Dear Mr Hammond

First of all, congratulations on your appointment as Secretary of State for Transport, and at the same time commiserations on missing out on the Chief Secretaryship at the Treasury. I am sure that the Treasury job might have been more to your taste, but transport will be no less demanding and, on the whole, we’re a nice bunch of people to work with!

I know that your Minister of State Theresa Villiers worked long and hard on the transport brief in opposition and that she will be in a position to be of great help to you.

As a political observer and long-time analyst of the transport scene, I nevertheless thought that a few words from me might be of assistance. And I think I can sum it up in two words, and three or four bullet points. The two words are “be radical”.

And the bullet points are:

• Get the state out of the way: government cannot afford to pay for anything much in transport for the foreseeable future, so needs to find people who can – and quickly.
• Stop micro managing – it is not the function of the DfT to decide what type of buses and trains are bought and where they’re allocated, and nor should you be using taxpayers’ money to provide unnecessary incentives to businesses to do what they ought to be doing anyway.
• Regulate properly – and regulate local authorities as well as businesses. Whatever powers of local decision-making you delegate over transport, please ensure that the autonomy is set against proper standards of delivery and policy objectives.

Getting the state out of the way is vital. Public transport is one of the few areas left in our economy which still has an almost Marxist approach of directing, subsidising and nannying. Too many people around you in the industry still have the belief in “state good, private bad” and think that profit is a dirty word. You’ll find this to be particularly true in Europe – but you’ll have the last laugh there, because the sovereign debt crisis means that your transport policy is a jolly sight more affordable than theirs!

Micro management is endemic. The railways are of course the prime example of this, where as Secretary of State you enjoy greater powers of control than even your wartime predecessors. You need to get rid of that power, and quickly. My advice would to re-establish the Office of Passenger Rail Franchising as soon as possible.

On the bus side, immediately end all this pointless tinkering with BSOG. My advice would to abolish it, and instead make all bus and coach operators eligible to use red diesel. As I am sure that you will have learned from your days as a shadow Treasury minister, tax foregone is always easier and cheaper to administer than a subsidy. It also has the advantage of pushing the cost from your budget to HMRC’s, and reducing your administrative costs, and reduces bus operators’ administrative costs too. Simplicity and efficiency – “at a stroke”, to quote a catchphrase of Edward Heath, one of your previous party leaders (about to be rehabilitated, I am sure, in this new era of liberal conservatism).

The other thing on the bus side, of course, is to sort out concessionary fares: their implementation in England was one of the worst examples of public policymaking in this country since the war, and is still a festering sore in both local government and the bus industry. It’s poisoning relationships, and making important progress on partnerships more difficult.

My strong advice would be to take responsibility away from local authorities and to a proper national scheme using the banks or the post office as a means of distribution – nationally, DfT could be a big and important customer to the industry, who would be a willing seller of bulk travel at a discount. Negotiation nationally, not spending thousands on pointless consultancy to devise bogus formulas, is the right solution.

And talking of pointlessness, please get rid of those “public service” targets – particularly as they relate to things like the number of public transport journeys. It is NOT the government’s job to determine the way people travel – but to set an environment in which the public can make rational and informed choices of their own about whether and how to travel.

And talking of the environment brings me to that subject – rightly highlighted in your early remarks as a priority for the department. Here again, there is, or should be, one overriding priority, and that is modal shift.

Our bus and coach services – and many of our rail services, particularly outside London and outside the peak hours – have huge spare capacity, which would enable more people to be accommodated at minimal extra cost in terms of either resources or carbon emissions. Then there is walking and cycling, rightly highlighted by your party colleagues at City Hall as an attractive way of reducing transport emissions.

Here, of course, your options are limited – especially by the total spinelessness of your immediate predecessors in office over the question of road pricing. It has to come, you know, and the sooner you set your officials and colleagues on the path of devising a scheme which could be sold effectively to the electorate the better. It’s not for this Parliament, clearly, but it has to be the best long term approach. And that will be about reassuring people that the policy would be fiscally neutral so that other taxes (such as fuel tax) would be reduced as a result, or that the charge could deliver other advantages such as lower council tax or improved local services.

In the shorter term, one of your key weapons in driving modal shift could well be parking policy. Here, there are a number of things you could do. The first is to ensure that control, and where appropriate ownership, of parking rests with the same tier of local government as transport policy. The second is to take powers to regulate parking charges in both the private and public sectors, with a view to equalising them, to stop charges being used as inter-town competition and thirdly to ensure that all parking is priced to cover its costs.

The other wheeze – which I am sure your pals at the Treasury would find useful as a revenue-raiser as well as an environmental tool – would be to tax free workplace parking as a benefit: this seems to me to be a perfect example of a green tax – which most people can genuinely avoid by changing behaviour, and which could contribute to economic efficiency either by the revenue it raised or by the reduced congestion and carbon emissions that resulted. Of course, the Daily Mail would hate it, and go bananas – but then that’s what the coalition is for, isn’t it – to enable you to do the correct things without being the prisoner of the tabloid press?

Regulation of parking charges brings me to the whole thorny subject of regulation. Because of course if the DfT is genuinely to get out of the way and enable transport providers to get on with their jobs, it has to ensure that the industry is properly regulated, both in the interests of safety and so forth, and in the interests of consumers.

Here, too, I am afraid that the record of most of your predecessors is not very impressive – and that is not unique to transport: witness the hopeless mess that regulators have made of the energy market, and the incompetence of the OFT, which we in public transport knew all about before it became so public this week in the collapse of the BA case.
So, my agenda would be to restore the independence and authority of the Traffic Commissioners – and give them increased powers to fine operators for poor performance that genuinely impact on shareholders. Secondly, to create some form of economic regulation for the bus industry, so getting rid of this nonsense of it being regulated by people in the OFT and the Competition Commission who seem to know little and care less. Thirdly, as I mentioned earlier, to regulate local authorities properly as well: set minimum standards of transport provision and provide clear guidelines as to the outcome that authorities are expected to deliver. Set a clear timescale by which these obligations have to be met – and then let them get on with it. But set draconian measures (such as central government control) if they fail to deliver.

And of course talk of local authorities brings us back to the thorny question of money. You rightly said that “new and innovative ways” would have to be found to fund capital expenditure. In public transport, of course, this is rather easier than in roads (though no doubt Lord Mawhinney and Sir George Young could bring you up to speed on all the hard work they did on PFI road projects, largely thrown away by Prescott and his [many] successors).

And it is in this field of course that necessity is the mother of invention. A few years ago, for example, we had bus operators like Go-Ahead, FirstGroup and Arriva investing in new bus infrastructure in Crawley, Leeds and Bradford. We’ve seen very little of that since, because getting it from the government was always easier.

As the economy recovers, there will no doubt be an appetite to invest once more in these projects – but of course they remain hugely expensive to devise and promote (as you’re about to find out over the High Speed Rail project). This is a barrier which could be usefully addressed.

The recent signing of the Evergreen 3 project at Chiltern Railways points the way forward for private sector involvement in transport infrastructure investment, and shows that good projects can always be funded. Chiltern is in many ways a vindication of the last Tory government’s rail privatisation scheme, flawed as that was in many ways. But it also holds two critical lessons for the future of your rail policy: firstly, that long franchises can be effective in levering in investment, as Sir Alistair Morton always said; and secondly, that smaller tightly focused train operators perform better and deliver better for their customers.

If you really want to make the railways perform even better, then don’t just change the agreements, but look again at the franchise map and learn the lessons that Chiltern, Anglia before it and TransPennine Express clearly point to: small is beautiful in rail operation. Oh, and float Network Rail again (but keep a big stake in it this time), but I suspect that will have to wait until the second term!

This has been a long letter, but as I am sure you’re finding out, this is a big subject. In closing, one more piece of advice: in this oh so statistical industry, if you forget all the other figures that are thrown at you, remember this one – every 1% of car demand you can persuade on to public transport represents a 14% increase in demand for public transport. It would not take much of a push to make public transport self-funding again. And if as Secretary of State you can deliver sufficient modal shift to do that, you’ll assure yourself and your coalition a real place in history. Oh, but I forgot, you’ve all already achieved that this week!

Anyway, I wish you good luck in your endeavours … and a long stay: after last few years, it would be really nice to have a Secretary of State that we can get to know again.

Yours sincerely,

Chris Cheek