
572 LGW press notice, “Gatwick completes departure route trial and asks for feedback
in the final week of its airspace consultation”, 8 August 2014
573 “Gatwick Airport's potential new departure route trial ends amid complaints of
increase in noise in West Kent”, Sevenoaks Chronicle, 11 August 2014
574 “Plymouth airport closure a sign of things to come”, The Independent, 29 April
2011
575 “Cardiff Airport is sold to the Welsh government for £52m”, BBC News Online, 27
March 2013
576 “Prestwick Airport sold to Scottish government for £1”, BBC News Online, 24
November 2013
571
Number 7177, 13 May 2015 146
small scale in December 2014 and started serving commercial
passengers again in April 2015.577
However, by far the most contentious was the closure of Manston
Airport in Kent in May 2014.578 Campaigners have been trying to get
the airport site sold and reopened since its closure and there have
been various accusations levelled against the former owner and the
responsible council. The Transport Select Committee used Manston
as a ‘case study’ in their March 2015 report on smaller airports,
detailing the twisting tale of the airport’s closure, and calling for more
clarity and transparency by the parties involved.579 In the May 2015
local elections UKIP took control of Thanet District Council and
indicated their intention to compulsorily purchase Manston with a view
to reopening it as an airport.580
7.5 Issues for the 2015 Parliament
What is the role of the National Policy Statement for
aviation?
As indicated in section 7.3 above, in order for the Development
Consent (planning) permission for any airport expansion to go ahead,
a National Policy Statement (NPS) for aviation must be approved by
Parliament and designated by the Government.
The Aviation Policy Framework, published in March 2013 presumably
stands in lieu of the NPS until such a time as it is designated. It is
unclear when this would be. The APF states that the Government
expects the final recommendations of the Airports Commission to
feed into the NPS process.581
The lack of an NPS might lead to delays in any decision as it is not
clear whether a decision could be taken in its absence. It would likely
depend on whether the Secretary of State at the time were inclined to
wait for the NPS or not – there are powers for them to take the
decision in the absence of the NPS and there are also powers for
him/her to delay the decision.
Section 105 of the Planning Act 2008, as amended, gives the
Secretary of State the power to take the decision on a DCO in the
absence of an NPS. Section 107 of the 2008 Act and section 23 of
the Infrastructure Planning (Examination Procedure) Rules 2010 (SI
2010/103) (the ‘procedure rules’) allows for further time to be taken in
the decision making process. Under section 107 any extension to the
statutory timetable would require the Secretary of State to make a
statement to Parliament and would not be a decision which “would be
“Blackpool Airport: Daily passenger flights to resume”, BBC News Online, 21
March 2015
578 “Kent's Manston Airport to close on 15 May”, BBC News Online, 6 May 2014
579 op cit., Smaller Airports, section 3, pp16-22
580 “Manston airport: Thanet council Ukip leader Chris Wells says council will try to
buy the site with compulsory purchase order”, Kent Online, 11 May 2015
581 DfT, Aviation Policy Framework, Cm 8584, March 2013, p74
577
147 Transport 2015
taken lightly”.582 Government guidance states that the Secretary of
State:
… is required under the Procedure Rules to notify all interested
parties if he is inclined to disagree with the Examining
Authority’s recommendation because he differs from the
Examining Authority on any matter of fact mentioned in, or
appearing to be material to, a conclusion reached by the
Examining Authority, or because the Secretary of State
proposes to take into consideration any new evidence or
any new matter of fact.
The Secretary of State will set out the reasons for disagreement
with the Examining Authority and will give interested parties the
opportunity to make representations in writing, in respect of
any new evidence or new matter of fact, by an appropriate
deadline.583
How much is a new runway in the South East likely to
cost the taxpayer?
The promoters of the three shortlisted schemes for Heathrow and
Gatwick insist that the cost to the taxpayer will be nil. As Heathrow
and Gatwick are both privately owned it will be for them to raise the
money to fund any expansion proposal. The Airports Commission
concluded that the costs of the three shortlisted schemes at these
airports “could credibly be financed” but that for all options under
consideration “some level of Government involvement may be
required to secure financing at an attractive rate”.584
Government guarantees aside, there is one other area where the
taxpayer might have some liability and that is in the provision or
improvement of surface access for any new or enhanced runway and
the extra traffic (in terms of public and private transport) it would be
expected to generate. There is a general principle for this sort of
scheme that ‘user pays’. For example, the London Underground
Piccadilly line extension to Heathrow Terminal 5 was wholly funded
by the airport owner.585 It is also worth noting that any sort of public
sector contribution would be affected and likely limited by European
State Aid rules.586
In November 2014 the Commission published surface access
analyses by Jacobs Consultancy of the three shortlisted options for
expansion. In summary, these stated as follows:587

582
Gatwick Airport Second Runway: Funding would need to be
secured for the uncommitted BML [Brighton Main Line] rail
CLG, Planning Act 2008: Guidance for the examination of applications for
development consent, March 2015, para 108
583 ibid., paras 117-118 [emphasis added]
584 op cit., Airports Commission: Interim Report, p196
585 TfL press notice, “First Piccadilly line passengers travel to Heathrow Terminal 5”,
27 March 2008 [see ‘notes to editors]
586 for example, the December 2012 Leipzig Halle judgement of the ECJ held that the
construction of infrastructure with a view to its subsequent commercial use, is an
economic activity “and shall be prima facie aid to the operator”, for more, see:
DCLG, State Aid and Infrastructure – Leipzig Halle Guidance (ERDF-GN-1-010),
February 2013
587 Airports Commission, Additional airport capacity: surface access analysis, 11
November 2014
Number 7177, 13 May 2015 148


infrastructure to provide sufficient capacity to accommodate
background demand in 2030. The airport has allocated £50
million in their second runway cost plan for enhancements to
the airport station if additional works are required. The schemes
associated with the airport’s road proposal in the vicinity of the
airport were priced independently by Jacobs based on a QS
assessment and out-turn costs from comparable recently
completed schemes, and an initial estimate of £510 million was
derived for all the identified schemes (£734 million with
optimism bias).
Heathrow Airport North West Runway: The total capital
expenditure costs were estimated at between £1.43 billion and
£2.72 billion. The range relates to the criteria that were applied
to define the requirement for strategic road widening and rail
infrastructure. If optimism bias is included this cost range rises
to between £2.16 billion and £4.03 billion.
Heathrow Airport extended northern runway: The total
capital expenditure costs were estimated at between £1.76
billion and £3.09 billion. The range relates to the criteria that
were applied to define the requirement for strategic road
widening and rail infrastructure. If optimism bias is included the
cost range rises to between £2.64 billion and £4.56 billion.
It is as yet unclear whether the taxpayer would be asked to contribute
to these costs.
Is new runway capacity compatible with environmental
commitments?
As indicated above, both the Labour and Liberal Democrat parties
went into the 2015 election with a manifesto commitment to consider
the environmental impacts of aviation expansion before taking any
decision on new capacity. The question of whether a new or extended
runway with the attendant implied increases in air travel is compatible
with tackling climate change, limiting air pollution and minimising local
noise impacts is a complex one. Particularly on climate change, the
UK has signed up to international and legislated for its own goals to
reduce greenhouse gas (GHG) emissions.588
Globally, aviation accounts for around 1% to 2% of GHG emissions,
but is expected to make up a growing proportion of the total as other
sectors decarbonise. Aviation is harder to decarbonise than other
sectors because of the lack of an obvious low-carbon alternative to
aviation fuel (kerosene). In addition, the long service life of aircraft
compared to most other vehicles means that it takes longer for new
technologies to penetrate the aircraft fleet than, for example, surface
vehicle fleets.589 The Airports Commission stated that industry-driven
fuel-efficiency improvements and biofuels use “will not be sufficient to
tackle the climate effects of aviation”, making further measures
necessary to address the remaining emissions gap “ideally through a
global framework to control aviation emissions” Establishing such a
588
this section assumes that the Government will retain the current legal
commitments ‘as is’
589 op cit., Airports Commission: Interim Report, pp44-5
149 Transport 2015
framework “has, however, proved challenging”.590 However, the
industry has stated that aviation emissions can be carbon-traded to
other sectors that are more easily ‘greened’ and that new technology
can significantly reduce noise and emissions.591
The Climate Change Act 2008 set out a legally binding target to
reduce overall UK emissions by at least 80% below 1990 levels by
2050 and a system of five-year carbon budgets. Separate from the
statutory framework, in the context of its 2009 decision to allow an
expansion of Heathrow airport, the then-Government adopted a target
that gross CO2 emissions from UK aviation in 2050 should not
exceed 2005 levels. Analysis undertaken by the Committee on
Climate Change (CCC) at that time suggested that aviation demand
growth of around 60% between 2005 and 2050 was compatible with
that target, given prudent assumptions around aircraft fuel efficiency
and biofuels use.592
The Commission’s interim report concluded that expansion can be
accommodated, even where aviation emissions are capped at a level
consistent with current plans to meet UK climate targets. In this
scenario passenger demand at UK airports is still forecast to increase
from 217 mppa (million passengers per annum) in 2011 to 295 mppa
in 2030 and 389 mppa by 2050. This is an average increase of 1.4%
a year, compared to historic growth of 4% a year and forecast growth
of 1.5% a year without a carbon cap.593
The CCC wrote to the Commission in February 2015 clarifying its
position, specifically that:
… the 2050 target to reduce greenhouse gas emissions by 80%
compared to 1990 levels, set in the Climate Change Act …
could be achieved with aviation emissions at 2005 levels in
2050, and by reducing other sectors by 85%. Aviation
emissions at 2005 levels could be achieved with fuel and
operational efficiency improvements, use of sustainable biofuels
and by limiting demand growth to around 60% by 2050
compared to 2005. Higher aviation emissions than 2005 levels
in 2050 should not be planned for, since this would imply
greater than 85% cuts in other sectors; there is limited
confidence about the scope for this.594
In light of this the CCC recommended that the need to limit aviation
demand growth should be reflected in its economic analysis of
infrastructure investments and that “it would be appropriate to assess
whether investments still make sense if overall demand growth were
to be limited to around 60% by 2050 on 2005 levels”.595
The Aviation Environment Federation (AEF) stated that constraining
demand growth in this way would be difficult and that limiting
590
ibid., p46
for more information see the Sustainable Aviation website [accessed 6 May 2015]
592 HC Deb 15 January 2009, c360; see also: DfT, Adding capacity at Heathrow
airport - Consultation document, 22 November 2007
593 op cit., Airports Commission: Interim Report, p110
594 CCC, Letter to Sir Howard Davies, 3 February 2015
595 ibid.
591
Number 7177, 13 May 2015 150
emissions to the level recommended by CCC could require politically
unpalatable and practically difficult actions such as:
The introduction of a carbon tax, rising with time to between
£329 and £1316 by 2050 according to the Commission’s own
analysis,
The introduction of planning caps on activity at regional airports
Requirement of sectors other than aviation to make cuts in
emissions beyond the level currently deemed feasible by the
Committee on Climate Change, to allow for further leniency for
aviation596
In addition to greenhouse gas production, aviation also impacts on air
quality in the areas surrounding airports. Section 7.2, above contains
information on how the proposed expansions at Heathrow and
Gatwick might affect these more local concerns, particularly as
regards the numbers likely to be affected by noise. It may also be
worth noting that newer aircraft are quieter and cleaner than older
aircraft, and technological development is likely to continue in this
direction. This makes it more difficult to determine in particular noise
effects and depends to some extent on modelling of changes to
fleets.597
How do we support regional connectivity?
Domestic air travel has seen a decline since 2008.598 An increased
focus on tackling emissions under previous Labour and Coalition
governments has led policymakers to focus on providing reliable
public transport alternatives to short haul domestic flights – such as
high speed rail.
However, there are indisputably some areas of the country (e.g. to
the far north of Scotland and the South West of England) where
access to ‘lifeline’ flights is critical. Government can provide subsidy
for such flights via a Public Service Obligation (PSO), where
companies bid to run a required service on a monopoly basis with a
subsidy attached. PSOs are used in cases where there is insufficient
revenue for routes to be profitable in a free market, but where it is
socially, economically and/or politically desirable to maintain the
transport link. PSOs are a form of state aid and as such are governed
by the relevant EU rules.599
The Coalition Government introduced a policy to promote the use of
PSOs to maintain routes from smaller airports to London which might
otherwise be lost. As the Transport Select Committee explained in its
March 2015 report on smaller airports:
The funding stream for that policy is known as the Regional Air
Connectivity Fund. In June 2014, the Government announced
support from the Regional Air Connectivity Fund to maintain the
air link between Dundee airport and London Stansted until 2016
596
AEF, Climate change committee: is airport expansion viable when emissions are
capped?, 19 February 2015
597 for more information see the Sustainable Aviation website [accessed 6 May 2015]
598 CAA, UK Airport Statistics 2014: Table 02.3, February 2015
599 EC press notice, “State aid: Commission adopts new guidelines on state aid to
airports and airlines (Aviation Guidelines)”, 20 February 2014
151 Transport 2015
through a PSO agreed with Dundee City Council. In October
2014, the Government announced a second new PSO to
maintain the Newquay to London Gatwick air link, which was
agreed with Cornwall County Council. 600
In January 2015 the Government published guidance explaining how
airlines and airports with fewer than five million passengers per
annum could apply for start-up aid for new routes; those with between
three and five million would require clearance from the European
Commission. In March 2015 the Government published a list of those
who had applied for start-up aid: the routes were from 11 separate
airports across England, Scotland and Northern Ireland.601
600
601
op cit., Smaller Airports, para 23, p11
DfT, Airports with fewer than 5 million passengers per year: start-up aid, 22
January 2015; and Start-up aid for airports: applications received, 27 March 2015
Number 7177, 13 May 2015 152
8. Statistical Appendix: transport
trends since 2010
While there have been relatively few fundamental changes in the
patterns of travel in the UK over the course of the past five years,
there are some interesting trends to consider. This appendix provides
an analysis and discussion of some of the key statistical points with
regard to transport over the 2010 Parliament.
As much statistical data with regard to transport is produced on an
annual, rather than monthly or quarterly, basis the latest data for
many indicators is for 2013. In the majority of cases, particularly
where there have been no dramatic changes in trends over the period
2010 to 2013, one would not expect the 2014 data to show a
pronounced change.
The purpose of this appendix is not to provide a comprehensive
analysis of every statistical table and chart which could be produced.
Rather, it is to provide an overview of some of the more interesting
and policy-relevant areas, which may be of interest to Members of
Parliament, and their staff. In general, only GB or England-wide
measures are presented, rather than providing lists of data at local
authority and constituency level. Such data is, in many cases,
available.
Full sets of statistical data are available from numerous sources, the
most significant of which are outlined in HC Library briefing paper
Sources of Statistics: Transport (SN3853).
Overall Modal share
The modal share of selected modes of transport is given below – rail
usage has increased noticably, while other modes have remained
more or less constant. Car usage, however has declined by roughly
3% over the period, but remains by far the most prevalent mode of
transport, at in excess of 5,000 miles per person per year. It should
be noted that the per person averages presented in the chart are
subject to very considerable variations – many people will, for
example, very rarely or never use a motorbike, whereas for others, it
will be their major means of transport.
153 Transport 2015
Distance travelled by mode, England, 2009 - 2013
Miles per person per year
600
500
400
300
200
100
0
2009
Walk
2010
Cycle
2011
Motorcycle
2012
Bus
Rail
2013
Taxi / Minicab
Source: National Travel Survey, Table NTS0302
Transport Expenditure
As an ‘unprotected’ area of public spending, transport - in line with
many areas - saw significant reductions in expenditure over the 2010
Parliament. These reductions totalled almost 20% in nominal terms,
and over 25% in real terms. Expenditure on All Services was roughly
flat in nominal terms over the course of the 2010 Parliament, leading
to significant reductions in real terms.
Index: 2009-10 = 100
Public Expenditure, Transport & All Services,
2009 - 2014
140
120
100
80
60
2009-10
2010-11
2011-12
Total general public services
2012-13
2013-14
Transport
Source: HMT, Public Expenditure Statistical Analysis 2014, Table 5.2
Aviation
Both domestic and international aviation hit a trough in 2010, as a
result of the economic crisis causing a downturn in both business and
leisure travel. Recovery has been steady but provisional 2014 data
indicates that overall passenger numbers are still somewhat below
the pre-crisis peak in 2007. The number of flights has increased by
less than the number of passengers, as concerns over emissions and
noise has led to larger aircraft, with a higher number of passengers
per flight.
Terminal Passengers, UK Airports, 1990 - 2014
Number 7177, 13 May 2015 154
Source: CAA Aviation Trends 2014
Commercial Passenger flights, UK airports, 1990 - 2014
Source: CAA Aviation Trends 2014
As outlined in the main paper, the key policy decisions with regard to
aviation are those around airport expansion, with the Airports
Commission due to make recommendations later in 2015.
Road Traffic
After years of steady increases, the total vehicle mileage on British
roads fell during and after the 2008-10 recession, but has recently
started increasing again. The total distance travelled on British roads
was 310 billion miles in 2014 – more than 3,000 times the distance
between the Earth and the Sun.
155 Transport 2015
Road vehicle miles, GB, 1993 - 2014
320
Road vehicle miles (bn)
310
300
290
280
270
260
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
250
Source: DfT Table TRA0101
The roads that this mileage is being accumulated on are the subject
of concerns with regard to maintenance and repair, with potholes
being a particular concern. The amount of money spent on repairs
and maintenance of roads declined in real terms over the course of
the 2010 Parliament, with the 2013/14 figure being 23.5% lower than
that of 2009/10.
Expenditure on road maintenance, England
6,000
£m, 2013/14 prices
5,000
4,000
3,000
2,000
1,000
0
2009/10
2010/11
Trunk Roads
2011/12
2012/13
2013/14
Local Authority roads
Source: DfT Table RDC0310
The reliability of journey times on major roads is subject to seasonal
variation, but there is little overall trend change. The exceptionally
snowy weather in late 2010 led to only two-thirds of journeys on trunk
roads being completed in line with expected times, but the non-winter
average shows roughly 4 in every 5 journeys being completed ‘on
time’ (in line with the historical expected time for a given stretch of
road). This suggests, given the increase in overall vehicle miles
mentioned previously, that road users are selecting less busy times,
or less congested roads to use, rather than continuing to increase
congestion-related delays on the busiest roads at peak hours.
Number 7177, 13 May 2015 156
90.0
85.0
80.0
75.0
70.0
65.0
60.0
55.0
50.0
April 2010
June 2010
August 2010
October 2010
December 2010
February 2011
April 2011 3
June 2011
August 2011
October 2011
December 2011
February 2012
April 2012 3
June 2012
August 2012
October 2012
December 2012
February 2013
April 2013
June 2013
August 2013
October 2013
December 2013
February 2014
April 2014
June 2014
August 2014
October 2014
December 2014 p
Percentage of journeys completed in line with historical
prevailing time
Reliability of journeys on Highways Agency roads, England
Source: DfT Table CGN 0104
Data on the speed of vehicles from automated monitoring points on
motorways reveal that, when traffic is free-flowing, nearly half of most
types of vehicle exceed the speed limit. This trend has not changed
over recent years.
Percentage of free-flowing vehicles recorded as
exceeding speed limit on motorways
60
50
40
30
20
10
0
2010
Car
2011
Motorcycle
2012
Light Goods Vehicle
2013
Heavy Goods Vehicle
Source: DfT Table SPE0105
Heavy goods vehicles are shown as being more observant of the
speed limit than other vehicles, but this is likely due to the speed
regulator devices which have been mandatory on these types of
vehicles for over a decade. It should be noted that the data refer to a
strict interpretation of the 70 mph speed limit.
157 Transport 2015
Vehicle registrations
Percentage of all registered cars
Recent changes to the Vehicle Excise duty (VED) system to
encourage the use of vehicles with lower levels of carbon emissions
appear to be having the desired effect, although the direct causality
between any policy change and changed behaviour is difficult to
determine. The chart below shows the proportion of registered
vehicles in the two highest, and two lowest emission categories.
Percentage of registered cars, by emission band
(selected), GB 2009 - 2014
6
5
4
3
2
1
0
2009
1 - 100 g/km
2010
2011
101 - 110 g/km
2012
226 - 255 g/km
2013
2014
Over 255 g/km
Source: DfT Table VEH0206
Vehicles registered in the lowest emissions groups pay a zero rate of
VED in their first year, and low rates after this, in comparison with the
highest emitting vehicles, which are charged at a rate of £1,100 at
first registration, and £505 per year thereafter. In addition, vehicles
which emit high levels of CO2 will also tend to be those which have
lower fuel efficiency, meaning that users of these vehicles will also
incur higher amounts of fuel duty.
Diesel fuelled cars tend to have lower CO2 emissions than equivalent
petrol models, but concerns have been raised with regard to the air
quality implications of having a large number of diesel vehicles on the
road. This may be an issue for the 2015 Parliament.
Driving Licences
Roughly three-quarters of the adult (17+) population holds a full
driving licence but there are significant variations between genders
and age groups. Fewer than half of women aged 70+ hold a driving
licence, compared to 4 out of 5 men this age. The proportion of older
women qualified to drive a car is increasing slowly but, particularly as
it is unusual for people of this age to learn to drive for the first time, it
will likely be several decades before the numbers begin to equalise.
Social structures in the mid-to-late 20th century meant that women
were less likely to learn to drive than men, and this trend continues to
show up in the data for older driving licence holders.
Number 7177, 13 May 2015 158
Percentage of population holding full driving
licence by age and gender
85
80
75
70
65
60
55
50
45
40
2010
Men (all ages)
2011
2012
2013
Men 70+
Women (all ages)
Women 70+
Source: DfT Table NTS 0201
Concessionary Travel
Older and disabled people throughout the UK have a statutory
entitlement to concessionary travel on buses (the ‘bus pass’), and
some local travel authorities provide enhanced service by also
funding travel on other means of transport.
Within London (where the concessionary ‘Freedom Pass’ includes
travel on London Underground rail and trams, as well as buses) takeup of passes is at a high rate (98% of eligible older people have taken
up their entitlement), while in non-metropolitan areas of England the
take-up rate is 3 in 4. While it is unrealistic to expect a 100% take-up
rate, the significant disparities among areas may be a cause for
further investigation.
Take-up of concessionary travel passes among
older people
100
Percentage
80
60
40
20
0
London
English
English nonmetropolitan areas metropolitan areas
2010/11
2011/12
2012/13
England
2013/14
Source: DfT Table BUS 0820
Road Accidents
British roads are continuing to get safer, both in terms of the number
of accidents, and the number of people injured or killed in accidents.
159 Transport 2015
In terms of casualties per mile travelled, British roads are among the
safest in the developed world.
Road accident fatalities by user type, GB, 2009 2013
2,500
2,000
1,500
1,000
500
0
2009
2010
2011
2012
2013
Pedestrians
Pedal Cyclists
Motorcycle users
Car occupants
Bus & Coach occupants
Goods vehicle occupants
Source: DfT Table RAS 30001
The position of pedal cyclists has been of particular concern –
partially owing to the high-profile clustering of fatal accidents in
London in 2013. Such a clustering of events, while tragic, is not
indicative of an overall increase in the number of fatal accidents.
While the overall number of cycling fatalities has remained roughly
constant over recent years, this appears to be a function of increased
levels of cycling overall - the rate of fatalities per mile of cycling has
been on a downward trend.
Fatalities per billion vehicle miles
Fatality rates by type of road user, GB, 2003 2013
250
200
150
100
50
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Pedal cyclists
Motor Cyclists
Car drivers
Source: DfT Table 30013
Both accidents and fatalities involving drink-driving have remained
roughly steady over the period since 2010, but are at roughly half the
level seen in 2000. It may be the case that, after the social change
seen with regard to drink driving since the 1970s, less attention has
been paid to this issue in recent years, or it may be the case that
Number 7177, 13 May 2015 160
drink-driving has reached something of an irreducible minimum, and
that it is unrealistic to expect 100% of drinkers to make the correct
and responsible decision not to drive after the consumption of
significant amounts of alcohol.
Road accidents, and fatalities involving drinkdriving, GB, 2000 - 2013
Index 2000 = 100
120
100
80
60
40
20
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Fatalities
Accidents
Source: DfT Table RAS 51001
Trams and Light Rail
While there have been no significant tram or light rail systems
opening since 2010, those systems in use have continued to grow,
both in size and in usage. The number of passenger journeys on
these systems exceeded 200 million for the first time in 2011/12, and
the overall number of journeys was up by 22% on the final year of the
previous Parliament.
Total passenger
journeys
240
(millions)
220
Passenger journeys on light rail and tram systems, England, 1983
- 2014
Nottingham
Express Transit
Croydon
Tramlink
200
180
Midland Metro
160
Sheffield
Supertram
140
120
Manchester
Metrolink
100
Docklands Light
Railway
80
60
Tyne and Wear
Metro
40
20
0
1983/84
Blackpool
Tramway
1988/89
1993/94
Source: DfT Table LRT 0101
1998/99
2003/04
2008/09
2013/14
161 Transport 2015
Rail Performance
(all data Source: Office of Rail Regulation)
The performance of train companies in running trains on time has
come under significant scrutiny ever since privatisation in the mid1990s. While long distance operators have improved performance
significantly over the past decade (albeit from a much worse position)
overall performance of train companies has remained static and, in
the most recent periods for which data are available, has seen a
small increase in delays and cancellations.
Percentage of trains cancelled or significantly late, GB,
2003 - 2014
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Long-distance operators
London & South East operators
Regional and Scotand operators
All franchised operators
Over the same period, the number of passenger complaints with
regard to rail services has declined significantly. In 2002, one
complaint was made for every 782 passenger journeys – by 2013 this
had declined to one complaint for every 3,440 journeys.
Passenger complaints per 100,000 rail journeys,
GB, 2002 - 2014
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
Number 7177, 13 May 2015 162
While the numbers of passenger journeys have been going up in all
areas, the majority of rail usage still takes place in the South East of
England. In 2013/14, 70% of all journeys on franchised operators
were those operating in London and the South East. This is
undoubtedly a function of the density of rail lines, particularly the wellused commuter lines into and out of London, but may raise questions
with regard to finding an equitable distribution of expenditure among
the regions and nations of the UK.
Journeys made (millions)
Passenger journeys on rail services, 2003 - 2014
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
Franchised regional operators
Franchised London and South East operators
Franchised long distance operators
While some Train Operating Companies (TOCs) continue to receive
subsidies as a part of their franchise agreement, in order for them to
provide socially necessary but non-commercial services, the majority
of TOCs pay a franchise fee (negative subsidy) to the Government.
Over the four years of the 2010 Parliament for which data are
available, the Government received a net total of £1.05 billion in
franchise fees/subsidies from all active TOCs.
Conclusions
While there were some interesting changes in patterns of transport
usage and behaviour over the 2010 Parliament, and the past decade,
these do not amount to fundamental shifts in how people in Great
Britain travel. While major policy and infrastructure decisions,
including HS2, the future development of automated cars, and
choices about potential airport expansion in London will fall to be
made by the 2015 Parliament, the lead time on these types of large
infrastructure projects means that any changes to transport usage as
a result of them will be felt beyond the lifetime of this Parliament.
Changes within the next five years are likely to continue to be
incremental – it seems likely that the trend towards lower emitting
vehicles will continue, and that the number of passengers on trams
and light railway systems will continue to expand. Where previous
trends have slowed or ceased, as with the reduction in drink-driving
incidents or the punctuality performance of trains, it may be the case
163 Transport 2015
that a significant lead from Government and Parliament will be
necessary in order to continue improvements.
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