Examination of Witnesses (Questions 9980
- 9999)
9980. Should we then turn, first, to the question
of G9, which may be, I think, the lesser of the two concerns which
you are raising? You have an exhibit, have you not, which we can
put up in which you have set out the provision of G9?
(Mr Oatway) Yes. Exhibit EWS-27.[13]
9981. This is in your Lordships' bundle, but
one would not expect your lordships to be familiar with it. There
was a typo in the original version where it referred to "(d)(iv)"
and it should have referred to "(e)(iv)", and that is
simply corrected in manuscript but is not a matter that is going
to be of any great concern to their Lordships. Can you explain
the position in relation to G9?
(Mr Oatway) Yes. The main purpose of G9 is to ensure that
changes imposed by competent authorities can be dealt with within
the network change process, but a key difference between G9 and
G1, which is the main process for dealing with changes to the
network, is that under G9 all parties are expected to bear their
own reasonable costs and losses as a result of the change to the
network. In other words, EWS would not receive compensation from
any G9 change, neither would Network Rail, neither would any other
party.
9982. And the potential unfairness of that was
recognised by the Promoters, was it not, in the other place, and
an undertaking was given in respect of the predecessor of G9,
which was G5?
(Mr Oatway) That is correct.
9983. And if we could just put on the screen
EWS 29, please, you can see the third of those undertakings was
an undertaking that the Promoter would not invoke Network Code
condition G5, and G5 is almost in identical terms to condition
G9, is it not?[14]
(Mr Oatway) That is correct, yes.
9984. Now, what is your remaining concern in
relation to this G9 matter?
(Mr Oatway) Well, it is to ensure, firstly, that the G5 undertaking
will apply to G9 and, secondly, because we have had some doubts
recently on that and have seen some letters from the Promoter,
I am just looking for assurance from the Promoter that the G5
undertaking will be adhered to as it is written up there, and
will also apply to G9 or to, indeed, any other subsequent re-numbering
that G9 might change into.
9985. If we could just put up on the screen,
please, EWS 30, that is a letter on 26 February from the Department
to Mr Smith dealing with the question of G5, which is now numbered
G9, and in the fourth paragraph it says: "We had earlier
rejected use of G9 (was G5) because it did not have compensation
attached to it, not because it was otherwise unsuitable or inappropriate",
and that is the matter which you find objectionable, the use of
G9 because it would not give compensation, is that not right?[15]
(Mr Oatway) Yes, that is right.
9986. And then there is apparent comfort in
the text of the rest of that page of the letter, which I need
not read out, but if we turn to the second page of the letter
we can see under (ii) that one option they are considering is
to "explore use of G9 (was G5) but with compensation payable".
Now, until you received this letter, had you heard of any suggestion
that, notwithstanding the undertaking, G9, which is what G5 has
become, might be going to be used at all?
(Mr Oatway) No.
9987. And what is the position you are now seeking
in respect of G9?
(Mr Oatway) I am merely seeking that the undertaking that
was expressed in the previous exhibit we were looking at applies,
and it applies equally in relation to G9.
9988. And do you believe there are other parts
of the Network Code which Crossrail can perfectly well use without
having any need to have recourse to condition G9?
(Mr Oatway) Not if it does not want to avoid paying compensation,
yes, there are, which is G1, which I outlined earlier, which is
the part of the process which I assumed, once I got the G5 undertaking
back in the other place, that they would use.
9989. CHAIRMAN: Mr George, what is all
this about? This is interruption of use of the track because there
is access work or infrastructure changes going on, is that what
it is?
9990. MR GEORGE: It is entirely about
compensation for losses to other operators caused by the construction
activities of Crossrail, and the general principle accepted by
the Promoters is that we and other operators should be compensated.
It is just to make sure that the words, ie the principle, do take
effect. As I say, there are simply the two matters which we are
asking for comfort on. The first is G9 will not be used as it
could be said: "Oh, well, this is an authorisation of Parliament,
it will all be done under G9". We believe that is not the
intention of the Promoters, which is why they gave their undertaking
below; we simply want the reassurance that there is an undertaking
that they will not use G9. To use G9 would be incompatible with
the policy they stated, that these works should be done but not
at a loss to us. In other words, if there are costs, they should
be costs of the project, not costs of others. I do not believe,
as I say, there is going to be any great dispute on that particular
issue, but that is the simple point.
9991. The second point is another point relating
to compensation, and for this purpose could we put on the screen,
please, EWS 31.[16]
9992. This is where your skills, Mr Oatway,
are needed to explain the concept of the network change and the
particular provision of the definition of a network change which
you consider, as I understand it, to be inappropriate in the case
of Crossrail and, therefore, ought to be disapplied.
(Mr Oatway) Yes. I set out in this exhibit several instances
where I anticipate that curtailment or serious disruption to EWS'
business will be caused during the construction phase of Crossrail
but which I anticipate are likely to fall outside the standard
industry railway compensation regimes. I call this a non-compensatable
disruption.
You can see on that, and I will draw your attention
to (b)(ii) of the definition of network change, that it says there
"any change to the operation of the network, being a change
which does not fall within paragraph (a) above, which has lasted
or is likely to last for more than six months." I believe
there could be disruptions caused by, for example, temporary speed
restrictions, weight or gauge restrictions which will not last
for six months and therefore will not be compensatable under the
network change process. I think we need to take this a fraction
slower. You have got on the board the definition of `network change'
and it is right, is it not, the Committee should know, that, where
there is a network change, then compensation is payable, the problem
being that in (b) one of the categories which is excluded is a
change where it has lasted, or is likely to last, less than six
months. It has to be lasting more than six months to count as
the network change under (b)(2)?
(Mr Oatway) That is correct, yes.
9993. We see from the bottom of the page that
that includes temporary speed restrictions. Are you anticipating
temporary speed restrictions, weight restrictions, gauge restrictions
as a result of, and during the course of, the construction of
Crossrail?
(Mr Oatway) We have experienced similar disruptions many
times over similar big major projects that take place on the railway
network, for example, the West Coast, as we have mentioned earlier
as one example.
9994. Now, say they were to last for four or
five months or right up to five months, 30 days, those temporary
speed restrictions and weight restrictions, even though they might
cause a loss to EWS, would not qualify as a network change?
(Mr Oatway) That is correct.
9995. What has happened in other railway schemes
about this question of temporary speed restrictions lasting less
than six months?
(Mr Oatway) Within other schemes that have been promoted
by third parties on the network, and I will refer to the Channel
Tunnel Rail Link, when that project was being first kicked off
back in the mid-1990s, the Department at that time agreed for
a special schedule to be implemented into each affected train
operator's track access agreement which would ensure that, even
if works were done which did not meet the definition of network
change, those works would still be compensated as if they were
a network change.
9996. So, in that case, there was no need to
raise the matter before any Select Committee because the Department
took their own initiative and announced that the matter could
go into the access agreements and they were put into the access
agreements?
(Mr Oatway) That is correct.
9997. What then happened in respect of the East
London Line?
(Mr Oatway) Since that time, and CTRL is the only project
where that mechanism has been used where a specific schedule has
been inserted into each operator's track access agreement, but
normally, since that date, and particularly with projects that
are built under the Transport and Works Order process, there is
a specific protection put into the Transport and Works Order which
will ensure that, firstly, Network Rail would be compensated for
the disruption that it pays out to other operators as a result
of the changes to the network and, secondly, and more importantly
for train operators, that protection is directly enforceable by
the train operator in the event that they do not receive compensation
from Network Rail.
9998. If we could put up EWS33 to which I took
the Committee in opening yesterday, this is a piece of delegated
legislation because Parliament decided it did not want to deal
with these rather more minor railway works, that they should be
done under the Transport and Works Act of 1992, so they then went
to a public inquiry instead of coming before committees of this
House and that proposal contained, and we looked at it yesterday,
in Schedule 11, paragraph 1(2), a definition of relevant costs.[17]
That is at page 2 of the document and at page 4, paragraph 19
is the appropriate provision making it plain that all the costs,
direct losses and expenses incurred by construction were to be
paid by the Promoter. Is that right, Mr Oatway?
(Mr Oatway) That is correct. When I see any
Transport and Works Orders of this nature, this is the first schedule
I turn to to see whether that protection is in there. If it is,
that gives me a great deal of comfort that EWS can expect to be
compensated on a no net gain, no net loss basis for the disruption
caused by the project.
9999. We simply put this in as a sample because
there are a whole number of other schemes which have been promoted
under the Transport and Works Act where similar provision has
been provided which has given, therefore, comfort to other railway
operators who, otherwise, might suffer loss.
(Mr Oatway) That is correct.
13 Committee Ref: A57, Condition G9-Changes imposed
by competent authorities (LINEWD-103_05A-015) Back
14
Committee Ref: A57, Correspondence from Bircham Dyson Bell to
Department for Transport, Crossrail-Register of Undertakings,
21 January 2008 (LINEWD-103_05A-018) Back
15
Committee Ref: A57, Correspondence from Department for Transport
to EWS Ltd, Crossrail Bill: Part G and Compensation, 26 February
2008 (LINEWD-103_05A-019 and -020) Back
16
Committee Ref: A57, Non-compensatable disruption (LINEWD-103_05A-021) Back
17
Committee Ref: A57, The London Underground (East London Line
Extension) (No. 2) Order 2001 (SI 2001/3682) (LINEWD-103_05A-026
and -028) Back
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