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Response to DfT draft Local Transport Bill: Strengthening Local Delivery

1. Introduction

About the Commission

The Commission for Integrated Transport (CfIT) is an independent body which advises Government on transport policy. CfIT takes a broad view of transport policy and its interface with wider Government objectives for economic prosperity, environmental protection, health and social inclusion. The Commission provides expert advice supported by independent research.

CfIT's remit is as follows:

  • Providing policy advice via evidence based reports on:
    • Future policy options, so-called 'blue-sky thinking' on future strategic issues.
    • Policy issues spanning departmental boundaries (i.e. environment, social, etc.).
    • Best practice amongst local authorities/delivery agencies to encourage improved performance and to highlight barriers to best practice.
    • Comparisons with European/International policy initiatives and dissemination of best practice.
    • The impact of new technology on future policy options.
    • Specific issues as requested by the Department for Transport (DfT).
  • Refreshing the transport debate, based on published reports and with a view to raising the overall level of 'The Transport Debate' and where possible to build consensus among stakeholders.

The Draft Local Transport Bill

CfIT welcomes the draft bill and the thinking underpinning it. In particular, the Commission appreciates the joined-up thinking in respect of:

  • Transport governance, and specifically proposals to integrate public transport planning with management of the highway network. These changes will facilitate the extension of bus priorities and other measures to improve the speed and reliability of bus services (CfIT's 2002 report on Public Subsidy for the Bus Industry refers[1]).
  • Competition in the provision of public transport services in the UK (CfIT's 2004 report on Competition in the Public Transport Industry refers[2]).
  • Proposals to improve bus services and measures to facilitate road pricing, which CfIT believes is a fundamental pre-requisite to reducing traffic congestion in major urban areas (CfIT's 2002 report on Paying for Road Use refers[3]).

The important role that the planning process plays in the promotion of an integrated transport network should also be considered in this context. CfIT has a keen interest in the Government's recent 'Planning for a Sustainable Future' White Paper[4] given our remit for cross-cutting issues and Commissioners' experience of the impacts of land-use planning on transport provision. CfIT was therefore pleased to submit its recent response to the White Paper[5], giving a wide range of views from a strategic planning context.

Improvements in all of the above areas will be necessary to improve transport in our congested towns and cities. The draft bill resonates, in many respects, with CfIT's own recent work on those subjects.

In particular:

  • The CfIT report Moving Forward: Better Transport for City Regions, published in March 2007[6], which concluded that transport performance in metropolitan areas was lagging behind that of the larger non-metropolitan urban areas. The report set out a model to improve transport governance and delivery which would see the creation of city-region-wide strategic transport authorities with:
    • clear objectives to tackle congestion and improve access to jobs and services;
    • functions which combine the public transport responsibilities of the PTAs/PTEs and the highway responsibilities of the metropolitan districts;
    • funding arrangements including capital and revenue settlements negotiated directly with central Government, the ability to apply a local precept and co-ordination of the transport capital and revenue resources for the city region;
    • a political "executive" decision-making structure in which a single individual is charged with responsibility for transport delivery, with a certain security of tenure to allow difficult political decisions to be taken.
  • Since its report on Paying for Road Use, the Commission has favoured road pricing. Its World Review of Road Pricing, published in 2006[7], found that urban road pricing schemes around the world had been effective in their aims, had experienced improved public perception where revenues were hypothecated to improving transport and had benefited from interoperable technology. We believe that many of the barriers to implementation are now institutional, not technical, and these proposals should accelerate the progress of road user charging schemes.
  • Also, CfIT published analysis in 2002 that examined how public subsidy to the bus industry could be used more effectively to deliver patronage growth and modal shift. We recommended a change from the Bus Service Operators Grant (BSOG) to an incentive per passenger (IPP). We believed this reform, alongside continued investment in Park & Ride schemes, bus priority, and changes to the concessionary fare regime, could achieve a 35% increase in passengers over seven years. We have recently updated this analysis to take account of changes in the costs and revenues of the bus industry since 2002 - most notably the extension of elderly and disabled passengers' concessionary fares.

CfIT is therefore very supportive of the proposals to:

  • Facilitate the review of existing governance arrangements in metropolitan and other areas by local authorities, allow the Secretary of State to make changes to those arrangements through secondary legislation, and rationalise transport planning in metropolitan areas, with a focus on the PTA as the co-ordinating body. [The current distribution of PTEs reflects governance arrangements for local bus companies in the 1960s. CfIT agrees with the Government that the time is right to review the location of PTEs on the basis of regional travel demands, and to create new PTEs (with new highways powers) where the current local governance arrangements are inadequate];
  • Update the provisions of the 2000 Act on road pricing, but essentially preserve the principles of hypothecation of road user charging revenues for transport, variable charging, interoperability of schemes and co-operation between national and local government over scheme implementation;
  • Implement better working relationships between local authorities and bus operators in delivering improvements to bus services.

Below are the Commission's responses to the detailed consultation questions.

2. Specific questions on the Draft Local Transport Bill

Buses - Chapter 3

The current consultation on proposed reforms to the bus industry is timely. Previous research carried out for CfIT by TAS (2004) showed that, under a "do nothing" scenario, the most likely outcome for conurbations outside London is a continual decline in bus patronage, driven by worsening traffic congestion and persistent cost pressures. Our buses analysis in 2002 showed that these trends might be reversed through the widespread extension of bus priority, enforcement and traffic restraint measures. We also recommended a change in the public subsidy going into the bus industry (BSOG) - to one that incentivises incremental bus patronage and not fuel burn.

We continue to stand by our earlier statements. It is also worth noting in this context that the rail and aviation sectors are not subject to the levy of fuel duty.

Q1: What are your views on the proposals relating to:
(a) voluntary partnership agreements;
(b) quality partnership schemes;
(c) quality contracts schemes.

Our 2002 buses analysis showed that regulatory changes, per se, were not likely to incentivise growth in bus patronage without:

  • Attention to operator incentives - e.g. BSOG reform.
  • Increased levels of funding.
  • Intensification of traffic management measures to speed up bus services.

Better working relationships between local authorities and bus operators are essential to delivering improvements to bus services. This is evidenced by the success of existing voluntary partnership arrangements, particularly where combined with traffic management measures that improve the speed and reliability of bus services.

CfIT believes that sensible cooperation and coordination between operators and local authorities is in the public interest and the proposed changes to the competition test to facilitate multilateral agreements under voluntary partnership agreements are a welcome step in that direction, so long as they do not impinge upon the benefits the public can gain from competition (CfIT's report on Competition in the Passenger Transport Industry refers[8]).

We appreciate that in some instances operators and local authorities may wish to regulate fares and quality levels through a more formal arrangement of Statutory Quality Partnerships.

On the proposals relating to Quality Contracts (QCs), we recognise that the changes are intended to make QCs a more realistic and viable option available to transport authorities. Where they are being considered, a trial covering part of the authority's area should be encouraged to determine whether they are a cost-effective approach to delivering bus services. Our own analysis would suggest re-regulation might have varying impacts upon both patronage and public subsidy support, and regulation per se is unlikely to solve the underlying cost pressures facing the bus sector.

CfIT believes that the experience in London is not directly applicable in other parts of the country, because:

  • London is unique within Europe in its size, population, economic intensity, economic growth rates, and current dependence on public transport.
  • The expansion of bus services in London has been underpinned by extensive bus priority and traffic restraint measures, including parking controls, bus lanes and congestion charging.
  • TfL has provided substantial public funding (£625m in 2005/6) to increase the scale, accessibility, frequency and quality of bus provision.

We also note the strengthened role for Traffic Commissioners in monitoring punctuality and approving QCs. Strong quality regulation is essential for the development of high quality bus services.

In our previous buses work, The Bus Industry - Encouraging Local Delivery[9], we have called for a rationalising of the oversight of bus service provision - given the overlap between the roles and remit of OFT and Traffic Commissioners. Our concern here would be with ensuring the Traffic Commissioners are sufficiently resourced to meet such new requirements in terms of their capability to collect fundamental data about the quality and reliability of operators' services, and to conduct robust economic analysis of the results.

(d) bus punctuality

Properly enforced bus priority schemes in congested areas are critical in enabling high quality services that attract patronage and compete effectively with the car. It is therefore essential that there are strong financial incentives on operators, and local authorities (providers of the bus 'track') to make services faster and more reliable. The importance of local authorities' contribution to bus punctuality alongside the bus operator is therefore to be supported. We have argued previously that LTP funding to local authorities should be contingent upon the successful delivery of local bus strategies. Whilst we support the proposed rationalisation of local bus strategies, it will be essential to ensure that the local transport performance regime continues to demand sound planning and performance on buses. An ideal system should encourage action by authorities and operators to deal with punctuality problems; as currently expressed, the Government's proposals place too much weight on reporting and not enough on resolution of passengers' problems.

Obviously, guidance will be required on setting indicative targets in bus speeds and quality (frequency and reliability) for different circumstances; and the reporting, monitoring, and auditing requirements. The compliance costs to meeting the demands of the proposed "punctuality performance regime" for the bus operator, local authority and traffic commissioner require careful consideration, and would perhaps be best addressed via the development of a clear regulatory impact assessment of this activity. As stated in para 3.33, costs of compliance should be proportional to the benefits.

Moreover, the Traffic Management Act (TMA) is intended to provide the basis for better conditions for all road users through the pro-active management of the national and local road network. Powers under the TMA have conferred significant responsibility upon local highway authorities which could have a positive impact on network performance, and ought to be a consideration in contemplating local authority success in helping deliver bus service reliability.

(e) community transport

CfIT has no specific comment on the proposed changes to community transport restrictions regarding permits and driver payment. We understand licensing arrangements are complex and the proposed changes remove a degree of "red tape", which should be welcomed. What we would emphasise is that community transport does have a key role to play in meeting the needs of specific communities and community organisations. Community transport services can also augment conventional bus services, though they should not be viewed as an alternative to those services.

However, it is not clear why community transport should operate to different (quality) regulatory standards than other parts of the market: if regulations for the safe and efficient operation of bus services are objectively based, they should apply to all operators, irrespective of ownership or size, and passengers should benefit from consistent protections.

Previous CfIT buses work (LEK, 2002) showed that conventional and demand-responsive taxis could supplement and replace bus services in rural areas and areas of low demand. CfIT is currently undertaking further research on "The Role of Taxis in Rural Public Transport", which will examine whether there is a role for the taxi to provide cost-effective solutions to meeting the public transport needs of rural communities. We intend to complete this work in Spring 08.

Q2: What are your views on the specific questions relating to competition legislation (Box 3.4)?

CfIT has no comment on the specific issues for consultation relating to competition legislation. As stated above, CfIT believes that sensible co-operation and co-ordination between operators and local authorities would be welcome and is indeed necessary if the bus is to compete effectively with the private car. Anything that either removes the threat of legal action or clarifies the position is to be welcomed, provided that adequate safeguards remain in place to prevent the public and transport operators from anti-competitive activities of either operators or local authorities.

Q3: Do the proposed "public interest" criteria for quality contracts schemes cover the right issues (Box 3.5)? Do they strike the right balance between making schemes a realistic option and protecting the legitimate interests of bus operators?

CfIT's view is that these criteria currently lack a degree of definition, and are therefore open to misinterpretation. They should be revisited to provide greater clarity for operators and authorities as to the balance of competing interests. Key issues are:

  • The absence of any clear guidance on decongestion, environmental and other benefits that may arise from modal shift.
  • The operating and transitional costs of any new arrangements.
  • The speed with which improved services might be implemented.
  • The availability of long term funding, and the balance of funding between passenger fares and taxpayers' subsidies (whether from central or local funds).

Q4: How can the proposed new bus punctuality regime (paragraphs 3.32 to 3.39) best be designed to achieve the desired benefits at minimum cost, particularly for smaller operators?

The distinction between small and large operations is a very subjective one. The requirement to provide this data should apply to all categories of operator, regardless of size. The key issue should be that the data collection is robustly cost-justified and is produced in a form that provides real passenger benefits. The benefits of the performance regime should outweigh the costs, and we have seen no rigorous analysis to confirm that the proposed arrangements meet this test.

The fundamental policy objective should be to collect data in sufficient quality and quantity to allow operators and authorities to make improvements to services that benefit existing and potential bus passengers. There is an obvious need to avoid the data-overload and 'blame apportionment activity' that has blighted rail operations since the 1990s and contributed to the inflation of railway operating costs.

CfIT has no specific comments on the actual design of a bus punctuality scheme. CfIT is, however, currently undertaking detailed research on the type of reporting regime required for an incentive per passenger scheme. This process may also be a viable reporting mechanism for concessionary fare travel.

Q5: Do the proposals to amend the existing powers relating to subsidy contracts provide sufficient flexibility to meet local authorities' needs (paragraph 3.47)?

CfIT has no specific comments at this time on the range of proposals. Our current analysis (ref: 2007 report by LEK, see: www.cfit.gov.uk/docs/2007/psbi/index.htm) re-confirms that the existing Fuel Duty Rebate/BSOG regime generates a high Benefit Cost Ratio (BCR) compared to many alternative transport investments, and supports higher service levels, and lower fares, than would otherwise be the case. The LEK research identifies that a BCR of around 5 is generated by moving from zero BSOG to the current level of BSOG (£274m paid in England outside London in 2005/06), which is materially above external benchmarks from DfT and TfL which are 2 to 3 respectively.

However, our view is that Government should also consider reforming the Bus Service Operators Grant (BSOG), a public subsidy to the bus industry linked to fuel consumed. We believe in its current form BSOG does not provide the maximum incentive to the bus operator to target patronage. As a public subsidy, it is also superficially at odds with the Government's Climate Change programme. However, analysis of the structure of bus operators' costs shows that the component of fuel costs is in fact too low to create strong incentives for excess fuel consumption. Our analysis recommends a move from BSOG to an Incentive Per Passenger carried (IPP).

The analysis carried out by LEK for CfIT can be found at: www.cfit.gov.uk/docs/2007/psbi/index.htm.

Transport Governance - Chapter 4

Q6: Do you agree that governance arrangements in the metropolitan areas outside London require reform?

CfIT has consistently argued that the strategic planning of public transport services must be integrated with management of the highway and parking stocks, and carried out over a recognisable journey-to-work area. In our report on City Regions, CfIT compared performance of local transport authorities by area type. It found that, although there was a wide variation between the best and worst individual authorities, unitary urban areas, which have similar levels of expenditure to metropolitan areas, consistently out-perform their metropolitan peers in respect of overall bus delivery, bus development, traffic growth management and cycling. There were some mitigating factors, but the Commission did not consider that these could explain the scale of difference in performance. We therefore concluded that the existing governance arrangements in metropolitan areas were hampering effective transport strategy and operation. Key requirements include:

  1. Integrated planning of bus priority and highway management.
  2. A planning area that reflects recognisable travel patterns, not historic local authority boundaries.
  3. Strong strategic leadership.
  4. Integration of traffic restraint, bus priority and parking responsibilities.

In our view, it will also be important to ensure that components of the new Integrated Transport Strategy are well integrated with land-use planning functions, given the impact of land-use planning decisions on local transport provision.

Q7: Do you agree that there is a need for flexible arrangements which allow for variation in the governance developed for different areas?

Yes - within reason. Powers under the TMA already allow for some flexibility, but these need to be provided in a measured way. There are also significant demographic and geographical differences between the metropolitan areas and it is important that local authorities are able to propose a solution appropriate to their circumstances. However, CfIT's 2007 study suggests that there are certain common principles which will assist good governance:

  • the most important is that key transport functions - most notably public transport responsibilities and highways powers - must be vested in the same authority;
  • that the transport authority needs to have clear objectives to tackle congestion, improve access to jobs and services. To this might be added a duty to tackle climate change, as the draft Bill proposes;
  • funding arrangements including capital and revenue settlements negotiated directly with central Government, the ability to apply a local precept and co-ordination of the transport capital and revenue resources for the city region;
  • a decision-making structure in which a single individual is charged with responsibility for transport delivery, with a certain security of tenure to allow difficult political decisions to be taken.

This is by no means intended as an exhaustive list, but the Commission believes that such principles should be referenced in the Secretary of State's guidance to local authorities on proposals for change. CfIT does not favour incremental changes that fail to address the totality of these issues.

Q8: Do you agree that the cities themselves should be asked to publish proposals on revised governance? Do you have views on which body or bodies should be asked to prepare those proposals?

It is right that the cities themselves should draw up proposals. In our view, it should be PTAs or local authorities who lead this. Clearly, evidence of joint-working with the other interested metropolitan authorities should be required, as should evidence of the degree of consensus in support of the proposals.

Q9: Do you agree that the Bill should enable broad changes, or should there be limitations on what change might be allowed?

In our view the change required may well be significant in terms, for example, of institutional change, geographical boundaries and funding arrangements. There should therefore not be any limit on the extent of proposals.

Q10: Do you think that the power to review and amend governance arrangements should allow development over time, or should the powers lapse after an initial review?

City region authorities are unlikely to be absolutely sure whether a model for better transport governance is the best for them until it is put in place. It is therefore sensible to allow arrangements to be amended over time. However, rearranging institutional structures and personnel comes with a significant cost and distraction from the "day job" of transport delivery. There ought therefore to be a weighing of the costs and benefits of reform and a presumption against repeated change of governance arrangements.

Q11: Do you agree with the changes we are proposing to the powers and duties of PTAs in all the metropolitan counties?

Yes - these proposals make good sense. The obligation for PTAs to have regard to climate change in their policy-making and operations is needed. The extension of the Local Government Act 2000 "well-being" powers to PTAs brings them into line with the rest of the local government. And the provision for PTAs to participate in development and implementation of local road pricing schemes acknowledges the essential role of public transport improvement in implementing such schemes. Indeed, the integration of public transport and highway modes is fundamental.

However, CfIT is opposed to legislative change that would re-shape the area covered by PTAs to the extent that they would cover the whole of the geographic areas of all the existing local authorities involved. This would effectively rule out the option in many of the areas where it might be advantageous/attractive to create further PTAs where the natural PTA/travel to work area should include all of the existing unitary urban areas, but only a small portion of the adjoining counties.

Q12: Do you agree with the proposed changes to Local Transport Plans described in paragraphs 4.43 to 4.45? Should these changes be applied only to the metropolitan counties, or should they be applied elsewhere, for example to other city regions?

The streamlining of planning through a requirement for a single metropolitan area Integrated Transport Strategy (ITS) to replace the LTP and bus strategy is a welcome rationalisation which should not only reduce the planning burden, but also enhance co-operation between the existing local authorities. However, in Metropolitan Areas, PTAs would sign-off the ITS as it runs the risk of weakening co-operation if governance models are not clear. The suggested duration for the ITS - 10 to 15 years - with an implementation plan covering a period of 3 to 5 years within that period appears to the Commission to be of the right order. It also has the attraction of separating the strategic planning and implementation phases.

CfIT is clear that there are metropolitan areas which will benefit from the kind of reform proposed in its 2007 report. The Commission considers that the identity of the current metropolitan areas is something of an accident of (increasingly ancient) history and that there might well be other urban areas whose transport could benefit from similar structures to the 'reformed PTAs' that might appear. Outside the main conurbations, inter-urban strategic transport infrastructure planning and delivery should, however, be dealt with by a separate sub-regional delivery plan process, either within individual regions or spanning regional boundaries. This process should be distinct from LTPs which need to cover holistic urban and/or travel to work areas and not cut across them. Our view is therefore that the opportunity for reform of governance to improve transport planning arrangements and delivery ought not to be limited to the current metropolitan areas.

Road Pricing - Chapter 5

CfIT remains strongly supportive of a move to national road-user charging in the longer term. In the medium term, we see local road pricing schemes as the most promising means of tackling congestion, and the possibility of extending road pricing schemes should be a fundamental test of these reforms (CfIT's report on Paying for Road Use refers). The Commission is delighted to see the road pricing provisions of the Bill set out along side provisions to improve local bus services and transport governance, since road pricing will work most effectively in an environment where public transport is enhanced and vision and leadership are strong.

Our World Review of Road Pricing found that local road pricing schemes around the world had been effective in their aims, had experienced improved public perception where revenues were hypothecated to improving transport and had benefited from interoperable technology. We are therefore happy to see that certain core principles of the 2000 Act enhanced in the draft Bill, namely:

  • hypothecation of revenues for transport purposes, which is not only necessary for the effective operation of schemes, but has been shown to improve public acceptability;
  • that charges may vary according to a number of criteria;
  • that schemes ought to be interoperable.

Naturally, there is a need to engender broad public acceptance of road pricing as a strategic transport tool. However, the benefits must be seen to be commensurate with the so-called 'hard choice' impacts.

Q13: What are your views on the proposals relating to: local freedom, flexibility and accountability (paragraph 5.18), including the proposals in Box 5.1;

The provision to allow PTAs to jointly make road pricing schemes with other local authorities is essential. However, the Commission takes the view that, without the kind of reform of transport governance set out elsewhere in the Bill and covered above, it will be very difficult to deliver local road pricing schemes in the metropolitan areas, because of the division of functions, in particular. It is also the case that current PTE areas are not necessarily the most congested places.

The devolution of further responsibility to local authorities by removing the need for the Secretary of State to approve schemes and proposed disposal of revenues and to require an inquiry is sensible. This is particularly the case given the wider "freedoms and flexibilities" agenda for local government, but will also serve to reduce the time required to bring a local scheme into operation.

As we say above, the preservation of the principle of hypothecation of revenues for local transport purposes is very welcome. The need to have regard to potential environmental consequences is certainly pressing and the proposed changes in that respect are very sensible.

The move to add the method of payment and collection to the list of criteria for which local authorities may vary charges is welcome. This will allow the charging regime to acknowledge the different administrative costs imposed by different payment methods and to incentivise adoption of lower-administrative-cost technology accordingly.

consistency and interoperability (paragraph 5.22); and (c) information (paragraphs 5.26 and 5.29)?

Consistency between road pricing schemes and interoperability of schemes will be vital if, as we expect, there is a growth in local schemes in the medium-term. The motorist needs to be able to readily understand and use schemes in different areas.

Our 2006 research into the international experience shows that in Europe, North and South America, and in Japan, road charging systems can be used seamlessly for different schemes within countries - and in one case even across national borders. The Commission therefore supports the Bill's proposals to allow the Secretary of State to specify data, encryption and security standards and equipment numbering systems.

Equally the proposal to allow the Secretary of State to make regulations to require authorities to accept payment from what will effectively be national payment schemes is entirely sensible.

Chapter 6

Q14: To what extent is there a problem of 'inconsistency' between the approaches of the different traffic commissioners, and what costs does this impose on PSV and goods vehicle operators?

CfIT believes that a clearer remit in relation to service reliability is needed in order to reach more consistent decision-making. In terms of resources, there is scope to delegate some functions to PTAs, i.e. for the PTA to act as agents of the Traffic Commissioners.

However, consistency between Traffic Commissioners is a minor problem compared to the other issues that face operators and passengers. If the Traffic Commissioners adopt policies that are consistent but burdensome, there is a risk of divergence between actions to satisfy them (such as reporting the reason for every variance from the published timetable), and actions that benefit passengers.

Q15: Do you agree that the proposals outlined here would help to reduce those costs.

CfIT has no specific comment on the cost implications of the proposals. However, it is clear from our research that the long-term trend of bus industry costs is upwards, driven by the long-term growth in the cost of staff (driven by general economic growth), and the decline in labour and capital productivity caused by worsening traffic congestion. Any additional cost burdens created by additional regulatory requirements will have to be paid by either the passenger or the taxpayer. A detailed regulatory impact assessment is essential to determine the efficiency of the final proposals.

CfIT is currently examining the consultation document on the role of the Traffic Commissioners. CfIT will consider its response to the consultation (required by 15 October 2007).

CfIT
September 2007


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1: www.cfit.gov.uk/docs/2002/psbi/index.htm.
2: www.cfit.gov.uk/docs/2004/pticomp/pticomp/index.htm.
3: www.cfit.gov.uk/docs/2002/pfru/index.htm.
4: www.communities.gov.uk/publications/planningandbuilding/planningsustainablefuture.
5: www.cfit.gov.uk/docs/2007/pwpresponse/index.htm.
6: www.cfit.gov.uk/docs/2007/moving/index.htm.
7: www.cfit.gov.uk/docs/2006/wrrp/wrrp2/index.htm.
8: www.cfit.gov.uk/docs/2004/pticomp/index.htm.
9: www.cfit.gov.uk/docs/2004/busindustry/index.htm.
 
Published: 22.10.07 | Home | Top | © Crown copyright 2008