Select Committee on the Crossrail Bill Minutes of Evidence

Examination of Witnesses (Questions 10020 - 10039)

  10020. So you would need a new access option to be obtained in order to be running trains on the network that would be running at the same time as Crossrail trains?
  (Mr Oatway) Yes, a new access contract.

  10021. So the points that EWS is making about the requirement to provide infrastructure now relates to the protection of paths in an access option which EWS does not yet have?
  (Mr Oatway) Yes, that is correct.

  10022. MR TAYLOR: Let us turn away from that then and move on to questions about compensation. Can we start please by looking at Information Paper H2 which we have already had attention drawn to today.[19] We can see the general approach that is being adopted by the Promoter set out at paragraph 6.3 of H2 where, I think it was Mr Elvin, but I cannot quite remember, it was a while ago now, July 2006, but where clarification was provided—

  10023. CHAIRMAN: Mr Taylor, which of the exhibits is this?

  10024. MR TAYLOR: This is Information Paper H2.

  10025. CHAIRMAN: Yes, but is it one of the exhibits?

  10026. MR TAYLOR: It is. Here we have paragraph 6.3 on page 4 of Information Paper H2 which relates to railway matters and compensation. The principles to be applied on compensation were clarified before the Select Committee in the other place by a reference to three principles, firstly, that industry mechanisms will apply whether the access option or the Bill powers are used. Now, Mr Oatway, you wholeheartedly support, do you not, the application of industry mechanisms?
  (Mr Oatway) Absolutely.

  10027. The second principle is that, where an industry mechanism for compensation exists, it will be used, and again that is a principle which you wholeheartedly support, is it not?
  (Mr Oatway) Well, with the exception of the gaps I have raised in my evidence, yes.

  10028. So there are industry mechanisms that you are unhappy with?
  (Mr Oatway) No, the industry mechanisms are there to cater for the normal running of the railway, the day-to-day options and changes by Network Rail. When there are specific additional huge projects, third-party projects, which relate to changes in the railway, then those mechanisms were not intended to meet those particular types of arrangement, which is why we needed the extra protections, as we have pointed out, in the Transport and Works Orders, for example.

  10029. So you are not happy about the application of industry mechanisms to large projects and you would not want them to be applied? That is what you are saying?
  (Mr Oatway) Well, the industry mechanisms for large projects go far beyond just compensation. What I am really trying to point out is the fact that the Promoters have said that we can get compensated on a no net loss, no net gain basis, but, where industry mechanisms exist, they will be used. Well, if the industry mechanisms to which I have referred are used, it will not result in us being compensated on a no net loss, no net gain basis, so I am just seeking to plug that gap, as I coined it earlier.

  10030. I am trying to understand whether you are saying to the Committee that industry mechanisms should be used or should not be used. I thought that you had said in answer to the questions I put to you in relation to the first principle at paragraph 6.3 that you wholeheartedly supported the application of industry mechanisms.
  (Mr Oatway) Yes, as far as they go, yes.

  10031. There is a qualification to it now, is there, "so far as it goes"?
  (Mr Oatway) Yes, and I think that is recognised in the third bullet point. Where the industry mechanism does not exist, one has to be drawn up and the principle of no net benefit, no net loss will be applied and that is what we are talking about here.

  10032. Where an industry mechanism does not exist?
  (Mr Oatway) Yes.

  10033. Well, we will come on to see whether industry mechanisms exist or not. Unlike in relation to the points you raise about infrastructure, I have not seen anywhere in the exhibits provided to the Committee an undertaking written down as to just what it is precisely that you are seeking in terms of a form of words in relation to compensation matters. Am I right in thinking that there is not one before the Committee?
  (Mr Oatway) I believe that that is the case.

  10034. So what exactly is the form of words that you are seeking then in terms of undertaking?
  (Mr Oatway) Well, what we are seeking, in line with the Promoter's third principle of compensation, EWS seeks an undertaking from the Promoter that she will develop, and operate, a bespoke compensation regime to cover all other losses which are not covered by network change or any other standard industry compensation mechanism described.

  10035. If we have a look at the transcript, then we have the words that you are seeking, so thank you very much for that clarification. Let us turn please to this issue about G9 first before we move away from the page in front of us, and we can see at the bottom of page 4 of Information Paper H2 a reference to an addendum dated January 2008 which explains that, "The railway industry is currently discussing applying suitable compensation arrangements to `competent authority change' under the Network Code", and that is this point about G9, is it not?
  (Mr Oatway) Yes.

  10036. The addendum goes on to explain, "The competent authority change, with compensation attached to it, is a potential means by which the works approved in the Crossrail Bill could be undertaken. This may prove preferable to amending Part G as described in this paper. The Promoter will be considering this further in line with the assurance detailed above in paragraph 6.3 to use industry compensation mechanisms—in this case an emerging mechanism—where possible". So the Promoter has made it perfectly clear that it wishes to take into account the result of the consultation process on changes to the competent authority change arrangements within the Network Code, has it not?
  (Mr Oatway) It mentions it there, yes, that is right.

  10037. Yes, and am I right in thinking that that consultation process is not yet concluded?
  (Mr Oatway) Yes, it has not been formally consulted yet with the industry. It has been discussed within the working groups of which I am a member.

  10038. If we turn then please to your exhibits, EWS30, which is at 05A-019, the concern that EWS has regarding the potential use of the G9 mechanism is that it does not have compensation attached to it.[20] Is that right?

  (Mr Oatway) Yes.

  10039. So, if that mechanism were changed so that G9 could be used, but compensation would be payable, that would meet EWS's concerns?
  (Mr Oatway) Yes, if we did get compensation, but there would be no reason for using G9 if there was compensation because you could just use G1 because that is the normal one you get compensation from.

19   Crossrail Information Paper H2-Railway Compensation (LINEWD-IPH2-005) Back

20   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

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