Select Committee on Environmental Audit Minutes of Evidence

Examination of Witnesses (Questions 300 - 319)



  Q300  Joan Walley: What I am trying to get at is, are you saying that is happening or that it is not happening sufficiently?

  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 involved.

  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 decisions—and 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 travel patterns?

  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[29] 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[30], frankly.

  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 out.

  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 wants—and that is absolutely critical with things like containers; you cannot let it take two days when it will go by road in 12 hours—so 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 want.

  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 customers?

  Mr Lyons: I think it is becoming evident already. It is clear that if you have got a 10% factor probably on road freight—again 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 extremely useful.

  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 problem—and we come back to this issue—is 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 these questions?

  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

30   Footnote inserted by witness 10.05.06: For domestic journeys. Back

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