Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 1-19)




  1. Gentlemen, the clock on the wall says four o'clock and so four o'clock it is. Can I wish you most warmly welcome and ask you first to identify yourselves.

  (Mr Sweet) Michael Sweet, Tibbett & Britten Group.
  (Mr Blencowe) Steve Blencowe, Tibbett & Britten Group.
  (MrSmith) Graham Smith, Planning Director for English, Welsh and Scottish Railway.
  (Mr Woodcock) Andy Woodcock, European Relations Manager for EWS.

  Chairman: Thank you very much. Before we start we have a little bit of housekeeping. Any declarations? I am a member of the Rail, Maritime and Transport Union.

  Miss McIntosh: Interests in Eurotunnel, First Group and Railtrack.

  Mrs Ellman: Louise Ellman, member of the Transport and General Workers' Union.


  2. Do any of you wish to make an opening statement?
  (Mr Smith) I would, madam Chairman. English, Welsh and Scottish Railway operates the UK side of rail freight traffic through the Channel Tunnel and has been very badly affected by the events that have taken place since last November. In our evidence to you we supplied you with the numbers of trains that have run and asylum seekers that we have discovered. If I may, with your permission, madam Chairman, update you on those figures, since last November we would have run normally between France and the United Kingdom 3,116 trains. We have actually been able to run 1,221 trains. Therefore we have been able to run 39% of services. During that time our own security staff at the EWS yard known as Dollands Moor near Folkestone have found 1,605 clandestine entrants. In our evidence we described to you what has been happening—or rather not happening—over the last 10 months. It has been a sorry tale in which we have suffered significant loss, as have our customers, as have our suppliers and our associates such as Tibbett & Britten. There has been a significant safety impact on our staff who have been having to work in very unpleasant conditions, being inundated with asylum seekers attempting to board trains in Calais. Yesterday we appeared before the European Parliament's Petitions Committee in association with our petition to the Committee in our complaint to the European Commission, and the Commissioner for the single market, Mr Bolkestein, expressed great sympathy and stated that unless there was a significant recovery in services by the end of this month the European Commission would take action under the so-called strawberry regulation.

  3. Strawberry?
  (Mr Smith) Strawberry regulation, so named because it related to the inability of Spanish farmers to transport their strawberries to market, this being an issue of the free movement of goods. The European Commission under that regulation would take action against the French Government. His particular concern was that many promises from the French authorities that interim measures would be put in place had not happened. As I said before, we are facing significant losses, in excess of £10 million, in addition to which we are continuing to have to pay repatriation costs for clandestine entrants over whom we have no control. Earlier this month there was a meeting between the Secretary of State for the Home Office and his opposite number in France where the French gave a commitment to have a full service operating from the beginning of September. To do this they are implementing long overdue security measures and I and Andy Woodcock, who is my eyes and ears in Calais, have seen the work that is being done. It will be the decision of the French authorities and the French railways whether they feel they are safe enough to run a full service. It is crucial that we have that full service. Without it we will miss the build-up for the Christmas stockpiling which is one of the major sources of traffic through the Channel Tunnel. In conclusion I would like to look ahead and say that when this service can be resumed we need to look at a fairly high profile marketing re-launch, and we are going to need support. We have taken significant financial hits, as have our customers and suppliers, and we are going to need assistance to enable our services to be re-launched, and indeed to grow the business which is both the Government's and the Strategic Rail Authority's objective. In the European Commission yesterday one MEP suggested that the Commission should suspend its rules on state aids to ensure that all terminal operators and customers can reinstate this service as quickly as possible. Whom we should look to for that support I am not yet clear. Should it be the United Kingdom Government, the French Government or the European Commission? I am not sure but we must now look ahead to rebuilding the service and restoring it to full operational value.

  4. Thank you for that. Do you wish to say anything, Mr Blencowe?
  (Mr Blencowe) Yes, madam, just a brief comment. Tibbett & Britten is a large logistics company operating in Europe and rail has formed part of our strategy for the past five years and we have been very committed to it. We are keen to see it fulfil the future needs of our customers and we are keen to work with our partners, EWS, to get the freight off the roads. We have experienced, as Graham said, a great amount of disruption. The freight terminal that we operate up in the Midlands is the largest one in the UK privately owned. We have invested a lot of time and effort into building it and we are seeking help now at the latter stages of this crisis from the highest levels to try and rebuild the business.

  5. That is very helpful, Mr Blencowe. I think we will want to question both of you on various aspects of your statements, but could I ask you, Mr Smith, to begin with, what did Herr Bolkestein say as regards a timetable or was that not part of his statement yesterday?
  (Mr Smith) He stated that he was extremely concerned at the failure of the French authorities to fulfil their promises about implementing interim measures.

  6. Yes, I am sure he did, but what timetable did he put out?
  (Mr Smith) He said, after being pressed by Members of the European Parliament, that if there was not a significant recovery in services (which he did not quantify) by the end of July then the Commission would take legal action against the French authorities.

  7. Yes, but what did he then say about the timetable for implementing whatever action he was alleging he was going to take?
  (Mr Smith) He said it could take years.

  8. Oh, very encouraging. So nothing would happen before the end of July and then whatever action the Commission wanted to take would take years. Presumably he based this on the history of action that was taken under the strawberry rule?
  (Mr Smith) Yes. He said that he had very limited legal powers available to him, in part because Member States had wished to reserve those rights to themselves. He bemoaned his fate and said what he could do. If we could have put the fence in place with the amount of paper that has been written on this subject we would have been well protected long ago, and I think that the Commission are producing a little bit more.

  9. Have you had any assistance in any form from the Strategic Rail Authority?
  (Mr Smith) We have had meetings with the Strategic Rail Authority regarding the build-up of services when they are restored but we have not sought, nor have we been offered, any financial assistance during the current period.

  10. What could they do or what could the Office of the Rail Regulator do to encourage more integration on rail freight?
  (Mr Smith) I think the Office of the Rail Regulator is fairly limited in this respect. He has already published conclusions on track access charges and similar issues relating to the whole business. The focus is very much on the Strategic Rail Authority. It is my view that the SRA, using its existing powers to give grants on the basis of environmental benefit, could perhaps take a leaf out of the road investment and passenger investment lobby and also look at the grants that can be awarded for user benefits and to reduce congestion, and might well give consideration to offering start-up assistance to rebuilding services, enabling us to restore full services as soon as security is in place.

  11. Are you saying you have had talks asking for that?
  (Mr Smith) We have had outline discussions with the Strategic Rail Authority and we are currently looking at what would be required to get the service going again. That leaves aside the whole issue of historical compensation, which may or may not be tied up with legal issues, although I would really rather not have to go to court to get compensation for this.

  12. That is quite relevant. Given your experience do you want to see your franchise agreement changed so that it has got some reflection of the force majeure disruption?
  (Mr Smith) We are not a franchise. We bought our rail freight business for good or for bad, and sometimes on the international side it is for bad. I think I would far rather have discussions with the SRA perhaps about compensation, certainly about restarting the business, and in due course we will need to talk to the Strategic Rail Authority about the tolls for using the Channel Tunnel. At the moment the Strategic Rail Authority fund tolls for using the Channel Tunnel. Their funding for that will cease in April 2005. I will be blunt with you, madam Chairman. The international business would not be able to survive if it had to pay tolls to go through the Channel Tunnel.

  13. Have you got any estimate of what it has cost your customers so far—not you, your customers?
  (Mr Smith) I have no specific estimate. I know that the customers' representative group, Rail Freight Group, has suggested that there are thousands of jobs at risk but I am not aware, unless Steve has got it, of a value placed on customer loss.

  14. Any estimate, Mr Blencowe?
  (Mr Blencowe) Not of our customers, no. Only of our own losses.

  15. Do you want to tell us what they are?
  (Mr Blencowe) The latest estimate for this year, as long as things do not deteriorate, will be circa £300,000 for our one terminal in the Midlands.

  16. And that is assuming that there is a resumption of full traffic by the end of July?
  (Mr Blencowe) Yes. If there is a resumption of full traffic the estimate could get better. If it does not deteriorate any further, and obviously it only takes a split second for these guys to deteriorate it, we are working on the estimate of £300,000 loss for the rest of this year.

Miss McIntosh

  17. Could I ask EWS: the SRA grant that has been referred to is presumably in addition to the contribution the Government have said SRA will make payable to the strengthening of the fence? Is that the Rail Freight Board?
  (Mr Smith) Yes, it would be. The contribution offered by the Secretary of State I know is being considered by the SRA, if it is still in place. What we are talking about here is funding associated with a marketing relaunch to enable us to put back into service all the services. That is between 15 and 18 a day rather than the seven that we can run at the moment.

  18. You referred to repatriation costs. Are you able to quantify as of today what the repatriation costs have been in total?
  (Mr Woodcock) Last year it was £110,000 or in that order.

  19. Pounds?
  (Mr Woodcock) Pounds, yes.

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