Committee of Public Accounts

Press Notice No. 11 of Session 2004-05, dated 5 April 2005


Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, said today:

"Modern tram systems in English cities have indeed improved the quality of their public transport and general environment. But only seven light rail systems have been built in England since 1980, at a substantial cost to the taxpayer, and passengers have not benefited to the extent envisaged.

"The Department for Transport has persisted in an arm's length approach towards light rail. The Department has left local authorities to make mistakes, and system planning has been poor. In general, there has been poor integration with other public transport, poor provision of supporting facilities like park and ride, and poor route planning - with lines often not connecting shopping and business areas with where people live. No wonder that passenger numbers have largely been lower than expected and some operators have been losing money.

"Problems with existing systems have driven up the costs of building new ones, discouraging local authorities and potential private sector investors. This situation must change. The Department of Transport needs to rouse itself and develop a strategy for the development of truly integrated and properly planned light rail systems. It also needs to rigorously test the financial viability of proposed systems, and evaluate what has been delivered so far for the £1.2 billion invested."

Mr Leigh was speaking as the Committee published its 11th Report of this Session, which examined the Department of Transport's approach to light rail, the delivery of expected benefits and the cost of light rail.

The Committee found that, since 1980, the Department for Transport has contributed £1.2 billion to the £2.3 billion that has been spent on building seven light rail systems in England. The Government envisaged that up to 25 new lines could be built and the number of light rail passengers could more than double by 2010. But it has left local authorities to determine whether light rail is appropriate in their areas, and has not prioritised in value for money terms which schemes should be allocated funds and built. Planning and approval of schemes has taken too long, on average eight and a half years. And the Department only has a partial evaluation of what light rail has delivered. It has not, for example, evaluated the provision of vehicles, track and stations, or the frequency of services. Regeneration impacts will take several years to come through.

Systems have improved the quality and choice of public transport, offering fast, frequent and reliable services and providing comfortable and safe journeys. But they have not delivered all of their anticipated benefits. Some have fallen well short of their passenger forecasts and have been poorly integrated with other forms of public transport. Outside London, for example, light rail and de-regulated bus services have been competing for passengers, rather than providing an integrated service. Systems in France and Germany are better connected to centres of social and economic activity, and given priority at junctions to provide quick and punctual services. English systems have not provided complementary measures, such as park and ride facilities, to attract passengers and reduce car use and traffic congestion.

The Department has withdrawn final approval for three proposed schemes because of their escalating costs. Lack of standardisation in the design of vehicles and systems and the diversion of water, gas and other utilities have added to costs. The use of design, build, operate and maintain type contracts has had implications for costs as operators have been left to bear risks of factors, such as patronage and fare levels, over which they have limited control. Promoters have not questioned the need for diversions, how costs could be minimised and which organisations should pay for the work. Operators have been left to bear all of the revenue risks, and have built risk premia into their bids. New light rail technologies might offer scope for reducing costs, but smaller, less expensive systems do not qualify for departmental grants. The Department did not act soon enough when problems with the design and delivery of systems started to appear and costs started to escalate.

Operators of some systems made significant financial losses over the period 2001 to 2003 and would bear the losses if they withdrew from their contracts. There would still be residual risk to the taxpayer if a local authority took over the operation of system or disposed of it, and was unable to repay the Department's grants.

Click here to view Report