Select Committee on the Crossrail Bill Minutes of Evidence


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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