Examination of Witnesses (Questions 10360
- 10379)
10360. That the Petitioners seek to be opportunistic,
we say, is shown not only by their about-face in comparison to
their positive reception of the provisional ORR decision, but
by the fact that your Lordships have been troubled with a very
lengthy exposition of growth in the freight industry which is
not in dispute and was included in the modelling; by EWS's criticism
of the evidence before the ORR, which to date they have welcomed
the ORR's decision; spurious justifications advanced by witnesses
as to why they should bring a parallel claim before your Lordships
having not pressed their claim before the regulator; and Mr George's
false analogy with planning applications.
10361. We say the concern which has been expressed
is difficult to follow in circumstances where the ORR has plainly
acted independently in balancing all the interests and has not
accepted the entirety of the Promoter's application. Stringent
requirements have been imposed on the project in terms of the
objective outputs test and the change control requirements. The
ORR's decision is welcomed and judged to be fair and transparent
and the ORR's legal duties are set out in the 1993 Act and attempts
to pressure the ORR and take a decision based on that pressure
would be amenable to judicial review.
10362. The issue between us is a narrow one.
We are simply saying to your Lordships, we want to retain a modicum
of flexibility for a relatively short period of time, possibly
only as much as three to four years, because there is the possibility
that we may not have to spend several millions of public money
on infrastructure works that may turn out to be unnecessary. We
have got mechanisms, as your Lordships have seen now at some length,
in the ORR's decision to secure that Crossrail complies with the
requirements to protect the interests of other passenger services
and of the freight industry and growth in the freight industry.
There is that protection there. As Mr Berryman has said to you
very frankly, there is a good chance we will have to do the works
in any event to get to the position under the access option. There
are possibilities that we should not, but it is a question of
prudent public accounting not to require us to do works when they
may be costing £10, £20, £40 million which simply
then becomes irrelevant.
10363. It is very easy in the context of a £16
billion project to regard tens of millions as small change, if
only it was small change to most of us! It is a matter of prudent
public accounting and we simply seek that flexibility. The reality
is freight is anxious to secure capacity which is needed in any
event from the network, whether or not Crossrail goes ahead. As
I say in sub-paragraph 4, a number of the works which you have
been asked to look at are works which are committed and funded
in any event. Somehow it is expected that Crossrail can wave a
magic wand and accelerate other infrastructure works unrelated
to the Crossrail Bill in order to generate capacity which is required
whether or not Crossrail goes ahead. That is just an indication
that there is perhaps a little inflexibility and a degree of opportunism
in the approach of the freight Petitioners.
10364. Finally, the reliance for commitment
to the on the Acton dive-under, of course there are specific reasons
for the dive-under being committed at this stage and Mr Berryman
has repeated his explanation to you this afternoon. If the dive-under
is not put in, then effectively we extinguish the Acton Freight
Yard, which is a very important facility because there are no
real alternatives and there is no other way of preventing a significant
number of conflicts and, as your Lordships heard, over 30 movements
per day.
10365. It is necessary to examine whether the
Petitioners should succeed on the very narrow issue of whether
we should have the degree of flexibility that we say is properly
to be allowed on prudent public accounting grounds.
10366. Firstly, the points that I have already
made, that it marks a significant and unjustified departure from
the fully argued position before the regulator.
10367. Secondly, and I say this with the greatest
of respect to your Lordship's Committee, your Lordships are not
in as advantageous a position as the regulator, which heard a
much wider sector of the industry, had fuller representations
and evidence and was in a better position to balance the interests
of the industry and come to the conclusion which Parliament has
said is the regulators to reach as to what the terms should be.
10368. Can I just interpose this, this comes
from a point which was made this afternoon, even if we had to
commit to all of these works today, regardless of whether or not
that would be expenditure that was necessary at the time, that
still, on current assumptions, will not deliver the full capacity
required by the regulator. The freight operators are asking for
six or seven items of works, one of which is committed in any
event, one of which is highly improbable that it will not be committed
within the near future, which is the Heathrow access, but even
those will not guarantee what can only be guaranteed through the
access option, which is the 92 per cent. To do that you will require
the majority of the works on current assumptions, including the
£80 million works at Maidenhead, which are not within the
list. Your Lordships may well ask, "What is the point of
requiring us to commit to works which we are probably going to
commit to in any event as a matter of practical necessity which
are ring-fenced and protected by the access option as to the outputs
and which even if we do them will not guarantee the necessary
capacity to protect the paths which have been ring-fenced by the
regulator in the terms of the access option?".
10369. There is only one mechanism which is
left to do that which is the regulator. It does make the position
of the freight industry incomprehensible before your Lordships
because it does not secure the objective of the regulator. It
does not go far enough in one respect and it goes too far in others
because it is requiring us to commit to matters which there is
at least a possibility we may not have to commit to and if £40
million of public money can be saved, then surely that must be
a desirable thing.
10370. My Lords, I have set out some further
comments here and I do not want to take them at any great length,
they are in writing should your Lordships wish to read them at
greater length. Can I just make the point that Mr Garrett accepted
yesterday that of course to tie us to the infrastructure works
now might also have the effect of unduly fettering future decisions
by the ORR and you will set that against the fact that we cannot
change the assumptions as to infrastructure in the model without
the industry agreeing or without the regulator taking an independent
decision that we were right. As Mr Garrett explained to you this
morning in re-examination, he said, surprisingly perhaps in view
of his earlier position, that in the absence of the detailed design
of the infrastructure works, he could not say what the implications
of those works were for capacity, so the only expert evidence
called by the Rail Freight Group before your Lordships says, "I
can't tell whether the works as they are at present will secure
those capacity improvements", which rather goes to prove
our point, that there is a degree of uncertainty, which means
we should not be tied down with the degree of nicety which the
Petitioners suggest.
10371. My Lord, summarising the position, we
are looking for a small degree of flexibility in the interests
of prudent public accounting. We are looking for a small degree
of flexibility which does not prejudice anybody because the way
in which the control change mechanism and the outputs based objective
test operates will ensure that freight paths are protected, including
future freight paths required for growth to 2015.
10372. It is noticeable that the passenger operating
companies and others who may be concerned with infrastructure
works have not petitioned and, in our submission, the degree of
flexibility we are seeking here is reasonable and we should not
be required to give any undertaking beyond the position that the
ORR has already established to the access option.
10373. I can be brief with regard to blocking
rights because nothing arises on blocking rights. It is agreed
that the Network Code and other mechanisms of the industry can
be used, and it is agreed that the appropriate approach is to
include an Olympics type clause to introduce a new consideration
for the ORR to take into account when reaching its decisions.
10374. I turn then to the question of compensation.
This turns out, having heard the witness this morning, to be a
very narrow issue. We have given an undertaking which cures any
concern there may be if G9 of the Network Code is used. That is,
we have given an undertaking in the form in which Mr Lancaster's
letter sought to reassure EWS, and with regard to the question
of network change the concern is there may be some impact on EWS
which falls into (b) of the definition of network change. It is
a common position before your Lordships, and the witness for EWS
made this clear, that the majority of the works which are likely
to impact on EWS fall within little ground (a) and the six-month
period restriction does not apply to little (a), therefore we
are talking about the possibility of works which last for less
than six months and which are likely to be the minority of works
which impact, or potentially impact, upon the operator.
10375. CHAIRMAN: And they are re-examining
the Code anyway, are they not?
10376. MR ELVIN: Your Lordship has my
next point: in any event industry mechanisms are being re-examined
by the industry. We have given a commitment that, where there
are no industry mechanisms, we will pay compensation based on
the no net gain no net loss principle, but at the moment there
is an industry mechanism, even if it allows compensation with
certain restrictions, but industry is re-examining that. Our short
point on this is that this is another instance where, given the
wide assurance that exists through the little ground (a) of network
change definition and the undertakings that we have provided both
in the other Place and to your Lordships this morning, industry
mechanisms can, as we all agree, be regarded as the proper way
to take matters forward.
10377. I simply record at paragraph 25, then,
that with regard to the intended way forward with the rail clauses,
as I said on Tuesday, it is not considered appropriate to give
any undertaking with regard to introducing the amendments. The
Minister has made two policy statements and, with respect to the
Petitioners, that is sufficient to provide the necessary degree
of reassurance as to what will happen.
10378. On Tuesday 29 April the Committee asked
for a note from the Promoter explaining clauses 40 and 41 of the
Bill.
10379. Clause 40 is based on a provision contained
in the Channel Tunnel Rail Link Act 1996 and deals with co-operation
between the controllers of railway assets with which Crossrail
construction, maintenance or operation interact and the Nominated
Undertaker. Either party can require the other party to enter
into an agreement. The object is to ensure that neither the Nominated
Undertaker nor the controller can act unreasonably in dealing
with a problem relating to the interaction of the Crossrail works
with overland or underground railway assets.
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