Examination of Witnesses (Questions 400
WEDNESDAY 26 JUNE 2002
MP AND MR
400. Minister, it has been reported that Bechtel
have produced a draft report which indicates that the cost of
the West Coast Mainline is now reaching £10 billion. Have
you seen that draft report?
(Mr Spellar) I have not seen that report
yet, although I have seen reports of that report.
401. Is such a draft report in existence, although
you have not seen it yet?
(Mr Spellar) I know that Bechtel have been working
very intensively on this and they are in discussions with obviously
the main actors in this, but I have not as yet seen the report.
402. Have you any knowledge at all, Minister,
of when you may see that report?
(Mr Spellar) I do not think I as yet have a date for
that, but obviously we are hoping to get a report as soon as possible
so that we can then get a clearer view of the options for the
way ahead and the various trade-offs to be struck on that.
403. You might not have seen it, but have you
been told what is in it?
(Mr Spellar) As I have said, I have seen
reports of it.
Chairman: Yes, you did answer that.
404. These reports about the report also indicate
two other things, that Bechtel cannot work out how much the changed
specification of the West Coast Mainline and the modernisation
may cost because of this distinction between renewals and enhancements.
They are not able to do that. Is that your understanding of the
(Mr Spellar) I have not seen that report
yet, but, as I said, we are waiting to get the report from Bechtel,
plus the discussions which have taken place between the actors
405. The options which are being considered
that you refer to, do they include an option of reduced performance
and reduced capacity on the West Coast Mainline?
(Mr Spellar) Well, I think one key area which has
already been discussed is not to proceed through to 140 miles
per hour and looking at the gain in journey time or the cut in
journey time as a result of that against the cost of such a project.
Now, that does have a knock-on effect potentially on the number
of train-sets required particularly on the main route operated
by Virgin and obviously discussions are taking place between the
SRA and Virgin on that.
406. In the light of that situation, what do
you make of the reported comments of Mr Graham Eccles, the Executive
Director (Rail Operations) with Stagecoach Holdings who of course
own 49 per cent of rail at Virgin Trains, who said in the original
report, "The original Virgin business plan is now in complete
tatters. The emerging railways that we can see will operate at
125 miles per hour rather than 140. There will be little or no
opportunity to compete head-on with airlines and the train plan
that was envisaged of franchising has had to be completely redesigned".
Pretty strong stuff.
(Mr Spellar) It certainly was not what the boss of
Virgin, Sir Richard Branson, was saying the other day when he
was standing alongside Brian Souter of Stagecoach where he was
being very positive about developments, but also the much better
working relationship that he has with Railtrack and with the Strategic
Rail Authority under their new management, and was being very
upbeat about the prospects of success for the new Pendolino trains.
407. Finally, clearly the uncertainty about
the upgrade, modernisation, renewal, whatever it may be, of the
West Coast Mainline is in no one's interests and given the timescale
that already this project has taken, are you in any position at
all, Minister, to advise the Committee when you anticipate that
some definitive plan will emerge that actually will be implemented
for the West Coast Mainline?
(Mr Spellar) Well, the SRA are hoping to publish their
proposed West Coast Strategy in the next month or so, but they
are in pretty intensive negotiations with the main companies and
organisations involved in this and there are a whole number of
interests, and indeed in some cases not necessarily with compatible
interests which have to deal with the outcome of this very unsatisfactory
affair, namely the failure of previous Railtrack in any way to
manage, budget for or price the West Coast Mainline.
408. The Ten-Year Plan says that it will boost
the economic competitiveness of all regions, yet the SRA have
confirmed to us today that they do not take regional economic
strategies or regional transport plans into account in making
their decisions. What are you going to do about that?
(Mr Spellar) There are a number of aspects
of the Ten-Year Plan and targets and aspirations in that, including
the increase of 50 per cent in passenger traffic and also 80 per
cent in rail freight.
409. I am asking you a direct question about
the regions. Now, the SRA say that they are not looking at that.
(Mr Spellar) Well, I am actually answering it because
particularly if we are talking about rail freight and the 80 per
cent increase figure for rail freight, that is very much tied
in with the operations across the regions and particularly in
trying to enhance rail freight capacity within the regions of
the country, particularly those main manufacturing regions, and
obviously an enhancement of that rail capacity is a significant
part of economic regeneration in those areas.
410. Are you satisfied then? The SRA tell us
that they do not take this into account, you have given me an
answer to do with freight, but we are concerned about passenger
transport as well, so are you telling us that you are satisfied
that the SRA are saying that they are not taking the regions into
account in making their decisions?
(Mr Spellar) But they are taking into account
411. They said they were not.
(Mr Spellar) No, they are taking into account the
need to increase again the percentage of those travelling by rail
and the regeneration then of many major city centres in the regions
of the country. They are directing themselves to enhancing services,
for example, the improvement in the Crossrail service in Birmingham,
the enhancement of capacity at Leeds, which is precisely to improve
the access of Leeds to London, but also dealing with suburban
rail services and also the enhancements of Piccadilly. All of
these are looking at the changing employment patterns in the regions
of the country and actually providing capacity in order to be
able to enhance that. Equally, the proposals for the Trans-Pennine
Express are for that franchise looking at achieving a faster and,
therefore, also a higher-volume service which will enable transport
between the main towns of the north precisely in order to be able
to enhance the regional competitiveness of the regions.
412. The SRA told us today that they do not
assess the impact of their decisions on the north. They make a
statement that said they did not do any work to substantiate that.
Are you aware of that?
(Mr Spellar) Well, they will obviously be looking
at the work that they undertake with the rail operators in order
to be able to make a comparison between different bidders for
the franchises in order to be able to make an assessment. Of course
Ministers also look at that as well and are very much aware of
the need for regeneration of the regions of the country.
413. Are you saying then that you are satisfied
that SRA's plans as presently constituted will deliver regional
improvements as put forward in regional economic strategies?
(Mr Spellar) I certainly think that and of course
I am always willing to entertain representations where people
may indicate to the contrary, taking into account of course that
we are talking about the mobility of passengers and there are
a number of mechanisms for achieving that in all cities. In some
cases light rail may be more appropriate and I think my recollection
is that the SRA's estimate is that the Manchester Metrolink is
carrying more passengers than the other suburban lines put together
in Manchester, which may be an indication that there is a package
that actually works more effectively within that environment and
also in a number of areas bus priority systems may also meet the
need. So from the point of view of the Department, it is looking
at transport requirement and transport need in areas, not necessarily
just meeting it by one mechanism.
414. Are you going to support light rail in
(Mr Spellar) Light rail in Merseyside, there is an
application in for that and that is being evaluated at the moment
by the Department along with the officials from Mersey Travel.
415. Are you going to propose any changes in
regulated and non-regulated fare agreements?
(Mr Spellar) In which, sorry?
416. Fare agreements, regulated and non-regulated.
(Mr Spellar) In which area?
417. Passenger fares. I think it is the case
that for some fares going from Liverpool to London, they have
been increased to around nearly 80 per cent over the last four
years. Do you feel that is satisfactory?
(Mr Spellar) I think that there is a real difficulty
here because one of the successes of the privatisation of passenger
rail has been a more market-orientated focus of the rail system,
and actually looking at the capacity that rail is carrying and
attempting to fill a greater percentage of that capacity, which
is more analogous to the way in which the airlines operate rather
than the more rigid formula that we had previously.
418. So you go along with this idea that we
should no longer turn up and go, but it should be a service much
more closely aligned to the way the airline industry operates?
(Mr Spellar) What I feel is that there
are advantages and disadvantages to both schemes.
419. I think we are aware of that, Minister.
We are asking you for your opinion.
(Mr Spellar) Well, one of the driving forces behind
the increase in the number of passengers using rail has been the
more effective marketing of the new companies compared with the
old British Rail, and I do not think that that is really deniable.
There is on the other side the high premiums charged for services
which are over-subscribed and, therefore, that market mechanism
operating, and I know that that causes concerns particularly for
business in a number of areas as to whether that is actually achieving
the best balance. It does also of course lead to estimates of
comparisons between fares in the UK and rail fares in other European
countries which do not necessarily capture the full range of fares
which are available in the UK. I do not think we should underestimate
the impact that the much cheaper fares have had in enabling mobility
of people across the country.