Examination of Witnesses (Questions 520-539)|
WEDNESDAY 5 DECEMBER 2001
520. Can I take you up on these stations. It
is noticeable that a lot of the finance committed in the early
phases refers to station modernisation and refurbishment. Where
did that suggestion come from that it be financed like that?
(Mr Hoare) It came in from London Underground. Could
I perhaps add what might be done under a station refurbishment
521. Can you clarify first the distinction between
"modernisation" and "refurbishment". A refurbishment,
theoretically anyway, could be putting paint on the wall.
(Mr Hoare) The refurbishment takes place every seven
and a half years in the contract now on the basis that stations
need upgrading and re-tarting up and making sure all the things
522. Can I just press you on "re-tarting".
It is hardly specific in the contract exactly what refurbishment
means, it may be simply a bit of paint around the station.
(Mr Hoare) No, it is very specific. One of the problems
is people look at modernisations and refurbishments but what they
include are upgrading the fire facilities, upgrading the communication
523. This is the refurbishment, is it?
(Mr Hoare) Yes. Some of it is done under refurbishment,
some of it is done under modernisation, it depends which comes
first. In terms of upgrading the fire facilities, upgrading the
communications, upgrading the passenger help points, upgrading
video control of what goes on at the station, all of that goes
into that expenditure as well as replacing the platform floors
if they have become slippery. There is a whole range of things.
524. But I am right in thinking that a refurbishment
is a significantly cheaper operation than a modernisation simply
because there are far more refurbishments than modernisations?
(Mr Hoare) Yes.
525. Okay. After the seven and a half year period
are you obliged to provide private sector finance? Are you under
a contractual obligation to produce more private sector finance
at that point?
(Mr Coucher) For the JMP lines we are not forecasting
any additional finance, so we are not anticipating any. There
is a mechanism by which we bring in new finance and that is a
contractual obligation as to how we introduce new finance.
526. New finance could be public finance?
(Mr Coucher) It could be public finance, it could
be private finance.
527. It could even be private finance?
(Mr Coucher) The contract provides a great deal of
flexibility in this area to cope with circumstances.
528. Finally, are your financing commitments
in place? In other words, despite the recent events you have the
backers, do you?
(Mr Coucher) Yes. We are just finalising our arrangements.
Last week we announced the addition of another banking group,
so it is looking very robust.
(Mr Hoare) I would confirm that for BCV and SSL as
Mrs Ellman: What do the contracts say about
penalties for inadequate safety?
529. One of you, please?
(Mr Coucher) The contract is quite precise in the
areas of safety. If we are in a safety breach and it is not remedied
immediately then London Underground step in and they charge all
the costs incurred in stepping in to us.
530. Mr Hoare, some conditions?
(Mr Hoare) Yes, I can confirm that 100 per cent. I
was looking for something else but I realised what your question
531. Who makes the assessment about whether
there is inadequate safety, whether there has been a breach?
(Mr Hoare) London Underground or the HSE or the HMRI.
532. What bonuses does the contract state for
(Mr Coucher) The Underground has specified some very
high performance targets and if we can exceed those we can make
additional monies. It is based on a £3 per customer hour
533. Is that the same for both of you?
(Mr Hoare) Yes. The contracts are basically the same.
The performance we have to achieve is spread over four parameters
Mrs Ellman: Are the bonuses a lot more attractive
to you than the penalties that you would incur for lack of safety?
Chairman: I am sorry, I cannot hear so I think
it might be difficult for the people who make a record.
534. Do you think you could be tempted to perhaps
breach safety because you might get better funding for bonuses
for better performance at the risk of safety?
(Mr Hoare) Firstly, the penalties for not reaching
performance can be severe and, therefore, one works hard to achieve
the performance you can because that is all based into the business
plan you are achieving. I would not, under any circumstances,
see how I or any of my people could be led into a position of
putting those sorts of bonuses before safety. Having worked in
the airline business, the shipping business and the railway business
now for 40 years and having seen those go through a process of
privatisation, I do not know any transport business that I have
certainly been involved in where one puts first any respect of
trying to earn bonuses or take away performance or avoid penalties
that has a conflict with safety because safety always comes first
in the transport business.
535. How do you ensure high standards of training
and competence of your contractors and subcontractors?
(Mr Coucher) There is already a very rigorous subcontractor
selection process designed to ensure there is competence in the
staff who are put on the job and we intend to enhance that regime
to make it even more exact.
536. Mr Hoare?
(Mr Hoare) We would do the same thing. Our supply
chain in terms of our subcontractors will be in place by the start
of our contract. We are in a somewhat different position in that
a lot of our supply chain capital expenditure work comes in very
much in the early years.
537. I am going to ask you very quickly, if
I may, because I want to allow you to escape quite quickly, what
peak period network capacity increases will you achieve in the
seven and a half years?
(Mr Hoare) The first thing is we will have increased
the availability on certainly all our lines in a very short period
of time by putting an investment in things like signalling and
538. We understand why you are being brought
in, Mr Hoare, but what extra capacity do you expect to deliver?
(Mr Hoare) Availability will create reliability which
will create extra capacity. It will,
539. Oh, I have great faith.
(Mr Hoare) As they say, the proof of the pudding is
always in the eating.