Examination of Witnesses (Question Numbers
1-19)
DEPARTMENT FOR
TRANSPORT AND
OFFICE OF
RAIL REGULATION
Q1 Chair: Welcome to you. We are looking
at rail capacity. We thought we would take it in two separate
sections: one looking at the overcrowding and planning issues
and then looking at the costs. So, we will try and divide up and
get some structure to the questioning that we have of you. I think
I'll start the ball rolling, if I may. According to the Report,
you set yourselves the task of increasing capacity by about 17%—117,000
more places. You are now saying in the Report that you are spending
the same, but getting fewer places—99,000 places. So, can
you tell us why that has happened and what on earth that will
mean for the commuters who are going to have to continue to travel
in cattle truck conditions?
Robert Devereux: Let me just make
a brief point about context, if I may, to start. What the Report
in front you does is to examine the Department's actions and plans
one-year in to a five-year delivery plan. At the stage that we
were examined I can tell you that we had contracted one-third
of the additional capacity the previous Government had sought
and every one of those actions had delivered value for money.
Q2 Chair: As what?
Robert Devereux: And every one
of those actions had delivered value for money. Beyond that, we
had plans—clear plans—that we could evidence to the
National Audit Office to take that third to 80% of the required
capacity, by which time, we expected to have acquired around 950
carriages and spent around £900 million. The third thing
we were doing then was continuing to work out whether we could
identify the interventions that would enable us to get to probably
around 1,300 carriages and to develop the full capacity, using
the full budget of £1.2 billion. So, the figures you just
referred—first of all, the figures you referred to are in
respect of London, and so the 117,000—
Chair: Yes—yes.
Robert Devereux: —is what
we support for London.
Chair: Sorry, and 37%—yes.
Robert Devereux: And there is
another 38,000 that we sought outside of London. And what the
charts are showing, effectively, is what had been contracted and
what interventions, for which we had very clear plans, the National
Audit Office could sign off in terms of what they would deliver.
As I say, that amounts to around 950 carriages, but it does not
use all of the budget of £1.2 billion that we had available.
We were still working through and seeking to spend that money
in order to increase the capacity beyond the figures shown in
the tables.
Q3 Chair: Well, then why when you
signed off—because you sign off these reports before they
come to us—did you say that you were going to buy fewer
carriages and, therefore, reduce the capacity both in London and
outside—33% outside reduction; 15% in-London reduction—but
you were going to do that for the same money? In the Report—in
the information that we have in front of us, you were still spending
£1.2 billion, not £900 million or whatever it is. That
was signed off, as I understand it, by the National Audit Office
and yourselves.
Robert Devereux: Perhaps if you
just look at the critical bullet on the bottom of page 8. What
it says is that the Department's latest plans—and by that
I mean plans that the National Audit Office would let us score
because there was detailed evidence for them—would have
delivered, I use the subjunctive tense, significantly less capacity
although the taxpayer would have provided as much—
Chair: Yes.
Robert Devereux: They would have
provided as much had we bought more carriages than the National
Audit Office put in those charts.
Q4 Chair: But the National Audit
Office put them in the charts because you told them that was what
you were going to do.
Robert Devereux: With the greatest
respect, we told the National Audit Office what our plans were
as evidenced in terms of quite detailed interventions. It was
quite clear, and they were aware that we had some capacity to
buy more, but that we did not yet have plans for that. This is
the paragraph about risks to value for money, and there was indeed
a risk to value for money that we might not be able to spend the
rest of the money wisely, but the money we have spent and planned
for is going to be spent wisely.
Geraldine Barker: Perhaps I could clarify.
What we asked for from the department was evidence of what capacity
was going to be delivered by 2014. They provided us with a bulk
of data, we looked at that and that's what we have reported. We
then asked them how much money they expected to spend to provide
that capacity. They told us it was £1.2 billion and they
quoted the figure of 1,300 train carriages. At that point, we
went back several times and asked them. We felt that there was
an inconsistency—you seem to be buying the same number of
carriages, but you're not delivering the same capacity. They told
us that there was not an inconsistency, but that information was
correct, and that is why we have placed those two sentences side
by side.
Q5 Chair: So what changed?
Robert Devereux: Well, nothing
has changed because I saw it—
Chair: Something must have changed because
your officials told the National Audit Office, who then produced
a document, which is in the public domain, that the money available
to you—the £1.2 billion—was buying you less.
That is obviously of huge importance. Suddenly—miraculously—from
when this was signed off in end of May to us seeing you here in
September, something has changed and you are buying less, but
spending less. Something's changed.
Robert Devereux: Well, I can apologise
if you think the story is different, but nothing has changed.
I can absolutely assure you. We have not changed our plans in
any respect. I think, if you listen very carefully to what the
NAO said, the fault line looks a bit like this: it was a commitment
of the previous Government to deliver 1,300 carriages, for which
they had a £1.2 billion budget. So, every time the question
was asked, "What do I expect to spend?", the answer
came back, "£1.2 billion." It was, as a matter
of fact, in figures 9 and 10, when asked, "What plans have
you got to deliver it?", the only things we were able to
evidence were the first 950. We are still working—we are
one year through a five-year plan on exactly what the rest of
them are. There are propositions in the Department now—because
we are now six months further on—for some more carriages,
which we believe will have value for money. We could not evidence
that to the National Audit Office when they came. That's the difference.
Geraldine Barker: But nobody told us
that there were other plans in the offing. We were given data
and told that was what was expected to be delivered by 2014.
Q6 Chair: This is very unusual. We
are probably on our seventh or eighth hearing and the basis on
which we undertake these hearings is, on the whole, an agreed
Report between the Department and the National Audit Office and
we can then make sense of the facts that we have in front of us.
It is not satisfactory—I have to say that to you—it
is not satisfactory to have an interrogation where the facts change
as you appear before us now.
Robert Devereux: I perfectly understand
that and—
Chair: Clearly, when I read this Report,
the thing that hits you—and I am sure all my members would
say likewise—what hits you is why suddenly, having planned
to spend £1.2 billion to get a certain number of carriages,
you are getting fewer carriages but spending less money. Now,
you're saying, "No, no, we have miraculously found that we
actually can spend less money and get fewer carriages." But
you're achieving—that change is not acceptable. I just have
to put that on the record.
Robert Devereux: Well, I must
accept that. I perfectly understand; I have been here six or seven
times before. I know the basis on which this is done and all I
can tell you is that this was signed off, and when I went through
this with a fine-toothed comb in order to prepare myself for this
afternoon, I had to make sure I actually understood on what basis
this had been prepared. If your conclusion of that is it should
have been more apparent that the tables to do with capacity had
to line up with the tables to do with carriages, had to line up
with the money, which was not the proposition that was in the
draft, then my apologies. We have not sought—I promise you—to
try to obfuscate this. We have told you the plans that we had,
and we have told you we had expected to spend the money. That
is the reality. As far as today is concerned, the position is
the position I've just described.
Q7 Mr Bacon: Surely the point is,
as Geraldine Barker just told the Committee, you did not tell
the National Audit Office that there were other plans in the offing,
did you?
Robert Devereux: I'm afraid I
was not party to the conversations, so I do not know what was
said, but it did—
Mr Bacon: That's not an acceptable reply
because you are the Accounting Officer.
Robert Devereux: But it—
Mr Bacon: The Department for Transport
did not—Geraldine Barker has told us the Department for
Transport did not tell the NAO there were other plans in the offing.
Robert Devereux: If that's the
case then I apologise.
Q8 Mr Bacon: Now, unless you are
accusing Ms Barker of lying, which I don't suppose you are, we
have to take that statement at face value. Why didn't the DfT
tell the NAO that there were other plans in the offing?
Robert Devereux: I'm afraid I
do not know the answer to that question.
Chair: But you do sign off the report.
Q9 Mr Bacon: When did you first tell
the NAO that the facts that you have signed off in this report
were not in all respects accurate anymore?
Robert Devereux: Well, in the
way I have tried to explain it to you, that when people present
things called planned capacity, they mean what I've just said
they mean. I am not trying to argue that I am trying to say that
somehow we have produced the wrong data. I have tried to understand
this on the basis on which actually the National Audit Office
has presented it. I did indeed—because you go through this
in some detail before you come before your Committee—do
quite a lot of work on this in the last few weeks, and in the
space of the last week to 10 days it has been quite clear to me
that there is a discrepancy in the way that is being understood
in the words. For that I apologise and I can only tell you what
I believe to be the truth now, and—
Mr Bacon: And what's the answer to my
question?
Robert Devereux: I'm sorry?
Mr Bacon: What's the answer to my question?
Robert Devereux: Which was the
question?
Mr Bacon: My question was when did you
first tell the NAO that the facts were not the facts as you had
understood them?
Robert Devereux: I personally
spoke to the C&AG I think it was Friday last week?
Amyas Morse: That's right.
Robert Devereux: I had been speaking
to my officials who have been speaking to the NAO in the week
prior to that. That's the timeframe over which I do the detailed
operation.
Q10 Mr Bacon: I have to say, Mr Devereux,
I don't find this very acceptable. It's not the first time that
we have had problems with the Department for Transport and information
being given to the DfT that turned out to be inaccurate. You will
remember the problem with the evasion of motor vehicle licences
and particularly motorcycle vehicle licences. So, I think just
we should record the fact in our report that we are not happy
about the DfT's co-operation with the NAO.
Robert Devereux: From memory,
the evasion figures—what you were told at the time—were
correct. It turned out subsequently that further information was
available and that's not the same as—
Chair: Well, I mean, it is so obvious—
Mr Bacon: I remember it well and it was
radically different from what you had told us previously. But
I just think, Chairman, we should probably move on.
Q11 Chair: Yes, okay. Can I now understand,
as you are buying fewer new carriages—
Robert Devereux: Correct.
Chair: Are you, therefore, increasing
capacity by less?
Robert Devereux: Yes.
Chair: Right.
Robert Devereux: Sorry, let me
be very clear: the 950 carriages for which I have firm plans,
which the National Audit Office has seen, buys less capacity.
Chair: Right.
Robert Devereux: That is not the
same as saying, "Have I given up on providing further capacity
with the balance of my budget?" However, there being a spending
review on, the—
Q12 Chair: You have offered them
up as savings?
Robert Devereux: No—the
availability of that is one of the things that the Government
are looking at at present.
Q13 Chair: So, if you are buying
less capacity, the increase in capacity is now 15% fewer places
in London, 33% fewer places outside London. That means overcrowding
will become worse.
Robert Devereux: Only if we buy
no more with the budget that, going into the spending review,
we had spare headroom within.
Chair: Or you will deal with the overcrowding
later.
Robert Devereux: Well, these are
the considerations that Ministers are having to work through with
the spending review. Clearly, in order to reach the 117,000 within
London, we will have to do further interventions—that is
quite difficult thing to do. First and foremost, it is a problem
of affordability. Secondly, it is finding the right transactions.
Q14 Chair: And do you still have
your £1.2 billion. Do you still have that budget or have
you offered that up as a cut?
Robert Devereux: The £1.2
billion is a budget over five years and it is over that period
that Ministers are now trying to make decisions. Lots and lots
of things are being looked at upside down and have—
Q15 Chair: So you have so far cut
out of it £300 million. You have chosen not to spend £300
million of your £1.2 billion.
Robert Devereux: I have chosen
not to spend £300 million—I have no firm plans at the
moment to spend the £300 million, but the budget conceptually
is the ex ante budget that the Government are currently
reviewing as part of the spending review, the conclusions of which
I don't know.
Q16 Chair: What is rather depressing
is that when I looked at the White Paper that you produced in
2007 on which the expenditure of £1.2 billion—not the
£900 million—was based, even if you extend capacity
to its full—ie don't extend capacity less—you are
still running to keep still.
Robert Devereux: Correct.
Chair: The overcrowding is still—
Robert Devereux: About the same.
Chair: —bad. So, were you not to
spend your full £1.2 billion, you would then be increasing
overcrowding for commuters. You would be making life hell for
more commuters on more trains in London and the major cities.
Robert Devereux: There are a great
deal of things that, with some available cash, I could make life
better with, and the issue, therefore, is simply to do with the
position that the Government find themselves in in terms of the
overall deficit and the priorities within that that are then set.
Your logic is absolutely correct that the previous Government's
White Paper accommodated further capacity at pretty much the same
levels of crowding as they were before the White Paper. That was
a conscious choice because actually, even then, this is costing
£9 billion to do, which will be paid for over a long period,
and there simply is not a magic well to put even more money in
to produce even more capacity and even less overcrowding.
Chair: Matthew.
Q17 Matthew Hancock: There is one
way, which is to get better value out of the money that is in
the current plan. So, taking the current plan to mean the £900
million, are you looking at that spend in order to try to improve
the capacity by more within that part of the budget, given that
the extra £300 million is under review in the spending review?
Robert Devereux: At the moment,
we actually have contracts that deliver, from memory, around 650
of those carriages, and the balance of the 950 are things for
which I have plans that I have not yet contracted and, therefore,
exactly, I am in the space saying, "What is the very best
price I could get for those?" I am not currently revisiting
the contract for the 650 and—
Q18 Matthew Hancock: Have you done
any assessment of whether you could successfully revisit those
in order to get better value for money given that you are a such
large purchaser in this area?
Robert Devereux: Could I get back
to you on that because I just don't know whether my colleagues
have done that.
Matthew Hancock: Oh, I would hope that
they would, but yes.
Chair: Austin.
Q19 Austin Mitchell: Let me present
to you a frail old man who has been twice the victim of your incompetence
at providing extra accommodation on trains. I travel on the East
Coast Line, and twice in the last two years I have been forced
to stand all the way to Leeds on a First Class ticket—first
by GNER and secondly by East Coast. That is just an absolutely
insane procedure because it says in the contracts that operators
should make reasonable endeavours to deploy their train fleets
to give peak passengers a reasonable expectation of a seat within
20 minutes of boarding. I didn't have one for over two hours.
Now, this really is disastrous. Unless you want to say that the
companies are going to run cattle transport, why isn't it included
in the contract with the companies? You did in the case of Chiltern
Trains; why isn't it included in all the other contracts that
they have to provide reasonable accommodation—that they
must?
Robert Devereux: At the very end
of the Report—I am on page 33 now—the National Audit
Office goes through the arguments for this and they identify exactly
that for Chiltern, which, for a variety of special circumstances
that they record as being a single operator, with strong growth
potential and a long franchise, that is indeed the nature of the
franchise. We have consulted in a consultation document that went
out in July on how might we change the franchising arrangement.
Some of the options that we have explicitly canvassed include
whether we could structure the franchises on the basis that you
are buying a franchise within which you will achieve certain levels
of, for example, crowding. Now, what the National Audit Office
says at the bottom—the very last sentence of 3.14—is
that obviously, as the accounting officer, you want to be really
confident that the operator knows how to price that risk in such
a way that you are not getting anything at a premium just for
giving him the—
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