Select Committee on Northern Ireland Affairs Fourth Report


FOURTH REPORT

The Northern Ireland Affairs Committee has agreed to the following Report:—

NORTHERN IRELAND RAILWAYS:
FINANCIAL PROVISION FOR NEW ROLLING STOCK IN 2000-01

Introduction

1. In April 2000, we announced an inquiry into the proposed financial provision for 2000-01 for new passenger rolling stock for Northern Ireland Railways (NIR), and its operational implications. Our inquiry was prompted by press reports that an initial figure of £18 million had been reduced to £5 million, and other reports that NIR might have insufficient serviceable rolling stock to operate the full summer timetable, which came into operation at the end of May.

2. Our decision to initiate an inquiry just preceded, but was unconnected with, the publication of the Arthur D Little Strategic Safety Review of Northern Ireland Railways[2], a report commissioned by Translink.[3] The Review concluded overall that, with few exceptions, Translink was operating NIR at safety levels that were "not unreasonable".[4] It did, however, identify a need to strengthen safety in certain specific areas and estimated that the corresponding investment and resource needs specifically to address its recommendations would be approximately £183 million[5] over the next ten years.

3. The immediate Government response[6] to the A D Little report expressed some concern about this outcome. Mr Adam Ingram, the Northern Ireland Office Minister responsible at the time for transport policy in the Province, commented:

    "The picture revealed by this report is of a railway system which has suffered from years of underinvestment. The report itself deals only with safety-related expenditure. There would be other substantial costs if the railways were to make a larger contribution to meeting [Northern Ireland's] transport needs.

    There has to be a real question mark over the priority which expenditure on that scale should have against the many other pressing demands on public expenditure."

He announced the setting up of a high level task force "to produce, as soon as possible, an options paper on the future of the railways in Northern Ireland." A task force consisting of senior officials from Northern Ireland Departments and senior representatives of the Northern Ireland Transport Holding Company (NITHC) and jointly chaired by the Permanent Secretary of the Department for Regional Development (DRD) and the Chairman of NITHC was duly appointed and is expected to produce an interim report in mid-August.[7]

4. We took oral evidence from NITHC and from DRD. We received written evidence from a number of organisations and individuals, much of which is reproduced as Appendices to the Minutes of Evidence. We are most grateful to all who have contributed to the inquiry. We visited NIR's York Road works, where we saw at first hand examples of corrosion damage to rolling stock, and maintenance and repair work in progress on rolling stock. We also visited the site of the former Craigavad Halt, where we saw examples of some of the infrastructure problems currently faced by NIR.

5. Our inquiry was originally a tightly focussed one, concentrating on the narrow issue of financial provision for new rolling stock in the current financial year. In view of the publication of the A D Little report and subsequent establishment of the Task Force, it is perhaps inevitable that a number of other issues have been raised in the course of our inquiry. We have commented on a number of these.

6. Since we began this inquiry, the matter of transport policy in Northern Ireland has once again become the responsibility of the Northern Ireland Assembly. It will therefore be that body, and Northern Ireland Ministers, who will be responsible for the task of deciding the future of the railways in Northern Ireland. We hope that they will find this report, and the evidence submitted to our inquiry, of assistance to them.

NIR Rolling Stock

7. NIR operates several different types of rolling stock, of varying ages.[8] The newest is the fleet of locomotive-hauled coaches, introduced in September 1997 and used exclusively on Belfast-Dublin Enterprise services. All other services are operated by Diesel Electric Multiple Units (DEMUs). The majority of these are operated by the nineteen Class 80 units, all introduced in the 1970s, and virtually all the remainder by the nine Class 450 units. These units, predominantly designed for short haul journeys, were introduced in the mid to late 1980s, but many of the principal components were recovered from scrapped Class 70 rolling stock and are thus in excess of 30 years old.[9] In addition, NIR has a six carriage train formed of former cross-border coaches which may be used, locomotive hauled, to supplement DEMU capacity.[10]

8. NIR's rolling stock is older than a lot of the rolling stock in regular passenger service on railways in Great Britain, but not exceptionally so. Virgin Trains, for instance, operates a substantial number of locomotive hauled coaches of the same general design[11] as those used by NIR. A significant proportion of the electric multiple units operated by Connex date from the late 1960s and early 1970s.[12] The majority of the current Gatwick Express rolling stock dates originally from the mid-1960s and early to mid 1970s. Predecessors in design terms of the Class 80 rolling stock still operate regular services on certain lines in Southern England.[13] However, a major difference is that many Train Operating Companies, including each of those mentioned above, have firm plans to replace much of their older rolling stock in the course of the next few years.

9. NIR has difficulties with both types of DEMU stock. It anticipates[14] that, to last beyond 2006-07, some of the Class 450 rolling stock will require significant additional investment to address increasing parts obsolescence and mechanical reliability problems and that the whole class will be retired by 2010-11. Although outwardly more modern, their reliability is lower than that of the Class 80 units.[15] The Class 80 stock is described by NIR as "near the end of its useful operating life" and significant capital investment will be required to extend this beyond 2001.[16] There is a particular problem with structural corrosion, and a programme of refurbishment for a number of these units has been put in hand.[17]

10. NIR has a total operational fleet of 29 train sets and the minimum operational requirement for the timetable current when its evidence was submitted was 25 sets.[18] Its expectation was that the programme of repairs would reduce availability to 21 sets, hence the concern as to whether services should be removed from the timetable. It intends to maintain the previous level of timetabled services "insofar as practicable", taking up the unit shortage by running some trains at reduced lengths, with passenger disruption minimised by provision of special bus services.[19]

11. Both DRD[20] and NITHC[21]envisage that, due to ageing and structural corrosion, an increasing number of rolling stock units will have to be removed from service on safety grounds. NITHC's best case scenario envisaged a reduction on structural corrosion grounds to a total of 17 or 18 sets by 2006, before account is taken of the possibilities of mechanical failure.[22] In the company's view, the service would not be sustainable at that level of rolling stock availability.[23]

Planning for new rolling stock

12. NITHC had identified the need to replace the Class 80 rolling stock "before the end of the decade" in 1993.[24] Initially, the acquisition of new rolling stock was seen as one of four possible Private Finance Initiative (PFI) schemes for NITHC.[25] An outline business case was completed in February 1998. DRD told us that, following the Chancellor's announcement in May 1998 of a major economic strategy aimed at promoting enterprise and encouraging investment throughout Northern Ireland, a review was initiated of potential Public/Private Partnership (PPP) opportunities for public transport services. These superseded the PFI reports, recommendations of which were put on hold as it was considered that "such options could potentially offer greater opportunities to attract both private sector finance and management skills."[26]

13. The PPP study report, completed in December 1999, concluded that PPP options involving the private sector were preferable to options retaining services wholly in the public sector. It also concluded that a franchise-type arrangement was likely to prove the most effective means of achieving project objectives, of which the most important is access to external sources of finance. On timescale, the conclusion was that a PPP arrangement could not be in place before 2005, with new trains following in 2006/7 at the earliest.[27] This report is currently under consideration by Northern Ireland Ministers.

14. In view of the substantial period of time before a PPP project could be expected to produce new rolling stock, a review of interim train requirements and investment needs was undertaken. This was completed in January 2000.[28] NITHC told us that a "do nothing" option was not considered as the resultant severe curtailment of timetabled services was contrary to Government policy.[29] Five options were selected for detailed appraisal, the capital cost of which ranged from £7.4 million to £45.8 million.

15. The preferred option of the DRD would provide for minor refurbishment of seven Class 80 units and six Mark II coaches in 2000-01, and purchase of eight new three car sets and four two car sets, to be introduced in 2002-03.[30] The capital expenditure cost will total £45.8 million, of which £3.4 million will fall in 2000-01 and £1.4 million in 2001-02.[31] This expenditure, totalling £4.8 million, would be exclusively for refurbishment of existing units.

16. DRD told us[32] that the 1998 Comprehensive Spending Review (CSR) had provided for expenditure of £5 million on railway rolling stock in Northern Ireland. The CSR allocated a further £5 million for 2001-02, subject to confirmation in the 2000 Spending Review.[33] As at that time the replacement of rolling stock was the subject of a PFI Outline Business Case, provision was also made for an additional £8 million in 2001-02 to meet the anticipated annual cost associated with this. The aggregate of these three sums appears to be the origin of the £18 million figure which appeared in the press.[34]

17. At present, only the refurbishment element of the expenditure has been approved as DRD recognises that this is now required irrespective of what solution is chosen for the longer term, due to the amount of time needed to acquire new train sets. However, DRD considers that decisions on the acquisition of new stock should be held pending the outcome of the Railways Task Force review. It has accordingly authorised NITHC to proceed only with this refurbishment.[35] DRD is bidding in the 2000 Spending Review for the necessary resources to enable NIR to start a programme of purchasing new trains.[36]

18. NITHC told us that the effect of this refurbishment is that NIR will again have a full minimum operational number of train sets in March 2002 and a full fleet complement by the end of 2002. However, we were told[37] that this situation will only exist for a short period, before further sets would need to be taken out of service for refurbishment. In any event, NITHC witnesses were unenthusiastic about having to resort to refurbishment, rather than acquire new trains. Mr Hesketh, the Managing Director, commented:[38]

    ".... The idea of sending 30 year old trains across the water to get them patched and welded is abhorrent to us but we have no choice. At this point in time, it is the only way we can continue to operate trains safely with the money available. We would much prefer even to see that money spent on leasing new trains and the money we are spending on the patch and weld job, as I call it, would go a long way to do that. We would have all the benefits of new trains and all the customer benefits that that brings, the reliability, the comfort, air-conditioning; whereas all we are doing is patching up trains that are at or near life expiry. We are not getting any advantage to the customer from the significant millions of pounds that we are going to spend over the next two years.".

19. DRD, for its part, also recognises that the year 2003 represents a key date in deciding the future of the railways in Northern Ireland. As Mr Sweeney put it:[39]

    "Certainly, in any event, we have reached the stage where there are some very fundamental decisions required; of that there is no doubt. There is a threshold now that is very clear, the year 2003, that if we are to continue with the existing network it will require some very fundamental decisions to put very significant investment in place. This is something that has built up over the years, and, as I say, we have reached the stage now where we must now make these fundamental decisions, if Northern Ireland is to have the level of service and network that it currently enjoys.".

20. We are inclined to agree with Mr Hesketh. Unless there is to be very severe truncation of the network, some new trains will be needed in any event.[40] It is clear that acquisition of the new trains is an essential element in the strategy and that decisions need to be taken as soon as possible, in the light of conclusions reached, following the Railways Task Force Review, about the future size of the Northern Ireland railway network.

21. We also sought information on how the balance of the £5 million allocated for new rolling stock in 2000-01 was expected to be used. NITHC[41] saw it being used for ongoing revenue subvention, although it had received no firm indications from DRD concerning its intentions. Mr Aiken, the Corporate Affairs Director of NITHC, commented:

    "We are simply assuming that, if there were any surplus funds available on the rolling stock procurement side or the refurbishment side, that would go some way to addressing the overall funding deficiency."

DRD, for its part, anticipated[42] that the balance of the money will be allocated for work on upgrading the brakes of the existing trains. Ultimately, it will be for the Minister for Regional Development to decide.[43]

22. Since we took evidence, two additional blocks of funding for NIR in 2000-01 have been announced. We set out further details of these at paragraph 59 below.

23. Likewise NITHC envisaged that the balance of the further £5 million expected to be allocated for new rolling stock in 2001-2 might be diverted to other useful capital expenditure.[44] DRD expected the allocation to be determined by its Minister after the deliberations of the Railways Task Force had been completed.[45] DRD also commented that it would not be in a position to spend any money under a PPP in 2001-02, so the further £8 million allocated in the 1998 CSR for 2001-02 at present remains unallocated, although it might be used to finance part of the interim solution.[46]

24. We are concerned that the process of procuring replacement stock for the Class 80 trains has been so drawn out. A requirement was identified in 1993 for replacement around the turn of the century. That should have provided sufficient time for decisions to be taken and the stock to be acquired. These decisions were not taken and the upshot is the need to have recourse to an expensive, short-term solution.

25. On the evidence available to us, there appears to have been a general lack of priority given to expenditure on rolling stock replacement. The Government has itself admitted that transport expenditure has been given a lower priority in Northern Ireland than in Great Britain.[47] Mr Aiken of NITHC described the position as follows:[48]

    "The pattern during the whole of the 1990s has been that the company would submit a corporate plan which pointed out the funding requirements which were usually well in excess of secured PE and the traditional pattern then was that the plan would be brought back with a view to trying to make it compliant with the available PE cover. That process, a ritual which occurred every year, effectively created a bow wave of under-investment and this year, for the first time, we have quantified the scale of that under-investment."

DRD witnesses conceded that NITHC's bids for resources had "been considered in annual spending rounds, and it is true that they have not received as much, or indeed anything like as much, as they wished to."[49] They maintained, though, that DRD had been bidding for extra money for railway rolling stock for the past two years "but Ministers have decided that other priorities were more important for the limited amount of funds available in the Northern Ireland Block.".[50] Also, officials had not anticipated at the start of the public/private partnership report that the lead-in period would be so long.[51]

26. We hope that both the Northern Ireland Assembly and the Northern Ireland Executive will take steps to prevent a recurrence of this unfortunate situation. The quality of the railway service in Northern Ireland has undoubtedly suffered as a result of a continuity of Government indecision over how to fund the new rolling stock. The deteriorating nature of the rolling stock may well have been a factor in the significant decline in usage of intra-Province services over the last three years.[52] A graph showing overall passenger numbers using these services from 1992-93 to 1999-2000 inclusive is reproduced below. As Mr Heron, a non-executive director of NITHC, commented:[53]

    "For someone like myself who, because of where I live, regularly has to use the roads to get into Belfast, there is not a sufficient alternative there at this stage. If we continue the under-investment in the railway, as has been the case over a large number of years, we are going to see a further decline in people using quality alternatives and increasing the pressure on the roads."  

Passenger numbers: all services except cross border services


2  Strategic Safety Review of Northern Ireland Railways, Vol. 1, Main Report Overview; Vol. 2, Main Report Working Papers, Vol. 3 Appendices, referred to in this Report as the 'A D Little report'. Back

3  The Translink Executive Group is responsible for managing day-to-day business of the three operating subsidiaries of the Northern Ireland Transport Holding Company (Northern Ireland Railways; Citybus; Ulsterbus); see Ev. p. 10. Back

4  A D Little Report, Vol. 1, p. 4. Back

5  A D Little Report, Vol. 1, p.10.  Back

6  Department for Regional Development Press Notice, 28 March 2000. Back

7  DRD Press Notices of 20 April and 21 June 2000. See also Appendix 9, p. 64. Back

8  Ev. p. 3. Back

9  Q 50. Back

10  These coaches are of BREL Mark II design and were introduced about 1970.  Back

11  BREL Mark II Coaches. Back

12  This rolling stock, like the Class 450 units on NIR, incorporates Mark I underframes and/or bogies. Back

13  Appendix 8, p. 61. This stock was originally built 1956-1958. Back

14  Ev. p. 3. See also Q 52. Back

15  Q 14, 16. Back

16  Ev. p. 3. Back

17  Q 38 and Ev. p. 4. Back

18  Ev. p. 1. Back

19  Ev. p. 1-2. Back

20  Ev. p. 27. Back

21  A D Little report, Vol. 2, p. 123, Q 58. Back

22  Q 59, 61. Back

23  Q 60. Back

24  Ev. p. 3. The 1996-2000 Corporate Plan (p. 39) noted that, in 1990, Coopers and Lybrand had confirmed that the Class 80 DEMU sets were approaching the end of their economic life. It continued "In the absence of any major capital expenditure, the 80 class sets are being kept operational only at the expense of high mechanical maintenance, servicing and overhaul costs.".  Back

25  Ev. p. 3. Back

26  Ev. p. 27. Back

27  Ev. p. 4, 27. See also Q 4 and Q 61. Back

28  Ev. p. 4, 27. Back

29  Ev. p. 4. Back

30  Ev.p. 4, 28 and Appendix 9, p. 64. Back

31  Ev. p. 4, 28. Back

32  Ev. p. 27. Back

33  The final allocation for capital expenditure on rolling stock in 2001-02 is expected to be known in December 2000, following formulation of proposals by the Northern Ireland Executive and their consideration by the Assembly. Back

34  Q 93. Back

35  Ev. p. 4, 28. Back

36  Appendix 9, p. 64. Back

37  Q 55, 61. Back

38  Q 35. Back

39  Q 152. Back

40  Appendix 12, p. 70. Back

41  Q 39-41. See also Q 37 and 83. Back

42  Q 96. Back

43  Q 97. Back

44  Q 42. Back

45  Q 98. Back

46  Q 100-101. See also Ev. p. 27. Back

47  House of Lords Official Report, 18 April 2000, Vol. 612, Col. WA86-87. Back

48  Q 68. See also Q 3. Back

49  Q 151. Back

50  Q 112. Back

51  Q 110-111. Back

52  Q 86. Back

53  Q 86. Back


 
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