Select Committee on Northern Ireland Affairs Fourth Report


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

Leasing

27. The question of NITHC's capacity to lease assets, and the potential contribution which leasing might make to the provision of new rolling stock for NIR, has been raised in the context of our inquiry. NITHC told us that, when the PPP study was being progressed, "there was a clear understanding that leasing was not a funding option and indeed the whole PPP study was predicated on the assumption that outright leasing was not a funding source that was open to us."[54] However, the outcome of the study apparently suggests that leasing for periods up to seven years may be acceptable, but longer leases may not. NITHC has doubts about the commercial merits of shorter rather than longer leases and is seeking an explanation from DRD as to the thinking behind the conclusion.[55] Our attention has also been drawn to a number of possible practical complications, arising from the very limited alternative markets for Irish gauge stock.[56]

28. DRD, in its evidence to us, suggested that leasing could potentially have a part to play in the interim solution.[57] However, later in the session, another witness commented that it was "difficult to see, in practice, how NITHC could be given permission to lease assets."[58] Public corporations are permitted to lease in certain circumstances where it can be shown to be value for money. However, one of the witnesses identified another difficulty arising from NIR's dependence on public subventions:

    "....when we talk about leasing, in the normal commercial context, we think of leasing in a situation where the assets leased can earn some money and help pay the leasing costs, but, in the context of Northern Ireland Railways, they already run at a substantial deficit, so, in effect, the Government would have to pick up the leasing costs."[59]

29. We believe it would be helpful if the apparent uncertainty over whether NITHC would be permitted to lease new rolling stock was ended. The company believes that it has the necessary legal powers under the Transport Act (Northern Ireland) 1967 but policy on leasing by public corporations appears to be a matter for the Treasury.[60] We request the Government, in its response to this report, to state, first, whether in its opinion NITHC has the legal capacity to lease assets, and on what basis, and, second, to set out the circumstances and situations in which it would be permitted to do so.

The Knockmore line

30. NIR has undertaken a major infrastructure investment, in large measure financed by the European Structural Funds, to re-open the line from Bleach Green Junction to Antrim via Templepatrick. This line, scheduled to re-open to passenger services next year,[61] will enable services from Belfast to Antrim and beyond to take a more direct, and consequently quicker, route that the present route via Knockmore.[62]

31. One consequence of the shortage of rolling stock is that NIR expects to be unable to provide a service on the existing route from Belfast to Antrim via Knockmore in addition to the service via Templepatrick. At the time of giving evidence, NIR envisaged that the line would be 'mothballed', although the position was subject to review.[63] NIR was happy to review the position "... because, in the context of the regional strategic framework, it would seem very much that, particularly with Crumlin being identified as a growth area, the future of that line could be secured at some stage in the future.".[64]

32. NIR has also completed a detailed economic appraisal for two new trains, which would enable some services to operate to Antrim via Knockmore, and provide "commuter services with an acceptable frequency between Belfast and Antrim."[65] Although the 2000-02 Corporate Plan[66] implies that this has been submitted to DRD and our questioning of them about the appraisal was predicated on an assumption that this was the case, we were informed by the Department that in fact NITHC has decided not to submit it at the present time.[67] NITHC has since informed us that its Board approved the appraisal at its meeting on 10 May but it concluded that this should not be submitted formally to DRD at that time in the light of current uncertainties over the Railways Task Force outcome and the availability of any further European funding support. Also, Translink does not consider it prudent to deal separately with these two trains in advance of the 'core' order for new trains, due to the advantages of standardisation.[68]

33. NITHC also conceded that the Knockmore line required considerable expenditure on modernisation and was not viable in purely financial terms.[69] Passenger usage at the three intermediate stations has grown over the last two years, but is relatively small.[70] An economic appraisal has been commissioned and was expected to be completed "before the summer".[71] DRD told us it had been informed by Translink, prior to the appraisal, that the cost of the upgrade would be "of the order of £8.5 million."[72]

34. We asked NITHC whether rolling stock availability or infrastructure improvement, some of it safety related, would be the greater determinant in influencing the decision to keep the line open. Mr Hesketh commented:[73]

    "In some ways, it is a chicken and egg situation but if the track is in an unsafe condition you cannot run the trains so the track has to have the priority to put it in the proper order."

35. DRD told us that the future of this stretch of line would be looked at by the Railways Task Force as would the question of the additional rolling stock. Given that the Bleach Green Junction to Antrim line is now to open in February 2001, and that the Railways Task Force is not due to produce an interim report until "the summer of 2000",[74] this will give insufficient time to procure additional rolling stock.[75]

36. On the evidence available to us, there must be real doubts, on practical grounds, as to whether passenger services can be maintained between Knockmore and Antrim as and when services from Belfast to Antrim and beyond are diverted to operate through Templepatrick. In our view, maintenance of a minimal service should not be used as a device to avoid initiating statutory closure procedures.[76] NITHC ruled out assistance from CIE in the Republic of Ireland on the grounds that they have their own capacity problems,[77] and rolling stock cannot simply be transferred from Great Britain due to the difference in gauge.[78] We recommend that NIR make an early statement of the practical options and spell out precisely what it means by 'mothballing'.

The Bangor line

37. The line from Belfast Central to Bangor carries about a million passengers a year,[79] and Bangor station is in the process of being rebuilt, with European funding, as part of an integrated bus and railway station.[80] 'Moving Forward', the Northern Ireland Transport Policy Statement, launched by Lord Dubs in November 1998, announced "a major track upgrade programme throughout Northern Ireland, starting with the Bangor line, will be undertaken."[81] The A D Little report recently indicated that the condition of the track is such that the most economic option is a complete relay.[82] NITHC has been informed that European grant aid towards the cost of this work of just over £7 million[83] will be available. The level of assistance is predicated on a 75 per cent grant rate and was based on an estimated total project cost of £9.5 million.

38. Work has not yet started, although NITHC has been authorised to go ahead with some preliminary work.[84] It has been delayed by the fact that the cost of a complete upgrade has now escalated to around £14 million[85] and there is a consequent shortfall in funding of around £4 million.[86] We understand that further European funding for this project is unlikely to be available to help cover the shortfall.[87] The deadline for use of the European Union funds is December 2001 and the Chairman of the NITHC expressed some concern to us that, if early approval were not to be forthcoming, it would not be possible to spend the money and have it accounted for, in European terms, in time.[88]

39. In answering a written question in the House of Lords, on 12 May 2000, about the cause of this substantial cost increase, Lord Falconer of Thoroton commented:[89]

    ".... Translink has advised that its original estimate of the cost was based on carrying out the work using their own resources. However, these resources are heavily committed elsewhere and in order to meet the deadline for receipt of European grant they would have to contract out the work. Translink has advised that the increase in the estimated cost is largely due to this change."

NITHC, however, maintained that it had a "distinct preference" for the use of its own labour, not least on health and safety grounds as it hoped to continue to operate the Bangor line on a single track basis during the upgrading works, in order to minimise disruption to passengers and consequent erosion of the passenger base.[90] NITHC conceded that the cost margin in using outside contractors could be "as high as 25 per cent".[91]

40. NITHC expressed the view that "everybody believes that the Bangor line has a secure future"[92] and that its primary consideration would be to get the job completed within the timescale. Witnesses admitted that there might therefore be a need for a mix of its own workforce and contractors if that is to be achieved.[93] DRD appears to have taken a slightly different view: Mr Sweeney, the Deputy Secretary, commented:[94]

    ".... in establishing the Task Force, what was agreed was that no work would be continued that perhaps could be classified as nugatory, should the Task Force conclude that there would have to be substantial reductions in the existing network. So what has been put in place is a sum of £100,000 to enable pre-project work to proceed, so that if the Task Force were to conclude that there was a compelling case for the Belfast to Bangor line to be upgraded then that could be brought forward fairly swiftly ...."

He also confirmed that the earlier announcement by Lord Dubs had in effect been suspended, awaiting the outcome of the Railways Task Force, and that DRD was aware of the time constraints inherent in the reliance on European money.[95]

41. In view of the difference of emphasis between the evidence of DRD and NITHC,we have sought further information from NITHC about what the Bangor line relay involves, the practical constraints[96] and the history of the costings.[97] The project is now planned to proceed in two phases, with the scope of the first phase defined by the extent of the available grant and the work programme prioritised on the basis of safety considerations. In this context, we note that there is likely to be a further reduction in line speeds, to 40 mph, later this year on safety grounds. It is also clear that NIR's preferred options at the time of giving evidence of maintaining some single line working during the works, and using its own workforce are no longer the preferred options. As NITHC put it in their supplementary evidence:[98]

    "... in view of the timescales, for reasons of both safety and European grant claim, a complete closure and full use of an external contractor has, with the passage of time, become the preferred option."

42. Another issue relating to the future operation of the Bangor line is the state of the Connswater bridge. This has been in a poor physical state for some time and was originally planned to be replaced in 1997-98. It has been subject to a 20 mph speed limit since February 1998 following changes in track alignment as a result of replacement of another bridge nearby.[99] NITHC told us that it had recently secured departmental approval, on urgent safety grounds, to replace the bridge with a structure built to modern standards and that this would be done "during the summer holidays unless it has to be closed before."[100] It is regularly subject to inspection by external experts. DRD also confirmed the parlous state of this bridge.[101]

43. The decision to replace the bridge was taken by the DRD rather than by Translink as the project required public financing.[102] It was taken before the Railways Task Force was set up as "this was work that simply had to be done."[103] Mr Sweeney pointed out that the Connswater bridge would form an important part of the infrastructure whether or not the route remained a rail corridor.[104]

44. We are nonetheless surprised at the delays in replacing this bridge, despite the agreement on the need for this course of action. The Railways Task Force was announced on 28 March 2000, by which time the decision had been taken, but the new bridge will apparently not be installed until August 2000, some 2½ years after the temporary speed limit was imposed, and despite the fact that the corroded state of the existing structure could close the line at any time.

45. We are concerned about the whole approach to the future of the Bangor line. We presume that the decision to rebuild an integrated bus/train station at Bangor was approved, both by NITHC and DRD, on the basis that the line was perceived to have a secure future. Expert opinion indicates that the track needs complete renewal, and is continuing to deteriorate. However, considerable uncertainties apparently remain, as to how the project is to be carried out, where the money is to come from and whether it can be completed in time to take full advantage of the European grant on offer. We would urge all concerned to make every effort to come to an early decision on the future of this line, not least to ensure that the considerable amount of European funding on offer for its upgrading is not lost. We understand the Minister for Regional Development has given approval for £1.5 million outlay on materials for the relay of this line and that, in anticipation of an early and favourable decision, these will be ordered as soon as possible. We welcome this.

46. We are also concerned about the consequences of the delays that have arisen with this project, which Lord Dubs announced in November 1998. Not only has the cost risen very substantially as a result of the delay, but users now seem certain to suffer the inconvenience of a prolonged closure of all, or parts, of the line while it is renewed, with attendant risks to the passenger base. In the interests of all concerned, we hope that any periods of closure will be minimised.

The Larne line

47. NITHC told us that the line from Belfast to Larne, which is part of the only Trans-European (rail) Network (TEN) in the island of Ireland,[105] carries 1.5 million passengers a year. It is the only remaining part of that TEN route which remains in need of modernisation, and parts of its are in poor condition.[106] NITHC told us it has identified a number of possibilities for both passenger and freight development.[107] Mr Hesketh told us that finance for urgent work on the sea defences along the route had been assured in the context of the discussions which led to the establishment of the Railways Task Force.[108] He also told us that NITHC had a strong commitment to the Larne line:[109]

    ".... The entire board of NIR and the Transport Holding Company are wholly committed to the concept that this funding [for upgrading the line from Larne to Belfast] must be found to modernise the Larne line and keep it in proper working order .... In terms of the overall economic significance of the railway, and the Larne line as part of that railway, the board are 110 per cent committed to that, I have to say."

48. DRD commented that the future of this line will be one of the issues to be discussed and considered by the Task Force. It added that passenger numbers using the stations in Larne "really are quite small in our view".[110] We are somewhat surprised at DRD's assessment of the passenger levels at the stations in Larne. According to NIR passenger flow data,[111] in 1999-2000, Larne Town was the thirteenth busiest station on the system outside the principal stations in central Belfast,[112] and ahead of flows at, for example, Newry, Ballymena and Antrim. Nonetheless, development of the trans-European transport network was one of the 14 priority projects adopted by the European Council at Essen in December 1994. As the Belfast to Larne railway is part of that link, any studies and works intended to improve the link have the potential to benefit from European financial support. We understand that NITHC has not submitted an application for EU funding and that no other benefits have accrued to the line as a result of being part of the TEN, largely, according to the Government, because other parts of the network have been accorded greater priority in terms of funding.[113] However, in view of NITHC's enthusiasm to develop the potential offered by this route, we hope that it will make every effort to secure any available European funding for its development.

49. We also hope that the Task Force, besides taking account of the strategic significance of the Belfast-Larne line in European terms, will also take due account of the fact that, in terms of passenger journeys, this line was the busiest in the Province in 1999-2000[114] and of the undoubted scope for an increase in passenger numbers if the quality of the service is improved.[115]


54  Q 43. Back

55  Q 43-44. Back

56  Appendix 8, p. 62. Back

57  Q 102. Back

58  Q 124. Back

59  Q 124. Back

60  Q 44, 125-6. Back

61  Translink now expect the line to be available for operations from December 2000. Following a period of driver training, passenger services are expected to commence in February 2001. (Appendix 12, p. 72). Back

62  Ev. p. 2. See also Q 21. Back

63  Q 19. Back

64  Q 19. See also Q 116. Back

65  Q 19. Back

66  Sent to DRD on 29 February 2000 (see House of Lords Official Report, 5 June 2000, Vol. 613, Col. WA125). Back

67  Appendix 14, p. 77. See also Q 160 and 167. Back

68  Appendix 12, p. 73. Back

69  Q 21-23, 27. Back

70  Ev. p. 24. Back

71  Q 22-23. Back

72  Q 117. Back

73  Q 25. Back

74  Ev. p. 28. See also Q 130. Now expected in mid-August, see paragraph 3. Back

75  Appendix 12, p. 73. Back

76  See Q 118. Back

77  Q 45. See also Appendix 11, p. 68. Back

78  Railways throughout the island of Ireland operate on a gauge of 5'3" (1600mm) compared to the Great Britain gauge of 4'8½" (1435mm) which is also the international standard gauge. The Irish gauge is used in very few other parts of the world. Back

79  Q 139. Back

80  Q 7. Back

81  Moving Forward, p. 10. Back

82  A D Little report, Vol. 2, p. 91. Back

83  Q 73 and Appendix 13, p. 76. See also House of Lords Official Report, 18 April 2000, Vol. 612, Col. WA 87. Back

84  Q 72. Back

85  Q 73. See also House of Lords Official Report, 18 April 2000, Vol. 612, Col. WA 87, where a figure of £14.7 million is mentioned, as against an original estimate of £9.7 million. Back

86  Q 79. Back

87  House of Lords Official Report, 12 May 2000, Vol. 612, Col. WA 242-3. See also Appendix 13, p. 76. Back

88  Q 72, 82. Back

89  House of Lords Official Report, 12 May 2000, Vol 612, Col. WA 242-3. Back

90  Q 75, 77. Back

91  Q 76. Back

92  Q 72. Back

93  Q 77. Back

94  Q 139. Back

95  Q 140, 144. See also Q 143. Back

96  Appendix 12, p 71. Back

97  Appendix 13, p. 76. Back

98  Appendix 12, p. 72. Back

99  A D Little report, Vol. 2, p. 99, and Vol. 3, Appendix C2, p. 6. Back

100  Q 72. Back

101  Q 153, 155 and 159. Back

102  Q 141. See also Appendix 12, p. 72. Back

103  Q 153. Back

104  Q 154. Back

105  Cork-Dublin-Belfast-Larne-Stranraer. Back

106  Ev. p. 25. The A D Little report concludes that, measured in terms of track miles, about 70 per cent of the track from Belfast Central to Larne Harbour is in need of relaying, including 90 per cent of the track between Bleach Green Junction and Larne Harbour. (Vol. 2, p. 91). Back

107  Q 64. Back

108  Q 65. Back

109  Q64. See also Ev. p. 25. Back

110  Q 168. 20 a day at Larne Harbour and 244 at Larne Town. Back

111  Appendix 11, p. 69. Back

112  For this purpose, Great Victoria Street, Belfast Central and Botanic. Back

113  House of Lords Official Report, 4 May 2000, Vol. 612, Col. WA 187. Back

114  Appendix 11, p. 68. Back

115  Q 168. Back


 
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