COMMISSION ON THE POWERS AND ELECTORAL ARRANGEMENTS OF THE NATIONAL ASSEMBLY FOR WALES

MINUTES OF PROCEEDINGS

of the

EVIDENCE OF:

Professor Stuart Cole – Wales Transport Research Centre

held at

Caradog House, Cardiff

On

FRIDAY 13TH JUNE 2003

In Attendance
 

Lord Richard: Chair, Richard Commission

Ted Rowlands: Richard Commission

Tom Jones: Richard Commission

Peter Price: Richard Commission

Dr Laura McAllister: Richard Commission

Sir Michael Wheeler-Booth: Richard Commission

Paul Valerio: Richard Commission

Vivienne Sugar: Richard Commission

Eira Davies: Richard Commission

Huw Thomas: Richard Commission

Professor Stuart Cole: Wales Transport Research Centre

Proceedings

Lord Richard

Thank you very much for coming.

Professor Stuart Cole

Thank you very much for the invitation.

Lord Richard

I wonder if, first of all, you could identify yourself for the sake of the record, so that we have it on paper, and then if you would be very kind perhaps to open up your paper to us, because, as you may know, we got it fairly late on and I think we have managed to skim it, at least I have, and I cannot say I have gone into it in enormous detail.

Professor Stuart Cole

Apologies for the late arrival. I have been in Poland for 10 days. Yes, I will do that.

I am Professor Stuart Cole and I am Director of the Wales Transport Research Centre at the University of Glamorgan.

If I briefly go through, there are two things probably which perhaps I could introduce to you: one is the powers that need to be, in my view anyway, transferred and I think that view is probably shared by the National Assembly Committee, the Environment Planning and Transport Committee as was, now slightly restructured, the Welsh Assembly Government through the Minister, Sue Essex, who was Minister prior to the elections, and the Select Committee on Welsh Affairs in the House of Commons, I do not know if any of you have pretty much the same view.

I think I was asked if I would say something about who was in charge of what on the railways because it is not immediately apparent. In terms of the powers and responsibilities issue, I suggest the underlying concern by both the Select Committee on Welsh Affairs, who I understand you are seeing in two or three weeks time, in their report in January indicated that there were probably three areas which they felt ought to have attention: one was powers over the Strategic Rail Authority on the railway side - powers of direction and guidance which are currently held by the Secretary of State for Transport for the UK Government. Second, the powers to create Passenger Transport Authorities, and I can explain that in more detail if you wish. Basically, they are bodies which are groupings of local authorities which effectively are happening now in terms of the consortia of local authorities, Tiger/Swift, in this part of the country, switch in the west, Trafryndiaeth Canolbath Cymru (Tracc) in the Midlands of Wales and Taith in the north. They are groups of local authorities, and one or perhaps two of them might become Passenger Transport Authorities on a more formal statutory basis. Thirdly, the decision about who appoints the member of the Strategic Rail Authority representing Wales, because currently that appointment is made by the Secretary of State for Transport, and I believe it must be very difficult for the member; the current member is Mrs Janet Jones, and it must be very difficult I think for that member to know exactly who he or she is responsible to. Clearly, the responsibility is to the Secretary of State for Transport as the appointing Minister, but the Assembly Government, the National Assembly Committee and the Select Committee felt that that responsibility ought to lie directly to the current Minister for Economic Development and Transport in the Assembly Government. That would be a much more satisfactory arrangement in terms of representing Wales's views to the Strategic Rail Authority as a whole.

The UK Government's view, of course, is that the Strategic Rail Authority is a body appointed by the Minister and, therefore, there is a significant disagreement there.

Reasons for bringing railways into the area of responsibility of the National Assembly and the Assembly Government, largely is based on the desire by the Assembly Government and others, and I think certainly three of the political parties in Wales and possibly the fourth have a sizeable degree of agreement: Labour, Plaid Cymru and the Liberal Democrats, on the fact that there should be an integrated transport policy, determined by the Assembly Government.

Now that requires a single budgetary body in overall terms, responsible for the railways, the roads, traffic management, funding of buses, maybe even the regulation of buses, so that when a decision is being made, and it would be in a partnership I think between the local authorities, who have certain responsibilities in terms of bus funding, and the Assembly Government, who have responsibilities in terms of highways funding, the Assembly Government would clearly be responsible for funding of the core network which would be the railways and the trunk road network as at present and local authorities, partly from their own funds and partly from Assembly Government funds, responsible for the more local issues, such as buses, roads -- local roads that is -- and traffic management.

That would enable us to bring together in Wales all those activities involved in transport and that would enable the Assembly Government and the local authorities between them to make a decision on where they spent their money.

At the moment if we want to solve, for example, the congestion problem on the M4 in this part of the country then we only have one option in terms of the Assembly Government's powers and that is to build another motorway, like the A48M, for example, whereas there is a perfectly clear alternative, which is to provide a metro system which would probably cost no more money than building the M4 across the Gwent levels. It would certainly be substantially less controversial and which would enable people to have a railway service which would encourage a large proportion of car users making simple single trips to make those trips by train rather than make them by road. At the moment that option is not available to the Assembly Government. It can spend money. It is spending money currently, and some two and a half million pounds on improvements to the railway, but that is not its primary function and it is not getting any other funding for that through, for example, the block grant or the funding that currently goes to the SRA.

So the restriction on the Assembly Government and local authorities together to come up with an integrated transport policy for Wales is there, and that is the big concern I think.

There is also I think a separate concern to do with the funding issue, and I think looking at Scotland is a useful lesson in terms of what the Scottish Executive is doing in terms of the railway compared with what the Assembly Government is able to do. The Strategic Rail Authority's budget has been cut by the UK Government for this current year by about £320 million.

Ted Rowlands

Not down by, £320 million, to £320 million?

Professor Stuart Cole

No, cut by £320 million.

Sir Michael Wheeler-Booth

Why such a big cut?

Professor Stuart Cole

I think you have to ask the Minister, as Sir Humphrey would say, but I think there are clearly other expenditures which the UK Government felt had a priority and whether it was within the Department of Transport singularly --

Ted Rowlands

Cutting subsidies to commuters in South East London and South London, that sort of thing?

Professor Stuart Cole

The whole of the budget was cut. The process was that Alistair Darling, as Secretary of State for Transport, cut the SRA's budget by just over £300 million. The consequence of that was that the SRA, the Strategic Rail Authority, had to find some way of saving that money, and the way they went about it was to go for those projects which had not yet been committed contractually, and effectively what happened is that a mechanism called the Rail Passenger Partnership, which is the upgrading system of the railways, which was worth about £400 million, that has been stopped. So there are no new contracts being put out. So the improvements, for example, that are currently taking place on say the Valley Lines stations; all that work has stopped, except where the Assembly Government has stepped in to pay for some of that work to be done.

Now that was an easy way for the SRA to cut immediately £300 odd million from its budget and that cut, as I understand it, was an immediate cut; it was an announcement directly that they would be getting £300 million less than they ought to have been getting in this financial year. So we have a situation where --

Lord Richard

What was the whole budget for it, approximately?

Professor Stuart Cole

This is a very difficult question, because the SRA are spending sums of money on both capital and subsidies, and it is sometimes difficult to separate out exactly what the expenditures are on the different elements. The SRA are not -- I do not know if you have spoken to the SRA yet, but they are not the most open of organisations currently, but we are talking about total expenditure on the railway in terms of capital investment of about £6 billion. That is what Network Rail are spending on capital expenditure, but then on top of that the individual train operating companies are buying trains, partly with their own money, partly with SRA money, and there is a subsidy to the whole of the railway, which is around about a billion pounds, or thereabouts, £1.1 billion, in this current financial year. That is the cash subsidy to run the railways, of which Wales gets something like, give or take £100 million, it is about £94 million this current financial year.

Ted Rowlands

Is that the subsidy bit?

Professor Stuart Cole

That is the subsidy bit. There are two railways in Wales – local services and Inter-city. Wales is served by several railway companies. That is the running costs of the trains, and that includes, of course, those companies having to pay Network Rail for use of the track and leasing of the trains. Most of the train companies own very little. If you take somebody like Wales and Borders, the vast majority of their trains are owned by leasing companies. The track is entirely owned by Network Rail and so most of their outgoings are on staff, and what are called "rail access" charges, charges for using the track and leasing costs on trains. That would account for probably 85 to 90 per cent of their costs.

So that is the underlying issue as far as the Assembly Government is concerned. I have set out in the paper --

Ted Rowlands

You were just about to say, "But in Scotland there is a most interesting" -- and we interrupted you. Apologies for that.

Professor Stuart Cole

The situation in Scotland is quite different to that in Wales; fortunately for the Scots and unfortunate for us. The situation is this. Perhaps I can go back just one stage and say a little bit about who is in charge of what, and that might put the Scottish situation into context. Network Rail is the company that took over from Railtrack. Railtrack went into liquidation, or into railway administration and after a long process which you will have read about in the press Railtrack were taken over by Network Rail who now own pretty well all the track in the country; the only bit it does not own are some of the track inside the depots, such as Canton Depot, the track is owned by the leasing company who own the depot which is the company that leases the trains to Wales and Borders and also, oddly, Fishguard Harbour, which is owned by the harbour authority, otherwise 99 per cent of the track is owned by Network Rail. Then we have franchises. These are companies franchised by the Strategic Rail Authority. It is a contractual arrangement to run trains. They do not own the track, they do not own the signals, they do not own the stations, they do not even own the trains; they lease the trains and they operate the trains. The First Great Western franchise terminates on 1st March 2006. The Wales and Borders franchise terminates on the 31st March 2004. It is a short term franchise because the original franchise terminated I think in 2002, and so a new 2-year franchise was issued in order to keep the trains running. It is a full franchise, but it is a short term franchise with an early termination clause.

Now the Strategic Rail Authority's intention is to terminate that contract, that franchise, either in October or November of this year and create the new Wales and Borders franchise which will run all the trains in Wales and a number of a trains from places such as Chester, Birmingham, Manchester, and so on, outside Wales. It will be part of the Great Britain train network, supervised and overseen by the Strategic Rail Authority.

The big step, just before that, at the end of September is that the whole of the existing two franchises; that is Wales and Borders, which covers the area as far as say Newtown, Aberystwyth and Pwllheli and the North Wales main line, which is a separate franchise, all of those will be converted on I think on 27th September into a new legal entity called the Wales and Borders Franchise. That is to prepare the ground for the new franchisee taking over in October.

Most of it is fairly long large amounts of paper and it is largely to do with legal issues such as transference of pension rights, transference of staff, leasing agreements, and so on. It is entirely administrative.

The decision then on the new franchisee is expected to be made quite soon. The franchisee would need at least 3 months notice to take over the franchise, so we are talking about probably July sometime, and therefore August, September, October is the amount of time that the franchisee would have available.

The dates for taking over the franchise are determined by financial periods and so it is the end of a financial period that the new operator will take over; those are monthly financial periods.

I am sorry, I did mean 28th September rather than the 27th a moment ago for this transfer of documentation and so on. So that is the situation at the moment.

There is one other player in all of this that I ought to mention which is the Office of the Rail Regulator, and the Rail Regulator's job is to oversee the licences of both Network Rail and the train operating companies. It is also the role of the Regulator to ensure that the controlled fares on the railway do not increase by an amount greater than that allowed by the Regulator.

There are different types of fares. There are a group of fares, 5 of them: the Open First, the Open Second -- that is unlimited use, get on the train whenever you like, turn up and go --  the Saver, the Super Saver and the Apex. Fares are all controlled by the Regulator and the Regulator decides by how much those fares may change.

All other fares are uncontrolled. The intention was that companies would have a degree of flexibility in terms of offering discounts, and so on, to generate more business.

So that is the role of the Regulator. Two other things probably worth mentioning: one is the Rail Passenger Partnership that I mentioned a moment ago. This is an investment fund which has currently been suspended by the SRA for the budgetary reasons I mentioned earlier. This was intended, £400 million of it was intended to provide a programme of improvements which the passenger would see. So smartening up stations. Some of it was to do with signalling and track, but in the main it was the bits the passenger saw, and the bits we see when we get on and off trains, smartening up trains, smartening up the stations would come from that money.

There was a second stage to that which was modern facilities at stations; the kind of work that has just been done at Treforest Station reflects that. It is a high quality piece of work with public address systems, CCTV, dot matrix information screens - the next three trains shown on the screen, television screen showing perhaps the next 10 trains, arrivals and departures and new buildings. That is the kind of facility that was expected. It is very expensive and it will be interesting to see how the cost of station improvements varies between the SRA's handling of these improvements via the Rail Passenger Partnership and the agreement recently come to between the Welsh Assembly Government and Wales and Borders Trains, where £2.5 million has been made available for smartening up stations, and we will see what the difference in outputs might be between those two approaches.

The suggestion being made by the Assembly Government and Wales and Borders is that by simplifying everything, by minimising overheads, and so on, it will achieve a lot more for the same amount of money, because control is local. There are not a lot of overheads put on to the schemes, which is the allegation against Network Rail.

That, of course, leads us into the issue of powers over the Strategic Rail Authority. Going back to the question about Scotland which said I would put that into context, in Scotland, the powers over the SRA are in two forms: one is a power of direction and control. So long as the directions given by the Minister for Transport in the Scottish Executive are not contrary to those of the Secretary of State for Transport, then the SRA must follow those direction and guidance, and that is for all services within Scotland and, indeed, it does cover some services that run just out of Scotland. It is essentially the Scot Rail franchise.

There is another power though, often less advertised, which is a power of advice and guidance on cross border services; such as Virgin Trains to London, Virgin Cross Country services and Great North Eastern services to London. The equivalent in Wales would be powers of direction and guidance over the Wales and Borders services and powers of advice and guidance over First Great Western and any services which extended substantially out of Wales in the north, so Central Train Services, for example, running from Cardiff to say Lincoln or Nottingham, clearly the writ of the Assembly Government would extend only perhaps to Birmingham, and beyond there it would be up to the SRA to decide, but the working arrangements between the Scottish Executive’s Transport offices and the offices of the SRA appears to be particularly good. There does not appear to be any major problems. It is a matter of sitting down discussing what the Scottish Executive want, what the SRA are able to afford and then putting the two together, and if the Scottish Executive then wish to have a better service than the SRA say they are able to provide, the Scottish Executive have the right to spend its own money.

Ted Rowlands

May I ask you to pause. In the Scotland Act the reservations and exceptions, it covers transport - provision and regulation of rail services is totally reserved to the UK, so under what competences is the Scottish Executive exercising this power of direction over the SRA?

Professor Stuart Cole

I think there must have been some subsequent change.

Ted Rowlands

There has been a further transfer of functions order?

Professor Stuart Cole

Yes. I am not a lawyer so I cannot tell you what the process was.

Ted Rowlands

We can track that, but it is post-1990 -- post the Scotland Act?

Professor Stuart Cole

Yes. These were powers which were brought in fairly recently and have only just become -- I think it was April or May of this year when those powers came in fully, but of course there has been the setting up of that process for some time.

I think that is all I wanted to say initially.

Sir Michael Wheeler-Booth

You have said a lot about railways. What about boats or air? Only railways?

Professor Stuart Cole

I can certainly talk about roads. The reason is that roads are entirely the responsibility of either the National Assembly or Local Government in Wales. The indicator, I suppose, is something as simple as if you have a road which goes from Wales into England then as some years ago under the Welsh Office, the Department for Transport built the Chester Bypass and the dual carriageway trunk road, but the Welsh Office had not got its section in the same period and so the A55 was single carriageway and once you got to Hawarden. You clearly recall that?

Huw Thomas

Yes.

Professor Stuart Cole

But the idea is that Department for Transport and the Assembly's transport division would talk to each other in terms of cross border roads, but all the trunk roads in Wales, that is the motorways and the A trunk roads, are the responsibility of the Assembly Government, and all the other roads, county roads, local roads, and so on, are the responsibility of local authorities. Traffic management is the responsibility of local authorities, so all the roads network is in the hands of Welsh authorities.

Vivienne Sugar

I thought there were some problems over bus regulation which, because they are not devolved, even though the Assembly and Local Government have got quite a lot of powers is that you find it very difficult to get an integrated road transport network because of bus operators being private organisations regulated by an English based body.

Professor Stuart Cole

Yes. Let me say a little bit about that. The bus situation is that funding for bus subsidies is provided by County Councils; these days, of course, within their groupings, such as Swift, and so on, that I mentioned earlier. That gives a more regional cohesion to buses being provided. In addition, of course, there is the concessionary fares scheme which is a national scheme, provided by the Assembly Government, funded by the Assembly Government. The passes are issued by local authorities and local authorities may provide some additional facility in terms of rail transport if they wish, but that is free travel for the over 60s and some other groups.

The regulation of buses in terms of safety; in terms of numbers of vehicles, where they might be located for overnight accommodation, is in the hands of the Traffic Commissioner and the Traffic Commissioner – Mr David Dixon is the Traffic Commissioner for Wales -- is also the Traffic Commissioner for the Midlands. He is responsible to the Secretary of State for Transport, not even to the Secretary of State for Wales as was, but the responsibility for regulation in terms of where buses may run is also in the hands of the Traffic Commissioner. This does present a difficulty in trying to integrate buses and trains. You are quite right, the regulation of bus services is the responsibility not of the Assembly Government at all. Therefore, any attempt to try to integrate -- even if the railways were transferred, powers of direction were transferred to the Assembly Government, bus operators are private companies almost in their entirety. There are one or two companies remaining, such as Cardiff Bus, but the vast majority of companies are private companies, and many of them are part of large groups like Stagecoach and First, and their primary responsibility is profitability, and that is a private company's objective.

They may come into a contractual arrangement with a County Council to run certain additional services. They may run additional services because they think it is profitable, but they may also cut services because they think they are unprofitable, and the only amount of notice they have to give is 56 days. That is not an awful long time for a Local Authority to try and work out what it might do to try and replace a bus service.

Ideally, I believe, we would have the same kind of facility for buses as there is for trains, with a franchising arrangement by the consortia would probably be the most appropriate body to do it. A franchising of buses in the same way as the train franchises - buses would then similarly have a contract to provide certain services along certain routes so that buses and trains would meet one another, which does not necessarily happen, even when there are very small numbers of trains and buses, and I can quote you examples in Llandrindod Wells where there are 5 trains a day and the bus appears to consistently miss the train by 10 minutes throughout the day, for reasons which I have never been able to work out. There are certain regions which have no bus services at all in major towns. Places like Swansea have passing bus services but no terminal facility. Bangor has passing services, but no terminal facilities, although there is a plan now to built a bus terminal at Bangor station. Llandudno Junction, which has more train services than Llandudno Town, similarly, a new facility is being provided at Llandudno Junction station, which is something which has been needed for a long time. The interchange there before was a very difficult walk even for those nimble of foot, let alone people with walking difficulties, and places like Llanelli and Neath, which have little or no bus service in the vicinity of the station, certainly not one that serves the stations and meets up with the trains.

So we are looking at I think a situation in the bus industry where the only regulation is that on safety, which is important, numbers of vehicles and licensing of vehicles and drivers carried out by the Traffic Commissioner. There is no regulation of how those buses should be run or ought to be run in terms of an integrated service with the railway; it is purely a matter of the companies deciding what their commercial advantage is or the County Councils coming to a financial arrangement with the bus companies.

Sir Michael Wheeler-Booth

What about air?

Professor Stuart Cole

Air transport is, again, entirely the responsibility of the UK Government. The regulation of Cardiff Airport, for example, is their responsibility through the Civil Aviation Authority. The airlines determine for themselves exactly what they want to do. In Cardiff the primary air operators now are KLM, Royal Dutch Airlines and Bmi Baby which is part of British Midland. Interesting name, isn't it? Bmi Baby is an interesting case in point. Bmi Baby are able to change their service whenever they feel like it. Should they decide that the service say to Faro from Cardiff is not profitable, they can take that service off immediately. They may then compensate their customers under the contract they have with the individual customer, but their argument -- and it is not just that company; it is all the so-called low cost airlines -- is that if you are being offered fares of £15, £20, £30, £40 pounds to go quite long distances then that is only being done on the basis that the operation is profitable and once it stops being profitable then the facility has to stop, so it is not just that company which is involved.

The higher cost airlines have more of a margin in terms of what their load factors might be on certain journeys and therefore are able to balance one journey off against another, one timing off against another.

So we have two good facilities of different types at Cardiff airport at the moment. We would really like to have more. There are one or two other companies as well who operate, such as Ryanair and Air Wales. Air Wales is a new company based at Swansea which runs services to Dublin, Cork, Jersey and London City airport from Swansea and Cardiff.

Lord Richard

Boats?

Professor Stuart Cole

Again, privately owned in the main as are ports. There are port authorities which are within the State's echo as it were, but the boat companies themselves are privately owned. That is Stenna, which is a Swedish company, and B&I ferries, which is an Irish company.

Ted Rowlands

What I am a bit puzzled by on this SRA issue is here you are sometime since 1999, the Scottish Executive makes a bid for a specific additional transfer of function to give itself this power of direction, at the same time the National Assembly is also highly engaged in it but makes no equivalent bid at the same time, saying, "Well, you know, what is good enough for there, Scotland in this case, is certainly necessary in our case". Why has this happened? Do you have any knowledge of what the UK Government's attitude toward such a bid would be now; having granted it to Scotland would it not be automatically sympathetic to a similar bid? I cannot understand why they did not both make a bid simultaneously.

Professor Stuart Cole

The Select Committee on Welsh Affairs at the House of Commons reported back in December 2002. There is a new inquiry starting in the middle of July to continue the inquiry into the railways. The members were not totally satisfied with what had come out of the first inquiry. The situation was that an earlier report from the Select Committee and, indeed, a proposal I think the year before last from the Assembly Government, was to transfer the powers I mentioned earlier over the SRA, to the Assembly Government. The Government's response both to the Welsh Affairs Select committee 1999/2000 session, transport and its impact on Wales, was if I can find the quotation quickly, they were not persuaded I think was the way in which they put it; they were not persuaded of the need to transfer these powers, and they saw any transfer of power of guidance and direction over the SRA to other bodies as fragmenting the railway. The purpose of setting up the SRA, the Government's response at the time, was to end the fragmentation of our railway network and to ensure there is a GB wide strategic body.

Ted Rowlands

That applies to Scotland as well?

Professor Stuart Cole

Indeed so.

Subsequent to that I presume the Scottish Executive put forward a Transport Bill, or some order -- I am not quite sure what the procedure was -- to change the rules in terms of Scotland which were then changed. The Assembly Government made similar representations 2 years ago and have now made a further representation in the Transport (Wales) Bill, which is currently in preparation, to achieve the same objective as they now have in Scotland, but the Government's response, the UK Government's response, to the Transport in Wales Report was as negative as it was in the past, which was that they saw no reason why the powers should be transferred. They also said that there was a substantial part -- over-exaggeration I think -- of the Wales and Borders franchise not in Wales. The Assembly Government's response to that in their response to the Transport in Wales report from the Select Committee was that those issues were not difficult to overcome, and it is true the issues being raised by the Department of Transport are issues which I personally fail to understand.

There are no difficulties in a set-up where direction and guidance is what is being given by the Assembly Government. The Strategic Rail Authority are still the body who put the whole GB timetable together. It is not the Assembly Government taking its bit, the Scottish Executive taking its bit and leaving England with its bit and three unconnected railways. The SRA have the expertise to do the job, they are given direction by the respective governments.

Ted Rowlands

So in summary the distinction that has been made in the Scottish example is that Scot Rail is pretty well co-terminus with the Scottish border, whereas the Wales and Borders, because it includes chunks in that area, is not of the same kind of category. Is that basically their defence?

Professor Stuart Cole

Yes, that is their defence. That is their argument. The bit of railway we are talking about, if you can imagine the railway network in Wales is a reverse E; you have a line going up the border which stretches from Cardiff to Chester, runs by Hereford, Ludlow, Shrewsbury and Chester. We then have three railway lines going in, in the south, in the middle and in the north, and it is that little bit of railway running along the border almost which the Department of Transport is saying, "This is the reason why". Because the SRA are still the co-ordinating body, there is no difficulty in ensuring that those areas get their fair share of trains. There are markets there to be tapped. No operator is going to not serve Hereford, Ludlow, Shrewsbury, Chester adequately, because they are big centres of population. What we will get though is improvements to places like Wrexham which at the moment has an appalling railway system, with single track in many places, so the reliability as well as the frequency is restricted.

To the SRA one has to be realistic. The SRA's primary objective is to look at mass transport of people, and there are three big areas, the East Coast Main Line, the West Coast Main Line and London and the South East. Their Franchising Director Mr Nick Newton has said publicly that what the railways are good at is moving large numbers of people over large distances and they are not so good at anything else. That was its implication, and he made this in an article in one of the railway journals, and it was quite clear. He also said in the same article that the SRA did not mind if they were unpopular or not.

Now that means that to the SRA the Welsh railway services are at the edge of their primary agenda. They have a primary concern at the moment for rebuilding the West Coast Main Line, which has not been rebuilt since the 1960s and that is a scheme which originally was going to cost something like 3 billion pounds and escalated to 10 billion. The SRA are therefore saying from their point of view, "This is our priority, we have to think very carefully about whether we will spend money anywhere else", and it is not just in Wales; it is the West Country; it is East Anglia; it will be Yorkshire, and so on; branch lines will come second.

The primary inter-city route into Wales from London to Swansea is unlikely to get any major investment for the next 15 years unless First Group decided that they are going to spent the money themselves. The SRA will certainly not be funding Network Rail or any major enhancement of the kind that First Group proposed just before Christmas of a new high speed train travelling on a new line between London and South Wales and Bristol, travelling at around 200 miles an hour, therefore reducing the journey time from Cardiff to London to something like 70 minutes. That is the French technology; that is all it is. It is not new technology; it is 20-year old technology in France.

Vivienne Sugar

Can we get that to Swansea?

Professor Stuart Cole

We could, even to Llanelli.

I will go along with anything which increases railway line speeds.

Paul Valerio

That is because of the heavy reliance on subsidy in rail.

Professor Stuart Cole

Yes. The argument is that for the big firms and, the passenger numbers, are on the East to West Coast mainlines. Those are the links to the big cities from London and on the West Coast Mainline you have Birmingham, Manchester and Liverpool and then Glasgow to the north, so you have very heavy flows of traffic. But even there the original scheme for the West Coast Mainline was to have 200-mile an hour trains, that has now been worked downwards so that the service being provided will be about 140 miles an hour. We are even now putting in old technology, where the French are putting in on the similar kind of lines technology which is up-to-date and the kind of speeds which that technology provides.

Ted Rowlands

I wonder if you would give us -- I do not know about my colleagues; I never understood who was who - the Office of the Rail Regulator controls fares. Presumably, that office could do more good or damage to integrated bus/rail transport adjusted by its fare policy than almost any of the other organisations. What is the current Assembly relationship with the Office of the Rail Regulator? Has it any hooks into it on any shape or form?

Professor Stuart Cole

There is no formal link between the two. I think recalling back the Transport Act 2000, there was not even at the beginning in the Transport Bill a relationship between the Assembly and the Strategic Rail Authority. It was only when the Select Committee pointed out that there was no link between the two that the SRA were required to consult the National Assembly.

I just think there is something I might be able to help you on your earlier question, in terms of where did the new powers come from? Maybe they came from the Transport Act not from the Government of Scotland Act in terms of Scotland, but it is just something in the back of my mind.

Ted Rowlands

It was not a Transfer of Function Order; it was actually written into a piece of legislation?

Professor Stuart Cole

I think it may have been because certainly the requirements of the SRA to consult the National Assembly was in the Transport Act 2000, so the facility for Scotland may well have been in the same legislation. That is what has suddenly crossed my mind.

Going back to your question about the relationship, the SRA are now required to consult the Assembly Government, but that is all. They do not have to take any notice of it. I expect the Assembly would be very cross if they did not, and the Assembly has been very cross because they have not necessarily taken the advice. The SRA authorised, for example, the direct service between Cardiff and Newcastle and Scotland last year. The service was introduced in last year and was withdrawn in May of this year. I am sure that was not with the agreement of the Assembly Government, and yet that decision actually was taken by the SRA. The decision to withdraw was taken by Virgin Trains, but the real decision behind it was taken by the Strategic Rail Authority, because they are effectively funding Virgin Trains and the decisions are much more in the hands of the SRA now than they were under the previous version of the SRA and, indeed, under the Officer of Passenger Raid Franchising.

So that is only the relationship between the two. There is oddly no relationship between the Strategic Rail Authority and local authorities, nor indeed between local authorities and the SRA. When the Transport Bill was passed, 2000, the Strategic Rail Authority, as I say, only had to consult with the Assembly Government in Wales and yet an action taken by the Strategic Rail Authority might well involve local authorities land use policies. It may well involve their roads policies. A Local Authority that might be thinking of enhancing the quality of the facilities around a railway station in terms of land use development might then at the same time find that 50 per cent of the services for that station have been withdrawn, because there is no requirement for either side to consult one with the other, certainly not the SRA with County Councils.

Sir Michael Wheeler-Booth

Professor Cole, we have been told over and over again on this Commission that one of the real problems that people would like the Assembly to tackle is improving transport in Wales. The picture you have been painting is dismal from that point of view.

Professor Stuart Cole

I am sorry about that, but the picture is not a happy one at present. Were we to see two things take place then there would be a substantial difference: one is the powers involving the railways transferred to -- and this is a personal view -- powers involving the SRA transferred to the Assembly Government; powers of licensing and franchising of buses transferred to the Assembly Government and then onwards to the consortia, because I think that is the appropriate place for local bus services to lie with the consortia, and those two bodies working together would enable us to start an integrated process for public transport. We have then the Local Authorities responsible for local roads and also for land use planning. So, for example, if a new housing says estate of 2000 homes is built the railway station is built at the same time, which was the plan, at a site in the Vale of Glamorgan and it is more or less on time – not quite. But land adjacent to the railway station could have been reserved for use for park and ride. Now at Rhoose, near Cardiff there are 2000 new homes and hardly anywhere to park next door to the railway station. The idea is that people will be encouraged to use the train at the new railway station to go into Cardiff and therefore not use their cars. It was more or less the perfect transport and land use strategy, except for the park and ride facility for those people living more than 10 minutes walk away from the station.

So we need that kind of cohesion which involves a partnership between the Assembly Government and the local authorities, because they all have different roles to play.

The role of the Traffic Commissioner I think is key to this as well. There are powers of the Traffic Commissioner which also might be transferred to the Assembly Government, or responsibility for direction over the Traffic Commissioner and using the Commissioner's office to carry out the work.

Now those give us the structure within which to operate. The second of the desires perhaps to reach a stage where we would have substantial improvement in public transport, not just per se but to try to encourage people to leave their cars at home, does involve substantial investment. I have calculated that over the next 10 years we would need somewhere in the region of £3 billion in Wales. That was a figure I worked out 2 years ago. I do not see any major difference now, other than a little inflation perhaps. What we are likely to get is £1.2 billion. That means we are £1.8 billion short. What does that mean in terms of what the public will see? It means, for example, on the South Wales Main Line a service running from Carmarthen then via Bury Port to Cardiff and Newport which will run every quarter of an hour. Half of that service would go on the main line to Bridgend to Cardiff, as it does; the other half on the Vale of Glamorgan line. So there will be half hourly services at places like Pontypridd and half hourly services on places like Llantwit Major, which will be whole of the length of South Wales. Rhoose, which is a commuter station at present, could become the gateway station for the airport, which would give access for people from the valleys and also from West Wales into the airport, and also from parts of South West England and the South Midlands of England directly into Cardiff Airport. That enhances the position of Cardiff International Airport quite substantially.

That kind of investment we are talking about, for the South Wales Main Line we are talking about an investment figure of about £400 million: new trains, new track, faster track. It pushes up line speeds along the whole of the route to 100 miles an hour. That is not new scientific development. It is still a slow railway but it is a better railway than the one we have now. Similarly, on the valley lines we are talking about £250 million to provide a 10-minute headway, (10-minute frequency) on the lines between Pontypridd and Cardiff; similarly then going onwards to Pennarth, Barry and Llantwit Major.

On the North Wales Main Line, a lot of work has been done in terms of new trains on the North Wales Main Line. There it is a matter of upgrade in the track, and the cost there is around 150 million. There are some new trains required in order to increase the frequency on that route, and then a further £400 million on other operations such as Wrexham and the Cambrian line.

The total cost in investment terms is £1.2 billion. What we are likely to get in investment over the next 10 years is £200 million. That is why the picture is not as bright as perhaps as we would all like to see it. I think that is the issue. It is simply a matter of investment and that investment then, as we have seen in other countries, encourages people to think that the railway is a pretty good way of getting around; the trains are not crowded, "I can get a seat, they are frequent, "I do not need to know the timetable and they start at 6 in the morning and they finish just after midnight.

Vivienne Sugar

I am afraid of what it would cost to renationalise it.

Professor Stuart Cole

I do not think it needs to be renationalised particularly; it is control which is the issue and decision making on investment in the trains and investment in the track. There is a lot of argument about the extent to which the private sector's objective differs from those of the public sector, and that is an issue I think which probably does need a lot of investigation to see whether in fact it would be cheaper to go back to an old system. Certainly Network Rail appear to be of the view that effectively renationalisation of part of the network is being done, and one can make one's own interpretation of whether Network Rail is a private company or a public company.

Paul Valerio

Given the realistic estimates you have given us and the financial problems of the railway, we can forget railway serious railway expansion. Therefore, the alternative then to relieve the congestion is the motorway. You were talking about the relief motorway, did I hear you correctly when you say that the funding as well as the control of the new motorway would be entirely within the Welsh budget from the Assembly?

Professor Stuart Cole

Yes.

Paul Valerio

We are no better off either.

Professor Stuart Cole

No, and indeed, the cost is not that much different. The cost of I think the lowest estimates I have seen for the M4 -- for the new road around Newport is something like £370 million -- numbers of that order -- and there we are, we are talking about the same kind of investment, but for the whole of the South Wales Mainline of £400 million. The money has to be spent if you want to relieve congestion, but of course you do not necessarily relieve the environmental issues which come as a result, for example, of a motorway.

Peter Price

Are you saying that if the Assembly Government had more powers in respect of strategic rail direction that it would be a real choice for them between those two things and that that is not a choice at the moment, or are you really looking in all you were describing at a Welsh part of a big jigsaw for the whole of the UK of massive underfunding on rail and, therefore, that we are just seeing a part of a totality that we really cannot do anything about because it is about a policy at UK level that cannot be separated out of under-investment?

Professor Stuart Cole

It is a matter of under-investment, and that applies to all parts of the UK. We have seen under-investment in the railway; I think it is pretty well generally agreed now. Part of that was due to the structure of Railtrack. Railtrack was an interesting organisation. It had -- I will not go in detail into its financial position, other than the outcome was that (a) it did very little investment, and (b) managed to go bankrupt. Not very many companies manage to not spend money and then go bankrupt; it is usually one or the other.

There were a lot of problems with Railtrack. It was a very expensive organisation to run. Why that was I think is a matter for a further enquiry perhaps and a lot of work has been done on that. So there was an issue to do with the financial cost, financial cost level.

Looking forward from where we are, in answer to the first part of your question were the powers of investing in the railway transferred and funding of the railway transferred to the Assembly Government, the Assembly Government then has a choice on how to spend its money, and that is really what we are talking about. It is a matter of choice in terms of solving, for example, the road congestion problems on the primary routes through South Wales from say the Severn Bridge through to Swansea and West Wales.

The big problem lies in the Newport/Cardiff area at the moment. The predictions from the Assembly Government are that we will see a major congestion problem arising in that area. We see it already. The widening of the M4 is an attempt to try and relieve that, but the Assembly Government would then have a choice: do we need to widen the motorway? Or do we in fact look at improvements to the railway?

The funding currently going to the SRA for improvements to the railway throughout Great Britain, because it is the Great Britain network we are talking about -- Northern Ireland which has a totally separate regime altogether -- but for the Great Britain network we would then have a decision being made in Wales about the extent to which we improve services within Wales and that would not be directly affected by the SRA's priorities in primary routes in England, because there would be a fund, partly as part of the block grant, which is currently paid to the SRA. So an amount of money would need to be identified that was currently paid to the SRA for funding railways in Wales, and one could then have an argument about the Barnett Formula and whether that is an appropriate basis to make that decision, but that level of funding then is transferred in a block grant to the Assembly Government who then become responsible for subsidies and investment, and it is then, as with the Scottish Executive, up to the Assembly Government to decide whether or not it will spend more money.

Peter Price

That means that the money, that the power merely of direction that we were talking about earlier, is not the only power you are seeking vis-a-vis the transfer of - vis-a-vis the Strategic Rail Authority. You go beyond that. You are calling for the transfer of the function in respect of the railways that are actually wholly within Wales, the function and the money.

Professor Stuart Cole

The money certainly. The power of guidance and direction is one of, if you like -- let us take an example: doubling the current single track between Chester and Shrewsbury via Wrexham, the case in point, I do not know what that would cost, but let us say the figure is £20 million pounds, that kind of investment, currently the decision is made by the SRA within its whole range of priorities. Now that decision would subsequently be made by the Assembly Government in terms of directing the SRA to dual that line, but at the same time agreeing with the SRA a funding amount to carry out that work.

Peter Price

So the direction -- when you talked about direction earlier, implicit in that transfer is that money would shift with it and with the direction there is money from the Assembly's budget.

Professor Stuart Cole

Yes, (but please see reply to Ted Rowlands on funding). That is exactly the power in Scotland, that the Scottish Executive give directions and also provide the funding, because the money that previously went to the SRA in Scotland now goes to the Scottish Executive.

Lord Richard

Can I thank you very much indeed. You have exposed a lot of things like this that we have not sorted out in any kind of detail at all and we are very grateful to you for it.

Professor Stuart Cole

My pleasure. Thank you very much for the invitation.