Examination of Witnesses (Questions 120-139)
MR CHRIS
BOLT, MR
MICHAEL BESWICK,
MR IAIN
COUCHER AND
MR ROBIN
GISBY
23 NOVEMBER 2005
Q120 Chairman: Who are
your exceptions, Mr Bolt? We do not need to spare their blushes,
do we?
Mr Bolt: On train operators Virgin
services was one example which opened a week later than was expected
and on some other services such as Hull Trains they are not currently
meeting the T-9 responsibility.
Q121 Chairman: Still?
A month before Christmas?
Mr Bolt: But they are open for
Christmas. This is T-9 taking us into the New Year. All services
have been open for booking over the Christmas and the New Year
period for several weeks.
Q122 Clive Efford: To
the Office of the Rail Regulator, it is clear from your memorandum
to the Committee that the new division of labour between the Office
of the Rail Regulator and the Department is quite complex. How
confident are you that the new structure for regulating and monitoring
will be an improvement on the old set-up?
Mr Bolt: I think we have to recognise
that the structure has been rather complex from the point of privatisation
in terms of the customer facing obligations of train operators.
They were divided between OPRAF and the ORR with some obligations
in franchise agreements and some in licences. That position has
continued but in a sense has been simplified following the Rail
Review. The broad position is that the Department for Transport
is responsible for some of the policy issues, for example the
Ticketing and Settlement Agreement and for train operators meeting
their franchise obligations. We are responsible for the licence
obligations which include what was originally called the Informed
Traveller Obligation. One of the additional responsibilities that
we have following the Rail Review is for publishing information
on a whole range of rail industry issues, including fares information,
and having taken on that responsibility from the SRA, I think
we recognise that as an area where further work is needed.
Q123 Clive Efford: If
I am a member of the travelling public and I want to hold someone
accountable for what is going on in setting fares through ticketing,
how do I understand this system? How do we make it simple for
Joe Public to understand?
Mr Bolt: I think in terms of the
passenger it should be very simple. The passenger deals with the
train operator. What happens behind the scenes ought to be of
no interest or have no effect on the service provided to the passenger.
I think timetabling is one example, and there have been issues
with what Network Rail have done, and there have been issues with
what train operators and the National Rail Enquiries Service,
for example, have been doing. Those are issues which we have tried
to sort out behind the scenes so that the passengers get what
they are entitled to expect, but if they have a problem they should
complain in the first place to the train operator.
Q124 Clive Efford: Quite,
but this is a public service and there is an enormous amount of
public money going into it, and you are not going to suggest to
this Committee that there is not a great deal of accountability
at the door of the Department for Transport and the Government
for the operation of our rail network. My question is about firstly
where are the areas of responsibility and how do the public understand
where that responsibility lies in terms of regulating the fares
structure within our rail system?
Mr Bolt: In a very simple sense,
the Office of Rail Regulation is responsible for regulating what
Network Rail does, so Network Rail's development of the time-tabling
process is something that we monitor and if necessary enforce.
Issues like fares policy—
Q125 Chairman: Before
you get off that, was it enforced last year efficiently?
Mr Bolt: I think so, given the
answer I gave to you right at the beginning in that we have got
the right outcome for passengers. It was an issue clearly which
the Board of the Office of Rail Regulation discussed at length,
whether accepting the recovery plan which Network Rail had put
forward was adequate or whether the likelihood of compliance would
be increased by enforcement. The view we took was that enforcement
was not necessary to deliver the outcome for passengers. I think
the results vindicate that.
Q126 Clive Efford: Do
the Office of Fair Trading and the Office of the Rail Regulator
share the role as competition authority for the rail industry?
Mr Bolt: Clearly we have under
competition law concurrent powers but in practice ORR deals with
all rail related issues. Obviously we exercise those powers on
a basis which is consistent with the practice of OFT but we are
the experts in railways so we enforce competition law for railways
in practice.
Q127 Clive Efford: So
OFT set the framework and you operate to ensure compliance?
Mr Bolt: Yes, that is a good way
of putting it.
Q128 Clive Efford: On
engineering works, Transport 2000 suggested that your "big
bang" approach to engineering possessions may exacerbate
the impact on passengers, and that an approach using small overnight
possessions would minimise the disturbance. How do you react to
that proposal?
Mr Bolt: The policy on possessions
is Network Rail's and they would clearly need to answer on that.
Our concern is two-fold—that there is proper planning of
the possessions process and that it takes full account of the
needs of rail users. This is not something where minimising costs
is the only objective. If that is done in a way which disrupts
passenger and freight services, that is not delivering the right
outcome for the railways.
Q129 Clive Efford: I should
have put that question in the first instance to Network Rail,
I apologise.
Mr Coucher: On engineering works,
we do the vast majority of our works at night in short possessions.
Any time that we need to do any work at all we have to liaise
and consult with the train operating companies, and certainly
if we wanted to do a very large, specific blockade we would consult
with passengers as well, but the decision about whether we can
do that is down to the train operating companies.
Q130 Clive Efford: But
do you treat engineering works in the same way as, for instance,
you would treat surveying work, that you would need complete control
of the track to shut down a piece of the network?
Mr Gisby: I think it depends on
the nature of the work. Mr Crow earlier on mentioned replacing
the bridge at Paddington. That is a major piece of work that will
be planned years in advance. Some of the big pieces of work we
have to do with signalling, bridges and embankments are planned
a couple of years in advance. We can do lighter weight surveying
work and go in and do short-term maintenance in access that we
have booked regularly every night anyway to fit in with the existing
train services. There will be times when we have to do a major
piece of work and we will then, in conjunction with the whole
industry, choose the optimum way in which to do it. Occasionally
that that will mean blockades of 52 hours and those kinds of things
on certain routes.
Q131 Clive Efford: The
discussions I have had with companies that carry out surveying
work on behalf of Network Rail have indicated to me that in order
to go onto the track that the safety regulations require the network
to be closed, but they are saying that they could reduce costs
for Network Rail and be more efficient. They say the nature of
the work that they are carrying out because they are not carrying
out engineering work means that is not necessary.
Mr Coucher: There are a number
of different ways of getting access to the track. In some instances,
the clearances to enable the inspections to be conducted properly
do require closure of the network so that it is possible to take
samples and to look at the track and you cannot have trains running
on it. In many instances, we can do it without the need to close
railways and we are currently working with companies to provide
automatic train warning systems which avoid the need to take any
kind of possession to do that. As Mr Gisby has already said, the
vast majority can be done inside the existing allowances which
we have for doing inspections and maintenance work at night so
we do not need to disrupt passengers to do that.
Q132 Mrs Ellman: What
penalties has Network Rail incurred for not meeting its T12 responsibilities?
Mr Bolt: In terms of financial
penalties through enforcement, none because, as I explained earlier,
we took the view that enforcement was not necessary to deliver
compliance with the licence. Quite clearly, and I am sure Network
Rail could spell this out in more detail, they have put significant
additional resources into train planning activities and planning
possessions to enable that compliance to be met. That is what
we have required them to do to make sure the licence obligation
and passenger responsibilities are properly met but there were
no direct financial penalties.
Q133 Mrs Ellman: Did you
say enforcement was not necessary?
Mr Bolt: We took the view that
given the recovery plan which Network Rail had submitted that
enforcement would not add to the likelihood of delivering the
T-12 outcome for passengers. Quite clearly, and we made this absolutely
clear to Network Rail at the time, if they had failed to deliver
on that recovery plan then enforcement was a very likely step.
Q134 Mrs Ellman: So what
would have to happen if you decided enforcement was appropriate?
Mr Bolt: We have just published
for consultation in the last week our policy statement on our
approach to enforcement, and one of the things that we have made
clear in that consultation (on which we are seeking views) is
that the co-operation of a company in dealing effectively with
the problem once it has been identified is important in deciding
whether enforcement is needed. Clearly, like all regulators, we
follow the principles of good regulation and look to take targeted
and proportionate action if licence holders are doing—
Q135 Chairman: Mr Bolt,
you gave us evidence—you gave us evidence—that this
was a problem during 1998 and the industry was failing to meet
its T12 commitment. The ORR proposed and in May 1999 agreed with
Network Rail licence modifications.
Mr Bolt: That is absolutely correct.
Q136 Chairman: So it is
not just the problem that they had last year and you are telling
us that you took that decision on the basis of what happened last
year?
Mr Bolt: No, the history you have
just indicated is absolutely right.
Q137 Chairman: Which you
were kind enough to give us, in the name of accuracy.
Mr Bolt: Before 1998 there were
some issues with Railtrack as it then was.
Q138 Chairman: Such as
they were not doing what they were supposed to be doing?
Mr Bolt: Delivering the right
outcome for passengers. At that stage the Rail Regulator—and
it was me who was the Rail Regulator at that stage—thought
that the right answer was to make that an enforceable obligation
under the licence. We did that. The history again is that when
the Office of Rail Regulation was created, we came into existence
on 5 July 2004, we found that Network Rail was in breach of its
licence, and one of the first discussions we had as a Board after
we came into existence was to decide what action to take, whether
to accept the recovery plan which Network Rail had offered to
the previous Rail Regulator or whether to take enforcement action.
We decided that enforcement action was not the appropriate step
because delivering the right outcome for passengers was the critical
thing.
Q139 Mrs Ellman: You seem
very reluctant to enforce anything. What would have to happen
before you decided to enforce the rules which have been accepted?
Mr Bolt: I think if you take the
situation as we found it last year, if Network Rail had not come
up with a plausible recovery plan, that would have been grounds
potentially for enforcement. If Network Rail, having proposed
a recovery plan, simply did not deliver on that plan so that it
was not getting back into compliance with the licence again, that
is the sort of thing where enforcement would be appropriate. We
want enforcement to be an effective weapon and if you have got
licence holders taking the right action without enforcement it
actually means when you do have to take enforcement it is all
the more powerful.
| 
