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

Examination of Witnesses (Questions 20-39)



  20. For the whole of 2001?
  (Mr Woodcock) Yes.

  21. And if the figures have gone up, which has basically brought us up to date today, you would expect that to be higher?
  (Mr Woodcock) We would. One of the difficulties of it is that we do not know until the asylum seekers come out of the system what our liabilities are. As there are more people being caught the suggestion is that ultimately we will pay more, which is further damage to our business.

  22. Have you a calculation of how much lorry movements have increased? Presumably freight has gone from rail to road.
  (Mr Smith) We believe that 70,000 additional lorry journeys, certainly in Kent, have been on the roads, on motorways and on the highways and byways. They will disperse further north but it will still be 70,000 lorry journeys.

  23. Are you surprised that it has taken the Commission this long to come forward with the court action, bearing in mind the disruption that has taken place since November?
  (Mr Smith) The Commission have expressed mild interest since November, like a lot of other parties in this process. They only took an interest when we lodged the petition with the European Parliament and the Petitions Committee, led by British Members of the European Parliament from all parties, gave the Commission such a thorough roasting that they actually woke up and took notice.

Mrs Ellman

  24. What about the damage caused to containers by the illegal immigrants? How significant is that?
  (Mr Smith) It is significant both in terms of the damage to the fabric and the fact—and I beg the Committee's pardon—that asylum seekers will regularly soil the inside of containers because they could be in them for between 12 and 36 hours so that not only destroys the fabric of the containers but destroys the goods as well. I will ask my colleague, Mr Woodcock, to go into the detail of that.
  (Mr Woodcock) So far this year it is about 10% of the total number of units that we have transported that have been damaged.


  25. Ten% of the total number of units that are transported. Do you have a round figure?
  (Mr Woodcock) It is broadly 1,100 up to the end of June because we are running at a much lower level because the service is at a lower level. That represents the physical damage which has to be repaired, but also the disruption to the transport. In a lot of the containers will be goods for supermarkets, DIY shops. Once the goods arrive they cannot be used.
  (Mr Blencowe) The actual damage to the product is doing far more damage to customer confidence than the delays because they can live with delays; they can build them into the supply chain. What they cannot live with is 20 tonnes of pasta arriving from Italy that has to be scrapped because they cannot sell it so they have to get some more. That is doing far more damage.

Mrs Ellman

  26. What can you do to make access to the containers more difficult?
  (Mr Woodcock) There are several measures that can take place which includes making sure that terminals that the containers are loaded in are secure, trying to avoid delays in transit. The main problem we have had this year has been caused by the intrusion into the site in Calais Fréthun.
  (Mr Smith) But in terms of the containers themselves a lot of the containers are curtain-sided. That is the mode of preference for many European customers. It is not too difficult to slash a way into a container with knives and weapons that asylum seekers will carry. Again, I repeat my concern about the security of our staff. There are all-metal containers and asylum seekers have been found with bolt cutters breaking seals, and in cases where organised crime is involved those seals are replaced and the asylum seekers are sealed inside all-metal containers. I fear that we will see a repeat of that awful incident last year when the Chinese citizens were found suffocated in a road vehicle. In our case they could be sealed in and it would be impossible to know that they were there because, to all intents and purposes, because the seals had not been broken it was a secure container.
  (Mr Blencowe) The British Government, in the form of the transport security people, impose on us the 1994 Channel Tunnel Security Act which is very exacting on security measures on the UK site. They regularly spot-check us and we have to conform and spend a lot of money securing our international terminals. I would like to know if that regulation is applicable to the continent and, if not, why not.

  27. Who do you think should be responsible for solving the problem of access through containers?
  (Mr Smith) Initially a customer has to ensure that their premises are secure and that the containers that they use are secure from entry from asylum seekers, but we are not going to single-handedly change the preferred method of operation of curtain-sided containers throughout western Europe. Therefore I think our attention should be much more focused on the security at the site than the security of the container itself. If asylum seekers cannot get at the container then however it is constructed and made will not be a problem.
  (Mr Blencowe) The curtain-sided containers that they generally get into, because the continent operates slightly different ways of loading products into boxes, they do not always have loading bays similar to what we operate in this country. They are loaded from the side, the top, so curtain-sided offers a great degree of flexibility, so we will never move away from it. We need to secure points of entry on the continent to stop them getting in. We can do it over here; we should be able to do it over there.

  28. Why is it not happening over there?
  (Mr Blencowe) Our security measures are imposed on us by our internal security within the Government. It needs similar security levels—the fencing, the cameras, the spot-checks that we have to do. It should be the same over there.
  (Mr Smith) The 1994 Channel Tunnel Security Act was aimed at the primary problem of unwanted persons getting into the tunnel from the UK end and, as a result, all rail freight facilities are surrounded by very high, very secure, metal palisade fencing and have cameras and infra-red equipment to protect the sites.


  29. Who pays for that, Mr Smith?
  (Mr Smith) We paid for that. The British Railways Board paid initially when the international business was owned by British Rail. We have to pay over three million pounds a year to maintain that security. The view of countries in continental Europe is somewhat more relaxed. There is not the equivalent of the Channel Tunnel Security Act and therefore terminals and yards that handle international traffic do not have anything like the kind of security that we are obliged to have in the United Kingdom.

Mrs Ellman

  30. Are you saying that the French Government should do more?
  (Mr Smith) I think the French Government and the French authorities have responsibility for the security of sites in France. We have argued that the French railways have some responsibility, which they have taken on in putting up fencing. But fencing is not the only answer. As we have found, even the toughest fencing can be broken down eventually. It is absolutely essential that there are security forces with the powers of arrest available at sites, so it is not just an internal security force but is actually policing in France, the gendarmerie or even the special policing squads that are allocated to the Eurotunnel site.

Chris Grayling

  31. Could I ask you about the situation with France, given that SNCF operate on this same route? You have a whole variety of concerns ranging from loss of business to security of staff. Are they suffering the same?
  (Mr Smith) Yes, because, although we are not actually allied in commercial terms, essentially a train that we haul through the tunnel to Calais will be taken up by SNCF and taken through France and vice versa, the French will bring the train through the tunnel to Folkestone and we will take it over, so we work very closely with them. The problems that we have, they have. The losses that we have, they have. I think the French railways share our concerns that they are not able to market what was a successful and growing freight link. The French railways are very much in this with us.

  32. There are rumours around that the French are trying to let this prolong itself in order to take over the business.
  (Mr Smith) I do not believe that is the case. If the French wanted to take over the business there are probably somewhat quicker and less public methods of doing it. No; I believe in this case that the French authorities have perhaps not agreed with the French railways. I think there have been problems between what the Transport Ministry wanted in France and what the Home Office in France wanted—shades of what we find over here—and the French railways sometimes found themselves in the middle of it.

  33. Do you feel that the Transport Minister in France has been supportive even if they may not have been getting the support they wanted from there?
  (Mr Smith) They have become increasingly supportive and colleagues of ours have met the recently appointed French Transport Minister who is appearing to get a grip of the situation. The fence is being built. Barbed wire has been purchased. As I have said before, the previous fence might look okay in your garden. The fence that is going up now I think would probably overshadow the garden a bit. The French Transport Ministry have been very supportive. The French Interior Ministry, who deploy the gendarmerie, have taken a little while to come round, perhaps because they have seen this as part of a somewhat wider issue relating to immigration policy and asylum seekers, a subject on which we choose not to comment. There are many other people who will.

  34. Can I take you to the question of track access charges and talk about track access charges through the tunnel? Clearly they are a very significant part of your business. What do you believe the consequences would be on your business if we started to see modifications to track access charges as a result of an interim review? My concern is that you may find yourselves faced with track access charges against which you are not protected and that makes the situation worse.
  (Mr Smith) That would be a concern of mine as well, but fortunately, in the small print of the Rail Regulator's final conclusions on the freight track access charges, he stated in print that any interim review of Railtrack's income, be it related to Hatfield or any other issue, would only impact on the passenger business. It may impact on the structure of freight charges but it would not affect the overall level. We take that written assurance from the Regulator's office that any interim review of track charges as a whole will not impact on the freight business. Clearly, if by some misfortune they did, then yes, that would be a further burden that we would struggle to bear.

  35. But you do not have any guarantees to that effect. You only have the word of the current Regulator.
  (Mr Smith) I believe something written in a document published by an independent Rail Regulator is something I am willing to regard as a fairly firm guarantee.

Andrew Bennett

  36. Could you tell me how potentially profitable is this activity?
  (Mr Smith) I will start and let Steve carry on. When this business was operated by British Rail it was not profitable, in part because of the charges levied by Eurotunnel. We have been able to turn it around. We have been able to introduce more efficient working practices, greater productivity and as a result the business is now worth doing. As we are a private sector company not a public company, I am not going to go into the detail. What is so good about this business is its massive potential. At the moment there are 60 million tonnes plus moving between the United Kingdom and western Europe and vice versa by shuttle, by ferry and by rail. At our normal level of service we are moving three million tonnes. We are currently moving 1.4 million tonnes. There is huge potential in this business that we wish to take advantage of and it is my view that when service quality is restored it will be possible to move traffic with high yields and higher returns. At the moment the only people using Channel Tunnel freight trains are customers who do not mind whether the traffic arrives next week or next month. Not surprisingly, they are not willing to pay that much to use the service.
  (Mr Blencowe) Obviously we are on the receiving end of the freight operating the terminals that offload the freight. Quite honestly, at this point in time it makes no commercial sense whatsoever. The level of investment that is required, the contractual commitment from the railway industry to the private terminals, are non-existent, so if you were going to do it it does not make any commercial sense. It makes a lot of sense to our customers for their strategy; it makes a lot of sense to us for our strategies, and this is the reason why the private companies are sticking at it. However, if you look through the SRA strategy, it calls for a lot of private investment in terminals and the interchanges. Quite honestly, at this point in time the commercial sense is just not there.

  37. So as far as EWS is concerned you do not really need all that much money from the state in some form to relaunch the business because potentially it is pretty profitable, is it not? If you got the service back toa reliable service surely you should be putting the investment in to attract people back.
  (Mr Smith) We have put significant investment into this business in terms of locomotives, wagons, control centres and systems. The rail freight industry overall has invested a billion and EWS £750 million in all of our activities. The problem we face is that in the last 10 months we have lost over £10 million in revenue and that is £10 million in profit because we have kept the resources on the books. What we are asking for is essentially a helping hand in the same way that the SRA gave the passenger business post-Hatfield to launch a marketing campaign to get the service relaunched and to enable us to get over the transition, over the next12-18 months, 15 or 18 trains and, hopefully, because we all want to achieve growth, significantly more. We have put a lot of investment in. We have so far taken the losses on the chin.

  38. What about containers? Are they roughly in balance, the number of full ones going out with the full ones coming back in, or is there an imbalance?
  (Mr Smith) There is an imbalance in that there is much more traffic imported by rail than is exported. That risk is taken by the shipper essentially. We just provide the train, Tibbett & Britten will provide the terminal service, but yes, there is an imbalance in trade.
  (Mr Blencowe) The majority of the imbalance is caused by the amount of non-UK hauliers that are bringing product over and taking the exports back for the cost of a tank of fuel, to put it in its bluntest terms, so the export market is driven down by the amount of non-UK hauliers that are currently operating in the UK, arriving on a Monday, working with a tank of cheap diesel for the week and then going back on a Friday for the cost of the diesel to get home.

  39. You put your faith in solving the security of sites. Is there not a danger that if those sites become secure some of the gangs are pretty determined and it will merely be that people are put into the containers at an earlier stage, putting your business at risk still and lives of individuals even more at risk?
  (Mr Smith) Your concerns are very valid. Unappreciated by many, but I think it has been discussed at this Committee before, this problem actually started about two years ago when criminal gangs were putting asylum seekers into containers at terminals in Italy, particularly in the Milan area. By improving security in that area the number of people getting put in there has reduced but yes, the risk of either being put in further back in the journey or even further back in France at less secure yards is still there. It is the sort of business where you have to tackle one issue at a time and then ensure that there is proper searching of trains when possible. We already search the trains in the United Kingdom because we have an obligation to do so, and also we do not want to run unsafe freight services with people on them. Our argument is that customers, terminal operators and rail operators should be applying the same level of search and security on continental Europe.

  Chairman: On that note, Mr Smith, can I say thank to you and to your troops. You have been very helpful.

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