Select Committee on the Crossrail Bill Minutes of Evidence


Examination of Witnesses (Questions 9880 - 9899)

  9880. MR ELVIN: My Lord, that is our entire case. There is sufficient protection built into the industry mechanisms, which we are told is the way we should go forward by the industry. The ORR has listened carefully, particularly to EWS about the change control mechanism and has imposed a set of very stringent criteria on us in the recognition, as your Lordship has rightly said, that the inputs at this stage are too uncertain, so you protect the outputs and you protect the rest of industry whose paths are specified in paragraph 79. That is the way it is done.

  9881. CHAIRMAN: Thank you. You can get back to poor Mr Smith.

  9882. MR ELVIN: Mr Smith clearly prefers to see Counsel being cross-examined! May I say, it is a refreshing change to give evidence! Mr Smith, that is broadly right, is it not, that the protection that industry has lies through the terms of the output and through the change control mechanism?
  (Mr Smith) That protection exists. It will come into play at some point in the future, eight, nine or ten years. We are not denying that that protection exists, our concern is it is a series of untried protections, particularly the objective test, which is why we asked for some certainty now, not with all 24 works, by no means at all, just the six we identified. I ought to draw out, and I do not have exhibit numbers or anything, but in paragraph 58 of the document which is currently on the screen—

  9883. That is page 108 if you would like to put that up.[9] There is no earmarking of future paths because freight has to apply for its access options in the future as well as everybody else, but what you have is an allocated capacity which is available to freight.

  (Mr Smith) There is an allocated capacity available for the whole industry for making the case which the ORR will then rule upon in accordance with its published criteria and procedures.

  9884. But to use my Lord, Lord Brook's terminology, the capacity for freight growth is ring-fenced in the output driven model. It does not say anybody in particular will get the paths because that is an access option exercise in itself, but it ring-fences the capacity for future growth as to whoever the ORR determines in the industry should be entitled to it.
  (Mr Smith) Not for freight growth. As 58 says in the first two lines: "We emphasise that the unapproved capacity has not been earmarked for freight traffic or for any other purpose".

  9885. In other words, the ORR is saying, "I'm not being fettered as to my future discretion under access options. What I am doing, though, is adding into the model existing paths and the freight growth so that if there is the freight growth, which is predicted and agreed, then there are sufficient paths to enable the freight industry to apply for them.
  (Mr Smith) Or any other user.

  9886. Yes, but it is always the ORR's job to balance the various interests. The fact is that he is making sure is that the capacity is there should those paths be required and justified.
  (Mr Smith) Correct, and including your two off-peak paths could go for that capacity as well.

  9887. But you, as we, must justify your case for new paths, must you not?
  (Mr Smith) Absolutely correct.

  9888. And that is the independent mechanism which the industry operates?
  (Mr Smith) That is the system which operates at the moment.

  9889. CHAIRMAN: Mr Elvin, one of the things we must bear in mind is that the ORR's decision dealt with freight growth up to 2015. There will not be any Crossrail trains in 2015.

  9890. MR ELVIN: No, but what it means is the model is constrained not simply by the paths which exist at the date of the decision, but that additional growth is then factored in and that constrains what paths can be produced in the future.

  9891. CHAIRMAN: But after 2017 when the Crossrail trains start running, they will refer the freight growth, so presumably there will have to be another exercise.

  9892. MR ELVIN: Effectively 2015 is giving you freight growth to the opening of Crossrail, is it not, roughly speaking.
  (Mr Smith) The two years could be important but it gets us close.

  9893. It gets us close, yes. After that, when you have got Crossrail operating, other franchise passenger services operating, freight operating, you have got a series of existing companies there seeking paths and the ORR then has to balance any request for future paths in the light of all the other train operating companies.
  (Mr Smith) In accordance with its criteria and procedures.

  9894. That is a standard process, there is nothing unusual about it?
  (Mr Smith) Nothing unusual at all.

  9895. CHAIRMAN: But the ORR has not decided on that yet.

  9896. MR ELVIN: No.

  9897. LORD YOUNG OF NORWOOD GREEN: I think it has been answered, but I was just looking at 58. That is talking about unapproved capacity after 2015, I presume?

  9898. MR ELVIN: I think it is talking about unapproved capacity full stop because the ORR cannot prejudge what applications are made for access options in the future. The ORR would be fettering its discretion if it said, "I am assuming I am going to allocate X paths to certain operators". What it has done is provided a cost of allocated growth based on freight predictions without committing itself to how that is going to be allocated precisely because that is a matter for the normal processes.

  9899. LORD YOUNG OF NORWOOD GREEN: Let me be clear then for my benefit what is protected in terms of EWS. Existing freight paths?



9   Crossrail Ref: P67, Correspondence from EWS Ltd to the Office of Rail Regulation, ORR's decision, 17 March 2008 (LINEWD-34_04A-108) Back


 
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