Finance and Constitution Committee

Meeting date: Wednesday, November 14, 2018

Official Report 667KB pdf

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Transport (Scotland) Bill: Financial Memorandum

Good morning and welcome to the 18th meeting in 2018 of the Finance and Constitution Committee. As usual, I ask members to put their phones into a mode that will not interfere with proceedings.

Agenda item 1 is to an evidence-taking session on the financial memorandum to the Transport (Scotland) Bill. We received 11 responses to our call for evidence, and today we will explore some of the issues that were raised in those responses.

We have been joined by the following Transport Scotland officials: Brendan Rooney, bill manager; Yvette Sheppard, environmental and sustainability manager; Peter Grant, bus policy team leader; and George Henry, parking policy manager. I welcome you all warmly to this morning’s meeting. Members have received a summary of the responses to our call for views and a note from the clerk, and I propose that we go straight into questions.

I note from the written correspondence that, according to some respondents, the cost of implementing low-emission zones has been underestimated and that setting up and implementing the zones will, in reality, cost much more than has been outlined in the financial memorandum. However, others have said differently. Respondents have also pointed out the cost to hauliers of upgrading fleets in line with the requirements of the low-emission zones, saying that that cost has not been outlined in the financial memorandum.

I would like your response to those views, and I will leave it to the lead official to decide who is going to answer.

Thanks, convener. It might be easier if I give a broad overview of how those costs were arrived at. I will then bring in Yvette Sheppard, who is more immersed in the implementation of LEZs and the alignment of costs in that respect.

With regard to the bill’s provisions on low-emission zones, implementation further down the line will be subject to quite a number of variables, and that will be covered in regulations that we make and by local authorities themselves when, in designing a scheme, they look at its geographical scope, including the roads it will cover and other such elements.

The regulations will set the national vehicles emission standard, which will dictate which vehicles are or are not compliant with the prohibitions allowed under the bill. Likewise, the technology used for detection and so on will also be set out in regulations. Some of the bill’s provisions are quite framework in nature, so there will be quite a number of variables to take into account to get down to binary cost figures. The aim in the financial memorandum was to give best estimates, taking those kinds of caveats into account, so there was always going to be a cost window and an element of fluidity.

Yvette Sheppard might want to expand on the specifics of implementation and the costs that might arise.

The financial memorandum was based on work to support the Scottish Government’s considerations with regard to introducing LEZs. As Brendan Rooney has alluded to, it is very difficult to make quantifiable predictions, because they will very much be based on the design of the LEZ, which is being carried out by local authorities at the moment.

There are a number of variables around the scale of LEZs, including the types of vehicles that will be included, the technology that will be used to enforce them and what the enforcement requirements will be. At the moment, that work is being undertaken by local authorities, so we will have more clarity not only through the provisions published in the bill itself and the regulations that will come forward but through the details of what will be designed by the local authorities. Because the LEZs are being designed and developed by local authorities to address their own specific air quality issues, the designs will vary according to the way in which air quality issues vary in the different cities and towns across Scotland.

There will be more clarity as we move forward on that. With the local authorities that are introducing LEZs, we are working closely with each of them individually and with all of them as a group to refine the costs further and get a better understanding of what they are likely to be.

I see that two cities in particular—Aberdeen and Edinburgh—have different views on the matter. Edinburgh did not indicate any issue with the overall cost of introducing these zones, whereas Aberdeen expressed concern about it. Is that because, as you have described, they might be envisaging different solutions for their own cities and that, therefore, there is a different cost envelope for each area? Is that what you are trying to tell me?

There will be a different cost envelope for each area as far as the eventual outcome is concerned. Because they are at different stages in designing their LEZs, their reflections on the issue might be different, based on their work to date. Aberdeen has expressed concern that the costings in the financial memorandum do not identify certain key things that it feels will be required to introduce LEZs, while Edinburgh has taken a different view in presuming that the scope for considering costs will be as wide as is required for delivery.

Certainly, in our dialogue with them, the local authorities both collectively and individually have not laid out any restrictions with regard to what we think they should consider in costing LEZs. Some of the things that Aberdeen has referred to have not been ruled out of the costs, so what you have pointed out might simply reflect the different stages that discussions have reached in relation to the design.

With regard to the principle of how the LEZs are funded, please correct me if I am wrong but I am assuming that they will be funded by contributions both from the Scottish Government and from local government

Yes. I think that the financial memorandum talks about a collaborative approach and partnership working, with the Scottish Government bearing certain costs and the local authority bearing the cost of delivering the LEZs locally.

Thank you. I call Alexander Burnett.

Thank you very much, convener. I have a question on the methodology used with regard to the provisions on pavement parking and double parking. With regard to how you arrived at the estimated costs, you have said that there was an issue with lack of data and that you engaged with the City of Edinburgh Council and Aberdeenshire Council to get that data. However, Aberdeenshire Council has said that the figures in the memorandum for pavement and double parking do not reflect those that were provided by it. I wonder whether you can comment on that matter, given that Aberdeenshire Council, South Ayrshire Council and East Ayrshire Council are all questioning the methodology and given the huge difference between enforcing such issues in a city and in, say, rural Aberdeenshire, which I represent and where you have multiple small settlements and very different landscapes.

No worries—I will take that. The forecasts in the financial memorandum came from Aberdeenshire and the City of Edinburgh Council. In our stakeholder engagement, we asked all the local authorities that were part of our parking stakeholder groups whether we could work with them on developing the costs for the financial memorandum, and Aberdeenshire Council and the City of Edinburgh Council helped us with that work. We discussed the draft criteria for the national ban on pavement parking and double parking, whether there would be any exemptions, how they would be assessed et cetera and, as a result, the two councils with which we engaged know a bit more about the criteria than others.

Officials from Aberdeenshire Council submitted the figures that are in the financial memorandum, and they were regarded as the best estimate at that time. If Aberdeenshire Council now feels that the figures are not representative, I am happy to discuss that further with it. The next meeting of the parking stakeholder working group is actually on Monday, so I will raise the matter with Aberdeenshire Council then and get some clarity on it.

We have jumped a bit in our questioning. I thought that Alexander Burnett was going to ask a question about LEZs. That is my fault—I should have asked him explicitly what he was going to ask about.

We will move back to LEZs. I call Patrick Harvie.

Good morning. Before I come on to my own question, I want to follow up on the convener Bruce Crawford’s question about the balance of the costs borne by the Scottish Government and those borne by local authorities. Obviously, some of the savings that will arise from LEZs, if they work, will come through their impact on health, and that will be more—though not exclusively—to do with the Scottish Government’s budget than with local authorities. On the other hand, the parking provisions might lead to councils having reduced revenue, if, again, they are successful in changing the modes that people use for travelling. Is there not an argument to be made for more of the cost being borne by central Government budgets than by local government budgets, given where the savings and potential reductions in revenue might come in the future?

I do not think that we have identified what proportion of costs would be borne by local authorities and by central Government. The funding that we have put in place for this year is primarily to support local authorities in delivering the design of LEZs, and three of the four local authorities that have committed to introducing LEZs have taken up that funding.

The costs that have been borne by local authorities with regard to the delivery of the design and the implementation work are in terms of resource; to some extent, they are providing the staff resources to do the implementation work. Where we have a bit more clarity on the split that you have referred to, we see that that is where it tends to sit.

We need a better understanding of the implementation costs around the introduction of the zones, the infrastructure and the back-office enforcement and support systems. Again, the costs will be different for different local authorities, because they will very much depend on the scale of the LEZ.

Will that future balance be agreed by negotiation with councils?

We will continue to work with the local authorities on that.

The modelling by which some of the cost estimates have been developed has been carried out by Jacobs and set out in a report. However, although the key findings of that report have been highlighted in the financial memorandum, the report itself has not been published. Why not?

Technically, it is still classed as a work in progress. It was prepared to inform consideration of the introduction of LEZs.

When it is completed, will it be published?

We can certainly clarify whether that will be the case.

It would be helpful to know that. Its theoretical conclusions seem to rely heavily on the ultra-low-emission zone in London, which, as a city, is obviously very different from our cities in Scotland. Even in our biggest city, where they might be considering what has been described as a large low-emission zone, you would not be talking about a density of traffic as high as that in London before the introduction of its congestion charge. Some of the most polluted parts of Glasgow, such as Great Western Road, Dumbarton Road or along the expressway, might be covered by a low-emission zone, which means that its shape might be rather different from a blob in the middle of the city centre. Is it a bit of a stretch to say that you can just scale down the ultra-low-emission zone in London, given that the different shape or configuration required in Glasgow might result in a very different ratio between the amount of work needed to administer the thing and the proportion of vehicles in the city that it might capture?

Yes. The information in the financial memorandum comes out of the work done by Jacobs, which made heavy use of the data from the London low-emission zone. It also looked at work by Edinburgh and Glasgow on the potential introduction of LEZs in a Scottish context, previous air quality management work that it had done and information from other European LEZs, but it focused on the work that had been done in London.

It all reflects the indicative nature of the costs included in the financial memorandum, which are best estimates based on data that we have and a series of reasonable assumptions around the likely outcomes of LEZs. Ultimately, those costs will be dependent upon the LEZ design and a fair amount of variability could come out of the approaches taken by different cities, given that they are being encouraged to consider local solutions to their air quality issues. As you have said, that might result in very different LEZs in different cities and different costs associated with that.

I should have declared an interest, convener, as I live in Dumbarton Road in the middle of one of the air quality management areas.

You are not getting to ask any more questions, then.

Finally, if you have made a best-faith attempt to construct costings for a Government bill but acknowledge that those are not the actual costs that will emerge—and if Parliament agrees the financial memorandum to ensure that we get the funding in place to meet those costs, even though they are unlikely to be the figures in this document—what general approach do you then take to revise what has been agreed?

10:15  

It is founded mainly on the work that we are doing. Our approach to the four cities that have made the commitment to LEZs is based on partnership working and collaboration, and we are working very closely with them individually as part of their delivery groups and collectively through the leadership group and the consistency group to better understand the costs as the designs emerge and to track any increase in clarity in that respect. The approach also allows us to identify with the local authorities collectively how to get the best efficiencies and the best value for the money that we invest, particularly in the infrastructure. We will continue to work with the local authorities to understand the emerging designs, and that will help give clarity on the actual costs and play a big part in shaping the funding packages.

Angela Constance has a supplementary in this area.

Good morning. Like other members, I am looking at this 46-page financial memorandum and resting on best estimates with regard to costs. Can you say a bit more about the feasibility studies that were conducted not just in Scotland but in England? Do their findings complement the work undertaken by Jacobs and the 11 submissions that this committee has received—which I appreciate is not a large number? Are the feasibility studies, the work done by Jacobs and the written information that the committee has received all pulling in different directions, or is there actually some point of convergence?

Given that the feasibility studies, particularly with regard to Scotland, were done some time ago, there is not necessarily any parity in relation to what exactly they were looking at. Although the models that they were looking at were similar, they were not necessarily the same as those that we would be introducing. The financial memorandum mentions the variability in the costs for the automatic number plate recognition camera systems; indeed, there is quite a range of costs in that respect. Jacobs came up with a cost of around £20,000, while in the Edinburgh feasibility study, the camera costs were around £37,000.

Again, in our work with the local authorities, we are coming up with different sets of figures for this element. They do not contradict the work undertaken by Jacobs, but the alignment is not necessarily identical, which partly reflects the fact that the different studies have made different assumptions about the LEZ, the scope of the vehicles covered, the geographic spread and so on.

The financial memorandum mentions an optimism bias of 44 per cent and an assumption of 10 per cent risk on year 1 costs. Is that the norm, or is it quite a generous calculation?

That is not something I can comment on directly, but I think that it aligns with the general approach that we would take in relation to transport projects. It does not seem particularly out of kilter with the approach that we would normally adopt, but we can certainly clarify that and come back to the committee, if that would be useful.

Okay. You have helpfully described your on-going work and dialogue with local authorities, but I could not find in the papers any formal response from the Convention of Scottish Local Authorities. Has there been a written response from COSLA?

COSLA has submitted a written response to the lead committee on the bill in its entirety. As for the call for evidence from this committee, there has not been a response directly from COSLA.

What about the Government’s consultation on the bill?

The Government did not consult on the bill in its entirety. Instead, it had a series of consultations, because it is quite a multi-topic broad-scope bill. I am afraid that I do not have in front of me information on whether COSLA responded directly in writing, but I do know—and Yvette Sheppard has already alluded to this—a lot of engagement is happening with local authorities and with COSLA.

Finally, notwithstanding the fact that many of the costs will depend on design and implementation, some actions will be within the gift of the Scottish Government, while a lot will also depend on the actions taken by our partners in local government. The norm for any new burden is for it to be factored into matters as they proceed, so am I not right in saying that any new burdens on local government will have to be accommodated financially by the Scottish Government within its block grant?

Yes. That is my understanding of the agreement with COSLA with regard to any new burdens that are set via legislation. Some of the joint commitment on low-emission zones stems from the programme for government commitment made by the Scottish Government with regard to the key four cities. Those are the ones that are being looked at in the short term. Whether other local authorities subsequently choose to implement low-emission zones further down the line is not mandated via the bill.

I would like to ask about the potential impact of LEZs on small businesses and a concern that the Federation of Small Businesses and others have raised with me. A self-employed tradesman, for example, might be buzzing in and out of an LEZ in a diesel van that is five or six years old and does not meet the requirements, and that could impact on the operation of that very small business. Has any specific work been done for the financial memorandum on the likely impact on very small businesses such as that?

There has not been any specific work done in relation to small businesses. We have been having fairly extensive engagement with the FSB, trade bodies and chambers of commerce to try to understand broadly what the issues are for their members. We had the consultation on building Scotland’s low-emission zones, and we have taken account of responses to that, but there is no quantified cost associated with the impact on small businesses to present in the financial memorandum.

In the bill and in the financial memorandum there are proposals for potential grant schemes that might be able to assist. How will such grants be able to assist a small business that is impacted by LEZs?

The most recent programme for government included the creation of a low-emission zone support fund, and we are currently looking at how that could support a range of cohorts affected by the introduction of LEZs. That includes users of light goods vehicles, which are the vehicles predominantly used by small businesses. Work is under way to look at how the cohorts who would find it the most difficult to comply with the requirements could be best supported through the introduction of LEZs.

When will we get a clearer picture of how all that will be finalised?

We are targeting the LEZ support fund details for April 2019. There is overlap with the issues of how the LEZs are designed by local authorities. Obviously, Glasgow has come forward with proposals that would see all vehicle types included within its LEZ requirements. That stage has not yet been reached for Dundee, Aberdeen or Edinburgh, so we are not certain which cohorts of vehicles would be most affected by LEZs at this stage. There is obviously the potential for different decisions to be taken in different cities, depending on which vehicles are deemed to be the ones that are impacting on air quality. In terms of the impact on small businesses, there is an element of variability that is related to the design of the LEZs, which we will be clearer on as we move forward.

One of the aspects of LEZs that relates to bus operators is the cost of retrofitting. First has stated that the cost of retrofitting a bus would be £25,000. If it did that for its whole fleet, it would cost £5.8 million. If there are additional costs like that, they may be passed on to passengers through higher fares, and you may see reductions in bus routes. Did you take that into account in the financial memorandum when you looked at what public funding support will be available to bus companies that retrofit?

The scenarios from the Jacobs work in the financial memorandum include an allowance for supporting bus operators to become compliant. The costs presented are a mixture of retrofit and scrappage for older vehicles that may be reaching the end of their life for reasons other than the LEZ. Those things are included in the costs in the financial memorandum.

Taking that forward in a practical sense, in relation to the policy rather than the bill, a bus emissions abatement retrofit programme is under way for the LEZs that are already in play. Phase 2 of that programme was launched a few weeks ago and it offers support for retrofit and scrappage for those bus operators that are going to have to meet LEZ requirements.

You might not have the figures to hand but, roughly, what kind of percentage of support is available to a bus operator if they are taking part in a retrofitting programme?

The BEAR phase 2 scheme will offer to large operators 40 per cent of the total cost of retrofit, rising to 60 per cent for smaller operators. That includes the costs of the kit itself, its installation and ancillary costs—the other costs of retrofitted vehicle operation, such as telematics and maintenance—for up to five years. Large operators will be offered 40 per cent of those costs. The actual cost to a bus operator will vary because it will depend upon the contractual arrangements that they make with whichever partner in the industry that they choose to go with for retrofit.

I appreciate the contribution that you have outlined and I appreciate that there must be a balance. Has any account been taken of the fact that, because of the increased costs for bus operators, they may reduce the number of bus routes? That might conflict with the bill’s policy objective of lowering emissions, because if people are not able to go on bus routes, they may take their cars.

That is not in the financial memorandum. It does not reflect that. I am not sure that we would have an understanding of the potential costs associated with that at this stage. We are obviously engaging with the bus industry around LEZs more generally and on the financial implications in particular.

Patrick Harvie and Tom Arthur have supplementaries.

I do not think that anybody would have a huge problem with agreeing that there are uncertainties around many aspects of the bill, including the costing. The Scottish Government says that it is committed to introducing low-emission zones in Scotland’s four biggest cities over the next couple of years. If one of the local authorities comes back and says that some aspect of the uncertainty means that it is not able to go ahead—whether it is on the grounds of costs or anything else—is the Government’s position that it will solve that problem and ensure that the low-emission zone goes ahead? That might be one to put to ministers. If that is appropriate, perhaps you could pass that on.

Yes.

I think that that was a nod to say that she is going to pass it on.

Is your question on LEZs as well, Tom?

It is. An issue that is clearly very topical is the challenges faced by the high street, from both online retailers and out-of-town shopping centres. If LEZs are successful in their objectives, they will reduce congestion and increase air quality, which may make it a more attractive proposition to shop in a town or city centre. Has any work been undertaken as part of this process to assess what impact that may have on economic activity and any benefit that could be accrued by local authorities as a consequence?

No, there has not been any work to quantify that. We are in dialogue with chambers of commerce across the four cities and at a national level to help to understand their issues and any concerns that they have, but no work has been undertaken to quantify the potential economic benefit.

Thanks, Yvette, for dealing with all those questions on LEZs. We are going to let you off the hook a bit now and go on to pavements.

10:30  

Good morning, everybody. I am interested in pavement parking and double parking, how you cost enforcement and how you make the financial memorandum statements accurate. I read in our brief that South Ayrshire Council, East Ayrshire Council and South Lanarkshire Council, which are all in the South Scotland region, are saying that there is a financial burden relating to the enforcement of pavement parking and double parking restrictions. They believe that making local exemptions could mean that the costs could escalate substantially from the estimates in the financial memorandum. Has any further detailed work been carried out to create a more accurate and up-to-date view of the costs of implementing and enforcing pavement parking restrictions and making exemptions?

Obviously, the policy is about making our roads and pavements accessible for all. The policy intention is very much about changing people’s behaviours around parking on footways and so on. It is very difficult for us to cost the assessment and, particularly, the implementation, with the potential number of exemptions that local authorities may wish to promote.

We are continuing to work with local authorities and COSLA, through our parking standards working group, to develop more robust costs for each of the respective areas. As I said previously, two of the local authority areas that offered to work with us on the costs know a bit more about the criteria to which we are implementing. The assessment and implementation are on-going. We provided the best estimates when the bill was introduced and we are very much committed to working with local authorities and COSLA to develop more robust costs for each of the areas as we move forward through the parliamentary process.

You said that there is a parking standards working group meeting coming up soon. Is the financial impact on local authorities part of your on-going discussion?

It very much is. We have asked all local authorities to join us for the meeting, which takes place on Monday, and we have good representation. That group is talking about the exact criteria for footway widths and carriageway widths, what should be available for footway parking to exist, and what will allow an exemption to be made. We will talk about the costs around that as we go through that process.

Each local authority needs to map out where their pavements are, so that they can feed into that assessment. There will be variables in some areas.

Yes. Understandably, local circumstances will vary, which makes the assessments difficult on a national basis. That is why we need the local authorities to join us at the group to look at the criteria against which they will carry out their assessments and provide the financial figures, which will give us more robust costs for moving forward.

My question is on the same issue. Will you clarify the estimates that you have provided of £40,000 for Edinburgh and £10,000 for Aberdeen? There has been disagreement on that, particularly from East Ayrshire Council, which is my local authority. Is that the cost of assessing the issue or implementing the measures?

That was the cost of assessing. We know that footway parking exists in a number of areas, because a number of complaints come through local authorities. They know where the footway parking problems exist and how they wish to address them. When we worked with local authorities in the development of the financial memorandum, it was purely around the assessment of the issue. It remains to be seen whether they will choose to promote exemptions on those streets to allow footway parking while still ensuring that there is enough space for pedestrians, wheelchair users and families with prams to use the footways for the purpose that they are there for. They will have to go through the assessment process.

We looked at flexibility in the way that local authorities can carry out assessments, so they may not necessarily need to do full site visits for each area. People may be able to use inventory databases and other technologies to do desktop studies to identify where footway parking is a problem, first and foremost, and then do site visits after that.

If we suppose that, as East Ayrshire Council says, the number of locations ends up being much more than has been estimated—it could be 20 or 30 locations, for example—what will that mean for the implementation costs? Is there any estimate in the financial memorandum about the actual implementation costs?

We have certainly tried to minimise the implementation costs as much as possible. The signs that will be required to allow footway parking to exist already exist—they are already approved in the Traffic Signs Regulations and General Directions 2016. Those signs could go on existing street furniture, so there might not be a requirement to put in new street furniture, such as poles. There would be white lines to mark out bays on footways where people would be allowed to park. We have tried to have as an efficient process as possible, and cost-effective measures that are not too expensive for local authorities to put in.

I thank the bill team for giving us their evidence this morning. You were very candid about the challenges that you face and very knowledgeable about the responses that we got. The clerks will now draft a letter to send to the lead committee.

I suspend this meeting to allow the changeover of witnesses.

10:36 Meeting suspended.  

10:38 On resuming—