Examination of Witnesses (Questions 119
- 139)
WEDNESDAY 30 JANUARY 2002
RICHARD BOWKER
AND PETER
TREWIN
Chairman
119. Good afternoon, sirs. Thank you very much
for coming. I am sorry we kept you waiting, but, as I am sure
you heard, we were taking some fascinating evidence. Can I ask
you, first, to identify yourselves?
(Mr Bowker) Good afternoon. My name is
Richard Bowker, the Executive Chairman of the Strategic Rail Authority,
and I have with me Peter Trewin, who is the Acting Accounting
Officer for the Authority.
120. I want to start off by saying, why have
you revised your assessment of an increase in passenger kilometres
down from 50 per cent to between 40 and 50 per cent? I am sorry,
I am being unfair to you; did you want to say something first?
(Mr Bowker) No, I was very happy to go straight to
questions, Madam Chair.
121. I beg your pardon, that is not deliberate;
when I am being rotten to you, it is always deliberate. Yes; why
did you revise your target?
(Mr Bowker) The target, rather than become a spot
estimate of one number, has become a range. It is possible to
deliver all aspects of that range, and 50 per cent remains an
achievable target. But we felt that it was appropriate, given
perhaps the uncertainty in some economic assumptions, actually
to put in a range; but I would repeat that 50 per cent remains
achievable.
122. How much of your assessment depends on
the variables between road and rail?
(Mr Bowker) There is a degree of modal shift, but
actually rail's market share is a relatively small percentage
of the total market. So, to be honest, quite a lot of what is
in the growth targets, for example, relates to off-peak travel
as well. And we believe that the delivery of the range is possible.
123. In your Strategic Plan, you put out a list
of schemes up to 2010. What are the ones that are not on that
list that were included in the 10 Year Plan?
(Mr Bowker) I believe that the schemes which are in
the Strategic Plan are the ones that were set out in the 10 Year
Plan. I am not aware of any major omissions there.
124. We have a little list here, which we looked
at, and it looked as though the following schemes were not due
to begin until after 2010; that is Great Western Main Line upgrade,
Crossrail, West Midlands Capacity enhancements, Greater Manchester
Capacity enhancements, Multi-Modal Study schemes. None of those
appear; is there a particular reason for that?
(Mr Bowker) There is a reason for that. On some of
those schemes there is a considerable amount of work being done.
For example, Crossrail, we are working with Transport for
London in a joint venture company, to which £154 million
is committed, we are providing half of that, to develop options,
to develop the business case, so there is a significant amount
of work that is under way there. We believe that the actual implementation
of that scheme though would be certainly to the very end, if not
beyond, the period of the Plan. Of the other schemes, what we
have done, in the Strategic Plan, is to take a view around prioritisation,
prioritisation not just through funding but also through resource,
and at the moment we believe that we can deliver the targets that
are set out in the 10 Year Plan by doing the projects that we
have committed to. Clearly, however, we need to plan for things
like Great Western upgrade, we need to plan for things like Crossrail,
and, to the extent that further resource becomes available, we
want to be in a position to accelerate them and bring those forward.
125. They are rather major, some of these, are
they not, and it would be very difficult if, for example, something
like the Greater Manchester Capacity enhancements were not included,
because they would have a direct impact on the Transport Plans,
not only for that area, not only modal shift, but also the general
problems of congestion?
(Mr Bowker) We accept that other work is going on,
on those, there is work, for example, going on on West Midlands
Capacity at the moment; but to be able to deliver the targets
within the resources that we have, we believe that it is not possible
to plan to implement those schemes during the period of this Plan.
Mr Donohoe
126. Mr Bowker, the report itself does not mention
making the calculation as to the awarding of the franchises and
the length of time that is going to be given to any of the franchises;
why is that?
(Mr Bowker) We have set out, in here, our refranchising
policy. We made an announcement on 19 December last year, which
we felt it was appropriate to do, even in advance of the Plan
coming out, because I was very concerned that we have restarted
the process, and that that policy says that, in some instances,
it may be appropriate to go for short-term franchises, as we have
done recently on GNER, it may be appropriate to go for longer
ones; and, indeed, the core franchise that we will be embarking
upon, on some of the regional franchise replacements, has a 15-year
frame as its base, and that is the basis that we are going for
with the franchise replacement.
127. Do you predict, in ten years, that there
will be the same number of Train Operating Companies in existence?
(Mr Bowker) No. I think, in ten years, there will
be fewer.
128. How many?
(Mr Bowker) I do not know; and I do not think, at
this stage, that I am in a position to say. I think, however,
it is essential that we move towards simplification and rationalisation,
and, rather than wait to sort of work out what we think is the
absolute number, I felt it was appropriate at least we started
the process, and that was what we said on 19 December.
129. But you do not think that might affect
the figures that you are giving, that you are going to be able
to get from the private sector; because the great majority of
the companies might not even be in existence?
(Mr Bowker) Of the 25 franchise companies, they are
actually owned by ten groups; and so, certainly, it is our view,
of the major players that are in that market, even if we reduced
it by a small number, there is still going to be significant appetite
and opportunity for the major players that are in the market,
and that is before we look at the possibility of new entrants,
and there are a number that are interested in entering this market.
Chairman
130. But have you been given any indication
by those large companies that they would take over what they would
see as failing franchises?
(Mr Bowker) There have been already some indications
that, the Greater Anglia franchise, which we are looking at, which
would combine, for example, the Great Eastern and the current
Anglia businesses, yes, there is a lot of appetite to be involved
in that new business. And indications are that operators form
the view that this is actually a good move, rationalisation and
simplification are a good move, in terms of creating a better-performing
railway.
Mr Donohoe
131. Over the 10 Year Plan, there is something
like, what, £54 billion that you have estimated will come
in from the private sector; is that mainly from the TOCs? What
are you talking about, of private investment coming into the process
through whatever the successor to Railtrack is?
(Mr Bowker) In answer to the first part of that, no,
I do not think it will come mainly from the TOCs. A significant
amount of it, for example, will come from rolling-stock leasing
companies, who have actually already demonstrated their appetite
and willingness to invest in that particular market, so there
will be a significant part from them. Or we think there will be
a significant amount of money from institutional investors and
other private sector investors keen to be involved in infrastructure
projects. So our view is that it will be quite a mix.
132. Why did you not put that down?
(Mr Bowker) One of the reasons why; we did mention
the split-out between rolling-stock and infrastructure, but I
am very concerned about being too detailed and specific about
what the breakdown is and, indeed, the terms upon which we have
assumed we will get the investment from the private sector. The
reason for that is, I believe, hopefully, fairly straightforward,
that this is a market, it is a competition, and I think it is
important that the SRA, in leading these projects, secures the
best possible terms from the private sector for the investment
we are trying to secure from them; and, at this stage, I do not
want to tell them what we have assumed, prior to having the competition.
133. Are you confident that you will get the
money from the public sector?
(Mr Bowker) I am absolutely confident that the Government
has said that this Plan is funded and committed to £33.5
billion.
Dr Pugh
134. Half the London Train Operating Companies
have failed on overcrowding standards; by 2010, do you think this
problem will be totally solved?
(Mr Bowker) I think it will be, under these schemes
that we have in the Plan, the majority of it will be addressed;
and, to those that perhaps we have not finally resolved the issue,
there will be plans that are being developed now to look at the
ways we could actually do that. But major capacity schemes for
London and the South East are included in the Plan, so Thameslink
2000, for example, the outputs that have been committed with South
West Trains and South Central, those are all committed to and
will be addressed in this. So, I think, by and large, we will
have made major strides towards resolving the capacity issues,
in terms of overcrowding.
135. (In terms of ?) standards of overcrowding
and measure of overcrowding?
(Mr Bowker) I think it would be wrong to say that
we would never look at any of the parameters that we use; but
the assumptions in this Plan are that, the overcrowding, the standards
that we have used are the ones that we use currently.
136. Can I invite you to comment on Connex's
suggestion to remove toilets, and seats?
(Mr Bowker) Connex have put forward possible ideas
for their very short, inner suburban, metro services, where some
of the journeys are considerably shorter than perhaps when people
travel on buses and in cars, and we are looking at those in the
context of the wider proposal that they are making to us.
137. Finally, a renaissance in the railways
requires a good deal of engineering skill, and institutions like
the Institution of Civil Engineers have said that that skill base
is not really out there; is that an anxiety to you, as you try
to deliver the 10 Year Plan?
(Mr Bowker) It is an anxiety, in the sense, certainly
we recognise that there is an issue, and, actually, the skills
issues are quite specific and localised. There is an issue around
signalling resource, for example, and it is primarily in the design
and also in the commissioning sector of that market. There are
concerns around other aspects, or the specific engineering branches.
What we are doing is working with the Railtrack resourcing team;
there is a huge amount of actually very effective work being done
with them to make sure we have got proper strategies and plans
in place for resourcing. So it needs managing and it needs monitoring,
but we certainly believe that it is deliverable, as long as it
is properly managed.
Mr Stevenson
138. Can I just clarify a point, Mr Bowker.
In your Strategic Plan, the decision to postpone the West Midlands
Capacity situation beyond 2010, is that phase two of the West
Coast Main Line?
(Mr Bowker) They are not the same thing.
139. Can you tell me what is going to happen
then to the phase two of the West Coast Main Line?
(Mr Bowker) There are discussions under way at the
moment between all the parties involved, looking at what is feasible
and deliverable under that project.
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