New Start for Public Transport in Northern Ireland

– in the Northern Ireland Assembly at 12:00 am on 17 September 2002.

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Photo of Lord John Alderdice Lord John Alderdice Speaker 12:00, 17 September 2002

I have received notice from the Minister for Regional Development that he wishes to make a statement on a new start for public transport in Northern Ireland.

Photo of Peter Robinson Peter Robinson DUP

I am grateful for the opportunity to announce to the Assembly the start of a period of public consultation on my proposals to reform the planning, delivery and governance of public transport.

When I presented the regional transportation strategy to the Assembly in July, I stressed the importance that I accorded to the future development of public transport. Of the proposed £3·5 billion investment envisaged in the regional transportation strategy over the next 10 years, some 32% will be allocated to public transport. That represents a doubling of the funding allocated to public transport over the past 10 years. It will require at least this level of investment if we are to achieve the stepped change in public transport strongly advocated throughout the process of formulating the regional transportation strategy. However, I cautioned that the scale of investment required for public transport is unlikely to be met by public expenditure alone. Inevitably, we will have to explore opportunities for attracting private sector finance and expertise.

Today, I am publishing an outline for a new institutional and regulatory framework in a consultation document, ‘A New Start for Public Transport in Northern Ireland’. I will outline the key elements of my proposals. The Northern Ireland Transport Holding Company and its Translink bus and rail subsidiaries would be amalgamated into a new, dynamic, publicly owned operating company, Transport Northern Ireland. An independent public transport regulatory body would be established, initially in shadow form and in due course on a statutory basis.

I propose the progressive injection of private sector finance and expertise to the public transport market, but only in so far as it makes sound commercial sense and is acceptable to the community. I want a new start for public transport in Northern Ireland, and I regard these proposals as important stepping stones to a system fit for future years.

The development of public transport in Northern Ireland has suffered severely from violence, underinvestment and declining patronage. Last year, despite the successful introduction of free travel for senior citizens and the uplift that that initiative brought to ridership, the overall number of Translink passengers fell by 2·5%.

Despite the difficult conditions of the past 30 years, Translink management and staff have managed to provide a regular and necessary service to the Northern Ireland public. I pay particular tribute to the courage and dedication of Translink drivers in dealing with the unwarranted, mindless attacks that have been inflicted on them in recent months. I reiterate my abhorrence of those attacks, which are made against the whole community.

On a wider level, I acknowledge the dedication of Translink staff in keeping services running despite a public expenditure framework that has constrained new investment and innovation. There is a growing recognition that some of the difficulties that we face in reversing the decline in passengers and quality of service may stem from the institutional structures in which public transport operates. It is generally acknowledged that the relationship between the Department for Regional Development, the Northern Ireland Transport Holding Company and the operating companies — Northern Ireland Railways, Citybus and Ulsterbus — must change.

Unlike the rest of the United Kingdom, the publicly owned Translink companies have a near monopoly on public transport services. They are controlled by the board of the Transport Holding Company, which has a statutory duty to act commercially but is constrained by public expenditure limits on borrowing and expenditure. Although the Department for Regional Development has overall responsibility for public transport policy and grant funding, it has been left to the Transport Holding Company to determine the extent of the network and the standard of public transport services using the resources that are made available to it. The Transport Holding Company has had the tension of trying to plan adequate services to meet social needs while managing the Translink companies in pursuit of commercial objectives.

I propose to address the institutional shortcomings by amalgamating the Northern Ireland Transport Holding Company and its Translink subsidiaries into a new publicly owned public transport company, Transport Northern Ireland. That company would have direct lines of accountability with the Department for Regional Development as its shareholder. It would continue to have a leading role in the provision of bus and rail services but would focus on developing the commerciality of the operating companies, with a view to competing in a market progressively opened up to private sector participation.

The Transport Holding Company’s functions of planning a transport network to meet social needs and of setting and enforcing appropriate standards of services would be transferred to a new public transport regulatory body. That body would be appointed by, and report directly to, the Minister for Regional Development. Initially, it would be set up in shadow form in the Department for Regional Development, but once formally established, it would have its own staff and resources and would operate at arm’s length from the Department.

The proposal’s aim is to make the planning and delivery of public transport more rational and objective, and to give the operating companies an independent challenge. The establishment of a regulatory body would rectify the current conflicting role whereby I, as Minister, am the public owner, policy maker and part regulator of public transport.

Under my proposals the regulatory body would take on the licensing of bus routes as part of the overall economic regulation of the bus network. The Department of the Environment carries out that function at present, and I welcome the Minister of the Environment’s agreement that the proposal be included in the consultation paper. The Department of the Environment would, however, continue to regulate the safety and operating standards of road passenger transport providers under a revised licensing system.

I have considered public transport arrangements in other countries. Experience suggests that independent or quasi-independent regulation is essential in developing a market in public transport. However, there is no one-size-fits-all model for the roles and responsibilities that a regulatory body should hold. Although the consultation paper lists some possible functions that a regulatory body might perform, the most appropriate arrangements for the Northern Ireland market have still to be worked out. Ultimately, the precise role of the body will be determined after the public response on how far Translink services should be open to the market. Changes to the functions of the Transport Holding Company and the establishment of a regulatory body will require new legislation. I intend to review the Transport Act (Northern Ireland) 1967 and other relevant legislation and in due course introduce a Bill for the Assembly to give effect to an agreed package of reforms. That is unlikely to happen before 2004. Members will have the opportunity to scrutinise the proposed finer details for the new institutions at that time.

I turn now to how private sector finance might be introduced to the public transport market. There are many models in use across Europe. At one end of the spectrum there is the closed market, in which a public sector operator is protected from competition. Such an absence of competitive pressures can give rise to cost and other inefficiencies and act as a barrier to new forms of finance. However, there are mechanisms whereby the public sector operator can be given scope to franchise services to private sector providers or can introduce private investment through borrowing. Under that model, it may be possible for the public sector operator to engage the private sector in the development of major schemes such as the proposed rapid transit initiative for Belfast.

At the other end of the spectrum is the deregulated free market with minimal barriers to entry by anyone and direct competition between operators. That model operates in the rest of the United Kingdom outside London. Although deregulation has undoubtedly resulted in operating efficiencies, the market turmoil that it has caused is well documented. Between those two models there are various permutations of controlled competition, where operators have exclusive rights to deliver services for fixed periods after the award of a contract through competition. Under that model, a publicly owned public transport company would compete actively with the private sector for tendered services.

In the consultation paper I do not advocate unfettered deregulation as in Great Britain but rather a model that retains a publicly owned public transport company subject to the possible progressive injection of private sector finance in a manner acceptable to the community. Some key strengths in the present model of delivering public transport must be considered when new arrangements are being developed. For example, Translink’s near monopoly of bus services enables it to cross-subsidise uneconomic services from profitable services without the need for further revenue support from the Assembly’s Budget. Furthermore, through its control of rail and bus services, Translink has the potential to plan and deliver public transport in a wholly integrated manner.

At the same time, we cannot overlook the findings of recent studies of public transport systems in Europe. Those found that cities whose public transport services were regulated under controlled competition experienced higher rates of growth in passenger trips and better recovery of operating costs through fare income than those with closed public transport markets. Those studies concluded that controlled competition helps to maintain stability in the public transport market at a lower cost and with better prospects for permanent involvement.

Controlled competition, in which Transport Northern Ireland would play a major part, has the potential to ensure more transparency in the allocation of the Assembly’s resources and better value for money for taxpayers and passengers. I posed the question in the consultation paper of how far and how quickly the public transport market should be opened up to private sector participation. No doubt I shall receive a range of views. Whatever the outcome of the consultation, the timetable for introducing greater private sector participation is likely to be influenced by European Union liberalisation measures now in draft form. EU Regulations on public service requirements and the awarding of public transport service contracts are under consideration. If adopted, they will move us away from the virtual closed market model.

Challenging years lie ahead of us in implementing the agreed vision for public transport set out in the regional transportation strategy. Today’s consultation paper outlines a bold new framework to help us to plan and deliver the modern transport services that the people of Northern Ireland deserve. We are faced with the real opportunity of shaping a new start.

I look forward to the paper stimulating a lively debate and encouraging a broad cross-section of the public to come forward with their views. It is my intention to publish the findings of the consultation process by the end of the year. Thereafter, I shall reflect carefully on the responses, and, in due course, I shall introduce a set of detailed proposals for consideration by the Assembly.

Photo of Alban Maginness Alban Maginness Social Democratic and Labour Party 10:45, 17 September 2002

The Committee for Regional Development has been kept informed of the Minister’s views, and for that we are grateful. The nub of the statement is the creation of a new, dynamic, publicly owned operating company, Transport Northern Ireland, and the setting up of an independent public transport regulatory body. Both developments are to be generally welcomed. The detail is for discussion and careful scrutiny by the Committee.

Although the closed market makes people uncomfortable and has not worked to the advantage of public transport in Northern Ireland, many people fear the opening up of the market to private operators, given what has happened in England and elsewhere.

Photo of Lord John Alderdice Lord John Alderdice Speaker

The Member must ask his question.

Photo of Alban Maginness Alban Maginness Social Democratic and Labour Party

Can the Minister assure the House that the introduction of the private sector into public transport will not affect the quality of service and will not undermine the publicly owned transport system in Northern Ireland?

Photo of Peter Robinson Peter Robinson DUP

I shall consider the Committee’s views with great interest when I receive them. Committee members may have the opportunity to speak to other stakeholders before making their own comments.

My purpose in introducing the proposals is to approve the public transport service. The principle of opening up public transport to private sector involvement is an attempt to move away from having the service that the provider decides is appropriate to one that is more responsive to the consumer — in this case, the passenger.

There should be no fear of the outcome. The purpose is to improve service delivery in a way that responds to user demand. The consultation paper’s underlying principle is that we are not suggesting unfettered deregulation. We are considering a controlled environment. Worldwide evidence suggests that the best results are achieved in controlled circumstances. EU documentation shows an increase in public transport usage in areas with a controlled private sector involvement. It also shows a reduction in public transport usage when there was either total deregulation or total public ownership.

Photo of Alan McFarland Alan McFarland UUP

I welcome the paper, and although I recognise the good work done by Translink, it is clear that Northern Ireland needs a new management system for the twenty-first century. Private sector operators will be interested in the most lucrative routes, and that will affect the service on lesser-used routes. Translink subsidised the less valuable routes with the more lucrative ones. How does the Minister envisage private sector involvement dealing with that?

I acknowledge the good work of the General Consumer Council for Northern Ireland, but has the Minister given any thought to introducing an independent transport users’ group to look after the interests of passengers and support the management of the proposed system?

Photo of Peter Robinson Peter Robinson DUP

I will not rule anything out at this stage. The need for a users’ group is a legitimate point that can be considered during the consultation exercise. The Deputy Chairperson of the Regional Development Committee will know from his interest in the subject that about 4% of usage on Northern Ireland’s roads is by public transport. I stated that 32% of the proposed funding would be allocated to public transport. However, that allocation was increased to 35% between the draft and the final regional transportation strategy, so there is significant development potential in public transport under the regional transportation strategy and opportunities for public transport to progress.

The large scale of investment envisaged requires the Department to examine the model and make progress in institutional terms. I do not want to be prescriptive in how I envisage the handling of various routes, but section 4.5 of the consultation paper acknowledges that Translink can cross-subsidise uneconomic services from profitable ones. That is a key element that the regulator will have to consider, because it is only on the regulator’s analysis that any decisions will be taken on the involvement of the private sector. The Department must ensure that the regulator can examine the data, analyse it and make recommendations. Those decisions will be the key to at least two issues — one of which the Deputy Chairperson has mentioned.

Photo of William Hay William Hay DUP

The 10-year regional transportation strategy is a vital component of the regional development strategy. The Committee for Regional Development has stated that new management structures are required to deliver the vision that all Members have for public transport. Does the Minister see any merit in consulting the private operator on the new structures and on the vision that the Department and the Committee have for the future of transport in Northern Ireland?

Photo of Peter Robinson Peter Robinson DUP

Private operators will have an interest in the consultation exercise and will want to give the Department their views, which will be considered with all others. However, there is a range of possible permutations from the public sector operator to the possibility of introducing private investment through borrowing and the franchising of services to the private sector and thence right through to the private sector operator. There is a range of possible outcomes. Anyone who has been in my position will have respect for the role that Translink staff have played in difficult circumstances.

The immense new opportunities should be highlighted. The number of routes and trips on public transport will increase substantially, and that will provide a good future for the people who are involved. Public transport will not operate to the detriment of the people who are working in the system.

Photo of Mr Pat McNamee Mr Pat McNamee Sinn Féin

Go raibh maith agat, a Cheann Comhairle. Gabhaim mo bhuíochas leis an Aire as a ráiteas. I welcome the Minister’s announcement of the consultation paper ‘A New Start for Public Transport in Northern Ireland’ and the proposals to improve the management of our transportation system. If we are to have the public transport system envisaged in the regional transportation strategy, we will need a new vision of how that is managed.

The Minister says that he proposes to proceed with his injection of private sector funding into the transportation system. Has he considered proposals that involve public sector finance? If so, can he assure the House that his proposals will represent good value for the spending of public funds? Has the Minister fully considered the long-term implications that private sector finance would have for his Department’s spending of public moneys?

Photo of Peter Robinson Peter Robinson DUP

One of the first conundrums that I faced in the Department was the issue of trains. I had visits from the Northern Ireland Transport Holding Company and from Translink. They wanted to lease new trains, but could not do so under the present arrangements. I am not going to be prescriptive about the extent of private sector involvement.

There is a danger that, the more questions I answer, the more it might seem that my mind is closed on the issue. That would reduce the effectiveness of the consultation process. My mind is not closed; I am avoiding responding to some questions simply to leave the issues open, because legitimate views will emerge on a range of issues.

There is a qualification in the statement and in the consultation document in relation to the injection of private sector interest and involvement, which is the extent to which the community in Northern Ireland felt comfortable with it. The key gauge for the consultation exercise is to find out how much the community believes the issue should be opened up.

My experiences of travelling outside Northern Ireland are that the private sector has become increasingly involved in public transport and that higher standards have been created through that competition. That is to the advantage of the consumer, and more people are now using public transport. That is a key objective in the regional transportation strategy. Much of the process flows directly from the regional transportation strategy and its objectives to encourage the use of public transport and to make Northern Ireland transportation less dependent on the car.

Photo of Seamus Close Seamus Close Alliance

Can the Minister guarantee that proposals such as that in section 4.7 of the consultation document would not lead to the further demise of public transport through the closure of uneconomic routes?

In my constituency of Lagan Valley, people are conscious that an axe hangs over the Knockmore railway line. It is ironic that the Minister can talk about a new start while contemplating the closure of some lines. I hope that this is not an extension of a closure policy and that the Minister, who referred to rationality and objectivity, will ensure that lines are kept open, rather than introduce the private sector and allow it to close more lines.

Photo of Peter Robinson Peter Robinson DUP 11:00, 17 September 2002

I never cease to be amazed at Mr Close’s ingenious inclusion of the Antrim-Knockmore line in every question.

If a consultation exercise were to result in the recommendation that routes be opened up to private sector involvement, that option would be scrutinised by the regulator. Experience has shown that regulators, such as the water industry commissioner, Alan Sutherland, in Scotland or the electricity regulator, Douglas McIldoon, are friendly to the consumer. Mr Close will find that the regulator is an independent champion of the consumer. I would have thought, therefore, that he would have been applauding me from the Benches for adopting an approach that will surely assist the consumers’ case.

Photo of Ms Jane Morrice Ms Jane Morrice NIWC

Undoubtedly, the service is in dire need of a shake-up. I therefore welcome the long-awaited attempt to make a fresh start. However, the Minister admitted that he is the public owner, the policy maker and part regulator of public transport, so he must be responsible for the mess that it is in.

First, how much will the regional transportation strategy cost? Secondly, how long will it take to implement, and, in the meantime, what will he do to ensure that the buses in Bangor link up with the trains and that the trains run on time?

Photo of Lord John Alderdice Lord John Alderdice Speaker

That should be "meine Dame".

Photo of Peter Robinson Peter Robinson DUP

I did not confess to operating the trains and buses, so Ms Morrice has reached an unwarranted conclusion. However, she said that the service is dire and in need of a shake-up, and the General Consumer Council for Northern Ireland made remarks about the attractiveness of the service. Even if the Member and the Consumer Council had not made those comments, it is clear that services in Northern Ireland could be improved.

The increased funding, the institutional changes and changes in arrangements, which I proposed in the regional transportation strategy, are precisely intended to give the service a shake-up. However, as to who is responsible for the mess, the Member ought to recognise that the mess did not start in December 1999. It existed before I took responsibility for the Department.

The Department is trying to draw in private finance, thereby reducing the amount of public expenditure required. Until I know what model will be adopted, I cannot say what the reduction in public sector funding might be. The costs of providing the type of public transport system that we require are set out in the regional transportation strategy document, which I am sure the Member has read in detail.

Photo of Robert McCartney Robert McCartney UKUP

I welcome the aspirational aspects of the Minister’s statement — I use the word "aspirational" advisedly, and in no way as a criticism of the Minister. Yesterday, when the First Minister presented the working group’s review of the opportunities for public-private partnership, he said that there was a major deficit in public investment that would require £6 billion over the next 10 years.

Last Monday, the Minister for Regional Development, when answering questions about water and sewerage, indicated that £3 billion would be required over the next 20 years — or £1·5 billion over the next 10 years. If my arithmetic is correct, his Department will require £5 billion over the next 10 years for water, sewerage and transport. That leaves £1 billion for the major spending Departments — Health and Education.

Does the Minister agree that whether the money comes from public-private partnerships, Treasury loans or elsewhere, the capital and the interest on that money must be repaid? Does he envisage that that repayment will come from increasing the rates, with a tap tax on water or possibly a toilet tax on effluent? If not, where will the money come from to meet what the Minister — properly and correctly — described as a major requirement? Are we back to the position where there is no way we can reasonably fund, without screwing the people of Northern Ireland, the terrible deficit left by the British Government, which was accepted by those who negotiated the agreement?

Photo of Peter Robinson Peter Robinson DUP

My Department requires £3 billion over the next 20 years. Over 10 years, that is £0·5 billion more than we might get through public expenditure normally, if one were to extrapolate the figures over that period. It is not an additional £3 billion over 20 years — that is the amount we require over 20 years. Therefore, in the next 10 years it would be only £0·5 billion, rather than £3 billion, that would be counted in the £6 billion mentioned by the First Minister yesterday.

The underlying message, however, is accurate: there is no free money. If one borrows from, or involves, the private sector, there is a payback. The private sector is not renowned for being so altruistic that it provides the public sector with services without getting a return. The Minister of Finance and Personnel — and I had better be careful to get my facts right because he is in the Chamber — will tell you that, if the reinvestment and reform initiative is used, a new stream of income must be identified. Therefore, that would be additional to the regional rate.

If a PPP is used, that can be covered under the departmental expenditure limit to the extent that there is room for manoeuvre with regard to additional expenditure. Undoubtedly, if the reinvestment and reform initiative is used, an additional stream of income will be required. Therefore, an increase in rates may be required.

Photo of Joe Byrne Joe Byrne Social Democratic and Labour Party

I welcome the Minister’s statement, particularly the proposals to set up a single transport company in Northern Ireland and to establish a new regulatory body.

There will be anxiety among the employees of the bus and rail companies, and they need some reassurance. Their fear would be that we might have privatisation of bus and rail by the back door. Can the Minister assure us that that is not his primary intention and that there is a commitment to retain a substantially publicly owned transport system?

Does the Minister favour a controlled competition system for Northern Ireland, so that all areas of the region can enjoy some level of public transport provision? How can the number of passengers using public transport be increased, and will clear targets be set for the new company?

Photo of Peter Robinson Peter Robinson DUP

I made it clear in the statement that there would be a public transport company, which would be opened up to private sector involvement. I understand the concerns of those employed in public transport. There is always a concern when someone proposes the consideration of something new. However, if those involved look at the regional transportation strategy and the consultation paper, they will see that there will be an enormous uplift of employment prospects in public transportation.

Expenditure on public transport has significantly increased in the regional transport strategy. Although it accounts for 4% of road usage at present, it has taken about 16% of public expenditure over the past 10 years. That was increased to 32% in the draft and to 35% in the final document. With regard to expenditure, therefore, there has been a massive uplift in the potential of public transport.

If I worked in public transport and saw that the percentage of spend would more than double, that the number of routes in the Province would increase, that the frequency of journeys would improve and that a new rapid transport system had been proposed, I would see opportunities rather than doors closing behind me. There are real opportunities, and people who work in public transport should not be afraid of the document. They should grasp the challenge and the opportunity that it presents and move forward to the advantage of public transport users here.

Photo of Mr Roger Hutchinson Mr Roger Hutchinson DUP

I welcome the Minister’s statement and especially his recognition that Translink has had a difficult time during the past 30 years and has made the best of a bad job. How will the new transport body be appointed?

Photo of Peter Robinson Peter Robinson DUP

I have views on how it could happen. However, how it will happen is a decision that will be taken after proper consultation. I want to hear the Member’s proposals and those of others.

If the new arrangement that he refers to is the overseeing body, Transport Northern Ireland, I expect that it will be established through ministerial appointment. Ministerial appointment has always involved those who are closely connected with public transportation. At present, I am delighted with the equality on the new Northern Ireland Transport Holding Company (NITHCo) board. We have managed to bring in expertise from areas where the interest in public transport has been much wider at a higher level. That body of people immediately responded to the challenge of a new start and has been prepared to embrace it.

If the arrangement that the Member refers to is the regulator, I believe that that body will, at first, be set up in shadow mode under the Department. As the statutory basis of the regulator will go through the House, clearly he will have to be at arm’s length from the Department.

Photo of Lord John Kilclooney Lord John Kilclooney UUP

I welcome the Minister’s statement and his praise for those who worked in Northern Ireland’s public transport services during the troubles, to which must be added the name of the chief executive, Mr Ted Hesketh. I share the concerns of the hon Member for North Down about where the finance for the proposals will come from. We look forward to hearing about that in the months ahead. However, it is great to see new thinking being directed towards our public transport system.

I have, for many years, been interested in the resumption of a rail system linking Dundonald, Comber and Newtownards. I welcome, therefore, the proposed establishment of a public transport regulatory body. I know that it will be a shadow body at first. However, can the Minister give the House some idea of when it will become a separate independent body to which Members will be able to feed their thoughts on new routes that are required in Northern Ireland?

Photo of Peter Robinson Peter Robinson DUP

I welcome the Member who is visiting the Assembly today. We are always delighted to have him in the Chamber.

Photo of Lord John Kilclooney Lord John Kilclooney UUP

It was the hon Member for North Down who was not here yesterday. I know that he hinted that that should be mentioned.

Photo of Peter Robinson Peter Robinson DUP

The Member for North Down was here yesterday — I had the pleasure of having a conversation with him then.

Photo of Peter Robinson Peter Robinson DUP 11:15, 17 September 2002

Having read the Member for Strangford’s newspaper, which is going around the constituency, I hope that he will not use the next issue to take credit for this initiative, in the way that he took credit for my decisions on free fares for senior citizens, the Comber bypass and Castlebawn. [Laughter].

Photo of Peter Robinson Peter Robinson DUP

However, the Member rightly draws attention to the significant role that the workforce at every level of Translink has played over recent years. One is apt to forget, or it may diminish in one’s memory, the very difficult role that the workforce has had to perform in the past 10 or 20 years to keep a public transport system going amid the level of conflict on our streets. The community has much to be proud of in its public servants and has much for which to commend the workforce at Translink.

Sadly, the difficulties that the workforce faces continue, with regular attacks on bus and train drivers. I know the view of the House in its condemnation of such activity. I join the right hon Gentleman in welcoming the honour received by Ted Hesketh recently. The CBE was a fitting reward for his services to public transport and to the community in Northern Ireland.

The Member mentioned the prospect of a rail line between Dundonald and Newtownards or Comber. The future for that entire area best lies in the development of a rapid transit network. If a decision is eventually taken to run rapid transit down the Comber railway line from Dundonald into Belfast, there must be opportunities for Newtownards or Comber to link into that line. That is much more viable than any heavy rail options for those areas. There are massive opportunities for people in those areas to benefit from rapid transit should it run from Dundonald into Belfast.