Examination of Witnesses (Questions 300-319)
MS MARY
BONAR, MR
ROGER FORD
AND PROFESSOR
CHRIS NASH
12 JULY 2006
Q300 Mr Goodwill: Does anybody else
have a view on that?
Mr Ford: Yes. I would have thought
that the radical approach would be to consider vertical integration
upwards from the rail rather than downwards from the train. As
I say, Network Rail is extremely concerned about the trains that
have been bought since privatisation which are heavy, chuck out
lots more CO2, damage the track and so on. They have produced
a timetable. Perhaps there might be a case for Network Rail acquiring
trains and running a franchise themselves. That would give you
a lot of continuity and it could have break points in it at which
the Government could say, "You are doing a good job or a
bad job", but the train operating companies seem to be getting
a bit lukewarm on vertical integration. They were very keen on
it some time back.
Q301 Chairman: Is that because so
many of them have got what are in effect management contracts?
Ms Bonar: One of the problems
is that the industry by my calculation has been through four restructurings,
including privatisation, since 1994 and during the Rail Review
the operators did make a number of suggestions around vertical
integration and were interested at that stage. At the present
time I think it is unrealistic to expect those organisations to
be welcoming further radical change. If we are going to redesign
something, which I believe and the view of the Institute is that
the present system works and can be made to work, and there are
arguments either way, I would argue that we should spend some
time looking at a number of different models to work out where
the benefits are and where the risks are in those models. We run
a number of different models in this country already. London Underground
is split on the basis that operations only are carried out by
the operator and the provision of the rolling stock and the rail
and the timetable comes from the InfraCos. Tram systems tend to
be integrated. The DLR is separate in terms of the extensions.
We have got lots of things we can look at. It would, I think,
have been quite useful if we had allowed Merseytravel to go ahead
and see whether on their bit of the network, which would not have
interfered very much with other people, they could produce reductions
in cost and meet what passengers were looking for. That experiment
could have been going on and given us something to look in a UK
context but I would argue very strongly against radically changing
the system for the next few years.
Q302 Mr Goodwill: So you think it
might be useful for Mersey Rail or in Scotland, for example, to
run a pilot and see how it worked?
Ms Bonar: Yes, I do.
Q303 Mr Goodwill: Based on Mr Ford
said about Network Rail themselves bidding for franchises, do
you really think it is appropriate for a company underwritten
by the taxpayer to be competing with companies which are not in
that fortunate position for the provision of services on the railway?
Mr Ford: With respect, that is
an entirely artificial constraint. We have management companies
which are bidding to either take a subsidy or run a basic specification.
As I say, they are mere shells with operating skills, management
skills, customer service skills but they own no assets, they have
no weight and they only stand to lose their bonds or whatever.
Network Rail is an organisation strong on engineering, strong
on operations. They are the engineers and as a former engineer
myself I can see great merit in bringing both sides of the wheel
and the rail together.
Chairman: There's an old-fashioned idea!
Q304 Clive Efford: Can I go back
to something Professor Nash said earlier on? What did you envisage
when you said that train operating companies should be given more
freedom to exploit their knowledge of the industry? What did you
envisage them being able to do?
Professor Nash: Design timetables
that are more attractive to the customer, balance those with fares
policies that fill empty seats and do not over-fill full trains.
If they had long franchises then concern about lifecycle costs
would be a lot higher. I am also worried at what is happening
with rolling stock. Why are we getting much heavier trains that
cost much more to run but do not always give a better service?
Q305 Chairman: Do we not know why
that is, Professor Nash? Is it not in the interests of the ROSCOs
to do what they want to do irrespective? They do not own any infrastructure.
Professor Nash: But the train
operating companies do not have to go to the ROSCOs to secure
new rolling stock.
Q306 Chairman: Have you explained
that to them recently?
Professor Nash: They have got
to get finance from somewhere but they can go direct to manufacturers.
The ROSCOs have managed to maintain their position but again I
fear in the current climate nobody is looking closely enough at
the long term implications of what we are investing in in rolling
stock.
Q307 Clive Efford: But if I were
a train operating company with a seven to 10 year contract would
I go straight to the manufacturers and buy rolling stock?
Professor Nash: It would be a
case of finding alternative leasing arrangements. Some of the
manufacturers lease rolling stock themselves.
Q308 Clive Efford: Can I pursue that
for a minute? Is it the structure that is the problem? If you
replace one rolling stock company with another rolling stock company,
whether it is somebody who has bought from the manufacturer or
it is the manufacturer themselves, is it the structure of the
system that is wrong?
Professor Nash: Maybe there just
is not enough competition in the whole system, including amongst
manufacturers. To my mind to a large extent the problem with the
ROSCOs is more that to some extent they have a monopoly of the
existing rolling stock rather than when you come buy new rolling
stock. There are other ways of doing it when it comes to new rolling
stock.
Ms Bonar: From what I have seen
of rolling stock leasing and in the context of franchise bidding,
the franchise bidding process has had a large impact on the selection
of rolling stock because bidders, particularly those who were
acquiring Mark 1 replacement stock, were doing so in a time frame
where the things that mattered to them about the choices they
had to make amongst two or three European rolling stock manufacturers—and
this is nothing to do with the ROSCOs—were to do with cost
of the kit and the delivery schedule and the general performance
of that manufacturer's trains. From those deals that I have seen
the decisions were around those key factors. They were not around
whole life cost. They were very much pushed by things which were
to do with the pressure of the franchise bidding process. Again,
we are a very small island in terms of the rolling stock market.
We inevitably buy from manufacturers who manufacture stock for
railways which do not run under the same constraints that we do,
the railways in France and Germany particularly. We are not deliberately
going out to buy heavier rolling stock and rolling stock that
costs more to run. We are buying the rolling stock which is being
designed and run in Europe, and the European passenger happens
to expect to have air conditioning and so we have ended up with
air conditioning and we have ended up with heavier trains, but
these are to do with the market from which we are buying and I
think they are very little to do with the ROSCOs.
Mr Ford: On this subject, the
air conditioned trains that were built at Derby in the 1980s are
something like perhaps 17 tonnes less than the air conditioned
German trains which are running even now on the Transpennine Express.
Those vehicles each weigh over 50 tonnes and if you compare, as
I did, the fuel needed to get up to 100 miles an hour, the German
trains need about three litres of fuel more just to get up to
100 miles an hour. That is CO2 going in the air. When I say, "Why
are these trains heavier?", the Germans say, "You will
have to come and see what we put into them, but they are air conditioned".
Crash-worthiness? Not really. I think it is just that no-one has
had any incentive in Europe to keep trains light. As a result
trains have got heavier and the railways are losing out in environmental
terms to cars and planes.
Chairman: That is very helpful.
Q309 Graham Stringer: Just on that
point, is not one of the reasons trains are heavier the requirement
to have disabled access to toilets?
Mr Ford: It is not a significant
factor. If you look at, say, the Networker fleet, which are the
shiny trains built in the late eighties, they have got disabled
toilets, they have got various other features and they are significantly
lighter than the trains being delivered today. Trains have just
got heavier and there is no one particular reason in my view.
What it needs is somebody, a really good engineer, to say, "We
are going to have lighter trains and if you do not make them lighter
they will not run".
Q310 Graham Stringer: So you think
in relation to the Pendalino trains on the West Coast mainline,
which have very large disabled toilets that work from time to
time it is just bad design that gives that extra weight?
Mr Ford: No. It was a bad specification
on the Pendalinos. Virgin thought they were going to have three
classes. The Railway Vehicle Accessibility Regulations say you
have to have a separate toilet per class, so therefore they had
to have three toilets in a train, which obviously takes up a lot
of space and puts up the weight per seat. The Pendolino per
se is not that heavy a train. It is the weight per seat that
is high and that is because they had to put in more disabled toilets
than common sense would dictate.
Q311 Chairman: Is that the same case
with the same trains built by Rotem in Korea?
Mr Ford: I would not know, Chairman.
Q312 Chairman: Do you not know about
the Hitachi trains either? Are they the same?
Mr Ford: The Hitachi trains being
built for Channel Tunnel Rail Link will weigh more per seat than
the Electrostar trains built at Derby.
Q313 Mr Martlew: Just on the issue
of the weight of the trains and going back to yesterday when we
had the Energy Review, is the reality not that the heavier the
trains the more energy it takes to shift them and we should be
going to lighter trains not just because of the wear on the track
but also because the environment would benefit from it?
Mr Ford: This morning I had a
phone call from an engineer who ran a computer programme comparing
what it would take to run one of the older air conditioned trains
I mentioned and one of the new German air conditioned trains from
London to Brighton. I think the additional energy consumption
was something like 28%. If you are moving a lot of mass around,
a lot of heavy weight, it takes fuel and energy to get it up to
speed and unless you have got regenerative braking that just disappears
into the atmosphere so in addition to CO2 giving you global warming
you get disc brakes warming the air as well.
Chairman: That is very helpful. Thank
you very much.
Q314 Clive Efford: Is it your argument
that if you were the people who care for the track you would put
more consideration into the design of the rolling stock than is
currently the case under the franchises?
Mr Ford: That is indeed happening.
Network Rail is part of the working group responsible for the
high speed train replacement and they are adamant that the replacement
for the high speed train is going to be a lighter weight train
rather than a heavyweight train as it might appear at the moment.
Q315 Clive Efford: Can we ever really
transfer risk from the railways, given the importance of the railway
network to the economy et cetera? Is it ever going to be possible
to transfer risk in reality to the private sector from the public
sector?
Ms Bonar: We had a very interesting
example of this, did we not, with Government deciding to allow
Railtrack to become insolvent, so we saw private investors lose
money as a result of investing in a privatised railway? One of
the ways the Government seems to measure risk in the private sector
is if they lose money when things go wrong, so they did. We then
went to administration during which Government was in a position
where it basically had to pay what the administrators thought
they needed in order to fund the infrastructure controller, and
part of the cost base which Network Rail inherited had in fact
been inflated as a result of that process in my view, and I think
this is the problem, that public transport by railway tends to
come back to being something which Government and politicians
feel they are responsible for and therefore they are reluctant
to both see it go wrong and stand back and have no provision for
the public.
Q316 Clive Efford: Is that a fair
comment? Is it not that the public perceive it to be a public
service and therefore with the amounts of subsidy going into it
they would want some sort of accountability for that type of investment?
Ms Bonar: I do not think that
is the same as the question you asked. There is risk with the
public sector. Perhaps the risk is with the public sector for
that very reason. What I have been trying to think about is, do
we feel the same way about buses? I think the scale and cost of
railway operations tends to put them into a different position
from public passenger vehicles running on the highway. We can
see there that the bus companies could go bust and nobody would
do anything about it and somebody would come along and another
bus would appear, but it is very much cheaper to get that off
the ground.
Q317 Chairman: In fact, that does
not happen though, does it? What happens now when private companies
fail to provide a service is that a local authority will be almost
forced to step in and replace it.
Ms Bonar: That depends, Chairman,
on whether we are talking about a bus company which is running
a contracted service or whether we are talking about a non-regulated
bus company which is simply running and decides that the competition
is better than it is so it withdraws from the market.
Q318 Chairman: I am just interested
in this because in fact the experience is that that is a very
nice distinction which is not obvious to the public. The public
will simply say, "I require a bus service", and if a
bus company has gone bust and that bus service is not there they
will then require the state to provide one.
Ms Bonar: They require a bus service
and if the service which has gone bust is a non-regulated service
then the first thing that is likely to happen is that the private
sector takes up that route.
Q319 Chairman: Would that it were
so.
Ms Bonar: Otherwise, because of
the way that the obligations of local authorities work they are
required to provide a service.
| 
