Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence


Examination of witnesses (Questions 200 -215)

WEDNESDAY 16 DECEMBER 1998

MR COLIN CHILD and MR RICHARD GOLDSON

  200.  Where you want to go is where you think there are certainly going to be people. You do not want to have to go anywhere where you might encourage growth or an expansion of either industry or population?
  (Mr Child)  I do not think I would want to be in a position of being thought to be saying that. We are trying to look at the most commercially attractive option for utilizing this rolling stock.

Chairman

  201.  Is there a particular reason why Watford would not do?
  (Mr Child)  I think in our report we have highlighted Watford and it is a fortunate aspect of the Deputy Prime Minister asking us to prepare the report that we have put a lot of work into looking at the market demand and assessment for a Watford-Kensington service, which itself catches a lot of the west of London market in terms of the diverted air traffic, but equally allows us to contemplate inter-connections with the regions. Chairman, it is quite interesting to think about what the French are doing and have done for a number of years now in terms of their TGV services, where they are building hubs to foster and develop an initial service with connections and as the market grows they extend that service into a through service.

  202.  Mr Child, that is quite an interesting example because if you look at Charles de Gaulle, which has three train services under its main grouping, they do not even pretend to think that that is going to be a regional interchange, do they?
  (Mr Child)  I do not know.

  203.  I think the Committee is in some difficulty. Virgin comes along and says that they can operate the regional service without any problems but then you come along and say, "No, basically we have looked at it and we think that the only way we could do it would be to have a very large catchment area and that must be within the South East and, secondly, we do not believe that even with the advantages of these new train services we could produce the results". I am also not quite clear where you are really placing the emphasis. You are really saying people are not going to come off aeroplanes and go on to trains, they are just going to be generated in the South East, are you not?
  (Mr Child)  That is my view of the potential for a Heathrow service. I think it would be largely focused on those passengers making one journey from Heathrow through to Paris.

  204.  So you think that Virgin have made yet another mistake?
  (Mr Child)  I am struggling with the Virgin proposition because I do not know enough about it, but on the face of it it looks as if there is something at odds with our conclusions.

Chairman:  I think we have worked that out.

Mr Donohoe

  205.  How much public money is involved in your company and in this consortium? How much public money do you perceive you are getting from next year and the year after and how much have you already received, if any?
  (Mr Child)  We are not receiving any.

  206.  No subsidies of any description?
  (Mr Child)  No, we are not receiving a subsidy, but clearly the Eurostar business is running at a cash-flow deficit which underneath the structure of London & Continental is being funded by London & Continental.

  207.  There is no public money going into this system or into Eurostar or into any of the proposals that you have to open up a service to Heathrow?
  (Mr Child)  In Heathrow it will have to be a commercial proposition otherwise it just will not happen. In terms of the existing service, that clearly is part of the overall rescue package that has been put together by the Government with underpinning in terms of the building of the Channel Tunnel Rail Link and the on-going cash-flow requirements of the existing Eurostar operation.

Chairman

  208.  Mr Child, is it your view that Virgin overall make a profit?
  (Mr Child)  I have absolutely no notion. I read the papers and the journals and there is obviously speculation about the financial position of Virgin and its constituents parts. I do not believe I am in a position to comment on that, I am afraid.

Mr Stevenson

  209.  Mr Child is not in a position to comment on Virgin's business plan or any other aspect of it. The report you presented came to the conclusion that certainly at the moment the regional Eurostar services would not be commercially viable. Is it true to say that Virgin, who say they can operate it viably, were not consulted at all or were they consulted and they did not respond?
  (Mr Child)  We had a number of meetings with Virgin. Indeed, the Government requested that we meet with them to incorporate within our report on the viability of the regional services their thoughts and their considerations.

Chairman

  210.  But you are saying to us that the information that they gave you was not sufficient for you to make an assessment of the viability of the proposals, is that correct?
  (Mr Child)  That is correct.

  211.  Did you ask them, Mr Child, why it was they were not providing you with adequate information for you to make a judgment?
  (Mr Child)  We asked for the information. I do not know why they did not give us the information. They may well have perfectly good reasons.

Mr Stevenson

  212.  Is it not strange that they would not give you the information and yet they came to this Committee and said, "We can break even in three years, we have got a robust business plans and we want to operate it"?
  (Mr Child)  It is strange. I cannot explain it. We asked for the information and we were not provided with it.

Chairman

  213.  They did not say, "Because you were in opposition to us at another point and even though you are now supposedly producing an independent report, we cannot give you this information because you might use it in some other way"?
  (Mr Child)  They certainly did not say it to me.

  214.  Did they refuse to give you the information directly or did they not reply?
  (Mr Child)  They were asked directly to help us and provide information and I believe the Government asked them to do the same and they decided not to at that stage.

  215.  And you gave them a two year time span in which you would expect to be given the information to enable you to judge clearly what the options were?
  (Mr Child)  Virgin and their representatives were very, very well aware of the very tight timetable that we were working to. We had a number of meetings during the course of that process for them to share that information with us.

Chairman:  Thank you very much. I think, Mr Child, you have made your position very clear.





 
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