Examination of Witnesses (Questions 9360
- 9379)
9360. I am now going to return to my opening,
if I may. I had not quite read paragraph 20 and perhaps I ought
to do deal with that, it is on page iii: "TfL would plan
to establish a charging/access regime that meets the requirements
of the 2005 regulations. TfL understands that DfT has indicated
some flexibility on the regulatory and commercial arrangements
and has indicated that the establishment of the CTS as a separate
network would be possible. TfL welcomes this and considers that
a flexible approach is desirable to ensure that Crossrail remains
subject to regulatory supervision by the ORR while preserving
commercial flexibility to design the optimum financing package
for the construction and maintenance of the CTS. TfL also considers
that such an arrangement would not be inconsistent with ministerial
statements made concerning the future development of Crossrail
and the possible role of the ORR."[18]
My Lord, we regard that as totally unsatisfactory given the position
of the regulations that are there. There is no need for that sort
of approach.
9361. I will finish very briefly. At tab 16,
we ask for the assurance, and I make it clear there was an error
in that, this is on 17 April, it included reference to the fabric
of the tunnel, that was a misunderstanding, it should not have
been there, and that was corrected at tab 17, including the assurance
on regulation, and my Lord, then we get the reply at tab 18.[19],[20]
If your Lordship has that, it gives us the assurance under ROGS
but then goes on. Can I ask your Lordships simply to look through
it. It is making the same point about the necessary commercial
dealings with TfL. I will not read it out and to save time if
your Lordships would glance through that.
9362. In light of that, we ask for what we regard
as the unequivocal assurance we are still asking for, and that
is at tab 19.[21]
So at last we get a straight answer, and then the answer we got,
I think yesterday, is at tab 20.[22]
Firstly, "In relation to the maintenance of the central tunnel
section, the project sponsors are working on the basis that Network
Rail will be responsible for this, subject to satisfactory commercial
terms being agreed. We understand that this is under discussion
... " Your Lordships have my submissions on that. That is
simply inappropriate and unnecessary given the position of the
regulations under the overseeing of the ORR. Secondly, "In
relation to your questions about the operation of the Crossrail
system and regulation, we are clear that the arrangements must
be suitable to enable the access rights contained within the Crossrail
Access Option with Network Rail to be drawn down. Although here
are three networks (Network Rail's, the central tunnel and the
Heathrow Spur) they have to operate as one." There is nothing
that we seek to do that interferes a negotiation of access rights,
be it through the franchise or be it through access agreements;
it is not any part of our case. Thirdly, "There is not a
one size fits all approach to regulation. There are significant
differences between the central tunnel section and Network Rail's
own railway and these need to be allowed for. In particular the
financing and ownership arrangements for the latter are different."
That is the key point. It is financing and ownership, which is
nothing to do with what we are talking about. There is no difference
whatever as to operation and maintenance and safety, they should
be operated together under the regulations. If there is any difference
going to be pointed to one would expect to find it in this letter.
Finally, "This is a complex matter on which an overall package
of financing, operational and regulatory arrangement needs to
be produced in discussion with Network Rail and the ORR as part
of project implementation. It is not sensible in the meantime
to give piecemeal undertakings."
9363. Your Lordships know if there was ever
a hope of having some comprehensive package dealing with capital
financing as well as safety operation and maintenance, that is
now a forlorn hope. It is not going to happen during the passage
of the Bill. Therefore in our submission the time has come where
operation and safety need to be dealt with now and they can dealt
with separately not on the basis of piecemeal undertakings but
by comprehensive and specific assurances that we have been seeking
and continue to seek.
9364. CHAIRMAN: Is this reference in
the first paragraph to "satisfactory commercial" terms
a reference to bringing in contractors to do the maintenance?
9365. MR PURCHAS: My Lord, indeed, I
suspect it is. It is back to Railtrack and all that I think.
9366. CHAIRMAN: This is why I am concerned
about the maintenance side of it.
9367. MR PURCHAS: My Lord, rightly. Although
it is said by Mr Elvin that it is nothing to do with us, TfL and
the paper, this is precisely what TfL are seeking. They want to
go out and drive the negotiations with Balfour Beatty or whoever
it may be, and I have no criticism of those firms, but it needs
to be, and firmly in the public interest, within the context of
unified and integrated responsibility.
9368. CHAIRMAN: It is a Metronet situation,
is it not?
9369. MR PURCHAS: My Lord, yes.
9370. LORD SNAPE: I am sorry, forgive
me, Lord Chairman, Mr Purchas, not necessarily, is it? There is
a widespread view within the railway industry, if I can put it
this way, that Network Rail's pricing is somewhat over the top
for very basic schemes and maybe TfL are thinking they have a
fiduciary duty to their taxpayers and would like some comparison
so far as work is concerned.
9371. MR PURCHAS: I obviously go straight
to regulation 12. It is in the purview of the ORR. There are procedures
for that to be tested and we are under a statutory duty only to
charge within that framework. The machinery is there under the
regulations which accord with the European Directive and there
is absolutely no need at all for negotiation, flexibility or commercial
dealings on this. It is far too important for that, in our submission,
and there ought to be a straightforward signing up to those assurances.
Your Lordship notices there is not a word here for what TfL are
asking for; that is deregulation. If the Promoters are so far
away from what TfL are asking why have they not said—
9372. MR ELVIN: —It is sensitive.
9373. MR PURCHAS: It is sensitive, my
Lords, because your Lordships will know the weight that has been
placed by Mr Berryman, by the industry and by the public on the
ORR and the structure in the Act. My Lord, without any reference
anywhere that I am aware of publicly of the proposal to deregulate,
it came to our attention first when the Finance Director of TfL
in April sent us this paper, then you would think the Department
would have made it clear, at least to your Lordships and so far
it is wholly silent.
9374. My Lord, that was all I was going to say
in opening. I am sorry I have gone on slightly longer than I would
have intended and I am going to call Mr Gisby.
9375. CHAIRMAN: Before we do that, it
is now traditional that everybody goes and has a cup of coffee.
After a short break
9376. CHAIRMAN: Mr Purchas, do you want
to begin your evidence?
9377. MR PURCHAS: Thank you, my Lord.
I will call, if I may, Robin William Gisby.
MR ROBIN
WILLIAM GISBY,
sworn Examined by MR PURCHAS
9378. MR PURCHAS: Mr Gisby, you are Network
Rail's Director of Operations and Customer Services. Is that right?
(Mr Gisby) Yes, that
is correct.
9379. You have a Master of Arts in Engineering
and Science and a Masters in Business Administration. You are
a Chartered Engineer and you have 20 years' experience in a variety
of industries. You are a Member of the Institute of Production
Engineers, you have a Chartered Diploma in Accountancy and Finance,
and you are a Fellow of the Chartered Institute of Transport.
Is that right?
(Mr Gisby) That is correct.
18 Committee Ref: A54, TfL-Regulation of the Crossrail
Central Tunnel Section, Exemption of the CTS from regulation under
the 1993 Act (SCN-20080430-025) Back
19
Committee Ref: A54, Extract from correspondence between Bircham
Dyson Bell and Winckworth Sherwoods, 17 Aril 2008 (SCN-20080430-026) Back
20
Committee Ref: A54, Extract from correspondence between Winckworth
Sherwoods and Bircham Dyson Bell, 18 Aril 2008 (SCN-20080430-027) Back
21
Committee Ref: A54, Extract from correspondence between Bircham
Dyson Bell and Winckworth Sherwoods, 28 Aril 2008 (SCN-20080430-028) Back
22
Committee Ref: A54, Extract from correspondence between Winckworth
Sherwoods and Bircham Dyson Bell, 29 Aril 2008 (SCN-20080430-029) Back
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