9. The Government's Public Service Agreement (PSA) targets give an indication of the outcomes expected from the level of expenditure allocated. The Department for Transport currently reports against the PSA targets set in the Spending Review 2004 which covers the period 2005-08.

10. The Department has seven PSA targets (which is roughly the average number).[13] The Department explains that "PSA targets are used sparingly and do not cover the full range of the Department's responsibilities".[14] Indeed several transport modes are entirely excluded. Aviation, shipping, cycling, walking and freight are not directly covered by any PSA target. The Department's Annual Report lists public expenditure by a set of broad objectives, but not PSA targets, the extent to which expenditure follows the PSA targets is therefore not clear.[15]

11. The Department is on track to meet only two of the seven targets. The Government describes the PSA targets as a contract between the public and Government.[16] Given this picture of failure, we suggest the public should consider the contract unfulfilled, or that the targets are no more than aspirations which fail to guide the application of resources and should be abandoned. Targets should not be something visited once a year in performance reports—they should steer the focus and energies of the Department throughout the period to which they relate. The Department's record of poor performance against its targets indicates that it neglects to do so.

12. Table 1 below gives an overview of the Department for Transport's performance.

13. On 19 July 2005 the Chief Secretary to the Treasury announced that the Government intended to launch a fundamental Comprehensive Spending Review (CSR) reporting in 2007, to identify what further investments and reforms are needed.[17] This will cover departmental allocations for 2008-09 to 2010-11. It is also an opportunity for Departments to redefine the key outcomes that the public can expect by amending their PSA targets according to the investment priorities. The Secretary of State told us that the Department was "actively engaged in discussions both with the Chief Secretary and the Chancellor, anticipating the coming spending review" at both official and ministerial level.[18]

14. We were therefore disappointed by the Secretary of State's unwillingness to invite the Committee to participate in the review of PSAs.[19] We are aware that other government departments have made commitments to pass draft PSA targets to their respective select committees for comment, and we see no valid reason why the Department for Transport cannot do likewise.[20]If the PSA targets are, as the Government suggests, a contract between Government and the people, then the people's elected representatives should have some influence over their content. Consultation with the appropriate select committee would seem to be an obvious way to achieve this, and we recommend that the DfT make its draft PSA targets available to us for constructive comment.

Departmental funding

15. In addition to setting targets, the CSR will also set a budget for the three years from 2008-09. The Secretary of State told us that the Department was discussing its budgetary needs keeping in mind the inevitable constraints on public expenditure.[21] Of the Departments which have already been given their budgets, most are facing year-on-year real terms reductions of about 5%. We expect to see evidence that the Department is making a strong case to ensure that any budget reductions can be found from genuine efficiency savings rather than cuts in services to the public or delays in much-needed investment.

Performance against the congestion targets

16. The DfT published new congestion targets for urban and strategic roads in July 2005. The baseline data was collected between August 2004 and July 2005, and this is the first year for which performance figures were due to be reported.

CONGESTION ON THE STRATEGIC ROAD NETWORK

17. The Annual Report did not include an assessment of performance against the Department's new strategic road target. The target aims to make journeys on the strategic road network more reliable—there is no numerical value attached to the target, any improvement would mean it had been met. However, the Secretary of State told us that "initial analysis shows that on a selection of routes the average delay encountered on the worst journeys has increased slightly".[22] The DfT's Autumn Performance Report, published in December 2006, quantified the change: "the average delay encountered on the worst 10 per cent of journeys increased by 2.9 per cent from 3.8 minutes per ten miles in the baseline period, to 3.9 minutes per ten miles in the latest period (August 2005 to July 2006)."[23] The Department advised us that in terms of real journeys, this means that travelling 100 miles on a motorway will take 66 seconds longer than in the baseline period.[24] Owing to "serious anomalies in some of the data"[25], the Department has not yet included all sections of the strategic network in the baseline data or the assessment data.[26]

18. Although the deterioration in reliability for an average journey is so small as to be negligible when experienced by the motorist, it is nevertheless a matter of concern that congestion-related delays have not improved on the country's strategic road network. Despite the problems faced, the Department has chosen to restrict road pricing demonstration schemes to urban roads rather than the strategic network. The Secretary of State advised us that the Department and its executive agency, the Highways Agency, is attempting to reduce congestion through a combination of getting better information to drivers; targeting investment at pinch points; and managing the network more effectively, for example with Traffic Officers.[27] He told us: "The Highways Agency is working on a detailed development of a full range of interventions that will contribute to delivery of the target by 2007-08."[28] The Department also has an extensive road building and capacity improvement programme underway, funded by £1.9 billion of investment between 2005 and 2008.[29]

19. There is little evidence that these methods have been particularly successful to date. The Department's own study into road pricing found that measures such as extra capacity, land-use planning and better public transport would only ever have short-lived impacts in areas of high demand, if new demand replaces old.[30] The congestion target and the accompanying baseline data were established only a year ago, making it difficult to judge any long-term trends in performance. However, the target itself only covers the very short term: striving for any improvement by 2007-08. Failing against a road congestion target with such a weak ambition is in itself disappointing. If the target for strategic roads is to be met, the Department and the Highways Agency will have to implement a full package of bold measures. We would suggest that the Department should not exclude the possibility of road pricing demonstration projects on the most congested sections of the strategic road network.

CONGESTION ON THE LOCAL ROAD NETWORK

20. The Department did not set the baseline data for the local road congestion target until its revised Technical Note was published in July 2006. This meant performance against the local road congestion target had not been assessed in time to be included in the 2006 Annual Report. The Department anticipates that the first assessment of performance is likely to be published in next year's Autumn Performance Report, due in December 2007.[31] This amounts to a significant delay—particularly considering that the target applies until only 2010-11.

21. The target itself is complex. Each of the ten largest urban areas have set a targeted increase in person journey travel time on main roads into city centres, taking into account expected increases in total distance travelled.[32] On average the target will be judged to be met if a 4.4% increase in travel is accommodated within a 3.6% increase in person journey time per mile. There is considerable variety in both the expected increase in travel and the targeted increase in journey travel time across the ten areas (and of course, also in the baselines). For example: travel is expected to increase between a range of 1.5% in Greater Manchester and 12.1% in Tyne and Wear; and journey times are targeted to increase by between 0% in Greater Manchester and 14% in Bristol.

22. The data on which the target is underpinned is also complex. The data is derived from in-vehicle GPS tracking systems. In assessing the quality of the data, the Department states that coverage varies and the data provides an estimated average journey time, since robust information on every vehicle traversing every route is not available. The Secretary of State told us: "we are very much at the cutting edge of data collection and technology within these urban areas."[33] We welcome the innovation embraced by the Department in measuring local road congestion, but look forward to measures which will make the information provided more accurate and realistic.

23. The Secretary of State indicated that the Department expects local authorities to use a variety of measures to reduce urban congestion in the next four years: better enforcement of traffic regulations; better transport planning; promoting public transport as a genuine quality alternative to the car; traffic management technology; and investing in particular road junctions and road layout.[34] There is nothing new about these measures, and we are concerned that faced with the continuing increase in car ownership and the annual distance travelled on the roads, they will not be sufficient to turn the tide of worsening urban congestion. The only new measure advanced by the Secretary of State was the proposed road pricing demonstration projects. Road pricing would introduce a system of charges to use roads which varied according to the level of congestion.

ROAD PRICING DEMONSTRATION PROJECTS

24. The Government's aim over the next five years is "to develop a sizeable city-region pathfinder to demonstrate, at scale, the role that pricing could play."[35] Local authorities have been invited to submit bids for the Transport Innovation Fund by July 2007. The two categories for funding are 'congestion schemes' and 'productivity schemes'.[36] It is clear that the prospect of a successful bid will be increased if the proposals include an element of road pricing. Pump-priming funding has already been awarded to some local authorities to assist in the development of packages of schemes which include pricing. The authorities considering schemes are varied in size and character; they include for example, the West Midlands, Greater Manchester, and Norfolk, Cambridgeshire and Shropshire.

25. The Secretary of State told us that the Department was engaged in "intensive discussions" with local authorities and that he would be "in a position by around the end of …[2007] to have reached a definitive view in terms of the regional pilots."[37] The Department issued a Prior Information Notice on 18 July 2006, inviting technology companies to participate in a series of demonstration projects to help develop understanding on how road pricing schemes might operate in practice.[38]

26. We welcome the debate on road pricing and the Department's efforts to move this forward. In particular, we believe it is right to be looking for a common technological application early on, as well as an overriding framework of objectives, to ensure the small-scale pilots are transferable to the national stage.

27. The Secretary of State explained:

"The challenging point… is to make sure that we do not devise… a range of different bespoke solutions, but that we do … say, 'What is the basis on which the proposals you are putting forward… could have common technological application or be scaleable…'"[39]

Clearly road pricing schemes would need to meet a selection of both local and national requirements if they are to be local "path-finders" for a national road pricing system. The Secretary of State was keen to stress that local authorities were submitting bids on a voluntary basis and there was no requirement for a local authority, or a region, to undertake a demonstration project.[40] As our report on Local Transport Planning and Funding illustrated,[41] the Transport Innovation Fund will grow within five years to dwarf the other sources of funds available for local authority and regional transport improvements. The Fund will first be made available in 2008-09 with a budget of £290 million, which rises to £2.5 billion in 2014-15.[42] There is real pressure to develop a scheme despite indications from some local politicians that residents would rather endure congestion, than pay more to use the roads.[43] We are concerned that, although strictly speaking road pricing schemes are voluntary, the very significant levels of funding associated with the bids and the broad scope of transport improvements the funding could deliver, place significant pressure on authorities to engage with the project.

28. We note the Secretary of State's recognition that road pricing will not be the 'silver bullet' which eliminates congestion, and share his belief that to be successful it must be part of a variety of measures.[44] In particular, we would stress that in order to provide people with an attractive alternative to paying more to use the roads, there must be tangible improvements to public transport, made ahead of the introduction of road pricing.

Performance against the local transport and bus use target

29. The Department has a target to increase use of public transport—it restricts the definition to bus and light rail—by more than 12% by 2010 in England compared with 2000 levels, with growth in every region. The Secretary of State was certainly using understatement in his assertion that "the target for patronage in every region remains challenging."[45] In most regions bus patronage is falling. A significant increase in bus patronage in London since 2000 accounts for the vast majority of the national average increase. Only a handful of authorities outside London have achieved patronage increase: Telford, Brighton, Dorset, York, West Sussex and Cambridgeshire. We explored the reasons for this trend in our recent report on Bus Services Across the UK.[46]

30. We are disappointed not only by the lack of progress in encouraging people to use public transport, but by the Department's lack of ambition. The Department's Annual Report states: "there is no expectation that growth in all regions can be achieved during the Spending Review 2004 period (April 2005-March 2008)."[47] The Department declares that it is instead aiming for "year on year growth in every region during the final three years of the PSA target period (April 2008-March 2011)". It is unfortunate that the Department appears to have given up in the short-term on improving what are vital bus services for many people throughout the country.

31. The Secretary of State was reticent about how he planned to improve the situation. This may in part be explained by the fact that, when he gave evidence to us, the Department was shortly to publish its bus strategy, Putting Passengers First. The bus strategy was published on 12 December 2006, just a fortnight after our evidence session. We were therefore not able to draw many conclusions from our evidence session about how the Department might meet its target. We will instead scrutinise closely the Department's draft Road Transport Bill when it is published. The Secretary of State told us he was looking at the issue of governance and finance in relation to public transport.[48] Our recent reports—Bus Services Across the UK and Local Transport Planning and Funding—made a serious contribution to the debate on public transport governance and finance, and we expect to see the recommendations of our Reports given proper consideration in the provisions of the draft Road Transport Bill.

32. In addition, we were pleased to hear the Secretary of State insist that material improvements to bus services were needed long before the realistic delivery timeframe of a national road pricing system.[49] Given the potential for road pricing to greatly increase demand for public transport—some estimates show that a 5% reduction in road traffic will equate to a 50% increase in demand for rail and buses—investment in these modes will need to increase commensurately. The Permanent Secretary suggested that funding would be made available to local authorities for enhanced public transport through the Transport Innovation Fund.[50] The Government must ensure it has thoroughly modelled and planned for all the implications of road pricing, including increased demand for public transport. The Secretary of State indicated that enhanced partnerships would continue to be promoted as a tool for securing high-quality bus services.[51]We seek reassurance from the Department that the adoption of road pricing will not be an eligibility criterion for participation by a local authority in the statutory bus quality partnership schemes or quality contracts.

CONCESSIONARY FARES

33. The Chancellor announced in the 2005 Budget that free off-peak concessionary travel will be introduced on local bus services in England for people aged 60 and over and disabled people.[52] The scheme came into effect on 1 April 2006. In March 2006 the Government announced that this local entitlement to free bus travel would be extended from April 2008 to allow older and disabled people in England local bus travel in every area of the country.[53] This will be taken forward through the Concessionary Fares Bill, announced in the Queen's Speech 2006. The Department anticipates that free local concessionary fares will "generate significant patronage uplift" (i.e. encourage more passengers onto buses) helping the PSA targets to be met.[54]

34. Despite £350 million being committed to the first scheme and an additional £250 million having been committed to the new national scheme, some authorities have suggested that the high costs of the scheme have meant they have had to cut other public transport services.[55] Disputes have ensued between local authorities and bus operators over the costs of reimbursing the bus operators for the concessionary fares. The Department's regulations state that the compensation should leave operators 'no better and no worse off' than if a concessionary scheme did not exist. The Department issued guidance and a 'toolkit' to help authorities calculate the costs of reimbursing the bus operators, and forecast the level of generated trips.

35. The Secretary of State acknowledged that there had been problems funding the concessionary fares scheme, and admitted that lessons should learned ahead of the roll-out of a national scheme.[56] The Secretary of State gave no detail of exactly what steps the Department would take to resolve the disputes over concessionary fares between bus operators and authorities. The concessionary bus fares scheme is an important initiative with the potential to improve the lives of many thousands of people, but it seems that the Government may have underestimated the financial impact of mandatory, free, off-peak bus travel. Given the Government's plans to broaden the scope of the scheme, it must learn the lessons from the first scheme, resolve existing funding problems, and ensure that the expanded scheme is properly resourced.

PUBLIC TRANSPORT ACCESSIBILITY

36. The Department no longer includes improvements to punctuality, reliability and accessibility in the PSA target, but these remain part of a Departmental "overarching objective".[57] The Department reports that 50% of 'full size' buses were low-floor, wheelchair-accessible vehicles in 2005-06.[58] However, making buses wheelchair accessible does not make them accessible for people with sensory impairments or learning difficulties. The Disability Rights Commission has said that investing in audio-visual announcements on public transport would be very helpful for visually impaired people, hearing impaired passengers, many people with learning difficulties, and anyone unfamiliar with the route.

37. Alterations which help to make the transport system accessible for people with impairments are actually useful for a large number of people: access improvements benefit anyone with pushchairs or heavy luggage, and improved signage and information help everyone. We recommend that the Department adopt a public transport accessibility target which more fully reflects the range of impairments which people using public transport have. The targets should also give an indication of the actual use of public transport by people with impairments, to show whether the new vehicles and alterations are meeting the aim of increasing accessibility, and patronage, in practice.

BUS DRIVING EXAMINERS

38. Driving tests for drivers of Passenger Carrying Vehicles (PCVs) can be conducted by the Driving Standards Agency (DSA) examiners or by in-house company examiners (called delegated examiners). There are large discrepancies in the pass rates for those drivers who undertake a PCV driving test with a DSA examiner, and those who are assessed by a delegated examiner. In 2005-06, the PCV test pass rate was 43% for tests conducted with DSA examiners, and 59% for those conducted with delegated examiners.[59]

39. The Department told us that DSA examiners and delegated examiners undergo the same training, and must demonstrate the same competencies. Its explanation for the significant difference in the pass rates between the two groups is that bus companies are more likely to ensure their candidates are well-prepared for the test.[60] DSA Supervising Examiners are employed to attempt to ensure uniformity of test control and assessment. We do not have any evidence that drivers who pass their test with a delegated examiner are any less safe on the road than those that pass with a DSA examiner and the Department does not collect data which would allow any such links to be identified.[61] However, we suggest that the discrepancy is sufficiently large to warrant some further analysis by the Department. We believe that rigorous training and testing regimes are a fundamental part of this picture of safety. We urge the Department to investigate fully the quality control system for ensuring high levels of competency by all PCV driving test candidates, and to carry out analysis of the subsequent collision rates of drivers who undergo the different training and testing regimes. The Department should act on any findings and work hard to disseminate best practice.

Performance against the road safety targets

40. We congratulate the Department for being on course to meet its road casualty reduction targets. The number of people killed or seriously injured in 2005 was 33% below the 1994-98 average (against a target of 40% by 2010) and the number of children killed or seriously injured was 49% below the 1994-98 average (against a target of 50%). It is encouraging to note that the Department is also on track to meet the added objective of tackling the significantly higher incidence of casualties in disadvantaged communities.

41. The picture of strong performance is to some extent undermined by questions over the quality of the data used. The Department for Transport collates data from forms submitted by individual police forces across the country. As the Secretary of State noted, there are concerns as to whether the number of collisions reported to the police accurately reflects the true number of crashes and casualties occurring.[62] The Department has work underway with the Office of National Statistics to verify the data quality and to investigate whether levels of reporting to the police have changed in recent years.[63]

42. Although the progress in casualty reduction is encouraging, the overall death and injury rate is still high—with 32,155 people killed or seriously injured in 2005—and continual efforts must be made to prevent as many road casualties as possible. There are certain categories of road user and certain types of crash which continue to occur with devastating regularity. For example, there were more pedal-cyclist deaths and serious injuries than the previous year, and fatal single-vehicle crashes on rural roads also increased.[64] 'Hit and run' incidents have increased over recent years; and drink-driving, drug-driving, and speeding persist in bringing danger to large numbers of road users.

43. When questioned about his proposals for dealing with some of these specific problems, the Secretary of State told us: "I think these issues are better dealt with in the round rather than trying to pluck out, ahead of the Road Safety Review, specific measures and responses to specific offences".[65] The second three-year review of the Road Safety Strategy is currently underway and is due to report in April 2007.[66] We look forward to the publication of the Road Safety Strategy Review, but it would be a matter of some concern if policy developments were on hold until the outcome of the review. Given the emphasis put on the Strategy Review we will expect the document to contain significant new measures and detailed plans for dealing with some of the most critical and persistent problems posed by road safety.

COLLISION INVOLVEMENT OF HEAVY GOODS VEHICLES

44. As a Committee we have repeatedly drawn attention to the collision involvement rates of lorries, and foreign-registered lorries in particular. We did so most recently in our report Roads Policing and Technology.[67] This year, for the first time, the Department's casualty statistics identify separately British-registered and foreign-registered lorries.[68] The statistics paint a stark picture of the very serious problem faced: see Table 2 below. Indeed 40% of heavy goods vehicles (HGVs) involved in collisions are foreign-registered, even though foreign-registered heavy goods vehicles are just 3% of the HGVs on the road.[69] On an incidence per million vehicle kilometres basis, the Freight Transport Association has calculated that foreign left-hand drive vehicles are 29 times more likely to be involved in a 'sideswipe'[70] collision than domestic vehicles.[71]

Source: VOSA South East International Pilot data for 2005/06 from targeted roadside checks [72]

45. The Department told us that enforcement levels had increased and that a more targeted approach to checks had brought enhanced results.[73] In one sense, we are impressed by the effectiveness of the pilot scheme run in south-east England which used a combination of Weigh in Motion Sensors and Automatic Number Plate Recognition technology to identify and take action on dangerous vehicles. On the other hand, however, we are disturbed that during the course of the pilot, 44% of UK and foreign goods vehicles checked were issued with prohibition notices.[74]

46. Such a high rate of non-compliance with safety standards by heavy goods vehicles —and particularly foreign-registered vehicles—is a reason for real concern. It suggests that the total number of un-roadworthy lorries currently on our roads is staggeringly and unacceptably high. The Department must ensure that the Vehicle and Operator and Services Agency is provided with more resources to invest in enforcement checks which will raise compliance levels to an acceptable level. The Department cannot divorce itself from this crisis of non-compliance: it must state what action it will take and when. Ensuring that all commercial vehicles meet high safety standards will have the added benefit of creating a level playing field among UK and foreign haulage operators.

PRIVATISATION OF VEHICLE AND OPERATOR SERVICES AGENCY

47. The Vehicle and Operator and Services Agency (VOSA) carries out lorry and bus licensing and testing, vehicle inspection, and enforcement. These are safety-critical tasks. VOSA's Chief Executive was asked by transport ministers in November 2005 to undertake a strategic review to assess the merits of 'outsourcing' services currently provided directly by VOSA staff. The review is intended to establish whether outsourcing would deliver better value for money; improve customer service; lighten the regulatory burden; and deliver wider government objectives.[75] Trade unions have raised their concerns that outsourcing of such services could lead to profit, rather than safety, becoming the focus of VOSA's work. The Agency's work undertaking vehicle and driver inspections and enforcement actions are currently very effective in improving road safety—in one day alone, of 63 vehicles stopped, 41 were given prohibitions on mechanical grounds, 12 received drivers' hours prohibitions, and two further prohibitions were issued.[76]

48. Asked directly, the Permanent Secretary told us that it is not the Department's intention to privatise VOSA.[77] We welcome this assurance. However, Sir David quickly went on to qualify his answer by stating: "that should not be read to mean that we never look at the balance between in-house and outside provision; but, no, we have no intention of privatising VOSA".[78] We were subsequently concerned by the written evidence we received containing the details of the study undertaken to assist the review. The study report indicates that very wide-ranging responsibilities are being considered for outsourcing. Table 3 below sets out the conclusions about which responsibilities are considered suitable for outsourcing in the draft report.

Source Ev 31

49. We are concerned that the VOSA responsibilities considered "in-scope" for outsourcing to private companies include training, lorry and bus testing, routine enforcement (fleet checks, vehicle examinations) as well as roadside enforcement support. The number of staff considered "in scope" for outsourcing totals 1,692—this is over half the total number of VOSA staff (60%). With those staff in the "grey areas" added, the proportion is even higher. We would question the claim that it is not the Department's intention to privatise VOSA if over half the staff were outsourced to other companies. We have serious reservations about proposals to outsource any testing and enforcement responsibilities. Safety must be the top priority.

Performance against the climate change targets

50. The Department shares a joint target with the Department of the Environment, Food and Rural Affairs and the Department of Trade and Industry to reduce greenhouse gas emissions to 12.5% below 1990 levels between 2008-2012, in line with the Kyoto Agreement, and "to move towards" a 20% reduction in carbon dioxide emissions below 1990 levels by 2010. The Government is on course to meet the Kyoto target, but on current trends the more stretching 20% carbon dioxide target will not be met. Latest projections indicate that carbon dioxide emissions will only be 16.2% below 1990 levels by 2010.[79] In addition, the Kyoto and domestic targets do not include emissions from international aviation and international shipping because there is no agreement on how to allocate these emissions between countries. Clearly, that does not mean that these emissions simply disappear—they will continue to affect the climate whether or not they are 'counted'.

51. The Department's Annual Report does not give details of the amount of carbon dioxide and other greenhouse gases emitted by the transport sector. This omission allows the Department to disguise its poor performance. We recommend that the new PSA target, to be established in the 2007 Comprehensive Spending Review, must allow proper scrutiny of the Department's performance in this policy area, and identify greenhouse gas and carbon dioxide emissions from the transport sector alone. This will help guide action to reduce the transport sector's contribution to climate change.

52. The Department currently has a four approaches to reducing greenhouse gas emissions from transport:

• reducing the fossil fuel content of transport fuel;
• seeking to increase the fuel efficiency of vehicles;
• encouraging more sustainable transport choices; and
• transport Emissions Trading Schemes.[80]

The Secretary of State added that the Department's strategy was to "look at a carbon price ultimately and trading therein, but we need to look at regulation and we need to look at price signals; we need to look at fiscal measures."[81] We agree that each of these measures is necessary. We hope that the Secretary of State's references to the international nature of the problem of climate change do not indicate that the Department will seek excuses for inaction.[82]

53. The Secretary of State told us: "I can assure you that it has been for me, both in personal terms and for the Department in policy terms, one of my objectives in the last six months to build on the focus that has traditionally been laid on environmental concerns."[83] We welcome the Secretary of State's commitment to tackling climate change, but since transport is the only sector of the economy in which emissions have been rising consistently since 1990 and are projected to carry on rising, he will need to consider bolder measures than the Department has been prepared to take forward to date. We would very much like to take the Secretary of State's comment as an indication of a turning point in the Department's priorities, and a signal that the Department will now work with renewed commitment to cut transport emissions. But given that transport is the worse performing sector in the UK, we await tangible evidence that this is indeed the case. We reiterate the point made in our Report last year: the Department will receive the support of this Committee in whatever reasonable and practical measures it proposes in order to mitigate the destructive effects of climate change.[84]

EUROPEAN UNION EMISSIONS TRADING SCHEME

54. In December 2006, the European Commission adopted a proposal for legislation to include aviation in the EU Emissions Trading Scheme. The Secretary of State told us that getting aviation included in the Emissions Trading Scheme had been one of his priorities since coming to office.[85] He said: "I think it is very important that over a time aviation does meet its environmental externalities, and those are costed in. Trading is, I think, the most appropriate policy by which we can achieve that objective".[86] We welcome the European Commission's decision, and note the Government's role in helping to secure this initiative. Aviation emissions trading is a step in the right direction. If the scheme is to achieve its full potential, it must be comprehensive. But research shows that hopes of mitigating climate change through emissions trading alone look unrealistic given the severity of the problem.[87]It is a step in the right direction, but the Department must not put too much stock in this single measure.

EUROPEAN VOLUNTARY AGREEMENT ON NEW CAR EFFICIENCY

55. On current trends it looks very likely that the Voluntary Agreement between the automotive industry and the European Commission, which aims to deliver average new car efficiency of 140 grams of carbon per kilometre by 2008-09, will not be met. This is a disappointing failure. It demonstrates that the Voluntary Agreements lacked the power to achieve the required change. The Department states in its Annual Report that it is pushing for new and better Agreements as soon as possible. The Autumn Performance Report goes further, to suggest that: "all options, including mandatory targets with trading, must be considered."[88]

56. We support the decision to consider mandatory targets. There are structural problems with the existing Voluntary Agreements, which have limited their effectiveness. For example, the Agreement is between the Commission and the industry associations, rather than individual companies. Furthermore, there are no financial incentives or regulatory requirements for companies to meet the target. A MORI poll for the Energy Saving Trust found that 70% of people would support a 'miles per gallon' regulation.[89] The Trust considers that sales-weighted targets with individual car companies are now needed to ensure progress across all brands.

57. The new car Voluntary Agreements have failed to achieve the necessary improvements in vehicle efficiency. It is essential that a formal regulatory approach be adopted for new car efficiency standards, and that the requirement is placed on individual companies, rather than the industry associations, to meet this standard. The Government must push strongly at the European level for mandatory targets which are challenging and which bring swift and significant improvements. The Department should lead the way by ensuring that its own vehicle fleet and those of its executive agencies meet the highest efficiency standards.

COMMUNICATIONS

58. The Department told us that £40 million earmarked for environmental grants and advice over the next two years remains allocated for green transport initiatives, but will be refocused on a communications campaign to promote consumer information on buying greener vehicles, eco-safe driving and workplace travel planning.[90] We welcome this campaign, but note that it is competing with vehicle manufacturers' annual advertising budget of £900 million.[91]

59. Policies which also raise awareness of the need to reduce greenhouse gas emissions from transport should be encouraged. We note that one London borough is considering linking parking charges to carbon emissions standards of vehicles, and that the London Mayor also proposes to link the congestion charge to carbon emissions. We understand that these types of schemes should be fairly straightforward to implement as they rely on existing data sets. The impact of local measures which link carbon emissions standards of vehicles to other types of charges should be evaluated, and if effective they should be promoted. As well as aiming to bring about actual reductions in carbon emissions, these policies will do a great deal to raise awareness among drivers of the need for change, and the differentials in energy efficiency and emissions standards of different types of vehicle.

Performance against the air quality targets

60. Road transport is a major contributor to air pollution: around two-fifths of nitrogen dioxide emissions and two-thirds of particulate (PM10) emissions in London result from road transport emissions. Particulates worsen respiratory and cardiovascular conditions and carry cancer-causing compounds into lungs. The European limits which are designed to safeguard human health are regularly exceeded in the UK. The Department for Transport has again failed to make progress against transport-related air quality targets. According to its Annual Report:

"Provisional data indicates that there were some sites in urban areas and beside busy roads where the nitrogen dioxide and particles (PM10) objectives were not met in 2005, and that with present policies and technologies it is unlikely that the objectives for these pollutants will be met by the 2010 target date… recent measurements show that long term reducing trends for nitrogen dioxide and particles are flattening or even reversing at a number of locations".[92]

61. We are dismayed by the Department's lack of success in improving local air quality. The consequences of this failure are not insignificant: it is estimated that respiratory disorders associated with PM10 episodes are responsible for 8,100 additional deaths and 10,500 additional hospital admissions in the UK each year.[93] Yet few authorities have proposed bold policies. The Department states that where air quality standards are exceeded because of emissions from road traffic it would "expect the local authority to use their traffic management powers … to reduce levels of pollution."[94] However, research commissioned by DEFRA found that local transport schemes have relatively little air quality benefit, and that larger benefits resulted from low emission zones, scrappage schemes and motorway speed restrictions. [95] The review found that by far the most effective (and cost-effective) way to achieve air quality improvements was the implementation of new vehicle emissions standards.

62. This evidence demands that the Department revises its policy on air quality, and that it takes a more 'hands-on' approach, rather than expecting local authorities alone to deliver results through traffic schemes. The Government must push for stringent vehicle pollution standards at the European level. It is clear that without more radical measures progress will not be made in reducing particulates and nitrogen dioxide. The Department should also encourage more local authorities to adopt bold measures, such as London's proposed Low Emissions Zone,[96]and reward those that make clear improvements.

Performance against the rail targets

63. Given the Department's commitment to reduce carbon emissions and road congestion it should take an active interest in encouraging modal shift from road and air transport to the railways. Yet the Department dropped the 2002 Spending Review target to increase rail use by 50% from 2000 levels by 2010 when it adopted its 2004 Spending Review targets.

64. In fact rail use has increased in recent years. The Annual Report states that passenger kilometres had increased by 12% compared to the baseline by the end of December 2005, and the Autumn Performance Report shows the increase had continued to 14% by the end of August 2006.[97] This is a substantial increase, but still some way off the original 50% target. It is clear that peak-time capacity is now a constraint to further growth. The Secretary of State acknowledged the difficulties: "We now have a billion-passenger railway, the fastest-growing railway in Europe. So rail will face challenges in terms of capacity in the future."[98] We remind the Department that overcrowding is already a problem on some lines at peak times.[99]

65. Increasing rail capacity in line with demand will be an ongoing challenge faced by the Department. The Secretary of State told us that the Department would publish a rail White Paper in the summer of 2007 which would address the capacity problems on the railways over the next 30 years.[100] The White Paper will set a strategy for dealing with:

• how to accommodate anticipated passenger growth;
• the role of high-speed inter-city trains, including the case for a new north-south high-speed line;
• improving the environmental performance of the rail network to ensure it maintains its advantage over other modes; and
• responding to the needs of passengers in the context of an ageing and more culturally diverse population.[101]

66. With the prospect of road pricing schemes in the near future, the demand for rail is likely to increase. The Department must plan for this eventuality, and in the interests of both the environment and the economy it must ensure that the provision of public transport capacity matches demand. Increasing rail fares and effectively pricing people off public transport is not an acceptable response to capacity shortage.

67. In terms of the Department's surviving rail PSA target, the far-from-ambitious 85% punctuality and reliability target was met six months ahead of schedule.[102] The target uses the 'Public Performance Measure' which combines punctuality and reliability. Scheduled franchised passenger train services are measured against the timetable and are considered 'on time' if they arrive within 5 minutes of the scheduled time, or 10 minutes for long-distance trains. The breakdown of performance data shows that the long-distance sector is lagging behind the overall progress, and in fact this sector failed to achieve the 85% target: reaching just 83.4% for the 12 months up to August 2006.[103]

68. We understand that work is ongoing to set a new rail reliability and punctuality target for 2008. According to the Autumn Performance Report, the most recent performance measure scored punctuality and reliability at 87.4%. We expect the new target to take this level of performance into account, and to set a far more stretching target for the next period. Performance in the long-distance sector is decidedly unimpressive—more progress must be made in delivering long-distance passengers to their destination on time. In the longer-term, it should not be beyond human ingenuity to run a rail network in which punctuality and reliability is close to 100%.

RAIL FRANCHISING

69. In our report on Passenger Rail Franchising, published on 5 November 2006, we outlined our concerns about the costly muddle that is rail franchising.[104] We urged the Government to develop a structure capable of delivering the capacity and service improvements required, at a reasonable cost. We shall refrain from going back over our many concerns, but two aspects of rail franchising deserve a special mention here, either because of recent developments, or because of new information unearthed during our inquiry into the Annual Report.

70. Throughout our inquiry into Passenger Rail Franchising, as well as in our evidence session with the Secretary of State on the Department's Annual Report, the Government always maintained that it would not renegotiate the terms of failing rail franchises.[105] We are relieved to find that in the case of the East Coast Main Line, it has stood by its word, and hope that that will continue to be the case. On 15 December 2006, GNER 'handed back' its ten-year franchise to the Government due to financial difficulties, and a new re-franchising competition was launched immediately. The East Coast Franchise had been awarded in March 2005 and commenced in May 2005.[106] Just over 18 months into a ten year franchise, the company failed. Despite our relief that the Government held firm and refrained from renegotiating the GNER contract, the result represents only the least undesirable outcome—there is nothing to celebrate. The costs of severing the franchising agreement and re-letting it so soon effectively represents wasted expenditure as there is no tangible benefits to the travelling public. Improvements and upgrades to services on the East Coast Main Line are now suspended for a year, and passengers are missing out as a result. This is not good value for money. We can only re-emphasise our conclusion that the franchising system is wasteful and muddled, and recommend that the Government seriously re-think the way passenger rail services are provided for the long-term.

71. We were also concerned to learn that the Department for Transport has only limited commercial law expertise in-house, despite the fact that the Department has a legal section employing 66 lawyers.[107] Consequently, it incurs significant expenditure on external specialist commercial law advice in connection with rail franchising. Table 4 shows DfT expenditure on external legal advice in each of the past five years. Although the costs in the last three years represent little more than an average of 0.1% of the value of franchises let, they are nevertheless large sums of money. The Department must be sure that buying-in external commercial law expertise is more cost-effective than having a suitably staffed team in-house.

Source: Department for Transport Supplementary Memorandum

72. The rail franchising system means that the DfT will require access to commercial law specialists on a regular basis for the foreseeable future. We urge the Department to conduct a thorough cost-benefit analysis to establish whether it would be more beneficial to employ commercial law specialists in-house to handle the recurring work arising from the rail franchising process. The contracts negotiated are worth billions of pounds—the Department must be confident it is securing good value for money, but it should evaluate whether hiring external help to carry out significant parts of its workload is the most cost-effective way to achieve this. We doubt that this is the case.

CROSSRAIL AND HIGH-SPEED RAIL LINKS

73. Crossrail is the proposed cross-London rail link which would connect Shenfield and Abbey Wood in the east, with Maidenhead and Heathrow in the west, through a new underground tunnel in central London. The Secretary of State told us that there was "a discussion underway… within government, in terms of the funding package for Crossrail and progress continues on the Bill."[108] The project was originally estimated to cost £10 billion in 2002 prices.[109] The Permanent Secretary told us that there was "some quite intensive work going on at the moment to see if that number can be reduced, and I think there is some prospect that it may come down".[110] But Sir David also emphasised that because the £10 billion figure was in 2002 prices, any actual outturn figure would be higher in today's prices; he thought it could already be as much as £16 billion. The Secretary of State confirmed that the balance of funding between London and national taxpayers was still to be determined, and would be informed by the Lyons review, when this reports.[111] He indicated that a decision would be taken in the context of the forthcoming Spending Review.[112]

74. The progress of the Crossrail project depends on the Government agreeing a viable funding package with the Mayor, London businesses and taxpayers, and the Treasury committing to provide the remainder—which will itself be significant. We question the reliability of the cost estimates and whether the very substantial costs will, in fact, be met by central Government. We look forward to progress being made in the forthcoming Comprehensive Spending Review. Careful consideration must be given to the impact any funding decisions will have on transport fares and charges, local residents, and national tax payers.

75. In addition to Crossrail, the Secretary of State drew attention to the Government's manifesto commitment to look at the feasibility and affordability of a North-South high-speed rail link.[113] He gave no further details of the Government's thinking about a North-South high-speed rail line, but instead told us: "This issue will be addressed by the Eddington review, which … will obviously inform the work that my department takes forward".[114] The Department confirmed that the assessment of the feasibility and affordability of high speed rail, including Maglev technology, was being taken forward in the development of the long-term strategy for the railways, due to be published in summer 2007.[115]

76. The Eddington report did not, in fact, recommend the benefits of what he labels 'step-change measures' such as a high-speed North-South rail line:

"Step-change measures intended to transform the economy are not, in a world of constrained resources, likely to be a priority… it is not at all clear that creating new networks is the most appropriate or cost-effective method to achieve increased capacity: high speed options should be assessed coldly alongside other polices for achieving the same objective. Other transport investments are very likely to offer superior returns compared to where projects rely on new and largely untested technologies."[116]

The Report goes on to recommend: "Do not be seduced by grands projets with speculative returns, for example: pursue high speed rail options only where they have been demonstrated."[117] We await with interest the Department's response to the Eddington Report in the context of the Comprehensive Spending Review and the Department's forthcoming rail strategy. We are keen to monitor what conclusions the Department will make about the potential for high speed North-South rail links.

Performance against the efficiency targets

77. The 2002 Spending Review set an efficiency target to achieve annual efficiency gains of 2.5%. The 2004 Spending Review repeated this aim, but removed the PSA status of the target; it is now just a Departmental objective. Whatever its status, efficiency gains by the Department exceeded the target and the Department is on course to deliver its savings of £785 million by 2007-08.[118] It should be noted that this target excludes the rail budget, which was subject to its own review. We expect to see the resources from the Department's efficiency gains released for front-line activities and actual improvements in the transport system.

14   Department for Transport Autumn Performance Report 2006, Cm 6976, page 1  Back

15   Public spending is listed by PSA Objective in Table A1 of the Annual Report, page 226 Back

16   Department for Transport Autumn Performance Report 2006, Cm 6976, page 22, para 2.7 Back

17   HM Treasury press notice 65/05 19 July 2005 http://www.hm-treasury.gov.uk/newsroom_and_speeches/press/2005/press_65_05.cfm  Back

18   Q6 Back

19   Qq 12, 13 Back

20   DEFRA and Home Office Back

21   Q8 Back

22   Q15 Back

23   Department for Transport Autumn Performance Report 2006, Cm 6976 page 9 Back

24   Ev 46 Back

25   Department for Transport Autumn Performance Report 2006, Cm 6976, page 10 Back

26   The Autumn Performance Report cites an average performance figure for 58 routes, out of a total of 103 routes. Back

27   Q28 Back

28   Q15 Back

29   Department for Transport Annual Report 2006, Cm 6817 page 67 Back

30   Department for Transport (2004) Feasibility Study of Road Pricing in the UK, page 5 Back

31   Department for Transport Autumn Performance Report 2006, Cm 6976 page 13 Back

32   The ten largest urban areas are London, Greater Manchester, West Midlands, Merseyside, South Yorkshire, West Yorkshire, Tyne & Wear, Nottingham, Leicester and Bristol. Back

33   Q19 Back

34   Q18 Back

35   Department for Transport Annual Report 2006, Cm 6817 paragraph 4.38.  Back

36   Department for Transport, Transport Innovation Fund Guidance January 2006 Back

37   Q16 Back

38   Ev 1 Back

39   Q29 Back

40   Q24 Back

41   See Transport Committee Twelfth Report of Session 2005-06 Local Transport Planning and Funding, HC 1120, for a discussion of the TIF framework  Back

42   Department for Transport Annual Report 2006, Cm 6817 page 74 Back

43   Q25 Back

44   Q18 Back

45   Q14 Back

46   HC 1317 Back

47   Department for Transport Annual Report 2006, Cm 6817 page 259 Back

48   Q33 Back

49   Q34 Back

50   Q36 Back

51   Q32 Back

52   Department for Transport Annual Report 2006, Cm 6817 paragraph 6.19 Back

53   ibid., paragraph 6.20 Back

54   Department for Transport Autumn Performance Report 2006, Cm 6976 page 21 Back

55   Q59 Back

56   Qq 59-62 Back

57   Department for Transport Autumn Performance Report 2006, Cm 6976 page 20 Back

58   All new light rail vehicles are required to be accessible to disabled people, including wheelchair users. Back

59   Ev 31 Back

60   Ev 31 Back

61   Ev 46 Back

62   Q15 Back

63   Department for Transport Autumn Performance Report 2006, Cm 6976 page 27 Back

64   Road Casualties Great Britain 2005: pedal cycle death and serious injuries were 2,308 in 2004, rising to 2,360 in 2005. The number of fatalities in single-vehicle car crashes on non built-up roads increased from 340 in 2004 to 346 in 2005. Back

65   Q113 Back

66   Q112 Back

67   Transport Committee, Tenth Report of Session 2005-06, Roads Policing and Technology: Getting the balance right, HC 975 Back

68   DfT/National Statistics Road Casualties Great Britain 2005, page 37, tables 3b-3d  Back

69   The Freight Transport Association calculated this figure, using DfT's Transport Statistics Great Britain 2006, Survey of Foreign Vehicle Activity 2003, and Road Goods Vehicles Travelling to Mainland Europe Q3 2006. It should be noted that it relies on an average round-trip distance for foreign vehicles that was estimated in 2003-which is the most recent data available. Back

70   'Sideswipes' are where HGVs are involved in collisions while changing lane on motorways and dual carriageways. Back

71   Freight Transport Association briefing 03/11/06 Back

72   Vehicle and Operator Services Agency (VOSA) South East International Pilot Ministerial Launch 17 July, Media Information Sheet. Because the checks are targeted, the overall level of non-compliance will be lower than these figures. Back

73   Q119 Back

74   VOSA data supplied to Committee. Back

75   Ev 31  Back

76   Profile magazine published by Prospect, October 2006, page 11 Back

77   Q121 Back

78   Q122 Back

79   Department for Transport Autumn Performance Report 2006, Cm 6976 page 32 Back

80   Q15 Back

81   Q78 Back

82   Q78 Back

83   Q77 Back

84   Transport Committee, Fourth Report of Session 2005-06, Departmental Annual Report 2005, HC 684, para 53 Back

85   Q79 Back

86   Q79 Back

87   Cairns, S and Newson, C (2006) Predict and decide: aviation, climate change and UK policy, page 70-77 Back

88   Department for Transport Autumn Performance Report 2006, Cm 6976 page 33 Back

89   Waterfront Conference "Reducing Transport's Energy Use: Taking Real Action" 21 November 2006, presentation by Alex Veitch, Energy Saving Trust. Back

90   Ev 1 Back

91   Waterfront Conference "Reducing Transport's Energy Use: Taking Real Action" 21 November 2006, presentation by Alex Veitch, Energy Saving Trust Back

92   Department for Transport Annual Report 2006, Cm 6817 page 265, Appendix D Back

93   Great Britain Committee on the Medical Effects of Air Pollutants Great Britain (1998) "The quantification of the effects of air pollution on health in the United Kingdom". The Stationery Office. COMEAP is an Advisory Committee of the Department of Health. Back

94   DfT memorandum to 2005 DAR evidence session (HC 684) Back

95   DEFRA commissioned a review of Air Quality Strategy Local Road Transport Measures in 2004. Scrappage subsidies are grants paid by the government for the release of old vehicles for scrappage. Back

96   The London Mayor is consulting on the introduction of a Low Emission Zone, to improve London's air quality. Under this proposal, diesel lorries, coaches and buses that fail to meet a minimum pollution standard, from 2008 face having to pay a charge if they drive within Greater London. Back

97   Department for Transport Annual Report 2006, Cm 6817 page 257 and Department for Transport Autumn Performance Report 2006, Cm 6976 page 17 Back

98   Q10 Back

99   Q43 Back

100   Q43 Back

101   Department for Transport Annual Report 2006, Cm 6817 para 5.6 Back

102   Department for Transport Autumn Performance Report 2006, Cm 6976 page 16 Back

103   Department for Transport Autumn Performance Report 2006, Cm 6976, page 17 Back

104   Transport Committee, Fourteenth Report of Session 2005-06, Passenger Rail Franchising, HC 1354 Back

105   Q 52 [Rt Hon Douglas Alexander MP and Sir David Rowlands, DfT]; Transport Committee, Fourteenth Report of Session 2005-06, Passenger Rail Franchising, HC 1354, Qq 406-407 [Mr Lambirth DfT] Back

106   When awarding the franchise to GNER in March 2005, the SRA hailed it as "the biggest deal in European rail history". See SRA press release, 22 March 2005, available at http://www.sra.gov.uk

 Back

107   Ev 46. This includes a Rail Contracts Division with seven lawyers. Back

108   Q90 Back

109   Department for Transport Annual Report 2006, Cm 6817 paragraph 94 Back

110   Q90 Back

111   Q93 Back

112   Q93 Back

113   Q 46 and The Labour Party manifesto 2005 'Britain Forward not Back', Page 24 Back

114   Q46 Back

115   Ev 46 Back

116   Eddington Report, Volume 3, Para 1.33  Back

117   ibid., page 141 Back

118   Department for Transport Autumn Performance Report 2006, Cm 6976 Back