The cost challenge and how to fix it
The biggest issue holding Britain back from the benefits that trams bring is cost. The European average cost per mile of tramway is £42mn. The average British cost is more than twice as high at £87mn. To make tram projects more affordable in the UK the Government needs to set common standards and encourage a pipeline of projects, devolve the current Transport and Works Act Order process that approves new projects and fix current utility guidelines that make tram projects move almost all pipes and wires, while paying 92.5% of the cost.
To help encourage standardisation and develop a pipeline of projects:
• The Department for Transport (DfT) should create a specialist delivery unit responsible for trams, metro and light rail within its new public transport directorship.
• This team should work with industry bodies to develop a national tram standard modelled after the German common set of standards, their VDV Blue Books and BOStrab.
• This unit should encourage replicable and low cost engineering solutions and capture lessons where trams were delivered cheaply both in the UK and abroad, as well as advocate for cheaper, simpler tram stop designs.
• Additionally, the Competition and Markets Authority should issue guidance explicitly allowing cooperation of tram promoters to jointly procure new tram vehicles.
To speed up the planning process for new trams, which can take up to 14 years and costs millions of pounds, the Government should:
• Devolve the Transport and Works Act Order approval process to allow regional mayors to sign off on new projects instead of the Transport Secretary.
• Remove the requirement to complete environmental statements for areas where the tram runs on existing roads or through built up areas.
To avoid the costly process of moving too many utilities in the road:
• The Government should update the Code of Practice to give clear rules on which utilities to move, reducing the cost and time of negotiation with utility companies.
• The Department for Transport should adopt a nationwide waiver specific for utilities left in place on tram routes for Section 82 of the NRSWA 1991, which currently burdens utility companies with liabilities if tram services are suspended because of a need to access the utilities.
• This currently makes utility companies sceptical of leaving utilities beneath tramways.
• Tram services should terminate at the two stops nearest any disruption caused by utility access, enabling a quick walk between stops.
• The Government should update the statutory instrument The Street Work (Sharing of Costs of Works) Regulation 2000 to rebalance the cost of diverting utilities from tram projects to utility companies.
• Future British tram projects should study and, provided it is feasible, implement cheaper shallower trackbeds used in cities like Portland and Vienna, and consider Coventry’s experimental very light rail.
How to fund Britain’s new trams
The UK currently has one of the most centralised funding systems in the world for new local transport infrastructure.
This encourages higher infrastructure costs because the group that is funding the proposal (the Treasury) is different from the group that is designing the system (local leaders). Making the right trade-offs between price, delivery and design becomes harder to achieve. Instead we should hand power back to those with skin in the game. Funding powers for local transport should be in the hands of the local decision makers, and new trams should principally be funded by the people who benefit the most from lines opening.
To fund a tram renaissance:
• Central government should enable councils to collect stamp duty uplifts for houses sold near tram stops and add targeted council tax precepts, subject to a referendum. Councils should also levy Business Rate Supplements on businesses near the new line, with the requirement to get approval from the majority of authorities within a combined authority removed.
• Councils should engage in Tax Increment Financing to borrow against future revenues from the uplift in property values around the line. The Government should expand these powers to council tax precepts and stamp duty uplifts.
• To develop in-house capacity and give local authorities the ability to kickstart the development of tram projects while encouraging a national pipeline of projects, the Government should create similar grants to America’s RAISE, TIGER, and BUILD grants.
• The Government should also allow Metro Mayors to levy an extra penny on employer’s national insurance, modelled after France’s Versement Transport. This should be conditional on ring fencing it for new infrastructure and approval at a local referendum.
• Future tram projects should look to Nottingham’s example and introduce Workplace Parking Levies directly tied to the new tram. The Government should remove the requirement of Transport Secretary approval by fully devolving the sign off down to the local authority level.
