Examination of Witnesses (Questions 14360
- 14379)
14360. The next slide: rail freight volumes
moved have increased by 60% in 10 years, and I think that reflects
the competition above the rail, better service quality and more
competitive prices.[2]
Some of the customers are now saying that the train operators
provide 98% on-time arrivals, which I suggest is better than many
of the passenger services that this Committee will have looked
at. We are entirely in the private sector, apart from some small
volumes which get grants from the government for environmental
benefits. That small sector is about 10 to 15%. The private sector
has invested something over one and a half billion pounds in the
last 10 years since privatisation.
14361. If I can turn to government policy, figure
three, and that is also in my paper.[3]
I do not intend to read it out, but it does indicate that the
government is keen on rail freight, it recognises that it has
a good role to play, it recognises that it is in the private sector
and, therefore, it has to ensure that the policies and regulations
do not put unnecessary obstacles in the way of future growth,
which is key. It wants the private sector to invest. They need
certainty about whether they will be able to use their investment
having invested it.
14362. If I can now turn to access to the network.
As I have said, the government has structured the regulatory regime
to provide for the needs of investors and funders to be taken
into account when they apply for access rights. As I said, that
is to give them comfort and they can use their investment. This
started with the 1993 Railways Act, subsequently it changed in
the 2005 Railways Act, but the independence of the rail regulator
has always been stressed many times by ministers in Parliament.
Independent regulation is the key. One has to make the point that
private sector investors are always suspicious of the government
mind or policy. If one wants private sector investment, that has
to be protected, and the protection we get is from the independent
ORR.
14363. It is my submission that the government,
as a funder of Crossrail, is also seeking to get comfort that
it can use its investment when it is complete. In other words,
having invested all this money in the new set of tunnels and the
works on the surface, it will be able to operate its trains and
get the return in both quality of service and the financial return
which it will be seeking. In many ways what the government is
trying to do is the same as what the private sector is trying
to do, which is to get comfort that they can use their investment.
14364. It may seem odd for me to be saying this,
but normally any Promoter would go to Network Rail to get access
agreements and then get it approved by the ORR, and normally the
ORR would not grant an application if he considered that it materially
and adversely affected other parties who had access rights and
therefore whose business would be affected. Probably the ORR would
say in those cases, "If you want to run more trains and there
is not enough capacity, you have got to fund the infrastructure
necessary for those extra trains". That seems reasonable
and that is what one would normally expect to happen in the industry,
whether it is a small freight siding or Crossrail or anything
else.
14365. Of course, lastly, there is the question
of compliance with Article 14.1 of the European Directive 2001/14:
allocation of capacity on a fair and non-discriminatory basis
in accordance with community law. I believe EWS railway will be
speaking about this more when they appear so I shall not go any
further, except to say that those are some of the policy issues
which I think ought to be guiding the Committee in how they take
this forward.
14366. Turning to Crossrail, the Promoters are
seeking to apply these principles but they wish to run Crossrail
trains over the regulated network. The trouble is there are others
investors already using the line with exactly the same intentions.
They do not see why the Promoter's interest should take precedence
over their own current or future needs. It is my submission to
the Committee that the Promoters are currently trying to side-step
the above industry process by a combination of, firstly, removing
the ORR powers in clauses 22 and 44 of the Bill, secondly, by
saying that they will follow the industry processes but only on
the basis that Crossrail gets what it wants—that is my rough
interpretation of the letter from the Department for Transport
dated 29 June, which I think the Committee has seen already—thirdly,
failing to offer enhancements to provide the expected capacity
needs either for when the Crossrail services are proposed to start
or for a reasonable time thereafter, say 15 years and, fourthly,
by failing to commit to build any part of the new capacity at
a time commensurate with the forecasts.[4]
That is my submission on the regulatory issues.
14367. Can I turn now to rail freight traffic
and our forecasts. If you can put up figure four, please.[5]
Last year the Freight Transport Association and our freight group
undertook a major forecasting exercise at the request of the government:
what was the likely future rail freight traffic going to be in
2014, which is the end of the next control period.[6]
We subsequently did it for 2030 as well. We consulted 60 or 70
of the biggest companies who use rail freight, or could use it,
in the industry, and so it is a considered forecast modelled on
a GB Freight Model by MGS Transmodal from whom I think you will
be hearing later. You can see quite a growth. We would say this
is a bases case, but there will be significant growth by 2030
and quite significant growth by 2014.
14368. If you can turn to the next one, please.[7]
We have also produced route maps which compare the number of paths
available in 2005 with the number required in 2014, it should
read 2030, I apologise, figure seven. You probably cannot read
this on the screen, it is a hard copy and it is very difficult
to bring it out. It is something which needs a study. It demonstrates
that in some places there is congestion and in some places there
is not. These numbers, for the assistance of the Committee, are
a sum of both directions, average per day and peak per day, but
they do indicate that the two main routes we are talking about,
the Great Western and the Great Eastern, are quite challenging.
14369. If we can put up figure six, please,
which is the forecast for 2014.[8]
Again, it shows the forecast number of trains, significantly more
trains on the Great Eastern because of the recent planned growth
of both the London Gateway, as it is called, and the Haven port
Developments. If we want to look at figure seven, which is the
2030 one, it is assumed that we are going to go on importing goods
in the same way as we have done for years. One can only assume
all forecasts are probably wrong but these are probably right
as with most other ones. This is the kind of growth that we will
be expecting 15 years after Crossrail has opened.
14370. If one studies these, we believe that
there is sufficient capacity on the Great Eastern and the Great
Western to cater for the growth in freight trains, assuming there
is no change in the passenger trains, without Crossrail in 2014.
14371. If I can now turn to timetabling. I should
say, if the Committee wants some detailed answers on some of these
maps it is beyond my capabilities. We have a civil engineer from
MDS Transmodal who will be able to answer them later. Timetabling:
my contention on timetabling is that when one starts a project,
the first thing one should do is try and come up with a timetable
which fits not only with what the project has planned but also
takes into account the existing or future demands of other users
of lines that one wants to use. The worst example of this was
the West Coast Main Line when it decided how many trains it was
going to run and decided the infrastructure, but when they put
the timetable on afterwards it did not work. That is one of the
reasons the cost went up through the roof, but they have come
down again now. There were some terrible situations in the early
days when the government and Virgin Trains and Railtrack, as it
then was, agreed a timetable and freight did not fit in at all.
Then when the industry made a fuss we said, "We have got
rights to use this line", and they said, "Oh dear, but
we have agreed they are going ahead". It really is important
to do the timetable first, then do a design with enhancements
to which will carry the timetable, otherwise I suspect that when
the timetable finally gets agreed the design will have to change,
the costs will go up and everybody will be rather unhappy.
14372. It is really very sad that the timetable
work has only just started this year. We were all asking for it
to be done as soon as we realised that the Bill was being posited,
it must be 18 months ago nearly. Why has the timetabling work
not been done, let alone started. Some work was done last year,
but many of the freight trains were omitted from it and that did
not go down very well. The timetabling group only started at the
end of last year, as we heard earlier, and we were very surprised
that, in spite of the many requests, the Rail Freight Group and
I think the same applies to the Rail Transport Association were
excluded from it. We have had two consultation meetings with them
but we have been excluded from it and frankly we do not agree
with their conclusions.
14373. Picking up on the timetabling discussions
that the Committee had on Tuesday, I would submit that the logical
process on timetabling is to get a robust timetable, discuss all
the issues on pages 7 and 8 of the timetabling report, plus the
need to include forecast freight traffic in the future and to
check that the timetable works on the connecting line, the end
of the Great Western, the end of the Great Eastern beyond Shenfield
and any other links to make sure it all works. I would argue that
this has to be completed and agreed with everyone before serious
work can start on an access option. I would urge the Committee
to require that to be done before the Committee finishes its hearings.
14374. On the basis that we believe that without
Crossrail the 2014 growth in freight traffic can be carried on
the existing network, with Crossrail on the Great Western it is
less of a problem but on the Great Eastern there is a problem
so I would just like to offer two suggestions for providing the
capacity on the Great Eastern because I do not believe with Crossrail
that it will be able to go on the existing routes.
14375. The first one is London, Tilbury and
Southend traffic going to the Thames Gateway projects which needs
to go on the Gospel Oak-Barking line. All I would say there is
that we have done a little bit of work and talked to Network Rail
quite a lot about this and we believe that it could be upgraded
to take the capacity, gauge and maybe electrification, maybe not,
so taking a line through six boxes for around £20 million
capital cost. The problem is that if Transport for London achieve
their ambition of running lots of passenger trains on that line
through the tunnel there is not a lot of space for freight but
at least it will get it off the Stratford and Maryland and Forest
Gate connection there. That is a mitigating measure.
14376. We believe that really the solution is
for the Haven gateway traffic to reach Harwich—that does
not need to go to London to be diverted well away, and if you
could put figure 8 up, please, you need not look at the numbers
there but, for those who may not know quite where these places
are, you go from Ipswich to Peterborough to Nuneaton.[9]
It looks a bit windy on the map but actually it is quite a good
route. It gets away from the problems of going through London
and, as the Committee will know, Hutchison Ports have already
committed to some enhancements between Ipswich and Peterborough,
so extending that through Peterborough to Nuneaton at a very preliminary
cost estimate from Network Rail is that it could probably be done
for about £50 million. That would at least get much of the
Felixstowe traffic or Harwich traffic out of London. I would hope
that the Committee could consider urging Crossrail to provide
some funding for that as well as for the Gospel Oak-Barking part.
14377. In conclusion, Chairman, we are very
surprised that the Bill has got this far without a proper timetable.
I really am serious about that. I am very surprised that the Government
is trying to abolish the independence of the Office of Rail Regulation.
I know that they achieved it for the Olympics Bill but it was
a very minor thing that they were doing and they were not closing
very much and it has not caused a problem but this is very serious.
To me it would allow theft of capacity which the train operators
and the customers believe they are entitled to from their contractual
arrangements or from the planning inquiry results. I think it
is wrong that the Government should try and override industry
processes for its own ends to the detriment of the private sector
operators. I think it is extraordinary that the timetable is not
finished. I would urge the Committee to require it to be finished
in a robust way before the Committee ceases its consideration
and I would hope that the Committee would urge the Promoter to
invite the Rail Freight Group and the Freight Transport Association
to participate in this, and I hope also, finally, that the Committee
will say to the Promoters, "If you want to take capacity
from the existing routes over which people have rights then you
must commit to funding the necessary enhancements to be completed
before the project opens and also to look at what happens for
the next 15 years thereafter." I am grateful for your time.
14378. Chairman: Thank you very much.
Mr Elvin?
14379. Mr Elvin: Sir, you have already
put in evidence on these matters, sir, so I will combine response
and closing submissions if that is acceptable. Sir, as a general
principle Lord Berkeley is misconceived because the Promoters
are seeking, as you will recall, as a primary means of resolving
the capacity issue to use the access option route and, as you
heard on Tuesday, we are negotiating an access option with Network
Rail in the usual way and that, of course, will be subject to
supervision by the independent regulator. As I made clear, I hope,
to the Committee on Tuesday, the powers are only in the Bill as
a backstop to ensure that the scheme which Parliament thinks is
a good scheme does not fail for other reasons, but that is no
more than a backstop and if I might remind the Committee—I
put it in yesterday late—the Minister's letter, P109, dated
29 June, gives an assurance that the Bill powers will be revisited
as soon as the access option is resolved, so it is fully intended
that the normal industry processes will be followed with the use
of the independent Network Rail and the independent regulator
but we do have to have a backstop for the simple reason that Parliament,
supported by many interests, commercial, public and otherwise,
see the importance of the Crossrail project.[10]
This is not simply the view from one vested interest within the
freight industry. This is a general view across the board, and
of course there is more to commerce than the freight industry.
I do not have to remind the Committee of the strong representations
you have received in support of Crossrail from the business sector,
the City and the like as to the importance of Crossrail to their
sector of the economy.
2 Committee Ref: A163, Growth in UK rail fright-tonnes/km
(SCN-20060705-002). Back
3
Committee Ref: A163, Government's rail freight policy (SCN-20060705-003). Back
4
Crossrail Ref: P106, Correspondence from Department for Transport
to Office of Rail Regulation, Crossrail Bill-Railway Powers, 29
June 2006 (LINEWD-GEN13-036). Back
5
Committee Ref: A163, London forecast freight trains 2005 (mean
and maximum per day 2 direction summary) (LINEWD-21305-017). Back
6
Committee Ref: A163, London forecast freight trains 2014 (mean
and maximum per day 2 direction summary) (LINEWD-21305-018). Back
7
Committee Ref: A163, London forecast freight trains 2030 (mean
and maximum per day 2 direction summary) (SCN-20060705-004). Back
8
Committee Ref: A163, London forecast freight trains 2014 (mean
and maximum per day 2 direction summary) (LINEWD-21305-018). Back
9
Committee Ref: A163, Route map showing Ipswich to Nuneaton direct
from 2014 forecasts (LINEWD-21305-016). Back
10
Crossrail Ref: P106, Correspondence from Department for Transport
to Office of Rail Regulation, Crossrail Bill-Railway Powers, 29
June 2006 (LINEWD-GEN13-036). Back
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