Examination of Witnesses (Questions 20340
- 20359)
20340. Do you see any reason why you should
not have a freehold there? Is there any point in the Department
retaining a freehold interest?
(Mr Smith) I do not think
the Department plan to operate passenger charter services or maintain
locomotives, so I am not sure that they would have a continuing
interest in the site and this would replicate the position of
all freight operators with a vast majority of their maintenance
depots, which are on a freehold basis.
20341. Then "2. to carry out accommodation
and other works at the North Pole Depot such that it is rendered
reasonably fit for purpose as a replacement for the Old Oak Common
Depot; and 3. pay disturbance compensation to EWS in relation
to its move from the Old Oak Common Depot to the North Pole Depot,
and compensation for additional running costs of the North Pole
Depot, as agreed by the Promoter and EWS or, failing agreement,
as determined by the Lands Tribunal on a reference by consent".
That gives you a mechanism if there was a dispute about disturbance
compensation?
(Mr Smith) That is right.
May I emphasise the fact that this is something which is reasonably
fit for purpose. To replicate Old Oak Common completely would,
for example, include a connection facing towards London. We have
worked out a method of operation which means we do not need that,
which has enabled to us to save the costs. We are reasonable people.
We have had a number of discussions with the Promoters. We have
jointly retained consultants to do the work. We will continue
to be reasonable. It is in the public interest and our interests
to make this work.
20342. Would this give you the certainty that
I referred to in opening?
(Mr Smith) Freight customers
and our customers for the Old Oak site want to know that we can
provide them with a service for the long-term, because they will
invest significant sums of money themselves. If you are a passenger
on a train, you buy a ticket, you travel on the train, end of
the relationship. Both for our charter business and for our rail
freight business we have long-term contracts with our customers.
They want to know that we are going to be able to deliver for
them not just tomorrow but in many years' time. That is why the
regulator is very aware of this in giving us a 15-year access
contract to use the network which expires in 2015. We have a long-term
relationship with Network Rail. The freight businesses in the
UK are here on a long-term basis. We are not a passenger franchise.
We do not get re-let every seven years. Creation of stability
and certainty in all of our relationships with the rest of the
railway industry are critical to give customers confidence to
stick with and grow with rail rather than other modes. Yes, it
is stability and certainty we need, and this undertaking provides
that.
20343. Can I take an example you mentioned earlier.
You said there were to be enhanced passenger services on the North
London line provided by the Mayor and TfL?
(Mr Smith) That is correct.
20344. The Committee heard about this in the
summer and know about this. Has a final decision yet been taken
as to where those trains are to be serviced and maintained?
(Mr Smith) No final decision,
because no final decision has been made on the successful bidder
for that franchise; in the same way there is no final decision
on the successful bidder for the cross-country franchise again
where certain bidders would anticipate having their rolling stock
maintained and serviced at Old Oak Common or at a replacement
site close by.
20345. Those activities could be accommodated
at Old Oak or at North Pole?
(Mr Smith) They could.
20346. If you are going to be going out trying
to seek the custom of, let us say, the Mayor and TfL or, let us
say, the Virgin cross-country service and so forth, how important
is it for you to be able to say, "and we can do it even if
Crossrail happens"?
(Mr Smith) Utterly critical—because
if we could not make that commitment then the bidders would not
seek to use our services.
20347. Have you seen the undertaking which Mr
Elvin is prepared to offer and prepared to work through; but does
that give you this certainty?
(Mr Smith) I am afraid it
does not. However well intentioned it might be it strikes me that
this is an undertaking from the DfT which is cost-driven; it is
the cheapest solution for Cross Rail, so it is produced in Crossrail's
interests. It ignores the effect on EWS and essentially it leaves
everything for a future date, which could be a long time in the
future. It leaves us in a very uncertain position in the meantime.
We would obviously have to disclose that in any bidding that we
made for passenger services; and I think that would be an unacceptable
risk for existing and potential customers.
20348. Mr George: Thank you very much.
Cross-examined by Mr Elvin
20349. Mr Elvin: Mr Smith, good afternoon.
We did not meet last time. I was sojourning in Liverpool the week
you were here. Can I just understand this: this question of potential,
you talk about a number of expressions of interest in terms of
the use of the depot (and I am not talking about the rail freight
terminal concept—I will come back to that in a moment) in
using Old Oak as a possible site for freight maintenance and the
like. You mentioned some but you said they were confidential.
(Mr Smith) Yes.
20350. You also mentioned the possibility of
a North London line. There will be, as is always the case, a number
of bidders for each of the various services that is on offer?
(Mr Smith) Everything you
say is absolutely correct—so far!
20351. I was going to sit down for a moment!
Each of those bidders though presumably has his own idea as to
what facilities it would require, and not all of them would be
tying their bids to the possibility of using Old Oak Common?
(Mr Smith) We were approached
by a number of bidders to use Old Oak Common, but it is a difficult
position because there is a fair degree of commercial confidentiality
around this.
20352. Mr Smith, I am not asking you to breach
confidentiality, that would be entirely wrong. I am not suggesting
you have not had any bids, what I am saying is that there will
be other facilities competing with Old Oak Common owned by other
companies which will also be bidding to provide maintenance facilities?
(Mr Smith) There are very
limited facilities in the London area that can provide the kind
of services that we have been asked to tender for, for both the
London and the cross-country franchise—very few.
20353. Does that mean the answer to my question
is, yes, there are other bidders?
(Mr Smith) The answer to
your question is, there are very few other facilities in the London
area.
20354. Does that mean, therefore, there are
other companies, other than EWS, bidding for this work?
(Mr Smith) I do not know
what other companies are doing.
20355. You must know that you have competitors
in the market; you do not have the monopoly in freight maintenance,
do you?
(Mr Smith) There are very
few other facilities in the London area.
20356. That I understand. That is not answering
my question. My question is: are there likely to be others who
are going to be competing with you for the successful bidder to
whatever franchise or service is in issue for the maintenance
of their rolling stock?
(Mr Smith) I cannot answer
that. I do not know.
20357. So far as the North London line is concerned,
is that electrified?
(Mr Smith) The North London
line franchise involves both electrically-powered and diesel-powered
services.
20358. There is no electrification which would
allow access to Old Oak?
(Mr Smith) No, there is
electrification into North Pole but not into Old Oak.
20359. So Old Oak Common would not allow you
to bid for the North London franchise?
(Mr Smith) It would not
allow us to bid for the entirety of the maintenance of the fleet
for the North London franchise.
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