Examination of Witnesses (Question 80-99)
MR CHRIS
AUSTIN, MR
PAUL FURZE-WADDOCK,
MR JONATHAN
METCALFE, MR
TOM SMITH,
MR DAVID
FRANKS AND
MR ADRIAN
LYONS
5 JULY 2006
Q80 Chairman: I see. So you do not
think this exists?
Mr Franks: There is a provision
within our agreement that enables the DfT at its discretion to
actually provide some support but that support has not been forthcoming.
Q81 Chairman: Let us try a little
game, shall we? Mr Lyons, have you had any compensation from the
Department for industrial action?
Mr Lyons: No, we have not. I do
not operate a train operating company.
Q82 Chairman: Then we will go down
the line. Mr Franks?
Mr Franks: No.
Q83 Chairman: Mr Smith?
Mr Smith: No.
Q84 Chairman: Mr Metcalfe?
Mr Metcalfe: No.
Q85 Chairman: Mr Furze-Waddock?
Mr Furze-Waddock: No.
Q86 Chairman: I know Mr Austin has
not had any compensation.
Mr Austin: No.
Q87 Chairman: Well, this is interesting.
We must ask around more. Have you taken into consideration the
possibility of open-access operators in your pricing? We did ask
you that before but that was in terms of space. Do you add that
in?
Mr Franks: You certainly have
to take a view and price it.
Q88 Graham Stringer: I would just
like to know whether you think that PTEs should play a greater
role in franchise design and specification.
Mr Franks: We work with Centro
PTE. I think they add value. It is a DfT decision that they should
not be party to future franchise agreements.
Q89 Graham Stringer: This is the
2005 Act?
Mr Franks: Yes. There is still
a discretionary element to allow a PTE to be a co-signatory to
an agreement in the future if they choose to. Our relationships
with Centro PTE have proven to be very beneficial, we work together
very, very well.
Q90 Graham Stringer: They have not
changed since the 2005 Act?
Mr Franks: We have entered into
a new franchise agreement to enable the new franchise mapping
to take place and Centro PTE remained as a co-signatory.
Q91 Graham Stringer: So your relationship
has not changed?
Mr Franks: No.
Q92 Graham Stringer: What about the
other companies?
Mr Smith: We have no relationship
with PTEs because of the location of our franchises.
Mr Metcalfe: The same.
Mr Furze-Waddock: We have a very
strong relationship with Transport for Scotland through the ScotRail
franchise, which works extremely well. We have relationships with
several of the PTEs in the north-west and north-east through the
TransPennine franchise but the TransPennine franchise obviously
is not the predominant operator, that would be Northern.
Q93 Graham Stringer: Has your relationship
changed since the 2005 Act?
Mr Furze-Waddock: Not discernibly,
no. TransPennine is a relatively new franchise anyway.
Mr Franks: I guess the next opportunity
to see if there is any change in the relationship will be when
the new Midland franchises are let because that is the next time
there will be a potential for a PTE not to be a co-signatory to
an agreement.
Q94 Graham Stringer: The PTEs believe
that the franchises are being drawn up in a way that does not
take into account local needs, that basically they take into account
national priorities and they fit into the national plan but do
not fit into the local transport plans of West Yorkshire, Greater
Manchester or the West Midlands. Do you think that is a fair criticism?
Mr Franks: I have some sympathy
with that view. There is a balance to be had between what is right
for local conurbations like Birmingham and the inter-city type
operation and a balance has to be struck and it is of critical
importance for the Department to make sure it listens to what
the PTE believes is right in the Birmingham situation for Birmingham.
Q95 Graham Stringer: Is that your
experience? Would you agree with that?
Mr Furze-Waddock: Yes, I would,
very much so. When there has been a consultation process and the
Department has to make some deliberations and make some decisions
to arbitrate on some of the priorities between local and inter-city
it is very important that they are then involved in the process
of feeding that back to the stakeholders that they have consulted
with to avoid any confusion over what the resultant timetable
looks like.
Q96 Graham Stringer: Do you think
that there will be a real threat to increased capacity in those
urban areas in the rail system because the PTEs are not there?
Mr Franks: I think there is always
a threat to capacity where you try to blend and mix stopping services
with non-stopping services because it eats up capacity and that
is the dilemma. If you are in the travel-to-work area of Birmingham,
say, you are going to want to look after the needs of the local
population, and you will have people passing through that part
of the railway who are not resident or local people. That is always
a tension and always will be a tension. I think the dilemma will
be how you resolve conflicting needs.
Q97 Graham Stringer: You are rephrasing
my question. What I really want to know is whether it has rebalanced
that conflict. The conflict will always be there between people
who want to go through and people who want to go two stops on
the train to go to work in the morning. What I am asking is do
you think that balance will be changed in favour of the inter-rail
journeys compared to the local journeys?
Mr Franks: I guess there is no
lever any more. Ultimately, in the past the PTE would have had
to sign a franchise agreement and they had a lever to force through
some changes and that lever perhaps has gone. It is going to have
to come down to very tough dialogue between the PTEs and DfT in
future to make sure the specification that is agreed, that goes
out to tender, is right.
Q98 Graham Stringer: Can I have one
last question. I have had time to go back to Professor Nash and
get the details out. If I can bring him back from cloud-cuckoo
land for a minute. He says that your costs have gone up by 47%
but your kilometres travelled have only gone up by 6%. That is
an indication of inefficiency, is it not?
Mr Lyons: I am sorry, I have not
seen Professor Nash's submission but I have great admiration for
his work. The figure of a 6% increase in kilometres is not one
I even begin to recognise. The generally accepted figure is total
train mileage has gone up by 20% since privatisation. I think
also Professor Nash is clearly focusing on the very substantial
rise in infrastructure costs. If we look back to the immediate
post-Hatfield period and the time when Railtrack was in administration
they were even higher. At least the trend line is downwards. I
think no-one would accept that the present infrastructure costs
on the railways are at a desirable level. As we made clear in
some of the TOC submissions, the fixed costs of the infrastructure
loom very large in the train operating companies' budgets and
are costs that are arbitrated between the train operating companies
and Network Rail by the regulator and the government.
Q99 Clive Efford: I would like to
go back to the `cap and collar' scheme. We have heard how the
government indemnifies you against loss, but if you exceed your
expected profits does the government also benefit from that?
Mr Franks: It works in reverse.
Mr Furze-Waddock: The reverse
works from day one, so the revenue share is there from day one.
The support only kicks in in year five.
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