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We move to agenda item 8, which is consideration of the 2003-04 budget process. I welcome Iain Docherty from the University of Glasgow and Professor Alan McKinnon from Heriot-Watt University. I apologise for the slight delay, but as usual we have overrun in our discussions of various contentious issues.
I would like to thank the committee for the invitation to give evidence. My comments reflect my opinion, but arise from a sustained programme of work on the potential of Scottish cities in which my colleagues and I have been involved over several years. My comments also come from an unashamedly pro-city approach. It is fair to say that current evidence reflects the increasing importance of large cities in the global economy. The current and projected performance of the two largest cities in Scotland reflects the fact that the global evidence probably also holds for the future of the Scottish economy.
I should point out that, because I am a freight specialist, most of my comments will relate to freight transport and logistics. Over the years, I have regretted the fact that freight gets barely a token mention in most Scottish Executive and, previously, Scottish Office documents. It is disappointing that the most recent policy statement fits that pattern and makes little specific reference to freight. Two years ago, the Department of the Environment, Transport and the Regions produced a welcome and useful policy document on freight that might serve as a model for the Scottish Executive.
We have arranged our questions into various subjects. The first block of questions will be addressed mainly to Iain Docherty, but either witness may answer any question.
What do you think are the major priorities for public expenditure on transport in Scotland?
Our major priority is to make our key commercial centres and areas that have the most potential for contributing to the Scottish economy more attractive to business. From my opening remarks, the committee will be aware that I perceive those areas as being the main city centres. They will become increasingly important in terms of their overall share of our economic activity. A lot of research shows that the quality of the transport links that are available to businesses and people in the cities is an important element of the package that we must sell if Scotland is to be a competitive destination.
I am sure that Angus MacKay will welcome your words more than most.
I do not know whether they will deliver sufficient change, but they will deliver significant change. They are likely to make the city much more competitive. Edinburgh is in competition with other cities that have baskets of quality assets that make them attractive to investment. Cities must deliver the same sort of assets as their competitors do. If other cities are putting in place quality internal transport, Edinburgh must also do so or it will be left behind. The city has not yet grasped that fact.
What potential do you see for Ayrshire in the unashamedly west-coast approach that you and I might want to pursue?
When I talk about cities, I am actually talking about city regions. I extend my definition of the west to include the Ayrshire towns, which are an essential part of the west of Scotland economy. They will remain important, not just for their employment potential, but as part of a wider urban system in which people travel around to take up employment opportunities in the centre of the conurbation. In order to make the economic unit as a whole function competitively, it is just as important to tie in towns in city regions' peripheries as it is to get things right in the city centre.
Other members want to come in, but I hope that they will not make a range of parochial bids for Iain Docherty's approval of transport and investment in their area.
Of course I will. What is your perception of the importance of the ferry links across the Clyde into Argyll?
I do not claim to be an expert on the overall economic contribution that ferries make to the functioning of the city region. If we are serious about having an integrated transport system, we must connect all the communities that operate as part of those economic units to the functioning of those units. However, I cannot quantify the importance of ferries to the extent that Maureen Macmillan might wish me to. I will defer my answer on that question, because I do not have the information to deal with it.
I am interested in your points about city regions. One of the main problems that they face is social exclusion in that many people are geographically disadvantaged by the problems of the transport system. How will the social justice agenda be addressed within the context of the city regions that you describe?
Among the most important issues are appraisal systems and how we decide where to spend money. There seems to be a dichotomy in the system. The way in which our appraisal system of available capital expenditure works tends to suggest that we want to maximise the immediate revenue that can be gained back from, for example, a new light rail scheme. That leads to the provision of such services in areas in which congestion problems already exist or in which people are more economically active and where more travel already takes place.
I zeroed in on your idea of making key commercial centres more attractive. I argue that the north-east makes a huge contribution to the economy, although that has not been acknowledged as far as infrastructure is concerned. The corollary is localised overheating of economies, or putting our eggs into too few baskets. What are the merits—or otherwise—of the number of key commercial centres that you would encourage?
I will approach that subject from a different point of view. I worry about the current strategies because, despite our rhetoric about rejecting the model of a north American car-dependent sprawl, I am not sure that we have lived up to what that means in policy terms. Local authorities—particularly those in the central belt, where so many exist—are clearly in competition with one another for development. If we define too many key commercial centres, we risk magnifying the degree of sprawl and car dependency. That is a major problem.
Prior to the discovery of oil, the north-east made a major contribution to the Scottish economy in food, whisky and timber. That is not always recognised in strategic thinking.
Without wanting to be too parochial, I say that we need to have a more transparent and open debate about spatial strategies and priorities. It is obvious that local interests will want to argue why their infrastructure schemes are more valuable than others are to their region or to the Scottish economy as a whole. However, I do not think that we are having that debate yet. As I said in my opening remarks, I was disappointed that the enterprise reviews did not tackle more explicitly the notion of spatial strategies.
In your comments about firefighting, you answered in part my next question. To what extent does the recent transport delivery report meet your concerns?
I am not sure that it does. Unless we have a more integrated approach across Executive functions to determining what kind of economy we would like and what it will look like on the map, the discussion of particular schemes will take place in a vacuum and will be less strategic and well developed than it could be. The development plan does not answer fully our questions about priorities, about when schemes will be delivered and come on stream, or about the contribution that those schemes will make to the next stage of development of transport flows in the economy. I worry that schemes are being developed in isolation and that they are not properly integrated with other Executive work.
How effective do you believe the current administrative arrangements are for the delivery of transport policy in Scotland?
As I hinted, my biggest criticism of the current arrangements relates to the fragmentation of local government, particularly in the central belt, where the problem is most acute. We should not lose sight of the fact that the current structure was designed to induce competition among areas for tax revenues, jobs and population. I believe in the value of strategic transport planning. The ethos of competition at lower levels conflicts with higher objectives.
By talking about the fragmentation of local government and city-regional structures—however such co-operation may be achieved—you have anticipated my first question, so I will not ask it. Beyond that, can you suggest a reform of structures that might make a positive contribution toward delivery of our long-term transport objectives?
I am on record as saying that the organisation of the railways in Scotland and the extent of devolution of powers in that area from Westminster to the Scottish Parliament are issues that need to be addressed. Unless there is genuine parity in the control that is exercised by the Scottish Parliament and the Executive over roads and railways, there will never be a level playing field in the assessment of road and rail schemes. The current institutional structure will lead us to choose road solutions. Unless the position is clarified and responsibility for the financing and implementation of rail schemes is devolved fully to Scotland, we are unlikely to create a level playing field. We might end up heading in a strategic direction that we would otherwise reject.
Perhaps we could probe that issue further. Specifically, the question that faces us is the future shape of Railtrack and how it reports. Is there a need for a completely separate Scottish infrastructure company or would it be possible to devolve power to the Scottish Executive to prioritise in a unified UK structure? Perhaps there could be regional management of areas of the network.
Full devolution or the creation of a separate Scottish company is necessary primarily for financial clarity. If decisions are to be taken that are based on the true costs of road transport as opposed to rail transport, and the true potential benefits of each mode, they should be based on a completely level playing field. That requires a separate Scottish company.
You have answered the next question that I was going to ask, so I will not ask it. I have a third question, which I will ask, but first I want to ask about something that you said in reply to the convener. I understand your proposition about control over the infrastructure as well as the services that are run on that infrastructure, but I want to tease out the issue further. What are the downsides of that proposition, in particular in respect of ensuring continuity of planning and delivery in the wider UK rail infrastructure? Think of the main east and west-coast rail lines and the cost implications of maintaining, developing and improving them. Where will the jarring and friction occur? Nothing is ever cost free or pain free.
That is an issue. One has only to consider the problems in co-ordinating the completion of the missing link of the M6 on the west-coast road network to realise that there will inevitably be friction between two separate Administrations.
I would like to clarify a point. Iain Docherty referred to the line in Ireland that runs from the north to the south. I was a co-author of the report. It is remarkable that two state-owned railway companies in two separate states produced and delivered the plan within five years. That happened because a coalition of interests came together.
I did not want to go down this path, but it is enjoyable, so we will go down it a bit further. Are not the economic circumstances of Northern Ireland and the Irish Republic slightly different, particularly in the dynamics of the Belfast and Dublin economies, which are the leaders in both those economic areas? The relationship between Scotland and the rest of the UK is somewhat more complex, because it is not simply a relationship between Edinburgh and London—we have Edinburgh, Glasgow, Birmingham, Liverpool, Manchester and many other areas. More than one clear and distinct railway line needs to be constructed, operated and developed.
There are only two lines—the situation is not as complex as Angus MacKay suggests. The key issues that must be dealt with at GB level are matters such as safety. No other logical condition would prevent Scotland from running its own system. Otherwise, the argument in favour of devolving control of roads to Scotland would be an issue.
You said that you saw no reason why Scottish costs should not be lower.
I said that Scottish costs might become lower.
Under which system would that happen?
That would happen under a devolved system, with a separate company. The argument for that relates to the way in which track access costs are calculated. That is a complex picture on which we could spend the rest of the day.
A system that is fully devolved to Scotland would be similar to the system that existed immediately before privatisation, but a new system would be controlled by the Scottish Parliament, rather than by Westminster. In the latter days of British Rail, ScotRail owned the infrastructure and the track and operated all the internal services that became the ScotRail franchise. The inter-city operators are analogous to Great North Eastern Railway or Virgin Trains today. They paid the Scottish region or ScotRail for the right to access the track.
My next question is a slight departure from the previous topic. Some commentators—notably and repeatedly, David Begg, but others too—have suggested that transport expenditure per head in Scotland should match the figure in England and Wales and that any future increases in public funds that are made available through the comprehensive spending review should be read across to Scotland. I do not agree with the automatic read over, but what are your views on that suggestion? What might be the implications of adopting such a proposal?
When I said that the Scottish economy is undercapitalised and that Scotland has inadequate transport infrastructure assets, I had it in mind that future transport infrastructure spending in Scotland should approach the European Union average, rather than the figure in England and Wales, because our competitors go beyond other cities and regions in the UK. We compete at a European level. UK expenditure has been well below that in comparable competitive countries in Europe. Infrastructure spending has declined as a proportion of the transport budget over the past 10 years. We should invest more in infrastructure to compete at the level of our European competitor regions and economies. That inevitably suggests a significant boost to expenditure, although the whole point about the block grant is that the Parliament is free to decide to distribute it between services or functions as it wishes. I would make a case for increased expenditure on transport, but the Parliament would probably not want a direct read-across.
This question relates to your comments about reforms that might be needed to improve the management of the transport infrastructure. An issue that is apparent to me is that, although Executive expenditure on transport has increased in recent years, that has not always been reflected by increased local authority expenditure on transport. I am sure that local authorities would argue that that is because they have had to prioritise other services, such as education. Is a widespread change necessary in the management of, for example, the A-road network, for which local authorities are largely responsible? Should the Executive take responsibility for more of those roads or could a stronger form of regional transport executives deal with investment in them?
The reason for the lower priority that local authorities attach to transport seems to be the change in the budget headings that arose from the move to housing and non-housing capital allocation in 1996 as part of local government reform. Overnight, the priority that was attached to transport spending dropped—in an environment of a squeeze on local budgets, transport fell down the priority list. There is not much evidence that it will rise back up again without intervention to change the structures.
How many regions would it be sensible to create in Scotland?
The danger is to put on rose-tinted glasses and say that the nine regional councils were probably about as close to a sensible number and sensible structure of top-tier local government as we could get. I do not think that the number would be hugely different from that, although—as history is striking twice—you could go back to the evidence that the Wheatley committee took on the appropriate boundaries of strategic transport authorities, of which there were fewer than nine. You could go back to the idea of having a larger region that takes in the two estuaries in the east, for example. Somewhere between five and nine regions would be sensible.
Although you do not want continuing competition between local authorities for the development of the integrated plan, which apparently has not worked, do you want competition to continue between larger strategic groupings—whether there are five of them or nine—or do you want the integrated policy to be decided by the Government?
There are probably advantages in both approaches. Part of the reason why I support city regional authorities is that they guard against the over-concentration of investment in a particular area. I worry that our current enterprise and transport strategies for the area around Edinburgh are in danger of creating an overheating south-east economy, as there is in the UK as a whole.
That argument applies particularly in Strathclyde, in those areas to the west of Glasgow.
On the first point, I do not know how important the decline in European funding is in relative terms. It is difficult to separate it, as a factor in change, from all the other reforms in the structure of local government that went on post-1996. It is generally recognised that the days of substantial European money for infrastructure investment are probably over; that should be recognised in future planning. However, I would not be confident enough even to attempt to quantify how important the withdrawal of structural funds has been. Other witnesses today are probably better qualified to do that.
We will move on to questions that are more specifically directed at freight.
Professor McKinnon, in your opening remarks you indicated that the importance of freight transport in the context of the Scottish economy was not sufficiently highlighted. Will you give us an overview of the importance of freight transport to our economic performance?
The easy answer is that all economies are dependent on freight. The difficulty is using indicators to quantify that dependence. Freight transport accounts for about 2 to 3 per cent of sales revenue. In that context, one might ask whether it is that important. However, if freight transport did not exist and was not efficient, and if there was not a high quality of service to market, companies could not function. Many of the hard monetary estimates of the importance of freight underestimate its contribution to the economy as a whole.
Will you inform us about the shape or the pattern of freight traffic in Scotland? What are the trends in freight traffic and how would you explain them?
There are several important points to make about the Scottish freight transport system. Many of our freight movements are internal. About 85 per cent of the road freight that gets picked up by trucks is transported elsewhere in Scotland—it never leaves Scotland.
In your opening remarks, you spoke about the aim of increasing rail freight. Are you suggesting that the scope for that is limited and that road freight transport will always be of major importance, because of the short-distance, internal pattern of freight in Scotland?
Yes. Rail has a comparative advantage for long-distance movement. Rail will always struggle to compete with road on movements that are confined to Scotland, which comprise the vast majority of freight movements. There are relatively small amounts of traffic for journeys—to the European mainland, for example—on which rail could exploit its long-haul advantage. Much of that traffic is low density—it comprises high-value manufactured goods, which is not the type of traffic in which rail has traditionally specialised. Rail has majored in the movement of lower-value, bulk commodities.
That suggests that air freight and the logistics industry will grow in significance. I assume that the electronics sector in Scotland regards access to air freight facilities and the like as very important.
Very much so. The most recent figures, which are for 1998, suggest that more than half the value of inbound components to the electronics industry in Scotland come from around the world by air. As a result, air freight links are vital. Although the finished product tends to go out of Scotland by road or rail, we certainly need good air freight links for industries that—electronics is the best example—are essentially global businesses with global supply chains that link into the Scottish manufacturing base.
On the subject of long-distance freight, how do you see the future of freight in the far north of the country and in the Highlands and Islands in particular? What role should roads play as opposed to the railways, which I think are underused in the area?
There have been some interesting developments involving rail into the Highlands. For example, Safeway has moved containers by rail to serve its shops in the Inverness area and in Wick. However, although such developments should be encouraged, the volume of traffic that we are talking about is small, with only a few wagonloads a day. Any such developments are only tinkering at the edges of the bigger picture of the Scottish freight market and I think that the roads will dominate freight movements for the foreseeable future.
What about the role of shipping? I am sorry, Robin—I think that I am about to stray into your next question.
That is okay.
Will the development of coastal traffic present possibilities? Do you think that the puffer will make a comeback?
Napier University and Heriot-Watt University are working on a research project on what are called marine motorways, which might provide opportunities for getting freight off the road network and on to the high seas. We have identified a number of mainly long-distance routes—for example, from the Forth to the Thames estuary—for a roll-on, roll-off ferry service that would be modelled on the Viamare ferry service connecting Genoa, Naples and Palermo. It might be possible to introduce a similar service in Scotland and we are examining the viability of doing so. Although certain customers might be interested in such a service, the question is whether it would be economically viable at the rates that they would be prepared to pay for it. Even so, I think that such a development is still only tinkering at the edges. It might divert a small proportion of traffic, but road will remain the dominant mode of freight transport at all spatial scales.
Does the need for just-in-time delivery drive the dominance of road freight and, in turn, prevent the development of the rail freight network, which cannot reach enough of a critical mass—it cannot put enough goods through—to make it competitive?
That is certainly one factor. The dominant trend in logistics over the past 25 years has been what some call just in time or time compression, which means reducing lead times and rushing products to ensure that they arrive at the moment that they are required. Such a system has worked against the interests of rail. Because trains have to be timetabled and given particular pathways on the rail network, they do not have the flexibility that the road network can offer.
Have any other trends in supply chain management impacted on the freight transport system and on how goods, intermediate products and raw materials are delivered?
Yes—another dominant trend is centralisation. Many companies that would previously have had warehouses in Scotland to supply the local market have now centralised their distribution down south. That partly explains the imbalance between the flows north and south, because many Scottish shops are now served from distribution centres in the midlands. We have also seen an increasing trend towards the bigger manufacturers centralising their inventory at a European level. For example, Sun Microsystems is developing a large warehouse in the Netherlands, so a product that used to be distributed directly from its plant in Scotland will now go through a distribution centre in the Netherlands, adding an extra link to the chain. The process of centralisation—particularly of warehouses and inventories—tends to accentuate Scotland's peripherality. That has to be taken account of in considerations of how Scotland's freight transport system ought to evolve.
Would you like to expand on how it ought to evolve?
The relatively small, but high-value, movements from Scotland into the European market are time sensitive. We must ensure that we provide sufficient express freight services to get those products into key European locations within a certain time.
That is a good point and I think that Robin Harper's questions will follow it up.
My two questions have been substantially answered, so I will try to condense them into one. In your introduction, you mentioned modal switches—from road to rail, for example. Can you identify more precisely the opportunities for switches from road and air to rail freight? Does the transport delivery report address the needs of freight transport in Scotland? Are the priorities appropriate and is anything missing?
The main policy tool that is used to effect a modal shift to rail—and to water—is the freight facilities grant. The only specific references to freight in the document relate to that grant, which has been a reasonably effective measure. It is obviously a capital-related measure, whereby the development of rail sidings and terminals is subsidised. After a lean patch in the 1990s, when I do not think that Scotland awarded any freight facilities grants at all, we have swung towards quite generous provision of grants. My worry now is that we may swing too far and fund some schemes that will not yield a healthy rate of return.
When lorries were given derogation on road fund licences, the cost of delivering freight by road dropped. That had an impact on rail freight because the freight companies wanted charges to be lowered. There was a bidding war between road and rail. Is there any way out of that situation?
I will complete the picture that you described. The Government increased the maximum weight of lorries to 44 tonnes, which gave road freight an advantage. I think that the rail regulator increased the amount of track access money that was available in the UK. I think that £500 million was awarded, partly to compensate rail freight for the decline in vehicle excise duty and the increase in maximum lorry weight. That award helped to level the playing field again for the two modes.
In the inquiry, we are trying to reach a position whereby we can say to the Scottish Executive that it should change its expenditure priorities in an X, Y or Z way. What specific changes in the priorities for transport spend do you advocate to benefit rail and to deal with the peripherality of the Scottish economy?
I advise caution on expenditure that is earmarked for rail freight, which includes the freight facilities grants. We must ensure that there is a reasonable return for investments in rail terminals and sidings. Remarkably little research has been done in the past 30 years—which is how long the grants scheme has been running—into the environmental and economic benefits of the scheme. There must be a tighter appraisal of the scheme.
I imagine that Robin Harper will be quaking at the suggestion of green lanes for lorries.
I do not know much about that link, so I cannot give you any hard answer to that question.
Do any other members wish to ask questions? Is Robin Harper going to come out in favour of green lanes for lorries?
I have no problem with the idea of making freight transport more efficient by such measures.
Correct me if I am wrong, but a distillation of what you say is that trying to move freight traffic on to the railways is like trying to push water uphill. It is not what the market has sought or is likely to seek in the future.
The surveys that have been done suggest that many distribution managers would like to send more freight by rail but that they will not do it if it costs them money or disadvantages the business in some way. When the railways were privatised in 1995-96, there was a renaissance and a steep increase in the amount of freight that was carried by rail. That honeymoon period has now ended. Some of the business that the railways won at that stage was at uncompetitive or unprofitable rates and some of it has now been shed.
The only thing that will drive an increase in rail freight is increasing road congestion.
Ironically, that is true. However, rail congestion is also a problem. It is difficult to find pathways for freight traffic through the congested rail network, particularly when it has to go across conurbations at rush hour.
Both Fiona McLeod and Nora Radcliffe have questions. I ask them to be very brief.
I have a specific question that relates to what we were just talking about. In the budget for this year, one of the key priorities is to
I think so. There are two types of freight facilities grants. First, there are those that go to big generators of freight, such as the BP chemicals plant. On the basis of a big company's sales projections, it is possible to predict with confidence how much freight will be generated. Many of the recent big investments in freight facilities grants in Scotland have been of that type, involving an identifiable traffic flow whose expansion can be predicted with confidence. Secondly, there are grants to hauliers who are undertaking a speculative development. They say that they would like a freight terminal and that they would like to think that, say, 50 clients will use it over the next five or 10 years. That is a much riskier investment. I worry that, if the Scottish Executive expands the FFG programme, there will be fewer projects in the first category and more in the second. Such projects are riskier and more speculative—there is a danger that the freight predicted will not materialise.
My question is about the barriers to moving freight on to rail. Would that move be facilitated by introducing a requirement for dedicated freight time or for freight passages on the rail network? To enable things to be done quickly, we need to give attention to practicalities such as the physical transfer of loads from lorries on to rail and off again. Should we consider a roll-on, roll-off system?
Those are good points. It is difficult to find pathways on the rail network. Freight must compete with passenger services. Often the revenue that the infrastructure operator gets from a passenger train is greater than the revenue that it would get from a freight train. A market exists. Express freight—the higher-value, just-in-time products—may be able to bid for a more convenient path through the network. However, to date, rail freight has not done very well in gaining access to paths on the network.
Would it be more sensible to apply the proposal for a high-speed spinal track to freight traffic, and to take the freight off the existing passenger network, which goes through all the towns, cities and other settlements?
I would not have thought so. If the Strategic Rail Authority gets its long-term wish and there is a new spinal route, that would be better dedicated to passenger traffic, which would allow freight to get more pathways on the existing lines. That would be a more sensible solution.
That brings us to the end of our questioning. I thank both witnesses, Iain Docherty and Alan McKinnon. The evidence that they have given the committee has been very useful.
Thank you, convener. We appreciate the opportunity to give evidence to the committee on this subject. Whether we like it or not, finance is crucial to what SPT does in discharging its public transport responsibilities in the west of Scotland conurbation.
I have written a paper for the committee on the effect of grant-aided expenditure on local authorities' road networks. The paper considers whether the current formula is logical and reflects local authorities' needs. I am happy to field questions on the paper.
On behalf of the society of chief officers for transportation in Scotland, I express appreciation for the opportunity for Scott Rogers and me to present evidence to the committee. I will refer particularly to the COSLA submission on the comprehensive spending review.
The first block of our questions concentrates mainly on SPT. We will then move on to broader questions on transport. If a panel member wants to contribute to answering a question that was initially addressed to another person, by all means do so. We will start with Fiona McLeod.
I have general questions on the transport delivery report and in particular about SPT. Witnesses other than Malcolm Reed might want to comment. The transport delivery report praised SPT, but it is clear from your opening remarks that you are worried about the funding for delivery. Will the report deliver for Scotland's transport needs? If you think that things have been missed from the report, you can bring them to our attention.
The vision is there and is of a piece with what went before. It is probably fair to say that the present Administration has had a consistent vision since 1997 and, in Scotland, since 1999.
The vision certainly mentioned major improvements in the rail network and trunk and motorway roads. It indicates graphically a significant trend of increasing expenditure on transport. Again, that is not reflected in a similar increase for the local road network. Bus deregulation had a major effect on congestion in Glasgow. For example, 3,000 buses a day go down Union Street and at times they are nearly bumper-to-bumper. That is a problem for transport management in the city.
I turn specifically to SPT on financial allocations, which Malcolm Reed talked about in his opening remarks. Only one budget line specifically mentions SPT and its contribution for rail.
The grants that are available have been helpful. The rural transport fund has been of real benefit in allowing us to push out new public transport services into areas that are difficult to serve with conventionally funded public transport. There is always the problem of how much security of service we can provide if we are dependent on a potentially temporary annual grant. Our real problem stems from the fact that most of our funding reaches us indirectly, through our constituent councils, rather than as a separate budget line that is identified in the local government settlement.
One of the problems that SPT has in its funding base is that, of the £200 million that it spends annually, £70 million comes directly from local government lines. Almost annually, it enters into a funding negotiation process. SPT has powers and duties to deliver transport, but does not receive its funding directly. Obviously, there is a particular issue in respect of deliverability. SPT is grateful for the money that it receives from the rural transport fund and other funds, but to grow further or to develop transport, it needs to control that financial base slightly more so that it can put plans in place with its own control mechanisms. At the moment, because we rely on another party, we are restricted by our own growth through that mechanism.
Argyll and Bute Council is a rural constituent authority of SPT. In my paper, I touched on the Executive's current support for buses, which is based purely on population. One of our concerns is that we are spending significantly more than our grant-aided expenditure on bus support. I hear what SPT says, but if SPT wished to provide improved bus services and asked us for an increased level of support, we would have to try to find that support within our existing resource. Already, we are spending four times our level of GAE in providing support for bus services within Argyll and Bute, so there is obviously a mismatch somewhere within funding from the Executive for public transport and buses.
Is that—
I will bring you in in a moment, John. I have a question for Malcolm Reed or Valerie Davidson. SPT's submission highlights the relatively lower funding of SPT compared with that in similar metropolitan areas in England and Wales. How do levels of subsidy for public transport in the greater Glasgow area compare with levels in other metropolitan areas? What is the level of subsidy per passenger for rail and buses in the west of Scotland, compared to that in the greater Manchester area, or in other areas? What impact do those levels have on the use of public transport in those areas? What percentage of the overall commuter market uses public transport in the greater Glasgow area, compared with other metropolitan areas? If you cannot give me detailed answers off the top of your head, information in due course would be useful.
We can certainly provide a more detailed note. Some information will be available, but I would be the first to say that such cross-comparisons are inevitably broad and that there are always issues within figures. For example, we are unique in operating our own underground system. Tyne and Wear runs the metro, which is a much bigger light rail system, but it has a different financial impact as it is funded through the special rail grant rather than through local authority accounts.
That would be helpful.
We have by far the highest volume of rail usage of any of the passenger transport executives. That demonstrates that the consistent and reliable funding that we enjoy, in the form of direct funding from the Scottish Executive, allows us to develop services and provide passenger benefits in a cost-effective way.
Do you have a question, Fiona?
The matter has been covered.
We have probably touched on the answer to my question, but I will ask it anyway. What changes to address local and regional transport needs throughout Scotland would you recommend? You have already spoken about increasing services to Ayr, Kilmarnock and Bridge of Weir. Are there any other places that should have increased services?
I will supplement John Scott's question by asking whether we should consider creating structures that are similar to the SPTE in other areas of Scotland, to replace the looser forms of transport partnerships that have been developed between local authorities in those areas.
I will answer the second question first. We have always been careful not to be prescriptive about how other people should do things. We feel that in the west of Scotland we have a model that works well in those particular circumstances, and which has given us a base to carry out relatively successful work in the more rural parts of our area.
I was impressed by the double-decker trains that have been introduced in Nice, which travel at more than 100mph. Is there the possibility of, or potential for, that kind of technical development in Scotland? Obviously, the limiting factors are the length of platforms and the speed of getting people on and off trains.
I think that Professor McKinnon referred to the limitations on the loading gauge, which affects the ability to take freight. Unfortunately, the same applies to passenger traffic. Glasgow Queen Street high-level station is a classic example of a station in which all the platforms are short; in fact, not all the platforms will take even a six-coach train. To get into that station the trains must go through a tunnel that is built to Victorian dimensions. In whatever way the problem is solved, a lot of money will have to be spent on engineering. Both of the key lines that run east-west across Glasgow run through tunnels. The scope for double-decker trains is limited.
You touched on the difficulties between local government and parliamentarians. To broaden the question, how far do the present structural administrative arrangements between local government, the Scottish Parliament, the Executive and the UK Government promote the effective delivery of transport policy in Scotland?
I am bound to say that there are significant inhibitions in the present structure and relationships. Valerie Davidson referred to the specific difficulties that we have in negotiating our budget. I have every sympathy with local councils, which are under equally strong financial pressure from other priorities. We do not have a robust and buoyant means of financing public transport. That is partly because of institutional arrangements. France and Germany have dedicated taxes and systems of raising revenue that are used to support public transport, which makes the life of my equivalents in those countries much easier. That is reflected in the quality of service in those countries.
I would like to probe those points a little further, although they probably stray into the remit of our rail inquiry rather than into that of our current budget inquiry. I do not know whether you were here earlier when Iain Docherty proposed the establishment of a Scottish infrastructure company and the direct devolvement of infrastructure issues to the Scottish Executive. Would such measures help with the problem of the centralisation of decision making on the railways?
I think that they would help, but there would also be other ways of solving that problem. Iain Docherty and Professor Smyth referred to the lack of transparency in the way in which money moves around the rail industry—that is a particular concern of mine. Up until the last regulatory review, ScotRail was probably Railtrack's biggest single customer. Things have obviously changed since, but large sums of money are raised through track access charges and it is very difficult to trace where they go. Railtrack operates a single till—all the money is taken in centrally before being allocated. The achievement of transparency and accountability for those flows of funds must be urgently addressed. Although I understand the pressures and difficulties now that Railtrack is in administration, that increases the inertia and adds to the delay in getting decisions on schemes that are important to local and Scottish priorities.
I want to move on to ask about the position of local government. I imagine that Scott Rogers will be the most likely person to answer. I will not ask, "Is there sufficient funding for transport?" because you are clearly saying that there is not. However, I would like to know what funding you believe will be necessary to fund local government's transport commitments. If additional funding were allocated to local government by the Scottish Executive, would it go on transport or on other areas of expenditure?
Alistair Gow and I are from very different authorities, but I think that we agree that the existing method for allocating money to local authorities for road functions is historical and bears no relation to existing needs. The Society of Chief Officers of Transportation in Scotland has suggested that the allocation should be based on what each authority actually maintains: the carriageway area, the footway area, the traffic signals and so on.
Obviously local authority budgets are increasing. However, if additional funding intended purely for transport were provided in some future spending review, what is the likelihood that that money would be spent on transport? One of the continuing debates between the Parliament and local authorities is the degree to which expenditure is directed. By and large, local authorities want the maximum freedom to make decisions at a local level in accordance with their priorities. However, by the same token, if the Scottish Executive agrees with transportation officers' claims that they need more money and increases resources, will that money be spent on transport or on other services?
I cannot answer for all authorities. As I explain in the paper, Glasgow City Council spends significantly more on its roads function than it receives in GAE, simply because it recognises the importance of the local road infrastructure. To be perfectly honest, given the condition that the road network across Scotland is getting into, I would be surprised if any additional money directed at transport were not spent on that.
The SCOTS survey indicated that a 30 per cent increase overall—or about £86 million to £90 million—would be required to address the backlog. Although some of the figures may have an error of magnitude of plus or minus 10 per cent—I would not like to argue either way—that still represents a significant difference from the current position.
I want to pursue this question a little further. We asked earlier whether there needs to be a change in structural relations. I have found that problems arise in areas where major roads cross local authority boundaries. For example, a particular road can be more important to one authority than to another. As a result, the road might be maintained to a very high level up to a local authority boundary, but its condition becomes markedly different when it crosses into a local authority whose residents do not consider the road to be as important. What structural changes do we need to try to address that? Is there a need to put the responsibility for those roads on a city-regional basis, as we have been talking about? Is there a consensual view among local authorities about the way in which we should try to address such issues?
There is certainly a need for a wider regional dimension to transportation, and each of the four existing regional transport partnerships is developing a transport strategy, which will address issues such as those that you have highlighted. For example, a certain road may be very important to one community but less important to another. When I was in South Ayrshire, the A70 was important to the communities around Ayr as a link to the motorway; however, people in South Lanarkshire did not attach the same importance to that section of road. I hope that, in the wider context of the regional strategies, such issues will be highlighted and agreed as regional priorities.
I was going to ask the question that the convener asked, about ring-fencing money for transport. I know that, in certain authorities, for 20 or 30 years the transport budgets have been squeezed and often spent below the GAE. As you say, the chickens are now coming home to roost. It is like putting shoes on one's children's feet or food on the table, but not mending the roof of the house—and we now find that the roof is leaking. However, I do not want to pursue that line of questioning, as the convener has already done so.
I want to pursue it a little bit on the theme that Scott Rogers touched on. We are obviously reaching a point at which the roads are heading towards the state of those in third-world countries. How long have we got? The worse the roads get, the more investment will be needed to sort them out. What time scale are we talking about before they no longer function and we have to change our vehicle styles to drive on them?
I do not think that we will ever get to the stage of having classic third-world roads.
I have seen some third-world roads and they are better than ours.
Well, all right. I meant the classic idea that someone might have in their mind of extremely badly pitted and rocky roads. Rather than trying to maintain roads to an optimum standard, we are putting sticking plaster over them. We are paying for cheaper, short-term treatments rather than full reconstruction that would allow us to get 15 to 20 years' use from a road with minimal maintenance. The question of how long we have got is dependent on the condition of each individual road. According to our examination, in 10 years' time the maintenance backlog for carriageways in Glasgow will have increased from just short of £48 million to £131 million. That is a frightening figure.
I am conscious that we are running over time and I want us to address some specifically rural issues. There are two lines of questioning that we want to pursue. I ask Maureen Macmillan and Nora Radcliffe to be as concise as possible, although I recognise their legitimate interests in the subject.
Alistair Gow has already spoken a little about the rural dimension, so I will try to ask three questions in one. I have here the document "Scotland's Transport: Delivering Improvements". I have it open at the page for the Highlands and Islands, where there is a map of all the initiatives and projects. I want your opinion on whether such projects—which are a mixture of social and infrastructure projects—address the needs of rural areas. Would you like to see the money reallocated to other projects?
There are a variety of issues involved. I do not want to be prescriptive and try to identify specific projects in this forum, but there is a requirement to consider how funding is currently allocated—whether it is through the public transport fund, which is coming to its last year, or otherwise. When we are considering future means of prioritising or financing projects, I hope that there will be a wider set of criteria that acknowledges the divergence in transportation needs throughout Scotland.
I was interested in what you said about having to build new roads to access forestry or aquaculture. The aquaculture industry has raised that issue, and said that if the industry is to expand, it will have to go to places where there are roads—the industry needs to have access to sites and the roads are not always there. What budget would be needed for that?
It is difficult to come up with a figure. I might need more time to quantify that because it is difficult to grasp. Perhaps the aquaculture industry has already considered the road network and tried to set up some of its infrastructure where it can get good access to serve the fish farms.
Within the next 10 years, might the job become one of rebuilding rather than resurfacing?
You have made that comment already. Certain sections of the road network are showing increasing signs of disrepair. Scott Rogers touched on the fact—I do not want to highlight this as simply a rural issue—that we are doing patching and temporary repairs and adopting cheap, temporary solutions. People often do the temporary pothole repair before they do the permanent patch. The cost of temporarily repairing 1 sq m of road is probably between eight and 10 times the cost of resurfacing. In unit cost terms, temporary repairs are very expensive.
Another issue in some rural areas, particularly Argyll, is that the roads are detrunked and the local authority has to look after them. The road between Oban and Lochgilphead is in that situation, for example. Since it was detrunked, it has started to become like a third-world road. Do you see any possibility of persuading the Executive to take such roads back on board as trunk roads?
We have had discussions with the Executive. We talked about the A816 and the A83 south of Kennacraig, which the Executive has shown no desire to take back on board. The alternative is to ensure that local authorities throughout the country are funded adequately to address infrastructure problems.
We have to prioritise work on roads scientifically, rather than give the new stretch of road to the councillor who shouts loudest.
A lot of what I was going to ask has been covered. The only thing that has not been covered is the disparity in spending levels and revenue between Scotland and England. You cited £85 million over three years in relative terms. What impact does the £20 million of revenue funding that was announced in February have on that?
Obviously, that is beneficial. The money was welcomed because it shows that the Executive recognises that a problem exists. It is unfortunate that the funding is for one year only. I would have liked the Executive's document to say, perhaps as an 11th priority—without applying a time scale, as was done in England—that we need to invest in the existing local infrastructure network to ensure that it is fit for purpose.
Would it make more sense to make all local authority allocations on the basis of GAE, but raise the level of individual aspects of GAE, so that funding was not provided under two headings? Would that be better?
It is useful to have transparency so that people understand the allocation and how it has been derived. They can then decide whether they want to move funding from A to B. I will describe another problem with transportation by extending the house analogy. People can put off painting a window year after year, but if they do so, the window frame will eventually degenerate and a new window will have to be fitted.
I will clarify two points and pick up an issue to which Alistair Gow referred. A question was posed about whether structure and GAE should be examined. An important issue exists in relation to how GAE is distributed to authorities and subsequently, in the west of Scotland, to SPT. Alistair and his colleagues talk about roads, but the GAE mechanism does not refer to public transport policy and planning. That is a fundamental flaw in the process.
That brings us to the end of our questions. I thank all four witnesses for their informative evidence and for the written submissions. All the evidence that we have received today has reinforced to us the importance of long-term investment in our transport infrastructure. To some extent, you are preaching to the converted. If we need any further detail, I am sure that we will correspond with you.
Meeting closed at 13:56.
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