Examination of Witnesses (Questions 40-59)
DFT, ATOC, NETWORK
RAIL, ORR AND
SRA
12 OCTOBER 2005
Q40 Jon Trickett: If that was to take
place late in the franchise because enhancements take place over
a number of years, the shortness of time left for the franchise
operates as a perverse incentive against development towards the
end of the franchise. Can I ask if you reflect on it?
Dr Mitchell: First of all, a franchisee
has an obligation to return the stations in the same condition
as they found them. In other words, the dilapidations.
Q41 Jon Trickett: I am asking about
enhancements.
Dr Mitchell: In terms of certain
enhancements, these can be designated as franchise assets and
carried forward but we would expect that the franchisee would
look to make improvements in such a way as to gain extra passengers,
as a commercial incentive in some stations. It has to be recognised
though that in some stations that commercial incentive will not
exist.
Q42 Jon Trickett: If the enhancement
has a 20 or 25 year life and the franchise only has two or three
years to run, the fact of the matter is that it is unlikely to
take place, is it not?
Dr Mitchell: There is a small
fund of £50 million a year which is available for Network
Rail to enhance stations, so there is a means of plugging this
to some extent. It is not in itself an argument for long franchises.
Q43 Jon Trickett: It is an argument
for restructuring the way in which things are financed though.
In the case of South Anston Station and Featherstone Station in
my constituency, they are in a filthy and disgraceful condition.
The fact of the matter is that the franchisee, as far as I know,
has made no provision—nor has anybody else—to carry
out the necessary enhancements. They have not even been able to
maintain standards. Can I ask you about car parking because the
objective of all of this is to get more people off the road, I
guess. How do enhancements to car parking take place? How are
they financed?
Dr Mitchell: These are for individual
train operators to decide upon. It is up to them to make the commercial
decision where car parking should be provided. There is also a
provision that local authorities may well contribute towards that.
Q44 Jon Trickett: The Department
must have a view that it needs to increase the number of car parking
facilities, particularly at small, rural stations, and to make
them more secure. There do not seem to be any financial arrangements
which allow that to take place.
Dr Mitchell: There is the safer
parking scheme and we are looking at identifying the 100 highest
crime car parks at stations on the rail network with a view to
negotiating improvements so that they can meet the standards of
the safer parking scheme. In terms of car park provision, there
is no provision within the franchise agreement for the franchisee
to provide additional car parking at stations but it is in the
interests of the franchisee to do so.
Q45 Jon Trickett: At Fitzwilliam
Station in my constituency nobody, almost, in their right mind
would leave a car there because it is so unsafe, notwithstanding
the fact that we are trying to get CCTV and all the rest of it.
It seems to me that we need to get people out of their cars. The
villages I represent are being clogged up, similar to the nation
as a whole, and without car parking we are not going to get intermodal
shifts, which are required. In Hemsworth, which is the main town
in my constituency, there is no station although there is a Station
Road. It would be nice to have a station to complete the facility.
There does not seem to be any financial provision for new stations
in areas like that. How are we ever going to get more people in
Hemsworth to use the train if there is no station and there seems
to be no financial provision? What are you doing about that?
Dr Mitchell: It is a question
of value for money. There are many proposals for new stations
which we see, which the franchisees see and which Network Rail
see. These are all evaluated on the basis of which offer the best
value for money.
Q46 Helen Goodman: Mr Muir, I wonder
if I could draw your attention to paragraph 4.27 on page 44 which
says that in response to the NAO survey 16 train operating companies
said that the short length of their franchise term discouraged
them from investing in stations. Would you like to comment?
Mr Muir: Yes. A short franchise
does to a degree discourage but it certainly does not prevent.
The discouragement is merely that to organise an investment in
a station is a lot of management effort and if you only have 18
months to go maybe you will not put the management effort in,
but it does not prevent it happening. An example is that South
West Trains only a few weeks ago announced the conclusion of £300,000
investment in Basingstoke Station, even though their franchise
ends in March. The reason they are able to do that is that they
have agreed with the SRA that that will be what is called a primary
franchise asset. That is, at the end of their franchise at the
end of March, the book value of that franchise gets handed over
to the next one.
Q47 Helen Goodman: You are saying
that some of the time it is a real priority and some of the time
it is not?
Mr Muir: Correct.
Q48 Helen Goodman: Mr Newton, would you
comment on that? Would you comment on why a system has been set
up which does not provide incentives across the board for train
operating companies?
Mr Newton: The designated franchise
asset process was in the original franchise agreements in 1995.
That was a fundamental recognition of the long term nature of
a lot of railway assets. It gave the existing franchisee the comfort
that by investing in a longer life frame asset, at the end of
the franchise, they would get the value for that. Clearly, it
is back to this value for money issue. A franchisee has to come
to the Authority and request designation. If the Authority does
not believe that the investment in the asset is value for money,
it will not agree to designation. There are a number of other
factors that tend to operate in this. There is an issue about
management effort. The other thing against that is that most of
the franchisees have an aspiration to win back the franchise,
be successful in competition and it is therefore in their interests
to demonstrate that they have a continuing commitment and they
do not allow the franchise to decay towards the end.
Q49 Helen Goodman: Would you say
that for the train operating company the incentive to have this
recognised on the final balance sheet operates better in theory
than in practice?
Mr Newton: Where the investment
is value for money for the taxpayer, I think it operates effectively.
Q50 Helen Goodman: We have already
heard that in a large number of cases it is not an effective incentive.
Mr Newton: The example George
uses is the management effort. Certainly towards the end of the
franchise if the management are distracted by the competition,
that is possible although a legitimate project management effort
ought to figure in the cost line of any business case which justifies
value for money.
Q51 Helen Goodman: What would you
say was the payback period for investment in a railway station?
Mr Newton: It varies, depending
on the nature. If you are looking at high technology ticket machines,
the asset life has changed dramatically and, with the technological
development, you are probably looking at three or four years.
If you are looking at something quite structural, you are probably
looking at 10 years but that is really a stab in the dark. The
important thing is that the franchise asset designation is an
effective device to encourage sound value for money investment
in assets.
The Committee suspended from 4.01pm to 4.14pm
for a division in the House Q52 Mr Bacon: There
are so many of you here with responsibility, five of you, and
you all seem to have something to say, otherwise you would not
be here. It did strike me that one of the themes of this Report
is that there does not seem to be any overall direction or control
of strategy for improving stations and that was somehow reflected
in the fact that there are so many of you here today. Would you
like to comment on that?
Dr Mitchell: Yes. The Department
for Transport is preparing a high level output statement for railway
policy going forward, particularly for the period 2009 to 2014,
with probably a more general look 10 years beyond that. Alongside
that we are preparing a station strategy to address the very issue
you have referred to.
Q53 Mr Bacon: Could I ask about paragraph
3.8 on page 28 which refers to the fact that increasing numbers
of stations provide real time information on the progress of trains
as they move along the tracks. Presumably this is the equivalent
of sat-nav in reverse. It beams the position of the train to a
central server which puts it out to the stations?
Dr Mitchell: It has the same effect,
yes.
Q54 Mr Bacon: Why is it only in some?
Might it not be relatively easy to make sure that it is in all
of them?
Dr Mitchell: It is a question
of prioritisation of funds. In an ideal situation I would agree
with you.
Q55 Mr Bacon: How much does it cost
to do in each station?
Dr Mitchell: I would have to refer
to Network Rail.
Q56 Mr Bacon: Could you send us a
note?
Dr Mitchell: It is not a huge
cost.[5]
Q57 Mr Bacon: I would have thought not.
Relative to the overall cost of the train, a mini reverse sat-nav
would be a relatively small cost, just like sat-nav in a car is
a relatively small cost. Presumably it is electronic information
that then has to be collated and put out on monitors so somebody
can read it?
Dr Mitchell: Mr Armitt would be
better placed to give an answer to this possibly than I am but
a lot of the cost is inevitably to do with cabling and installation
of the equipment. It is not directly comparable to a sat-nav in
a car. It is a bit more extravagant than that.
Q58 Mr Bacon: This may be a question
for Mr Muir. The Report refers on page 30 to the fact that at
39 of the 60 medium sized and small stations visited by the NAO
had a public address system but at 21 of those it was not being
used to announce train departures or arrivals. Why are train operating
companies not using the infrastructure that is already there to
give basic information to passengers?
Mr Muir: There are some reasons
why PA systems are not used which I will explain but that high
number does surprise me and I would like to know why it is so
high. The reasons why PA systems might exist but not be used are,
for example, at some small stations the PA announcements might
be made by the person in the booking office. Very often, he would
be selling tickets and would not be announcing the trains. He
has to make a judgement as the morning goes on. Does he announce
the train or does he continue selling tickets? There are other
reasons why they might not be used. For example, they might be
broken. That is a bad reason but in some cases that might be the
case, or there might be long line PA systems whereby a whole number
of stations are all connected up to the one line and at these
stations the announcements are not well set up now to make specific
announcements for each station and they therefore tend to be used
for more blanket announcements like security announcements.
Q59 Mr Bacon: With one person sitting
in one place, doing it all, that would not be appropriate?
Mr Muir: That is right.
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