Transport and the Environment Committee, 24 Jan 2001

Meeting date: Wednesday, January 24, 2001

Official Report 275KB pdf

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Rail Industry

Our final item is information from the Executive on current developments in the rail industry, with specific reference to the franchise process. I welcome the two officials from the Executive, Adam Rennie and Paul Smart. I understand that you have prepared a short introduction.

Thank you, convener. We are grateful for the opportunity to give evidence to the committee. I am the head of transport division 3 within the Scottish Executive's development department. Paul is the head of the railways branch in that division. The clerks have handed out a short submission of two or three pages. Before we talk about the consultation paper on strategic priorities, it might be useful to remind the committee of the statutory background, which is not straightforward.

The policy on railways devolution was announced by Mr McLeish in the House of Commons, during the passage of the Scotland Bill in 1998. Rail transport is a reserved matter under schedule 5 of the Scotland Act 1998, with the limited exception of certain types of grant. However, Mr McLeish set out various measures of executive devolution and two transfers of legislative competence. The package was to be delivered in the context of the proposed new Great Britian regulatory framework for railways, which was eventually introduced under the Transport Act 2000. That act received royal assent in November.

Our handout summarises the three main strands of implementation of the devolution policy. I will be happy to elaborate on them if the committee wishes, but, in view of time pressures, I shall now hand over to Paul Smart, who will talk about strategic priorities and our recent consultation paper.

All committee members will have received a copy of the consultation document that we issued on 28 November. The document was sent to about 500 stakeholders and other interested bodies as part of a consultation exercise that will last until the end of February. We are receiving a steady stream of responses. I take this opportunity to provide a summary of what the strategic priorities document covers. As members will see from the slide, I will cover four main areas.

The document sets out a vision and a set of objectives, and emphasises the importance of partnership in delivering strategic priorities for railways in Scotland. As Adam Rennie pointed out, we are working within a set of devolved responsibilities. This document is the first major expression of our exercising those devolved responsibilities. It sets the scene for the Scottish Executive's strategic steer for a new Scottish passenger rail franchise, which we have said will need to be in place before the end of the current franchise, which is due to last until March 2004.

The vision draws its inspiration from the Scottish white paper on transport, which was published in 1998, and from the programme for government. It sees railways as a critical part of a sustainable and effective integrated transport system. It envisages a railway that is safe, accessible, supports economic development, assists with the provision of social needs and helps to reduce peripherality. The objectives are drawn from that vision and are geared towards seeking to increase the number of people who use the railway, supporting a reduction in congestion and assisting in greater accessibility to rural communities and regional centres.

The document points out that it is critical to the success of those priorities to develop partnerships, principally with agencies such as the shadow strategic rail authority, local government, Strathclyde Passenger Transport Executive, the rail industry and representatives of passengers—principally the Rail Passenger Committee Scotland. Those strategic priorities will inform how we develop our directions and guidance to the shadow strategic rail authority on the Scottish passenger rail franchise.

As I have said, the principal objective is to attract more people to rail. There is an opportunity to increase demand for rail transport. We can do that by improving the quality of the service and through the provision of new trains and associated improved track. In urban areas, we want an increase in the frequency of trains on key routes and propose the provision of longer trains on key routes to reduce overcrowding and to assist in the reduction of congestion in key transport corridors. In rural areas, we suggest that there is a need to increase the speed of train services to compete effectively with the car. We want to improve reliability and punctuality. That is a continuing commitment; it already exists within franchises, but we want it to be stretched even further. Overcrowding must also be tackled, especially on key commuter routes in central Scotland.

We know that the safety of the railways is a reserved matter, but we believe that the safety of rail passengers must extend beyond the train to the routes to and from stations. Secure stations must therefore be a priority. Our priorities include improving service quality, improving the quality and comfort of the journey, simplifying ticketing and improving the quality of customer care and staff.

We believe that rail will play a critical part in the integrated transport system. We have already said that we see it assisting in the reduction of congestion and that we believe that it will have a critical impact in improving the environment through the reduction of pollution. I have already mentioned that we want rail transport to assist in the reduction of peripherality. By making rail transport affordable and accessible to all people in Scotland, we also see its potential to assist in the reduction of social exclusion.

There is an opportunity to widen demand for rail transport. Developing a seamless journey must be a priority—through-ticketing is a clear example of that. Another priority is working more effectively with operators—not only the current ScotRail franchise holder, but also cross-border operators and freight operators—to ensure an integrated rail system for Scotland.

That has implications for attempting to secure investment. We recognise that railways cost a considerable amount of money—investing in new trains and track does not come cheap. There is a challenge for the Scottish Executive in supporting rail projects in association with the rail industry and there are opportunities for levering in private investment. There are opportunities for considering alternative means of investment through joint ventures and single purpose vehicles. We must also work more effectively with the shadow strategic rail authority, which—under the terms of the Government's 10-year plan—is being vested with a considerable amount of money to invest in the rail network throughout Great Britain. We want to consider ways in which we can work with it to match its funding with funding from the Scottish Executive.

That gives the committee a brief outline of where the strategic priorities come from and how we think they will contribute to a debate in Scotland about how Scotland's railways will develop in the future.

I will start with a point about investment, as the idea of the longer franchise period is to maximise the investment that the train operating companies will be prepared to make. I had always understood the strategy to mean much more than investing in the rolling stock. I had understood the investment to be co-investment with Railtrack and other interests. To an extent, I thought that the Railtrack investment would be funded through the charges that the train operators would make. I was surprised that the consultation document did not indicate the Executive's priorities for major enhancements or extensions to the network.

The paper from the National Union of Rail, Maritime and Transport Workers, which we have also been given today, points out that there is not a vision of where the Executive might want to see improvements. I find it difficult to believe that when it comes to the evaluation of bids, the Executive will not consider carefully where the potential operators want to invest. The Executive should have shared and debated that vision, so that we were aware of the criteria. Are you authorised to tell us what quantitative and qualitative improvements the Executive is looking for on major routes? If not, can you explain the thinking behind not being location specific? The proposals are admirable but general, so it is hard to see what is likely to pick up or improve materially in five to 10 years' time.

I will respond generally to that point and ask Paul Smart to say a few words about the channels for investment. The approach that the paper takes is, as Mr Tosh said, deliberately not location specific. At this stage in the exercise, we do not want to pick certain projects and say that one project is important and, by implication, that another is less so. We want to set out the general objectives, as Paul Smart outlined in his summary of the paper, that we want the next franchise to deliver in specific situations in Scotland.

Transport needs in Scotland vary from place to place. In some areas, the issue is congestion; in others it is journey time. The Executive is not in a position to identify specific projects and say that one is a winner and one is not. We want to indicate to the shadow strategic rail authority the sorts of projects that we want to emerge in response to opening the bidding exercise for the next franchise, so that it has a template against which to assess the proposals that are produced. The exercise will become more refined as it goes through the various stages. Specific projects will start to emerge. If we are too specific at this stage, we will unnecessarily close off options and creative thinking by potential franchise bidders, who are probably in a better position than we are—or at least as well placed as we are—to produce ideas and cost them.

That is the broad thinking behind our approach. Paul Smart will comment on the various avenues for funding capital investment in the railways.

I appreciate the point that is being made. We can all make shopping lists of the things that we would like to see on the rail network. The document tries to set out the priorities against which those shopping lists might be assessed. There are different priorities in different locations for how the railways can assist in developing an integrated transport system.

I genuinely expect that a lot of people will respond to the consultation. I hope that they will respond with an idea of how they would like to see railways develop in their localities. I expect local authorities to come forward with proposals along those lines. I do not think that the Scottish Executive is the sole guardian of what those priorities and schemes might look like. We need to provide a context in which people can express their aspirations for the rail network within a set of strategic priorities, to allow us all to prioritise those shopping lists.

From experience of franchise replacement, I expect that we will also see a lot of innovation from bidders for franchises, as is happening south of the border. We want that in Scotland, as we believe that there is room for innovation in the rail network. We and the strategic rail authority see that process as being output driven rather than input driven. We want people to have a set of broad principles and to come forward with ideas that we can cost and prioritise accordingly.

When the SRA makes the decision, with all the appropriate guidance and representation built in, will it look specifically at the material considerations behind proposals? If an operator comes up with a proposal for an express service from Glasgow to Edinburgh, for example, will the decision be founded on the material considerations?

Absolutely.

Because I represent the Highlands and Islands, I am interested in what will happen to the far north line, the Kyle line and the west Highland line. I am concerned about whether there is enough commitment to those lines. They are underused, although they have tremendous potential. In discussions with ScotRail, Railtrack and user groups, I have not got the impression that the potential of those lines is likely to be realised in the near future unless there is massive investment.

The consultation document contained some good things and asked questions about the speed and length of trains, but I felt that it concentrated too much on long-distance journeys and not enough on short journeys on the west Highland railway—commuter journeys from Mallaig to Fort William, for example, into Oban or from the west into Dingwall and Inverness. A good commuter network is building up around the inner Moray firth, but a lot more could be done and there is demand for it. Your document did not address that demand or ask questions about it.

The starting point for any new franchise will be the current public service obligation—that will be the minimum level—which is built into the current ScotRail franchise, plus any agreed enhancements. What we have at present will certainly form the floor of the future franchise.

We are interested in proposals from bidders for the franchise, particularly in respect of journey time priorities. That is particularly relevant for the north line. We are also aware of suggestions for developing some sort of local commuter network around Inverness. Paul Smart mentioned access to regional centres as being one of the priorities that we want delivered. Simply because something is not mentioned in the document does not mean that it is not happening or that it is ruled out.

We need a proper definition of regional centres. Everybody recognises Inverness as a regional centre, but there are smaller regional centres in the west Highlands that need to be considered in the same light.

We will certainly take that point on board. We want to see the proposals that are made in response to the priorities set out in the document.

I would like to ask about investment and about the part of your document that deals with attracting more people to rail.

On investment, Paul Smart mentioned the Department of the Environment, Transport and the Regions' 10-year programme and fund for the whole of Great Britain. I understand that the fund is about £7 billion over the period. How does the Scottish Executive access that fund? Will it come to Scotland under the Barnett formula or does the Scottish Executive have to bid for funds for specific projects in Scotland?

The rail modernisation fund, which has been allocated £7 billion over 10 years, will be allocated by the strategic rail authority against a set of criteria that will apply across the rail network of Great Britain. Bids will therefore be expected to come from Scotland as well as from other parts of Great Britain. Those bids will not come from Government or from local authorities, but from the rail industry itself, which will bid for significant capital investment in major projects. That is what the rail modernisation fund is there to do. Any Scottish project will be assessed against the Britain-wide criteria. That is how the system will work.

So it is not a Barnett formula share. If, at the end of the consultation, the Scottish Executive decides that the priority should be electrification of the east coast line, could Great North Eastern Railway bid for funds for electrification of the Scottish part of the line as part of achieving its franchise in Scotland?

If GNER saw that as a strategic priority for the franchise, there would be nothing to stop it doing that. However, the strategic rail authority would consider the bid against other priorities.

Will the directions and guidance that the Scottish Executive gives to the SRA encompass that sort of scenario?

The directions and guidance will apply to services provided by operators whose services start and finish in Scotland or to services operated by the same franchise that start or end in Scotland. That means that we can give directions and guidance on the services that are currently operated by the ScotRail franchise. Those will be broad strategic steers as to where we want the franchise to go and will form the basis on which the strategic rail authority will invite notes of interest for a new franchise. We will then have to wait to see what the bidders come up with to meet the strategic priorities indicated through the directions and guidance.

We have already given advice to the strategic rail authority, which is non-binding but which it has to take into consideration, on the east coast main line franchise replacement. We made it clear that we want an improvement in journey times on the Scottish leg of the east coast main line. How that is delivered is up to the rail industry, which should price it accordingly.

I want to move on to what your document says about attracting more people to rail. I assume that you are also talking about other users, including freight customers. There are some pretty ambitious targets for moving people and freight on to rail. Is our infrastructure capable of fulfilling those targets? I was going to ask about Railtrack, but that is a specific private company. I ask instead whether we have the right standard and quantity of rail infrastructure to meet the targets.

We accept that a 50 per cent increase in rail passengers in the next 10 years is a target worth pursuing. The reason for issuing the strategic priorities is to recognise that we will need to do things to the rail infrastructure and to the train operating companies' provision of services to reach that sort of target. You can infer that there needs to be an increase in the number of trains and a lengthening of trains on key routes to access new demand and to reach the targets. That is the sort of challenge that we have set out in our strategic priorities.

For freight, the target is an 80 per cent increase in tonnage over 10 years. The Scottish Executive does not have a function in defining a separate freight strategy. However, we administer the freight facilities grant and the track access grant, in recognition of the fact that the current infrastructure needs to be enhanced, improved and supported to meet the sort of targets that were set out in the programme for government. There is a recognition that, in its current state, the rail infrastructure needs to be enhanced to meet the targets.

Do we need to carry out an audit of the rail infrastructure to find out where we are and what we have to invest in to achieve those targets?

That is a legitimate question. We will have to examine the way in which the network functions currently to establish the pressure points. Having carried out such a review, we will have to take a view on where investment would be best targeted to avoid those constraints and to enhance the ability of the industry to deliver the targets.

I want to ask about the considerations that lie behind attracting more people to rail. Clearly, there is a broad transport strategy, an important element of which is relieving congestion and reducing pressure. Given the congestion overload across the whole transport sector, will you consider improving the speed of the service on the Glasgow-Edinburgh rail route—the busiest rail route in Scotland—and the suburban network in the west of Scotland when you develop the criteria for the strategic priorities for attracting more people on to rail? Will you consider light rail alternatives and so on, or is that a matter for local authorities?

Light rail is not tackled directly in the consultation paper, which focuses on heavy rail. Light rail is principally an issue for local authority proposals. However, we would expect the operator of any franchise in Scotland to take account of light rail options, including the possibility of joint running. So far, there are no such proposals.

As Paul Smart said, we would expect the successful franchises to address the issues that you raise. The particular issue in the central belt is congestion, rather than journey time. There are already capacity constraints on the Edinburgh-Glasgow line and on the Fife circuit. If the trains are already full, any ambition to get more people on the railways depends on an increase in capacity. That is not a problem on some other routes in Scotland, where the issue is lack of competitiveness with the car, because the train takes longer or is not much quicker.

In parallel with re-letting the franchise, consulting on strategic priorities, issuing directions and guidance and conducting a capacity study, we are conducting multimodal studies on the A8 and A80 corridors. Those studies will throw up opportunities for the rail industry, as well as other public transport modes, to assist in the reduction of congestion on those key corridors. That is an example of how we are trying to integrate our analysis of the pressures in central Scotland's transport system to facilitate a better appreciation of how rail can alleviate congestion.

I want to follow up Adam Rennie's comment on capacity constraints. If there is capacity constraint on rail services between Edinburgh and Glasgow, it is as true that there is capacity constraint on the road network. That raises the issue of where the investment should be targeted. Should investment go into rail to improve the service or should it go towards improving the road network?

That is a fair point. It is a question of horses for courses. There is general recognition that increasing capacity on the road network is unlikely to provide sustainable long-term solutions and that that is not the general direction that the minister is pursuing, although, as members will know, she is pushing ahead with certain roads projects. Expanding capacity on the railway network has an advantage, in terms of producing less congestion in inner city and wider city areas, over increasing the ability of the road system to bring cars into those areas.

I want to ask about getting goods onto rail and about the fact that the modern, larger freight wagons do not go through some of the tunnels and narrow points in the north-east, where I come from. Two of the major pinch points are the bridge at Montrose and the tunnel at Dundee, which are major, expensive projects. When we bid for the money that is needed for them—outwith the £7 billion that has been made available—it is obvious that we cannot compete on volume with places further south. Do we get a sympathetic weighting on the basis of distance from markets and the desirability of extending through-routes from the continent up to the north-east, which exports many goods?

The shadow strategic rail authority has kept us fully up to speed with the development of its freight strategy, which considers strategic priorities for developing rail freight across the British rail network. That will have an impact on how we target our freight facilities grant. We recognise, as does the shadow strategic rail authority, the constraints on the rail network carrying certain types of freight. Efforts are being made to identify strategic freight routes, to examine their capacity to support larger trucks and wagons and to consider what can be done to improve the network to take account of that. We have emphasised to the SSRA the strategic importance to industry north of the central belt of ensuring effective freight routes to terminals in central Scotland and onward to deep sea ports south of the border.

Do you think that we will get sympathetic consideration for distance to markets or are we on a level playing field with everyone else?

In conjunction with the shadow strategic rail authority, we have been considering the specific characteristics of some of those routes. We have made a strong argument that the specific characteristics of the freight network in Scotland merit a distinctive approach. The authority has shown a strong willingness to consider the matter in that light.

That is encouraging.

The same applies to those parts of the rest of Great Britain that have extended freight routes.

Power to your elbow.

I want to ask about two passenger issues. First, has disabled access been flagged up? It is another expensive issue and we must not lose sight of it. Secondly, can details be included in rail contracts to say that passengers should have access to hot drink and food on journeys over a certain length?

The Disability Discrimination Act 1995 applies to rail vehicles as much as to any other public transport vehicle. As members will have seen with the introduction of the 170 Turbostars, extra provision is being made for disabled passengers. That standard will apply to the introduction of all new trains and underpins our insistence on a steady replacement programme that incorporates the requirements of the Disability Discrimination Act 1995. We would apply the same argument to access to stations. It is all very well to have a train with disabled access, but if a disabled person cannot get to the train in the first place, it is pretty useless. We have made several public transport fund awards to help stations improve disabled access.

I have a vested interest in the issue of food and drink because I travel regularly between Aberdeen and Edinburgh—a two-and-a-half-hour journey—and have often found that there is no provision of food and drink at all.

Those are the sorts of quality issues that we will expect operators to demonstrate awareness of when they put in their bids for a new franchise. Clearly, the more additional passenger benefits they offer, the better the hearing they will receive. We will be seeking improvements in the quality of service across the board.

That is quite an important issue, particularly for tourists who, on a journey of such length, would expect to have access to refreshments. It can be very trying if they do not.

Indeed.

Several members have told me that they have to leave at 1 pm. Now that we have solved Nora's tea problem, it might be appropriate to end the meeting.

I thank Paul Smart and Adam Rennie for attending the meeting. It has been a short but useful session on current rail issues. If there are any subjects that have not been covered, I am sure that they would be happy to receive written queries from members.

Yes, indeed. Thank you.

Meeting closed at 13:00.