Examination of Witnesses (Questions 15280
- 15299)
15280. On regulation, paragraph 9, there is
a slightly trickier point but it is probably appropriate for me
to deal with in closing, because Mr George is right I did not
deal with it in detail in closing yesterday because of the hour.[23]
It is necessary to focus on what paragraph 9 is seeking, because
it is seeking three things: "An undertaking by the Promoter
to the Committee or to Freightliner that the Promoter will not
seek to change the Network Change process by using his powers
in the Bill (or otherwise) to reduce in any way Freightliner's
entitlement to compensation for Network Changes." That part
is perfectly acceptable and we will write to Freightliner in those
terms.
15281. There is a complication in the next clause:
"or to remove the ability of the train operators to object
to the detail of a Network Change . . . " On the face of
it, that looks fairly innocuous because you think "object"—there
is no problem with that. But if I can ask the Committee to look
at H2, which is the IP on railway compensation, what comes out
of that (and I will read from the paragraphs, it is paragraph
3.3) is that the power to object is, in reality, a power to veto.[24]
15282. If we can just go through, starting at
3.3. This is dealing with blocking rights under Part G of the
Network Code. "In certain circumstances in accordance with
the terms of Part G of the Network Code operators may be able
to block a network change which is required in order to undertake
the Crossrail works." Then we say that they will have the
opportunity to raise things during the passage of the Bill. Then
3.3.3: "arrangements will need to be in place for the payment
of compensation where necessary to the affected operators in this
case. The Department proposes to work with the ORR to develop
arrangements for the payment of compensation to affected operators"
(and I touched on that yesterday). "It should be noted that
whilst operators will not be able to block a Crossrail-related
network change the Department proposes that the standard industry
arrangements for information exchange and consultation provided
for in Part G of the Network Code should apply in respect of a
Crossrail-related network change."
15283. What all that means is that Freightliner
et al will be consulted and will have the opportunity to make
representations, but what they will not be able to do is stop
Crossrail doing certain work, having certain changes. For the
reasons we went through yesterday, it would be quite unacceptable
to investors to bring forward Crossrail and then have freight
operators being able to block necessary changes. So that second
clause of paragraph 9 of the Freightliner proposed undertakings
we cannot agree to.
15284. I can get Mr Lancaster, who is dealing
with this in the Department, to write to the Committee in more
detail on that point because, obviously, it involves quite complicated
understanding of the railway industry processes. Effectively,
what it comes down to is that we cannot allow freight operators
or anyone else to hold us to ransom.
15285. Mrs James: What about the freight
operators' commitments? What about their guaranteed paths? They
have got a business to run as well. There are two sides to everything.
15286. Ms Lieven: Absolutely, madam.
That is the balance that the ORR sets through the Access Option.
We are trying to get some kind of equity here between the needs
of Crossrail with this massive long-term and major investment
and the needs of the freight operators, who—an absolutely
valid point, and a point Mr George made yesterday—have also
made investments and they have to be able to make investments
on the basis of a fair future system. Our view is that a balance
is to be struck here and the balance is struck through the ORR,
but not by allowing one side to hold the other side to ransom.
15287. Mr Liddell-Grainger: Ms Lieven,
I think we have taken that as read, but I can assure you we will
be looking at this very carefully indeed. EWS and Freightliner
do have the right to operate on these lines, and so does Crossrail,
and as a Committee we will look at this in great detail. I take
your point on board but we will reserve our position on this because
I think there is a fundamental difference between blocking and
being destructive. I do not think that is what Mr George or any
of the—
15288. Ms Lieven: No, sir, I am sure
they are not suggesting, but that is the power. What is clear
from these paragraphs in H2 is that that is the power underlying
Part G, and it may be necessary, rather than for me to deal with
it in a rather on-the-hoof and, I have to say, not desperately
expert, way, for Mr Lancaster to write to the Committee in detail
about how these blocking powers arise. I do not know whether that
would be helpful.
15289. Mr Liddell-Grainger: Yes, it would.
I think this needs to be explored much further. I do not like
the idea of commercial companies being browbeaten by anybody.
I am not suggesting that is what you are saying but what I want
is clarification of the position. We have had a lot of evidence
in the last two days which shows that these companies have a concern
over timetabling access, sites and all the rest of it. If there
is a compensation issue we want to know what it is and we want
to see it in the way that you, as the Promoters, are putting it
forward. Is that understood?
15290. Ms Lieven: That is understood,
sir. Within the next three or four days we will write you a detailed
letter on this point explaining precisely how it works and we
will obviously copy it to EWS and Freightliner.
15291. Mr Liddell-Grainger: And it will
be put on the record.
15292. Ms Lieven: Yes.
15293. Mr Binley: Just for clarification,
we also need to know why "object" and "block",
which seem to me to be two very distinct English words, should
be considered to have the same meaning, because they do not to
my mind. If they do to your much more refined legal mind then
I would like to understand that.
15294. Ms Lieven: No refinement at all.
It may be, sir, that we are being excessively cautious on this
and all Freightliner want is the power to make representations,
which of course is no problem. However, if they are relying on
these powers in Part G then that is what we object to. We will
talk to Mr George about this in detail and we will write to the
Committee in detail.
15295. Mr Liddell-Grainger: I look forward
to that, Ms Lieven, and I look forward to hearing exactly what
the companies—
15296. Ms Lieven: The final part of paragraph
9: "or to object if the amount of compensation to which the
operator is entitled is not agreed, and to have those objections
adjudicated independently". On the face of it, that is acceptable—it
sounds fair—but we need, again, to understand what the consequences
of "objecting" are because if under Part G the objection
then becomes a block, then that would, again, be unacceptable.
So it is the same point arising on this last one.
15297. Mr Liddell-Grainger: I am sure
Mr George has heard that.
15298. Ms Lieven: Thank you, sir. Then,
finally, on paragraph 10, the bespoke compensation scheme, this
comes to the same point I addressed the Committee on yesterday.[25]
We believe that compensation should be in accordance with normal
industry processes. If it is not covered by normal industry processes
it should be in accordance with the underlying principles behind
the ordinary industry processes, which is no better, no worse.
15299. Mr Liddell-Grainger: I think you
can be safely assured the Committee will take that into consideration
23 Committee Ref: A170, Freightliner Requests for
Decision, Regulation (LINEWD-17205-013). Back
24
Committee Information Paper H2-Railway Compensation, billdocuments.crossrail.co.uk Back
25
Committee Ref: A170, Freightliner Requests for Decision, Compensation
for temporary disruption (LINEWD-17205-014). Back
| 
