Select Committee on Crossrail Bill Minutes of Evidence


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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