The below speech was presented to the Fabian Society event in partnership with Labour’s Policy Review on 3rd June.
“There are three key areas where I believe we are now taking Labour’s transport policy in a new direction:
“First, we have recognised the contribution that rising transport costs are making to a wider cost of living crisis. So, I have placed affordability at the top of Labour’s transport agenda – especially the impact of rising rail and bus fares. And with less money around, tackling this requires us to be more willing than we have been in the past to take on vested interests.
“The second change we have made is to become greater enthusiasts about the potential for transport devolution, rather than theoretical devolutionists that still look for new ways to control the purse strings. And so my starting point is now always to ask: what is the lowest level at which this decision could be taken, or this funding allocated.
“Third, we have recognised the importance of taking the long term view when it comes to transport, particularly when making decisions on major transport infrastructure. And we have understood that it’s no good preaching the importance of an integrated approach to transport locally, if we don’t also apply the same logic nationally.
“And finally, although in many ways most importantly, I have sought to ensure that we consider the environmental impact of each decision we take – and to take seriously the need to reduce transport’s significant contribution to climate change.
“For each of these areas, I’m going to briefly set out what we have learnt through Labour’s Policy Review, and what this means for the approach we will take if we win the next election.
“Affordability: Let me start with this pledge. If we win the election then, on day one, I will make it clear to the Department for Transport that its number one priority is affordability – and what more can be done to bring the era of inflation-busting fare rises to an end.
“Rail fares are rising by as much as 9 per cent each year and bus fares are going up, on average, by twice the rate of inflation. It is adding an unacceptable burden on families, with the cost of commuting increasingly the single largest cost facing households – unbelievably a season ticket is now more expensive even than the mortgage or rent for a growing number of households. A season ticket for some commuter routes into London is set to top £10,000 in the next year. And the lack of affordable housing, particularly in our cities, is requiring longer and longer commutes, driving up the amount we are requiring people to spend – just to get to work. The consequence of pricing people off buses has, arguably, even more serious consequences. Buses are a lifeline for those on lower incomes – often without access to a car – and especially for those in rural areas. Young people are particularly badly hit, with fare rises pricing them out of taking up college places – not least following the end of EMA.
“I was very pleased when I saw you had titled this event ‘People first’ because I am determined that the next Labour government focuses relentlessly on those who rely on our transport system. Yet at times when we were in government we risked sounding like we saw transport as being about projects rather than people. Of course passengers benefit from a new rail line or the next generation of intercity train, but they also need to be able to afford to use them. I was struck re-reading our manifesto from the last election that there was a lot about runways, roads, railways & recharging networks – all important – but little about the cost of transport. And that was a mistake. In a way, it wasn’t the priority during much of our time in government because households weren’t facing the scale of cost of living crisis that many are now experiencing. But I still believe we were too slow to recognise the impact – and too unwilling to take on the vested interests that benefit from being allowed to hike fares.
“And the answer is not more public spending. As Ed Balls has made very clear today: the starting point for the next Labour government will be falling departmental budgets. Back in 1997 things were different. If we wanted to tackle the cost of transport – say, for example, giving pensioners free bus travel, we were able to write a cheque to the bus companies – with billion pounds a year of taxpayers’ money. Using the proceeds of growth instead of reform. In 2015, reform will be the only way we can address inflation-busting rail and bus fare increases, let alone look at extending concessionary fares on bus services to young people agreed 16-19. Any new initiative will have to come from within existing budgets – more likely a reduced DfT budget.
“However, it’s not as if we don’t already spend a significant amount of tax-payers money on public transport – in fact, this year we will spend £4bn on rail and more than £2bn on bus services. Now, for rail, that includes the investment in infrastructure, but nevertheless it is a sizeable sum. What is less known, is that the private train companies made combined profits of £305m last year according to the independent Rail Regulator and the five largest bus companies reported combined profits of over £500m. I am clear that we can deliver better value for money from that investment – but it means standing up to vested interests and taking steps to reduce the levels of profit that are being made in our privatised railway and deregulated bus network.
“So, on rail, there are some immediate steps we can take: Capping annual rail fare rises on every route and reforming ticketing, including a new legal right to the cheapest ticket, tougher regulation on what can constitute peak time, and bringing increases in station car parking charges within regulation.
“But while those steps will ease the pressure on passengers, they will not cut the cost of the rail industry and free up money to enable us to tackle above inflation fare rises. So, we need real rail reform. There are two main reasons why our rail system costs on average a third more than equivalent networks across Europe: the waste of money caused by the fragmented structure of the industry that is the legacy of a botched privatisation; and the amount of money that leaks out of the system in excess profits. And I am clear that the next Labour government must tackle both.
“To tackle fragmentation we need to look at the case for a single organisation to lead the rail industry. At the moment we have Network Rail, as a not for dividend company, managing rail infrastructure and major upgrades of the network; a separate company called HS2 Ltd leading on the delivery of the new north south rail line; and Directly Operated Rail Ltd that delivers rail services – also on a not for dividend basis. And, because the Government actually accepts that this fragmentation has to be tackled, they have set up yet another company called the Rail Delivery Group to bring together all the disparate elements of the industry, chaired by a private train company CEO.
“A reformed Network Rail must sit at the heart of our rail industry. It needs corporate governance reform, as the bonus culture prevalent at the company demonstrates, but on the whole it is a creation by the last Labour government that has worked. So to tackle fragmentation, we are looking at the case for ending the separate role for the Rail Delivery Group, HS2 Ltd and Directly Operated Railways – and bringing them together with a reformed Network Rail into a single strategic not for private profit rail body, with all the appropriate internal separation of functions required by the EU. And I want to explore the potential for Network Rail take on the lead role in planning our rolling stock needs, sensibly bringing together decision on electrification and the knock-on rolling stock changes that follow.
“And to tackle the money leaking out of the system in excess profit, we must reform rail franchising. We are opposing the Government’s highly-political attempt to privatise InterCity East Coast rail services, which are currently being run on a not for private profit basis. Highly political, because the decision to bring forward that privatisation has meant delaying other franchising competitions with the consequence that Ministers are having to negotiate costly extensions to existing contracts. Unlike the two previous failed private operators on the East Coast, the government-owned company has made every franchise payment back to the taxpayer required under its contract: more than £800m by the end of this financial year – and invested all further profit in the network. That’s money – more than £40m to date – that, if privatised, will in future be shared with shareholders. Not only does it make no sense to change an arrangement that is working, but there is a very good argument for having a public sector comparator. And we need to decide if there is a credible case for further extending that model. It’s one of the reasons we voted against the EU’s ‘4th Railway package’ on liberalisation of the passenger rail market in the Commons last month.
“And the bus industry needs reform too. We started the job in government – legislating to enable transport authorities to adopt a London-model of regulation, where the fares and routes are set by an accountable transport authority. But the process of reregulation is too complex and it is hard to overcome threats from operators. So we need to toughen the law – and introduce a new power for the Secretary of State to introduce deregulation exemption zones to cut through the process. And I’ve said my priority will be using these new tough contracts to require bus companies to deliver that concessionary fares scheme for 16-19 year olds I spoke about. And to require companies to roll out across the rest of the country Oyster-style integrated multi-operator ticketing across rail and bus services.
“So, the next Labour government will make affordability our number one transport priority and take on vested interests to achieve it.
“Investment: The next change I would make at the Department for Transport would be to instil an absolute commitment to long-termism. The fact is that we have not put the energy required into ensuring that we make decisions for the long term and ensure there is a consensus to deliver them. Neither have we managed to move from lecturing local authorities on the need for an integrated approach to transport to ensuring national government does the same. Three years after the election, the Department for Transport has not published a transport strategy. Decisions have now been taken for nearly four years of a five year parliament without forming part of an overarching strategy – with decisions on different modes made in isolation. The Department has similarly failed to produce the overdue planning policy guidance on national networks. They are flying blind, which explains why the Infrastructure Plan is not a coherent strategy, but a list of projects.
“It is ridiculous that we spend nearly £4bn on rail infrastructure, and more than £3bn on roads, yet don’t so much as require Network Rail and the Highways Agency to even swap notes on their plans – and then we make decisions on airports and ports in isolation too. And then we fail to build the long term support necessary for the decisions we take – especially those that are contentious. Just look at the decision taken by the last Labour government on a third runway at Heathrow. In a way, it doesn’t matter whether it was the right answer to the problem it sought to address – and my own view is that it was not – but the fact is, it was never going to be actually delivered. Because it hadn’t come from a serious attempt to secure the consensus needed for such a project.
“That’s why I proposed an independent Airports Commission two years ago to crack this issue – and ensure that we not only had a decision but a consensus behind it. And, despite stubbornly opposing the idea for more than a year, the Government finally agreed. Although it’s disappointing they have told Sir Howard Davies not to report until after the election.
“So, in government, we will produce a serious integrated transport plan within the first months of the new government. Not the list of projects that the government passes off as an Infrastructure Plan, but an actual plan that integrates priorities on road, rail and how they join up our airports and ports.
“We will take forward the proposals arising from the Armitt Commission that has been established by Ed Miliband and Ed Balls: creating a new streamlined process for delivering infrastructure projects, learning from the Olympics, and particularly how to deliver schemes across parliaments with cross party agreement.
“And we will learn from how Network Rail has been able to use its long term funding settlement to get on and plan on more than a year at a time basis. It’s in stark contrast to the Highways Agency which has its budget chopped and changed year to year – slashed in the Spending Review by more than £3bn, then seeing half of that restored a year later. With the odd road scheme announced here and there to give the Chancellor a headline in his Autumn Statement – and a suspicion that the priorities are being decided by politics and not transport priorities. So, we will maintain the successful arms-length from government long term approach to rail investment, and explore the right way to extend that to other transport infrastructure.
“Finally, we will ensure that the very significant public investment in transport is used to deliver apprenticeships for our young people. We have said that every million pounds of public investment should deliver one apprentice. That doesn’t sound a lot, but that would see HS2 deliver 33,000 apprenticeships – 33,000 life changing opportunities.
“Devolution: The third lesson from our Policy Review is the need to embrace localism. The last Labour government did hand down power and funding, but too often it left too many strings attached. The responsibility didn’t always come with the funding, dumping the problem onto councils. This government talks the talk on devolution, but too often the intention is to devolve responsibility for making cuts, rather than a commitment to localism.
“I will not reverse the Government’s decision to devolve major local transport scheme capital funding, but I want to see decisions made by transport authorities, not unaccountable LEPs on their own – although of course we need to ensure the voice of business is heard. There will be no going back to the approach of 26 separate transport funding streams to which local authorities have to bid, or to endless targets that don’t take into account local priorities. That’s not to say that there is no place for national targets – axing the targets to cut deaths and serious injuries on our roads was a serious mistake that has weakened the focus on improving safety.
“We can and should go further. On roads, the system requires huge amounts of money to be wasted lobbying government on local schemes, when the priorities could be decided locally. On rail, there is little opportunity for communities to influence decisions on services or investment.
“So the review of the Highways Agency should be identifying the scope for devolution and looking at the right priorities for investment. Instead of lists of pie in the sky schemes that take years to be delivered, if at all, we need a shift towards smaller local schemes, especially those that can improve safety and benefit the local environment, often for relatively small investment. Road maintenance needs greater priority, with the NAO warning that today’s cuts cost us more in the long term. Devolution of funding is how we can realise our vision of a cycling nation – with funding reallocated from the national roads budget to deliver separated safe cycling routes and safer junctions, with a new Cycling Safety Assessment for new schemes.
“And on rail, we will support devolution of local rail to partnerships of transport authorities, enabling integration with bus services and communities determining priorities – starting with the current Northern, Transpennine and West Midlands franchises but looking at the case for devolution right across the country. And we would have no problem in principle with devolving much of the former ‘Network South East’ to a partnership between Transport for London and other transport authorities, if agreement can be reached.
“And those remaining parts of bus funding that are not devolved, specifically Bus Service Operators Grant, should transfer to transport authorities instead of being paid direct to operators by the DfT – strengthening their hand when negotiating local service improvements.
“Climate change: Finally, I am determined that any future Labour government will step up our efforts to reduce transport’s contribution to climate change. I intend to introduce a new Climate Change Impact Assessment test on any new policy at the DfT, in the same way that we have Equality Impact Assessments and Regulatory Impact Assessments.
“I have ended Labour’s previous automatic support for a third runway at Heathrow and made clear that any recommendation from the Airports Commission must be deliverable within the tough target we have set to reduce emissions. And I have gone further and committed us to expanding that target to include, for the first time, our share of emissions from international aviation – which should be included in all future Carbon Budgets.
“And on roads and motoring, which is transport’s greatest contributor to emissions and climate change, there are two tasks: enabling people to switch modes from cars to more environmentally sustainable forms of transport and shift freight from road to rail; and, where people do need to drive, to step up the moves to ultra-low emission vehicles.
“On the first, the agenda I have set out to get the rising costs of public transport under control is critical, as is shifting the focus of our spending on roads from major new schemes to a ‘fix first’ strategy to repair existing roads and invest in separated cycling infrastructure and support walking. And it means opposing a blanket increase in the motorway speed limit to 80mph, which would not only drive up deaths and serious injuries, but emissions.
“On the second, we need to rethink what has so far not been a successful strategy for delivering a step-change in Ultra-Low Emission Vehicles, not helped by the Government’s disinterest and the reckless decision to abandon the Coalition Agreement commitment to deliver a national recharging network. Instead of prioritising knocking a few grand off the cost of a new electric car, that still leaves a price out of the reach of most people, we need to shift to focussing on requiring the public sector (and incentivising the private sector) to purchase ultra low mission vehicles, to green their fleets and kick start a second hand electric car market to bring down prices. And we need new incentives for developers and employers to install and support recharging technology.
“Conclusion: So, in conclusion: we’ve spent much of the last three years offering a critique of the government – that’s no surprise, as there is a lot to criticise. Whether it is failing to deliver a plan for jobs and growth or failing to tackle the cost of living crisis, they have called wrong every major economic and social decision over the past three years.
“But the reason I haven’t focused on that this evening is because I know there is a real desire to hear what Labour would be doing differently – and, most importantly, to offer a clear alternative.
“I hope I have been able to begin to map out for you a new direction for Labour’s transport policy: making affordability our number one priority – and taking on vested interests to deliver it; taking a long term integrated approach to investment; devolving funding and responsibility for transport; and ensuring we reduce transport’s contribution to climate change
“A new approach that puts people first.”