The place of light rapid transit in the UK

To understand the place of light rail in the United Kingdom over the last 20 years, you have to look at some underlying factors to do with politics, distribution of the population and the manufacturing base. First and foremost, the substantial tax raising powers lie with the UK Government at Westminster. This remains the case following devolution in Scotland in 1999 and in Wales (to a much more limited extent) also starting in 1999.

The politics

Central government has in the past provided around 90% of the annual capital funding for local and regional light rapid transit (LRT) systems. Under current policy notionally 75% of the capital cost of approved LRT Schemes is funded out of general taxation, the balance being the responsibility of local government. The larger metropolitan areas in England, West Midlands, (Birmingham), Greater Manchester, Tyneside, Merseyside, South Yorkshire, (Sheffield) and West Yorkshire (Leeds), do not have directly elected regional governments but local transport is the responsibility of Integrated Transport Authorities (ITAs) made up of representatives from the underlying elected local authorities. The existing ITAs (which were known as Passenger Transport Authorities or PTAs) are supported by Passenger Transport Executives (PTEs).

Recent legislative changes created integrated transport areas and have increased the powers of these metropolitan transport authorities.

Greater London is an exception in that it has had since 2000 a directly elected Mayor and Assembly with a functional body, Transport for London, which has also inherited the responsibilities of the former passenger transport authority. London Regional Transport, for the bus and underground networks.

Devolution has led to the situation where transport policy for England is set by the UK Government’s Department for Transport, for Scotland by the Scottish Executive and for Wales by the Welsh Assembly Government. Local and regional transport authorities, including London, are required to have a transport strategy for their area. Central Government has recognised the need to raise more funding locally for transport (and infrastructure more generally) and has given powers over the last ten years for local and metropolitan authorities to raise funding for transport through Congestion Charging (which has so far been successfully implemented only in Central London) and Work Place Parking Levy (which is likely to be used to fund the extension of the Nottingham Tram) and, more recently, has introduced a Community Infrastructure Levy aimed at raising funding in a more equitable way than in the past from new developments, which will be used towards funding new infrastructure including transport.

The second major factor is that unlike Germany, France and Spain, the UK no longer has a British rolling stock manufacturer to be a national champion; on the other hand Bombardier of Canada, Siemens of Germany and Alstom of France are established in the UK and provide local employment mainly in assembly and maintenance.

Role of the private sector and the LRT Forum

The Light Rapid Transit Forum was set up in the early 2000s in order to encourage the expansion of LRT in the UK. The Forum is a private sector organisation which interfaces with government as the main funder and local and regional authorities (including ITAs and PTEs) as the sponsors and ultimate owners of LRT systems.

Its objectives are first to influence politicians and civil servants in favour of LRT where it is an appropriate mode and secondly to work (often in conjunction with the public sector) in order to reduce or remove some of the issues which contribute to a view, at times dogmatic, that LRT is expensive, particularly when compared with bus. Membership of the Forum is open to operators, concessionaires, programme managers, construction contractors, vehicle manufacturers and other specialist suppliers, legal and financial advisors, journalists and design, engineering and economics consultants involved in LRT.

In the early 2000s, the preferred method of financing new light rail schemes was through private finance under the Public Private Partnership (PPP) banner. Typically, the public authority sponsor would go out to tender and grant a concession to Design, Build, Finance, Operate and Maintain (DBFOM) to a consortium usually comprising a construction contractor, an operator, a vehicle manufacturer (which would often also provide the signalling and communications) and private equity institutions. The consortium would be backed by debt funders providing long term project or bond finance. Tramtrack Croydon, the concessionaire of the Croydon Tramlink which opened in May 2000, typified this approach. The theory was that the fares revenue would, after operating costs, cover the debt service and equity return with the concessionaire’s equity and debt funders taking revenue risk. In practice, the revenue from most schemes, at least in the early years, has not been sufficient to achieve this.

As a result of its involvement in risk sharing the supply side of the industry, which is represented by the Forum, has had a real interest in making the industry more efficient and capable of being financed and considerable effort has gone into analysing other methods of risk sharing and funding support together with finding means of reducing cost and demonstrating the benefits of LRT.

Models used for several of the extensions to the Docklands Light Railway and the Edinburgh Tram, where the infrastructure concession has been tendered and funded separately from the operating concessions, have been explored. Attempts have been made to measure the cost (often expressed as risk premiums added to the tender price) of requiring the private sector concessionaires to take the consequences of risks which they cannot control. A prime focus is revenue risk in circumstances where fare and service levels are controlled by the public authority, another is the need to divert pipers and cables supplying water, electricity and other services, where the utility companies are not able to quantify the time and cost of the works.

The Forum is one of the founder members of UKTRAM – a body set up by the public and private sector side of the industry to develop best practice. It has worked with the aid of some government funding on solutions to a range of technical and procurement issues which have escalated to the cost of LRT schemes. This has allowed the Forum to focus on collecting evidence of the benefits of LRT and bringing these to the attention of the decision makers.

LRT progresses and then regresses

The Light Rapid Transit Forum was established at a time when government policy was to encourage new LRT Schemes. Following the success of Croydon Tramlink (it had financial difficulties, but has been successful in attracting passengers, opening up business and employment opportunities and increasing property values), Nottingham Express Transit opened in March 2004 – a 14km line serving the City Centre and linking new housing developments at Hucknall. The PPP scheme achieved its ridership and revenue targets from the outset.

Competitions were then launched for three DBFOM concessions: a 3-line extension of the Manchester Metro (which had opened in July 1992 and was extended by a 6.5km line from Cornbrook through Salford Quays to Eccles in July 2000), a scheme for Leeds and a route including a tunnel under Portsmouth Harbour linking Fareham, Portsmouth and Gosport in South Hampshire.

In London, the first elected Mayor, Ken Livingstone, planned a tramline in West London, extensions to the Croydon Tramlink and a new Cross River Tram between major stations north of the River Thames to Waterloo and their surrounding areas. While these schemes were at the conceptual stage, extensions to the Docklands Light Railway (DLR) to Woolwich Arsenal and City Airport were constructed and opened.

Merseyside, supporting Liverpool’s position as a European Capital of Culture in 2008/9, planned a 3-line tram scheme with Line 1 from Kirkby to the City Centre to open in October 2008, with the aid of UK government and other public funding.

With the exception of the DLR schemes, not one of those mentioned above has materialised. The period between November 2004 and February 2006, saw the schemes for Manchester, Leeds, South Hants and Liverpool first stalled and then cancelled. The tendered prices for the first three schemes were considerably in excess of the initial public sector estimates and central government decided they were not affordable, while in Liverpool the local councils were unwilling to take the risk of funding more than 25% of the price originally estimated. The West London Tram was quietly abandoned after strong local opposition in 2007 and late in 2008 London’s new Mayor has put the other London schemes on ice as they are not funded by central government. Manchester has received some capital funding to upgrade the existing routes, Leeds has an offer of funding for a trolley bus scheme and South Hants has been scrapped. Merseytram has some prospect of being revived but funding support remains uncertain. Existing systems in Sheffield and Blackpool have received assurances of some government funding and the metro system in Tyne & Wear has government funding for an upgrade.

In 2008, Manchester’s population voted in a referendum against the introduction of a congestion charge on motorists which was a condition of £1.5 billion of central government funding for three new lines. The only scheme in England which is progressing is Nottingham where Nottingham County and City are moving forward with proposals for two new lines to be delivered under PPP, probably using work place parking levy to support the local funding contribution. In contrast, the first line of Edinburgh’s tram is under construction.

Support for policy change

The Forum is in the course of meeting politicians, their advisors and civil servants, to discuss what needs to be done and will be holding a conference in Croydon in May 2009 to widen the debate. Further data is needed to add to that already assembled which demonstrates on top of transport reliability and safety, the regeneration and community benefits of LRT schemes and their contribution to the urban realm, including carbon reduction.

With relatively few systems in operation in Britain, there are many members of the public as well as politicians who have not experienced public transport by tram or other LRT and many motorists who see on-street LRT systems as a threat.

The public as well as politicians need to be convinced that LRT is not only more sustainable in operations (being carbon free at point of use and non-polluting) compared with buses and cars, but also that there are viable sources of low carbon energy. These factors need to be properly reflected in the assessment tools for transport schemes used by central government. Research is needed to establish the comparative whole life cost of bus, guided bus, trams and cars.

Recent legislative changes such as the Community Infrastructure Levy, the new integrated transport areas and enhanced powers for the Integrated Transport Authorities are moves in the right direction. However, policy changes are needed so that local and regional government has more say in the allocation of transport funding whether raised from national or local sources and the industry and public and private sector needs to continue to reduce the capital cost of new schemes.