Examination of Witnesses (Questions 300
WEDNESDAY 26 APRIL 2006
Q300 Joan Walley: What I am trying
to get at is, are you saying that is happening or that it is not
Mr Lyons: There are no hard facts
to transmit at this point. We have not really got to any stage
yet in road pricing at which the railway industry has had to get
Q301 Joan Walley: The point I am
making is that if the rail industry is not involved in the road
pricing argument, then it is going to be an add-on at the end,
is it not? It should actually be shaping the shape of their future
policy at this planning stage?
Mr Lyons: We, of course, have
been consulted. Network Rail and others have played a part in
the consultation process, but I would stress again that until
we actually get to firm decisionsand I do not think it
is a case of add-on because the railway industry would be in the
position of saying, "Look, if this is the scheme proposed,
this is what our response is." I do not think you can do
it the other way round. I do not think the rail industry can go
and say, "Look, we ought to build all these railways because
we think road pricing is going to come on. I think we have got
to do it from what we think the future demand pattern is, and
then the rail industry can respond to it.
Q302 Mr Hurd: Can bring you back
to your earlier comments about new housing. As you are well aware,
a number of new housing growth areas are being planned. Are they
being planned with adequate rail links and do you have any comment
on the degree to which the Office of the Deputy Prime Minister
and the Department for Transport are working together?
Mr Lyons: There is an onset of
projects, of course, and it is very interesting to look at Ashford,
for instance, where there is very substantial rail provision and
where it looks as though Ashford, certainly from a rail infrastructure
point of view, is able to cope with the sort of growth of 30,000
plus houses in the next 10 or 15 years. There must be greater
doubts on some of the other schemes such as Cambridgeshire. We
can see them. Clearly rail is the solution to successful transport
infrastructures. You only have to look at Milton Keynes and Basingstoke,
for instance, and Basildon, which are earlier examples where rail
has solved a lot of problems. Transport for London certainly has
got some very clear views of how it has got to help improve the
Lea Valley corridor (as it is called) which gets you between Cambridgeshire
and the City. I think it would have been better if some of the
Sustainable Community plans had been more factored into transport
plans at an earlier stage, but like a lot of these things, so
much in Britain in planning terms happens organically. Something
is suggested and then a response comes up to see if it actually
can be sustained. I think we are in a reasonable debate. I do
think, though, that the number of places where we have capacity
constraints on the network are now getting so great that some
sort of ordering of all this would be quit helpful and this is
where we are looking forward to a strategy from the Government
looking out over thirty years which will give the Government's
view of what it wants the rail industry to be doing for the future
and then we can see how we are going to make it work.
Mrs Shaw: The building of transport
as an afterthought is a recipe for an expensive project and a
less than optimal one. If you consider how people are going to
move in and out and to the next big city early in the process,
you can much more often hit a solution, probably about the same
as you would have done afterwards but at a much lower cost and
in a much more ordered fashion. The development then becomes sympathetic
to the town, the location, or whatever it is, but also to the
countryside which surrounds it.
Q303 Colin Challen: Are there any
schemes between train operators and employers to incentivise off-peak
Mrs Shaw: Not specifically employers
themselves. Operators like South West Trains have instigated schemes
such as Megatrain, which allows you to book tickets at a significantly
reduced rate off peak. There is a range of fares which encourages
people to travel as far as possible outside of the peaks, which
exist from the long-distance operators and from the shorter and
the urban operators. I am not aware of any schemes per se between
employers and the train operating companies.
Mr Lyons: Many firms offer very
valuable family concession schemes and sometimes free travel to
use trains and often they are limited to off-peak, you cannot
use them in peak hours.
Mrs Shaw: Where there is some
cooperation, I should add, is that the London-based operators
work with various attractions in the capital, London Zoo, the
theatres, and so on, to encourage leisure visits as far as possible
outside of peak hours by offering discounted admission prices,
and so on. There are a number of temporary or long-term schemes
which exist like that.
Q304 Colin Challen: Is this something
which could be developed? I have a constituency which is near
the centre of Leeds with commuter train lines which go into Leeds.
By the time a train passes through my constituency it is always
full and if people could be encouraged to go an hour later then
they could benefit possibly from concessionary fares. Large local
employers should be working with yourselves, and vice versa, because
it does not cost anything, there is no infrastructure. So is that
something which you think could be taken up?
Mrs Shaw: I would say there is
certainly some scope.
Q305 Colin Challen: Talking about
infrastructure, how important are new high-speed rail links to
reducing our carbon emissions?
Mr Lyons: I think I have got an
even bigger issue. We have seen across Western Europe some 2,000
miles of high-speed line has been built in the last 20 years or
so. Another 1,000 is actually effectively under construction or
at the very advanced stages of planning and all we have managed
to build is about 70 miles of that total. We have seen huge benefits
in economic terms and social terms and in environmental terms
in comparison with short-haul air with the introduction of these
lines and I think it is a key issue which we in Britain must address.
Even if we do not want to go ahead with high-speed lines, we ought
to understand why we do not and what the alternatives are, and
at this stage I do not believe the alternatives are at all palatable,
which is that it means increasing short-haul air operation in
this country to levels which I think would become completely unsustainable
or just building more and more motorways or allowing the present
motorways to run over capacity. So high speed lines meet, I think,
the full sustainable development triple bottom line, that you
build them and you do see significant advantages to the country.
Mrs Shaw: Given the size of this
country, we really ought not to have short-haul airlines,
Q306 Colin Challen: Would you prefer
to see domestic flights taxed more heavily so that that would
encourage the modal shift which everybody wants?
Mr Lyons: Of course, I think railways
should offer such a competitive product that you would not want
to travel by short-haul air, and actually that is already happening.
Places where short-haul air flourishes is because the railways
were not, quite frankly, delivering the service. A good example
was the link London to Manchester and with the West Coast mainline
and the chaos which was, quite frankly, evident on the line in
the last two or three years. We have now seen that the line has
been restored back to a reasonable service and a rapid shift back
from short-haul air is already occurring. It has gone up almost
60% as the market has turned around. I always think modes of transport
should present themselves as attractive and good value and not
worry about trying to pick off the others, because I think that
is not intrinsically, in my view, the way any business should
go. It should be confident in itself.
Mrs Shaw: Yes. The Eurostar is
another beautiful example. There is no London to Brussels air
market any more, and similarly London to Paris, which is a little
further and therefore takes further time on the train, is a very
much smaller air market than it ever was before Eurostar came
Q307 Colin Challen: Could we just
have a quick look at the demise of Motorail? Thirty years ago,
you could go into most corners of the UK taking your car with
you on the train. The last service, I think, was to Penzance last
year which was closed. What was the cause of that demise?
Mr Lyons: I think, regrettably,
it was the expansion of a motorway and dual trunk road network
which significantly shrunk Britain from the road point of view.
The heyday of Motorail was when it took almost a day's journey
to go from London to Penzance, if not longer; it could be a two
day one. The road system has been significantly improved down
to the South West. It meant that that market largely disappeared.
I do not think in British terms the Motorail concept looks like
a particularly commercially operational place for railways to
go. There is much more interest, I think, in exploiting the Intercity
market, also serving out to airports as well, rather than looking
at just trying to substitute car mileage in a Motorail format.
To be honest, I do not see it coming back in any great form.
Colin Challen: It had something to do
with the demise of British Leyland over the same period, obviously.
Cars are more reliable now!
Q308 Chairman: Can I just take you
back for a second to the comparison between flying and the trains,
because you say you would like the railways to compete effectively,
but you did say offering good value. Is it not the case that if
you book a very small time in advance you can fly on what is effectively
an ordinary scheduled flight from London to Scotland at a fraction
of the full price and that therefore it is very hard for railways
at the present to compete because you can get a £20, £30
flight from London to Glasgow or London to Edinburgh, and therefore
some soft of taxation on domestic flying would surely be part
of the process of enabling you to offer better value?
Mrs Shaw: If a realistic understanding
of what goes into the costs structure of an air fare was more
publicly known I think it would raise the consciousness that there
is no level playing field between road and rail, so the price
structure which an airline can operate is inevitably lower just
on the basis of costs. Equally, having said that, I could go to
the GNER website this afternoon and book you a fare between London
and Edinburgh for £25 return by doing the same as going onto
the British Airways website and booking in advance. Travelling
on an off-peak service I could get you that fare.
Mr Lyons: Chairman, clearly the
railways are very interesting because of course everybody who
uses short-haul air finds using the internet is the absolute way
to buy tickets. They are very clear websites with very sophisticated
yield management systems, but I think with rail people have probably
a more varied view of how they are going to get and access a ticket
for the train and it is clear we are going to have to move to
systems, particularly with Intercity travel, which look more like
the short-haul air ones because I think they are the ones where
we can sell attractive fares to passengers. That is already happening.
Mrs Shaw: Yes, the improvements
in the IT systems, the National Rail Enquiries timetable service
and the ticket booking services which the train operators now
use has led to a significant increase in business over the internet,
with people collecting tickets when they appear at the station
rather than turning up at a ticket office and waiting in line
to buy a ticket. It has enabled the railways to expand on their
off-peak business particularly. But we also have to deal with
the situation where people will want to buy a season ticket or
want to travel at particular hours; the services which go with
season ticket holders have also increased from the train operators
over the last few years to the point where they are offering their
season ticket holders a better service, not just in terms of the
quality of the trains but also the advantages which go with being
a season ticket holder, and that has increased the volume of season
ticket sales too.
Q309 David Howarth: I cannot say
I have noticed on the 6.15 to Cambridge, but never mind!
Mr Lyons: It is one of the most
overcrowded bits of the network
Q310 David Howarth: It is. You have
to turn up the day before to get a seat! Can we go briefly back
to freight? Could I just ask you first whether your comments about
the Department's priorities and putting other factors well above
climate change also applied to the attitude towards freight? There
are enormous advantages of shifting freight from road to rail.
Is the same low priority from the Department apparent in that
area as well?
Mr Lyons: I would not say it is
a low priority as such. The problem has been the issue of capacity.
That is the first thing. The network in so many areas is so relatively
heavily used that putting additional capacity in and guaranteeing
the service which a modern supply chain wantsand that is
absolutely critical with things like containers; you cannot let
it take two days when it will go by road in 12 hoursso
at present, to be honest, I think the Department has largely said
to the freight side of rail, "Here is a number of ways we
can facilitate the way you can grow the business, but in practice
you are going to be constrained by the amount of capacity on the
network." There are clearly ways we can squeeze more out
of it and Network Rail is working very closely with the freight
operators and with the passenger operators to see what else it
can get onto the network, but it does not alter the basic problem
that any really significant shift is going to require some new
capacity. You cannot squeeze much more on, and it is no good going
to people and saying to them, "Yes, we can guarantee you
two or three freight deliveries a day," when basically you
cannot and I think very often it has just been the constraints
of the infrastructure which has stopped growth. There is clearly
much more demand than there is traffic, but even then, of course,
traffic on the railways, particularly with things such as aggregates
and minerals, has soared. It has never been at these levels for
20, 30 years, but you can see it is producing some very significant
strains on the network to maintain those levels of service.
Q311 David Howarth: One of the suggestions
which has been made to us by Freight on Rail is to do with land
and planning, so one possible way of making sure there is more
capacity in the future is for there to be a national strategy
about rail freight and for that to be built into regional and
local planning decisions. Do you think that would be a good idea,
and if so, what needs to be in the strategy?
Mr Lyons: I think it would be
a good idea if all rail expansion, including things such as high-speed
alignment should get in. I always say, look how the motorway system
grew up. It was put in place by planners in the early 1950s and
we suddenly found by 1970 we had got 1,000 miles of motorway because
it had been in the planning process. Because we have very little
of this in national and regional planning structures at present
means that a lot of stuff goes by default. What should be in it?
Clearly there are two absolute priorities where rail freight is
right at the head of the field. One is that it is the obvious
way to move heavy, bulky, low-value traffic such as aggregates
and minerals. It is crazy to even think about road for them, and
making sure that that is facilitated must be a priority. The second
one is moving containers from ports to inland ports or sites for
it to be cross-loaded. Clearly that must also feature because
that system could make our ports operate so much more efficiently
and also save a considerable amount of road journeys across Britain.
So there are those two elements. Then you have the remaining areas
where other supply chain activities can be built in, and I think
you just have to look at them on a case by case basis. A large
industrial engineering complex may have significant advantage
if it is rail served but at present cannot be because it is too
far away from a rail head, and we ought to be looking at those,
but I think those are ones where there is no hard and dry rule
for this and you need to look at it on a case by case basis.
Q312 David Howarth: So what are the
main factors on the demand side when companies are deciding whether
to use road or rail for their freight? Obviously cost is a big
factor, but you are also talking about other supply chain problems.
What goes through their heads?
Mr Lyons: Cost and reliability
are the two drivers for any supply chain operator. Is the supply
chain going to do what it says on the packet? It is going to deliver
in so many hours, days, whatever it is? Is it going to deliver
in the right quality? Then finally, cost. Clearly we have got
to look particularly at certainly the more sophisticated supply
chain interaction between rail, road, ports, airports, to make
sure we have the slickest process. If you get transfer costs wrong
between modes, you can add very significantly to the cost and
time of the business. If you get it designed right, you can bring
costs down very significantly. That is where all this excitement
about piggy-back trailers and things on rail comes up. But I would
stress that particularly when you get to supply chain solutions
there is literally a huge range possible and to have a single
set of parameters I think would be wrong. You have got to work
with your customers and you have got to work inter-modally. You
have got to see what roads, ports and air are going to be doing
as well to produce that integrated supply chain that businesses
Q313 David Howarth: What about the
soft effect, the public relations advantages for companies of
being seen to operate in an environmentally friendly way? Do you
think that is being pushed enough, that companies could use the
fact that they are using rail freight as something to attract
Mr Lyons: I think it is becoming
evident already. It is clear that if you have got a 10% factor
probably on road freightagain you have got to compare loads,
but you are talking of a 15:1 advantage in emissions, and I think
under social responsibility reporting, which companies now do,
they are becoming very keen on this. This is a story they want
to tell and they are looking for options. I think too often they
are thwarted. They do come to the railway industry and find we
just have not got the capacity to help them. Again, I think we
should be looking at this because it should be part of the national
sustainable development strategy. Incidentally, I would welcome
a national freight supply chain strategy. I think it would be
Q314 David Howarth: One final point.
You mentioned the fall in financial support for freight. I think
the figures are that in 2001-02 £61.1 million came directly
from Government and that fell to £28.5 million in 2004-05
and that is set to decline further. Could you just set out for
us why you think that is happening, why the Government is doing
that, and what the effects of it are?
Mr Lyons: I cannot exactly quote
figures, I will have to check them, but there has been a decline.
I think the major area has been the Freight Facilities Grant,
which was to pay for expansion of the infrastructure to cope with
it. It was cut at short notice by the SRA when it ran out of money
some time ago and it is being reinstated. I think the Government
support is going up, but I do think the problemand we come
back to this issueis that there is almost a limit of what
can be taken out because the network cannot take that expansion
which actually many of our customers would like to see.
Q315 Mr Hurd: Could I ask you about
a push towards driving greater freight by rail, how it goes with
the grain of trends in the management of stock and distribution
and modern business practice? I am thinking here of the culture
of just in time and the fragmentation of distribution. Why go
through all the bother of freight rail when basically you can
use British motorways as your warehousing capacity, which other
people pay for?
Mr Lyons: The first reality is
that very few things are manufactured in Britain which are manufactured
from things entirely sourced in Britain. There is a huge amount
of component exchange running with other countries, both in the
European Union and further afield, and we have seen this huge
explosion in container traffic, for instance, which has been mirrored
by major expansion at Felixstowe, Thames Haven, and so on and
so forth. Yes, I fully agree, the rail is not always competitive
unless you have got some very, very sophisticated rail interaction
with your production system, probably road looks pretty good in
such circumstances. But the further you get, if you are moving
something from, say, Milan to Middlesbrough and you can do it
fast by rail, it makes a lot more sense than moving it by air
cargo or by road, and even the operators would agree with this.
They do not want to man a truck over these huge distances because
that costs them real money. It is much cheaper to put it on a
train and let the train take the strain for those long journeys.
At the far end, you then go into modal transfer for the short-haul.
Mrs Shaw: There is some scope
there. There has been some willingness from supermarket operators,
for example, to operate from their bases in the south of Scotland,
Glasgow in particular, to take pre-packaged truck loads of food,
produce, on rail wagons up to the north-east of Scotland, to Inverness
in particular, rather than using the main trunk routes through
the Highlands. So it is not that the unwillingness is there, it
is just that there is a number of other constraints which perhaps
collectively, if one were to start knocking them out, one would
find that this would happen more.
Q316 Chairman: On a different dimension,
one of the things which always mystifies me is that large numbers
of lorries arrive on a train through the Channel Tunnel to Folkestone
and then get off onto some of the most crowded sections of motorway
to go around London and head for the Midlands and the North. On
the face of it, that is ridiculous, but the scheme to try and
promote a privately funded piggy-back railway beyond this crowded
area of the South East has not worked. What has gone wrong there?
Mrs Shaw: Clearly, a scheme like
that can take a very, very long time to develop. Along the line
of route there would be a deal of time to acquire the land, which
has been used for other things, and get the route clearance through.
There is also a great deal of capital investment involved in setting
up a dedicated freight line and I think the consensus at the moment
across Europe is that actually the railway undertakings which
exist do not think that a dedicated network for freight actually
will pay its own way. They would prefer to optimise some routes
more for freight then they do presently for passenger. That is
a more cost-effective way of managing it than a dedicated freight
network as such. I think there were some difficulties specifically
within that project which began to surface towards the latter
stages when it was coming up towards a Parliamentary bill stage.
It is not inconceivable that something like that could be resurrected
with some changes in direction or different sources of financing,
for example, which might enable it to happen, but by way of comment,
when the Channel Tunnel rail link is opened there will be a significant
opportunity to increase the amount of freight which gets on the
rails the other side of the Channel and stays on the rails this
side of the Channel coming up towards London, purely because we
will have a more Continental size loading gauge between the Channel
Tunnel and the east of London, and then potentially further up
if Crossrail gets extended out to the kind of scope we would like
to see. We have a sweet irony in this country that we have the
biggest lorry loading gauge and the smallest railway loading gauge,
and if we were to go about correcting some of that we might claw
back some of the traffic which presently goes on large lorries.
Q317 Mr Caton: Accepting what you
have already said about the relatively low level of carbon emissions
coming from the railways, can we look at whether it is possible
to reduce carbon emissions from our trains? The Climate Change
Programme Review said that: "The Government will consider
how new technologies can improve energy efficiency and reduce
fuel consumption to get even more environmental benefits from
rail." What is the Government doing, apart from doing the
considering which it has told us it is doing?
Mrs Shaw: We fully expect to see
a reflection of that kind of question in the technical strategy
when it comes out. Certainly a move to some new technologies in
the form of hybrid traction shows some promise for reducing emissions,
particularly from diesel trains. The emissions from electric trains
at the point of use are already pretty close to zero. If one were
to increase the mix of renewable power going into the electrical
traction supply, then clearly that would also reduce the emissions
on a more global scale for trains. So we would expect to see some
more concrete comment and planning on either furthering the electrification
network using conventional National Grid connected supplies, or
alternatively exploring things like micro-generation at line side
or at stations to further boost the supply or create a new supply
where there is not one at present on the electrification front.
Q318 Mr Caton: This is a two-part
question. Can you tell us how much is likely to be achieved by
2010, which is the focus of the Climate Change Programme, but
also from what you have just said, Mrs Shaw, it sounds like there
is a debate going on about what is the best way forward? The clear
options seem to be going head-on for electrification, or secondly
looking for these new technologies you mentioned, or presumably
something in between. Can you give us an idea of the pros and
cons of the different approaches?
Mrs Shaw: To take your first question,
by 2010, that is three and a half years away, in realistic procurement
terms I would not expect to see any significant move to incorporate
new technology on a wide scale on trains. I would expect by then
we might see some applications for hybrid locomotives, particularly
where they have fewer constraints such as shunting locomotives,
for example. I would not expect to see them on multiple unit-type
trains, or even regular locomotive or high-speed type trains simply
because there is not the scale of power unit available that would
work in a high-speed or freight train that we know we could actually
put into something that would fit in our size train. We have looked
a lot at some of the American technologies that are available.
Even the American railroads, as big as they are, they are only
tinkering with these hybrid technologies at the moment and they
have a lot bigger space in their locomotives to put all the bits
and pieces inside the locomotive that one needs.
Mr Lyons: There are two issues
by 2010 which I think you can see very significant advances on.
One is the eventual switch to low sulphur fuels on the railway.
We have to meet this target actually by 2009 with the new Non-Road
Mobile Machinery standards. Secondly, of course, the move to brake
regeneration on electric trains, which has already started on
the West Coast mainline and on the East Anglian lines, could well
spread to the DC line south of the Thames, which again would bring
significant power savings. I think the high-speed train debate,
the HST2 specification, which is actually calling for a range
of power technologies for the train set which can be built which
can either switch currently from diesel to electric, or some sort
of hybrid, will not necessarily produce anything more than a prototype
but it will at least begin to focus the debate on where railway
power goes in Britain over the next 20 to 30 years.
Q319 Mr Caton: I think you, Mr Lyons,
said in your submission that the Department has not yet addressed
Mr Lyons: Yes. In fact we did
draft this before the Secretary of State made his announcement
about the technical strategy and, although we probably all unofficially
knew a technical strategy was beginning to emerge, I think, to
be blunt, we were trying to put some pressure on this because
these questions are very important for the industry. We are pleased
to see in the specifications for the HST these big technical questions
being asked and we hope the technical strategy puts this in context.
Of course, the other remaining issue we have not discussed is
where does hydrogen power fit into this mix? Does it have a future
or not? In some ways it looks very attractive for rail, in others
you could argue that electrification provides many of the advantages
that hydrogen will give for other modes of transport, but again
there needs to be a big debate about this and it needs to be set
in the context of a national power debate as well. Railways even
today use something like one to two% of the total grid output.
If you go on expanding the railways, is the National Grid going
to be up to it, or are there going to be Louise's micro-generation
type solutions? It is not just the railway industry here. We have
got a set of demands, but we need to see what the national context
is and very often when we are planning for the future we find
we have not got doors we can open because such issues have not
really been fully explored.
29 Footnote inserted by witness 10.05.06: This occurs
in other areas/TOC franchises. Back
Footnote inserted by witness 10.05.06: For domestic journeys. Back