7 JULY 2004

MR PETER ALDRIDGE, MR PAUL FRANCIS, MR PHIL VERSTER, MS ALLISON INGRAM AND MR VINCE LUCAS

  Q20 Mr Stevenson: It was a deliberate decision by your company to order the trains, to force them to do something they ought to have done in the first place?

  Ms Ingram: I cannot honestly plead that they were prescient but it did work.

  Q21 Mr Stevenson: Was that the approach of your company?

  Ms Ingram: No. I cannot say that we did it deliberately like that, but we knew we had that deadline and therefore we had to order the rolling stock, otherwise I think, rightly, we would have been criticised for not taking that action.

  Mr Verster: Just to explain it for South Eastern Trains, or Connex South Eastern at the time, and I was not involved with the company, I joined in January of this year. I think, to be fair to Railtrack at the time, it is clear from our project records that even though we placed our first order in July 1997, Mr Stevenson, throughout the latter part of 1997 and in 1998 Railtrack was engaging very actively with both Connex South Eastern and our supplier at the time, Adtranz, to try to ascertain what was the impact of the traction characteristic. That process definitely took place, and I have never worked for Railtrack, I have no loyalties there, but to think that Railtrack was blissfully unaware is not really the full perception as far as South Eastern Trains are concerned. It was a very active programme of meetings, interchange of questions, constantly trying to ascertain what would be the impact on the power upgrade.

  Q22 Chairman: You would rather expect that though, would you not, Mr Verster, of anything that was going to go onto their system?

  Mr Verster: Yes, I would.

  Q23 Chairman: Would not you regard it as automatic that if you knew that someone was going to run trains on your system you should at least be taking a mild interest in whether or not you had the electricity to make that possible? It is not much of a commitment is it, really? It shows willing but it is not what you would call tremendously unusual, is it?

  Mr Verster: No, but I think it is appropriate in the context to understand that there was an active process and that in a large project like this the onus actually to manage something like this, which is an illusive aspect of the process that is not resolved, lies with the Project Manager. In terms of our procurement processes, it is fair to say that the Project Manager which had to facilitate and resolve that at the time were the operators. Therefore the operators had to push, because we are the party between the supplier, the train-builder and the other parties, to get those answers. I think the fact of the matter is, the answer on what the traction characteristics were, in some of the cases of design, was simply not forthcoming because of some of the design uncertainties. Instead of pointing fingers at parties I think we must understand that the procurement process had as an uncertainty to it the design phase of the rolling stock.

  Q24 Chairman: Mr Verster, we are not pointing fingers, we are trying to say that if caveat emptor is the instruction to me when I go into a grocer's shop I would have thought it was even more an instruction to your Project Managers when they went into somewhere where they were ordering trains. Still, that is just a personal hang-up. Mr Lucas?

  Mr Lucas: The process in Southern was a little bit different because the first 120 vehicles we have got were ordered as part of the same order as South Eastern to which Mr Verster has referred. Having said that, I think it is worth just making a point that on new trains many of the things which have caused the change in the traction supply characteristic are a given, they are a given from beyond those people who are ordering the trains. Firstly, the trains have to comply with new crash-worthiness, which is right and proper and is a significant step forward from the Mark 1 trains they are replacing. To do that, their structure has to be different and that affects the weight of the train. The weight of the train is one of the fundamental characteristics required in calculating what the traction supply requirements will be. Firstly, that affects it. Second is the requirement for sliding doors, and that is part of the HMRI/HSE requirement to get rid of slam-door trains. Then you have a requirement on the new trains for sliding doors, which changes the way it uses power, it changes the weight, it changes the profiles. With any modern train I think people would be criticised if it did not have air-conditioning. Part of making rail attractive compared with road transport is to try to bring the quality of the interior closer to that of the modern car. If you look at the trains in the last 30 years, with the climate heating up, etc, it would seem unreasonable if trains were not ordered with air-conditioning. Air-conditioning also affects the weight and electrical power supply of the train. All those components are given, so you end up with not much leeway in some of the things which make up what the traction supply will be. If you wanted to reduce the drawing traction supply on those trains you would have to leave out some of the core elements which were part of the reason for the trains being constructed. Railways are a complex environment, each of these trains has four cars, you are looking at £1 million per car, roughly, in terms of capital cost, slightly less but of that region, it is a complex electrical beast. At the time the trains are built, as well as looking at what happens on power supply the other component which has to be looked at is how that tractive effort which the train uses affects the complex signalling systems which are on the railway. The signalling system on the railway will also have an impact on how the traction supply works, because if you put outputs from the train at a frequency of around 50 hertz and above and up to 200 hertz you can affect the signalling supply. When you are designing this train it becomes incredibly complex. What you find is that once the train is manufactured you have a design parameter and then you test it, and the approval that is given to the train companies and to Connex South Central, which is the predecessor of the company I am now in, the first approval is for tight testing on the network on which it is going to operate. It is at that time, when you see how that is going to operate, that you begin to understand how that will affect in a single case the way it uses power. It is not a simple case of just taking out more electrons because it affects also how long the power draw is and the rating in the sub-stations. Once then you multiply that out, for us, for 700 vehicles that is a very, very different scenario, in a complex environment, with other train operators. For us, we share with Gatwick Express some Connex South Eastern trains and that whole network needs to be modelled, so at the stage when we took an order for 120 vehicles, actually probably 120 vehicles in the network would not have caused a drain on the power supply over and above that which was there. We had to face a decision to order 700 vehicles to replace our existing fleet. During 2002 there was extensive work done with South Central and Railtrack to model that effect on the network. There was extensive modelling carried out on both the high voltage distribution network and the way it works on the trackside components. At the end of that, that work led to the core specification which became the Power Supply Upgrade Programme. That work had to be done iteratively and if there was something which could have been done better at the start—I think it is a question we will come to later—it is a question of that system integration and multiplying it up into a whole system effect.

  Q25 Chairman: Mr Lucas, I would not disagree with any of that but that must have been one set of circumstances, not those particular processes. That set of circumstances, the need to relate the quality of the rolling stock, the ability to run it efficiently, the matching of the rolling stock with the power system, frankly, that must have been faced ever since electrification came in. It has been altered in the type of train. You are not saying it is anything that the railway has not had to go through?

  Mr Lucas: No, but also it affects the types of trains and the number of trains, and during the late nineties we were also increasing the number of trains on the network, with the growth, 24% plus, 1 March.

  Q26 Chairman: You were aware of that. Those were the calculations of your business. Your business was running trains, your business was buying in trains to replace the broken down stock you had got.

  Mr Lucas: That is precisely why the modelling has been done.

  Q27 Mr Stringer: There is something I do not understand through your responses we have had. South West Trains, I think I am right in saying that you said Railtrack were not working on an upgrade?

  Ms Ingram: Not for our area.

  Q28 Mr Stringer: South Eastern and Southern seemed to say that they were working intensely?

  Mr Lucas: During 2002 they were.

  Q29 Mr Stringer: And from 1997-98. What was the difference? Were Railtrack prejudiced against you?

  Ms Ingram: No. We ordered our trains in 2001. On the South Western bit we have probably the weakest power supply. Also we take part of our supply from what is geographically bits of our neighbouring TOCs. It was the Railtrack view that you could not look at South West in isolation, you had to look at the whole of the Southern Region and all of the users, so you had to have a totally integrated approach to upgrading the power supply for the whole of the Southern. They would not be prepared to work with South West Trains only doing the South West Trains bit.

  Q30 Mr Stringer: I still do not understand because we were told that they were working with South Eastern and Southern?

  Ms Ingram: At that particular time, in 2001, South Eastern were not introducing that much in rolling stock.

  Mr Verster: South Eastern trains were introducing it in 2001.

  Q31 Mr Stringer: They had been working with you on the same problem since 1997-98, you said?

  Mr Verster: Yes, I agree with that. I do not agree with the comment that South Eastern was not introducing in 2000-01. Our introduction programme of new rolling stock was delayed significantly. We introduced most of our rolling stock during 2000 and 2001.

  Q32 Mr Stringer: So Railtrack were saying to South West, "We won't work with you because we want to integrate it," but even in 2004 South Eastern and South West do not have an agreed history of what went on?

  Mr Verster: Can I make it abundantly clear, probably with the PSU team that Network Rail have got, over the last few years the co-operation between what was Connex South East and is now South Eastern Trains, they have been working together continuously to make sure that the upgrades required for South Eastern Trains—

  Chairman: That is not what Mr Stringer asked you, is it?

  Q33 Mr Stringer: We are being told that South West did not believe Railtrack were doing any work because they wanted integrated work across the whole system for all three of you and yet two of you say they were doing work and you are still arguing about the truth of that statement. That is the case, is it not?

  Ms Ingram: I can only repeat what we were told at the time.

  Q34 Mr Stringer: On the same point, can I ask a slightly different question, because you posed the problem, Ms Ingram, the Health and Safety Executive were saying you had to hit this deadline and so you ordered trains not knowing that they would work, essentially.

  Ms Ingram: I think I said we ordered trains knowing we would have to improve the infrastructure.

  Q35 Mr Stringer: What was the difference in the cost between a decision of waiting for an extra year until the problems were sorted out and the different parties talked to each other and ordering at that time?

  Ms Ingram: There would be no difference in the cost, it would be one of compliance, the order timescale. We have ordered 785 vehicles and we were told by manufacturers that in order to produce those the latest we could place an order was in early 2001.

  Q36 Mr Stringer: You are saying there is no extra cost that you can quantify when in actual fact you did not know the extent of the problem because you say that Railtrack were not working on it. That is not a credible position, is it?

  Ms Ingram: Why do you think it is not a credible position?

  Q37 Mr Stringer: If Railtrack had not started the work, how could they know how much it was going to cost either them or you at that stage?

  Ms Ingram: Some consultants who work for us came up with an estimate of the work we needed to do on the infrastructure. In terms of ordering the trains, what drives the ordering of the trains is the timescale needed to produce the trains, test them and introduce them, and that was timescale-driven in order to comply with the deadline. The variable is how much you will spend on the infrastructure.

  Q38 Mrs Ellman: I would like to ask all these train operators, where would you look for compensation or financial adjustments now if the trains could not run because of infrastructure problems?

  Ms Ingram: We have an agreement with the SRA about the provision of new infrastructure needed for Mark 1 replacement. That was an agreement which was signed during Railtrack being in administration when we were unable to get Railtrack to do the work we wanted.

  Q39 Mrs Ellman: You would go to the SRA. Does that apply to the other train operators? Where would you seek compensation or financial adjustments if the trains could not run because of infrastructure problems, if that happened now?

  Mr Verster: In the case of South Eastern Trains, we are in a slightly different position from the other two operators, in the sense that we have benefited from network upgrades associated with the introduction of the Networker a number of years ago and also the introduction of the Eurostar. So all along over the last two years we have had less of a bottleneck or a risk in terms of power system upgrades. To be fair and to be honest with you, we have not considered that we will have that problem.