Uncorrected Evidence 219

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Oral Evidence

Taken before the Transport Committee

on Wednesday 9 January 2008

Members present

Mrs Gwyneth Dunwoody, in the Chair

Mr David Clelland

Clive Efford

Mrs Louise Ellman

Mr Philip Hollobone

Mr Eric Martlew

Mr Lee Scott

David Simpson

Graham Stringer

________________

Memoranda submitted by Greengauge 21, The Railway Forum and Mr Roger Ford

Examination of Witnesses

Witnesses: Mr Jim Steer, Director, Ms Julie Mills, Director Greengauge 21, Mr Roger Ford, Industry & Technology Editor, Modern Railways, and Mr Paul Martin, Director General, The Railway Forum, gave evidence.

Chairman: Good afternoon, welcome to you all. I am grateful to you for waiting for us. As you can imagine, this Committee is not responsible for the programme of what goes on in the House of Commons, or it might work! Can I ask you to indulge us for a moment, we have one little bit of housekeeping to perform? Members having an interest to declare: Mr Efford.

Clive Efford: Member of Unite.

Chairman: Mr Clelland.

Mr Clelland: Member of Unite.

Chairman: Mr Stringer.

Graham Stringer: Member of Unite.

Chairman: Gwyneth Dunwoody, always different, ASLEF. Mrs Ellman.

Mrs Ellman: Member of Unite.

Q1 Chairman: I am feeling somewhat hunted here! Can I ask you firstly if you would be kind enough to identify yourselves for the record, starting on my left and on your right?

Ms Mills: My name is Julie Mills; I am a Director of Greengauge 21 and co-author of the submission to the Committee. I am an independent consultant and previously worked for the Strategic Rail Authority.

Mr Steer: Jim Steer, Director of Greengauge 21 and also a Director of the Consultancy Steer Davies Gleeve.

Mr Martin: Paul Martin, Director General of the Railway Forum.

Mr Ford: Roger Ford, Industry and Technology Editor, Modern Railways and founding editor of Rail Business Intelligence.

Q2 Chairman: Thank you very much. Does anybody have anything that they want to say briefly before we begin? No. Then for all of you, does the White Paper provide the kind of long-term vision that the railways need?

Mr Martin: If I could launch off on that, Madam Chairman? In my view - and it may be slightly unfair - Brunel, Stevenson and Telford had vision, but the jury may still be out on the Department for Transport on that. The Railway Forum very much welcomed much that was in the HLOS when it came out last summer ---

Q3 Chairman: We are going to try and avoid discussing the general health of the public and HLOS.

Mr Martin: The White Paper, we felt, was disappointing. It did not have vision; it has not, in our view, tackled the problems of capacity over the next 30 years. It specifically does not deal with further electrification with a second high speed rail line in the UK. To be fair, the Minister, Tom Harris, has said that it does not set out to be a fully finalised vision but rather a framework and it is for the industry and others to fill the gaps there - there are many gaps in our view to be filled.

Q4 Chairman: Anything missing from that, Mr Ford?

Mr Ford: I think the main problem is that it is determined not to spend any money on permanent infrastructure and infrastructure improvements. The message seems to be anything but infrastructure improvements and to squeeze more out of the railway we have.

Q5 Chairman: Is it an accountant's view of the railway?

Mr Ford: I think that is being unkind to accountants! It is just a grey view of the railway with no vision and no ambition.

Q6 Chairman: Mr Steer, no strategy?

Mr Steer: What I would add to that is that it does not discuss what the role of the railway is, so it does not really look much beyond the railway's problems and those that can be anticipated. Really I think for a railway strategy looking forward over 30 years one would expect rather more than that.

Q7 Chairman: Ms Mills, is there anything else that you want to add that - anything that is not in that list?

Ms Mills: I have nothing to add.

Q8 Mrs Ellman: I would like to ask you for your observations on the problems caused by Network Rail over the Christmas and the New Year period. Have you put that down to intrinsic failures of Network Rail or is it some operational problem?

Mr Martin: If I could go first? Clearly it is difficult to determine precisely what went wrong over the New Year at Rugby. We will all wait to see the ORR and the internal Network Rail report to fully understand what the shortcomings were. Clearly, as the Committee is fully aware, there is a considerable and a growing range of major projects to manage in the railways and that is going to increase in the forthcoming years with Crossrail, Thameslink and all the others. We have seen years of a growing lack of key, skilled workers in the industry and under investment in the industry. I suspect that one factor in Rugby is likely to be the shortage of key personnel and I would say clearly that there is an urgent need for the industry as a whole to rack up its capacity to deliver key projects, and it is very unfortunate that that failed so miserably over the New Year.

Q9 Chairman: Any other comment on that?

Mr Ford: If I might, Madam Chairman? It was essentially a beautifully planned long-term look at it but when it started actually happening on site it all went wrong, and we must not forget that there was Rugby, there was Liverpool Street going on in parallel and in Scotland there was Shields Junction at Glasgow, which still has not been resolved as we speak, and in most of the cases it just does not happen on site; it is down to poor project management. On the two schemes in Rugby and Liverpool Street, which involved electrification, there were not enough parts to put up the wires; they had to raid Network Rail's own stock of spares.

Q10 Chairman: So it was not just that they did not have enough staff who knew what they were doing; they did not actually have anything with which to do it?

Mr Ford: Partly the problem was that the staff - a lot of the electrification staff in particular - were sub-contractors who were pulled in for jobs, they are not the regular team. No, it was badly managed on site; things did not happen. I am sure you will hear later on that the train operators were told at ludicrously short notice that it was not going to happen. Liverpool Street was due to open at four o'clock in the morning on 2 January and it was around about midnight when one railway was told that it was not going to happen. At the moment we do not know when Shields is going to open. It is a complete shambles, and I think the fact that you have three schemes all going very badly wrong suggests that there is something wrong in the system rather than just one going wrong somewhere.

Q11 Chairman: They did do quite a lot of others as well, though, did they not? They did how many over Christmas - 30?

Mr Ford: Something like that, but, for instance, my local one at Stevenage they abandoned before they started, as it were.

Q12 Chairman: How did they manage to do that?

Mr Ford: It was all scheduled, the possession was there and they did not use it. Similarly, work at Rugby should have been done earlier in the year during a possession, but it did not happen. There are severe problems on project management, particularly on the ground where you are dependent upon people with a lot of experience and a lot of skill and a lot of those people have bled out of the industry.

Q13 Mrs Ellman: In the past this Committee recommended that Network Rail should bring more infrastructure work in-house. Would that have solved this problem?

Mr Ford: I think there was already a move after these three schemes for at least electrification staff to come in-house. Because there is no real electrification work going on at the moment you do not have regular teams and the view is, I believe, that if they can establish a cadre of electrification people working on, hopefully, infill schemes this year, by the time that mainline electrification restarts the capability should be there. Yes, I think you will start seeing project work coming in-house.

Q14 Mrs Ellman: Do you think that there is likely to be a repetition of this problem unless something major changes?

Mr Ford: Yes.

Q15 Mrs Ellman: What about the role of the Office for Rail Regulation? Does that office do enough to bring Network Rail to account?

Mr Ford: To draw a parallel, I think they are standing there up to their knees in oil-soaked guillemots wondering why the tanker hit the rocks, when they should have been up on the headland firing off rockets to warn it before it happened.

Q16 Mr Hollobone: Longsuffering passengers who fall victim to Network Rail engineering overruns are frustrated because there is no direct connection between them and Network Rail, and the interface is always the train operating companies in between. Do any of you have a view about whether the system of rail regulation ought to be altered so that the compensation arrangements for passengers, and especially season tickets holders, can be a lot quicker and a lot more transparent in cases of engineering failures like this?

Mr Steer: I would only observe that the compensation arrangements are really quite complex. It took a good deal of time to establish them, so if that were to be adopted I think that great care would have to be taken to ensure that, firstly, it did not undermine the arrangements that are already in place; secondly, that it worked effectively and efficiently. I think it would be quite difficult to achieve actually.

Q17 Chairman: Before we move on to other subjects, can I bring you back to this business over the holiday weekend? We are constantly being told that of course one reason the work is so much better under its new structure is that there is excellent project management under private industry, who know what they are doing and who are lean, mean and efficient. Are you saying, Mr Ford, that Bechtel, who normally have been telling us at great length how efficient they are, did not do a good job?

Mr Ford: They did not.

Q18 Chairman: Why not?

Mr Ford: I do not know. Presumably the quality of the people on site or something, but certainly there were instances at Rugby where they were in charge, where things that were said to have happened in the office on the paper, when you went out on site I am told had not happened.

Q19 Chairman: Do you have any indication as to whether that was because they were not given accurate information on the project before it began?

Mr Ford: They are responsible for the west coast route modernisation, which they lead; they were the people who were put in to get it under control.

Q20 Chairman: So is this going to happen again?

Mr Ford: It all depends how fierce Mr Couch is when he speaks to them.

Q21 Chairman: Do you think it is endemic in the system that this method will always produce the same sorts of stresses?

Mr Ford: It is okay for planning; it is good at paperwork and computers and so on, but when you actually get down on to the site and you have to do things and you find that something is not quite as you expected or there is a delay, or whatever, whatever, there are certainly deficiencies in the ability of management to run it on site and the sub-contracting system means that a lot of the workforce employed are ad hoc, they are not working as teams. You only have to look at the way that the East Coast main line was electrified under British Rail under a senior project director and they just rolled along day in day out and delivered on time and on budget.

Q22 Chairman: So what you are really saying is that it is the division and structure that has made the difference. Because the same people are not working together, because they do not have the same commitment to get it done in time, is that what you are saying?

Mr Ford: Certainly British Rail employ contractors to do things like electrification but you have to be better informed than your contractors; you have to be able to know what they are doing, know when they are smiling and they are really, really worried about something going wrong, and I think what Network Rail has lost is the ability to be an informed customer.

Q23 Chairman: Why do you think that no passenger was given accurate information, say on Christmas Eve, of the debacle that they were going to face?

Mr Ford: I think you will have to ask Virgin that.

Q24 Chairman: I think I might do that but I am asking you; what information do you have?

Mr Ford: People were told desperately late; the railways were told desperately late that it was not going to happen. As I understand it, Virgin certainly had concerns as far back as 12 weeks ---

Q25 Chairman: I am sure that Virgin is very capable of telling of their problems; some of us hear from Virgin quite often. What is your view of it?

Mr Ford: First of all, the train operators were not told in good time; they were told very late, like midnight before, that it was not going to happen on the day that it was due to happen. Then it takes time for that to get through into the system.

Q26 Chairman: Why did the passengers not hear in a country which is overrun with means of communication, mostly used by the deaf? Why is it that nobody bothered to tell the passengers until they turned up?

Mr Ford: I think people did try to tell the passengers that there were buses laid on and so on, but it is short notice and I would agree with you that communication is not the railway's strongest forte.

Chairman: Would it surprise you to know that I actually rang Network Rail and asked why they had not put a representative on to the news waves and was told that they were doing a press conference at lunchtime, which was then four hours after comment had already been made on a news programme? Perhaps I should not ask that.

Q27 Mr Clelland: The White Paper seems to accept the conclusion of the Eddington Report that high speed rail would represent poor value for money in the UK. To what extend do you think that that assessment is acceptable?

Mr Steer: We think that it is an invalid conclusion, and that is based on the work that supports the Rail White Paper. What the Rail White Paper I think, first of all, usefully does is it suggests that some of the alternatives to high speed rail are really not worth pursuing and I think in that respect it should be noted that the White Paper really did a useful narrowing down job. But it then, while acknowledging in the longer term that there is a capacity need for high speed rail, confuses itself by some pieces of analysis which suggest that really if we need new capacity it is very questionable, I think is their conclusion, as to whether it should be high speed or not. We have set out in our evidence where we think they got that analysis wrong. The evidence we have is that correctly applying assumptions high speed rail would have the same carbon impact - which is one of the key things they are worried about - as existing Inter-City rail, for very straightforward reasons - higher capacity trains, higher load factor and so forth. That seemed to be the telling reason which persuaded them that this was too early to say anything positive about high speed rail - a simply rather poor analysis on that point.

Q28 Mr Clelland: Should there be a reassessment given the success of High Speed 1?

Mr Steer: Most certainly we feel that now is the time to really undertake the serious planning work that is needed on high speed rail. The Department is about to embark on a set of multi-modal corridor studies - sorry, it is a horrible phrase but there is nothing else to say for it - and we believe that there is a real risk that those will not be informed of clear plans for what high speed rail would actually provide. So we think that is really the challenge ahead this year.

Q29 Mr Clelland: Should there be a distinction made between conventional high speed train services and Maglev services, for instance?

Mr Steer: The White Paper certainly made that distinction based on some work from two learned professors. We would say yes, they should make that distinction.

Q30 Chairman: Does anybody else want to comment on that because Mr Steer will not mind me saying he is a little bit parti pris on this matter?

Mr Martin: If I could add, I entirely agree with what Mr Steer had to say. To be fair to Rod Eddington, he was portrayed in his initial report as not supporting high speed rail. He clarified when he appeared before you and this Committee that in fact he was opposed to Maglev and not to high speed per se. We think, as Mr Clelland has said, with the very successful launch of High Speed 1, a vision of what can be achieved, it would be a great shame to see the team that achieved that dissipated over the coming years and we would like to see them going forward with the new high speed line. I think clearly there is a strong business case for an initial line between London and the West Midlands. We believe that there is a strong social and economic case for continuing that subsequently through the northwest, up to Newcastle and to Edinburgh and in Glasgow, but clearly that will be done in phases, as the motorway network developed across the UK.

Q31 Graham Stringer: Can I follow up with one question on high speed trains. I have read the Greengauge submission and you made a point which you have repeated now, that the government underestimates occupancy and therefore its figures cannot be relied on. But in your paper you do not go into what the increase in carbon dioxide is as you move the speeds up from 125 mph to 200 mph and beyond. There is a big dis-benefit there, is there not, of the extra carbon dioxide?

Mr Steer: There is but it is important that we do not confuse ourselves over this. What you have to really look at is two cases: one with a high speed rail system in place and one without, and this is the standard way of looking at all of these issues. With high speed rail in place it is true that the higher speed of the rail operation will consume more energy - probably not as much as people think because, after all, if you are purpose-designing the infrastructure the train is not going to be starting and slowing down and calling at stations, all those things that conventional trains do that perhaps travel at 200 km an hour rather than 300. But it is true that there is higher energy at fast speed. But of course the impact of that fast service will be felt not just on rail but on other modes as well and on reduced demand for short haul aviation. It is that which lends high speed rail the diversion from air and from car its carbon credentials; and you cannot have that benefit without offering a high speed service that will attract people away from those modes that they are using in their droves today.

Q32 Graham Stringer: What distance from London do you think high speed rail will really begin to take passengers away from airlines?

Mr Steer: If you look at Heathrow I guess Manchester is about the closest of at least the significant airports ---

Q33 Graham Stringer: Passengers are already travelling by Virgin, are they not; that has happened?
Mr Steer: Yes and Virgin has done a great job of increasing its market share, but just as Richard Brown would tell you if you asked him about Eurostar, London/Paris, a very substantial and not that dissimilar market share, that there are still a lot of people - it might be down to 30% or 40% - travelling by air, and those passengers can also be attracted away from air; and we believe, and the evidence is, that that would be the case especially if high speed rail includes access to Heathrow.

Q34 Graham Stringer: A much more general question, in round terms there is now between two and three times as much public money going into the railways as there was at the time of privatisation and afterwards, until 1990/2001. There are a lot more passengers paying higher fares. What has gone wrong? Where is all that money going? You would expect with a lot more passengers higher paying fares that the public subsidy would go down. Why is the public subsidy still higher?

Mr Ford: If I might; this is my specialist subject? Basically costs have gone out of control. In rough figures in 1988/1989, 20 years ago, the railways' income in modern money was about five billion and it shifted something like three-quarters of a million passengers; the railways' income now is about ten billion and we have, at the moment, with the amount of projects going on, a lot of money going into the railways but it is not buying the sort of things we were buying then. Basically the costs have got out of control exacerbated by the panic after Hatfield. I calculate that project costs have gone up by about three times - boiling frogs syndrome - and costs have just gone out of control; and, as we can see, costs have partly gone out of control because we have lost the discipline of people who knew what they were doing working as a team.

Q35 Graham Stringer: All the reports from the Public Accounts Committee and this Committee and the government assessing it themselves recognise that costs got out of control during the transfer between Railtrack and Network Rail, but in your opinion why has it taken so long to get those costs back under control when the punctuality and reliability figures are not back to where they were pre-Hatfield either?

Mr Ford: It is a bit like tying a bungee rope around your waist, tying the other end to the tree and walking out on a slippery lake. British Rail was quite good at tiptoeing out, but the moment you lose concentration, i.e. privatisation, the rope snaps you back and it takes a long time to get back to where you were. On top of which there were other factors which would have affected British Rail anyway - Health and Safety requirements for working and that sort of thing. We certainly could not get back to the costs that were ruling in the 1980s but certainly we should not be spending the sort of money that we are spending now for what we are getting. The Department has said that it wants to get back to the historic norm and it defines the historic norm as the five years between privatisation and Hatfield. Even that is still quite a lot of money compared with what older people like me can remember for the railway we got and the money we paid for it.

Q36 Graham Stringer: It is a very general answer and I am genuinely trying to understand it. You can build a new railway in five or six years, but why can you not get a railway system that it is already there - where admittedly the costs got out of control, but it is there - why can you not get the costs back and the service to at least as good a level as they were prior to Hatfield in that five or six year period? It is extraordinary.

Mr Ford: I would say simplistically that having destroyed a fully functioning state railway, which was the most efficient railway in Europe, and also gave extremely good value for money, the bits will not go back together again. I would also say that I have struggled to answer this question for about the last five to ten years and I am none the wiser.

Q37 Graham Stringer: Do you think anybody knows the answer?

Mr Ford: No.

Mr Steer: May I add something, given that I equally do not know the answer? I would just point out a couple of things to add to what Roger has said. Besides the additional passenger numbers there has been a big increase in freight and there has been a significant continuing improvement in safety, and it would be wrong to assume - Roger mentioned health and safety legislation, but the safety record of the railway has continued to improve, and if you are looking back over a ten-year period it is materially different.

Q38 Chairman: To be realistic, are you actually telling us that because they are better at the job and because they are safer they nevertheless are spending much more money and should be excused on that basis?

Mr Steer: I am not suggesting that anybody should be excused; I am just suggesting that there are other parameters. The other one that is sometimes overlooked post-Hatfield may well have been an over reaction and certainly there was a loss of control, but the decision was then taken, rightly or wrongly, to increase the level of expenditure on maintenance and renewal work, and that was a positive decision. To some degree that was a catch-up of backlog and expenditure particularly through the 1990s both during the privatisation process and during Railtrack's tenure, expenditure that was not being made. I think we should understand that there would be some increase, but I am not suggesting for one moment that the level of increase is to be acceptable.

Q39 Graham Stringer: Do you think the direction in which the government is going in balancing what the passenger pays and what the taxpayer pays is right? Essentially they look as though they are trying to get the passenger to pay most of the train operating company's costs; is that the right way to fund the railway?

Mr Steer: My own view is that there is a risk that this is quite a financial shock that is being imposed upon the railway. In effect what is being said is that the level of financial support stays much the same, and it is argued that if it goes down it is pretty much the same over the five-year period on which the Rail White Paper concentrated, and all the additional income comes largely from additional passengers but also from the 1% real increase in regulated fares. So the balance goes from roughly 50% passenger funding up to over 70%. If you look at the historic records that is quite a sharp transition and I do not personally see the logic for it. I think you can see the logic for gradually increasing it but a shock like that is perhaps going too far.

Q40 Mr Martlew: What you are really saying is that the amount of government subsidy should increase considerably?

Mr Steer: Yes. Obviously one wants to see the money efficiently spent but I should have thought we are in a world where we should be expecting the railway to be doing more and to some extent - not a major extent - I would have thought there should be additional taxpayer as well as user revenue going in to pay for it.

Mr Martin: If I could add to that, Madam Chairman? I think there is a concern that there are elements at least within government and the DfT who think that one way to meet the problem of providing further capacity is to manage demand by increasing costs to passengers, I do not see that as being the way ahead. Clearly there has to be a re-balancing between the percentage paid by passengers and the percentage paid by taxpayers to the government, but the very dramatic turnaround that the government is looking for over the next ten years ---

Chairman: No, I do not want to repeat that.

Q41 Graham Stringer: Four years ago - and we have them here regularly - nobody in the industry, no government Minister was predicting the increase in passengers that we have at the present time, so there was not this expectation. Do you think that the change in the balance of the fare structure, these large increases about which we are talking, will undermine the government's now very optimistic projections on passengers?

Mr Martin: I do not honestly think that the government has a very optimistic projection. I think the figures from the DfT are very conservative. If one looks at the figures before by ATOC I think they are more realistic. All of that, of course, is subject to what happens to the economy over the next ten or 15 years. My members say that one of the first indications of a turnaround in the economy, a downturn in the economy is when the revenue from passengers over the previous week starts declining, and we have seen that in previous recessions. So with that caveat I think that the DfT is being conservative and in fact the demand is likely to be much greater than they are currently anticipating.

Q42 Graham Stringer: So these projections, which include large increases for the fares that passengers are paying, you think are realistic - the two can live together?

Mr Martin: I think there is a balance to be struck; I am not sure that they will work properly.

Q43 Chairman: Is that a yes or a no, Mr Martin?

Mr Martin: It is a no, Madam Chairman.

Q44 Mr Scott: It is said that 150 stations can be upgraded for �150 million. Do you think that is realistic or a pie in the sky figure that is just going to rise and rise and rise?

Mr Ford: It depends what you mean by upgraded. Stations require different amounts of upgrade; some are a few hundred thousand, some are several million. I do not think you can say �150 million, 150 stations. For instance, Hatfield needs work doing on it; it needs a disabled access to the island platform, and that would add something to the modernisation of Hatfield which would be quite expensive. Other stations - a coat of paint, new toilets, better lighting, better passenger information, not a lot of money. I do not think we can generalise on that.

Q45 Mr Scott: None the less it is �150 million that has been allocated for 150 stations, however that is divided up; do you think that is adequate funds?

Mr Ford: I am comfortable with it, yes.

Q46 Mr Scott: What do you think should be the process for selecting stations that are going to be upgraded?

Mr Ford: There are various techniques available where you go around with a clipboard and a tick box and you say: does it have passenger information? - not very good; are the toilets hygienic? - no, they are not; does it have disabled access? There are various processes that you go through. You come up with a ranking scheme and then you start prioritising down from there, and obviously you will presumably have some version of priority where you tend to spend a lot of your money on a few of the stations that really need it.

Q47 Clive Efford: Mr Ford, you are critical of the government's position over electrification, particularly the funding. What period do you think is realistic to expect the railway to pay back capital investment in things like electrification?

Mr Ford: Capital investment is always paid back over 30 to 35 years and one of the most appalling pieces of anything about electrification in the White Paper was the suggestion that because we might have hydrogen developed from bionic duckweed in 15 years' time and we might have to take the wires down and it would all be wasted, electrification should pay back in ten to 15 years. I thought that was one of the best examples of technical illiteracy in the government I have come across.

Q48 Clive Efford: Is there any potential in the rolling stock programme, in the investment in rolling stock not being used to bring down the cost of electrification?

Mr Ford: You get the situation where the Department paints it as though there are these mad people like me saying, "We want a totally electrified network," and you do not. What the call is for is for a rolling programme and a rolling programme gradually extends the electrification across but as you extend electrification you get benefits in. So if you are going to extend it progressively you do not buy diesel trains which are going to be redundant in ten years' time, you plot the programme so that new trains come in, electrification comes in and the result is yes, overall you do get a much better value for money.

Q49 Clive Efford: Does the current framework of the industry allow for that sort of planning and investment?

Mr Ford: No.

Q50 Clive Efford: Whilst we are on rolling stock, do you think that those that have been negotiating on behalf of public have actually done a good job in terms of the quality of the rolling stock that we purchase for our railway?

Mr Ford: The rolling stock has largely been specified by the train operating companies and bought by the ROSCOs and one of the interesting things is that the cost of rolling stock has not gone out of the window like the cost of infrastructure has - trains are still pretty much costing in modern money what they have all along. Yes, it is pretty good value for money but my one real criticism is that everybody took their eye off weight and as a result we have some of the heaviest trains ever built coming in; the new Japanese trains for the Kent coast are the heaviest electric trains in Britain and the Japanese are supposed to build lightweight trains. So, yes, there have been errors but by and large we have a newish fleet and quite good quality.

Q51 Clive Efford: Just going back to electrification, is the redeployment of electric powered rolling stock a problem?

Mr Ford: Not really, no.

Q52 Clive Efford: Is the extent to which the European market for electric powered rolling stock more competitive for self-propulsion, particularly for high speed trains?

Mr Ford: There is a lot more demand for electric trains in Europe; we are the only country mad enough to run high speed services with diesel trains, and even madder to consider running future high speed services with diesel trains. So that means that we are going to have to buy trains which are one-off, specified; nobody else is building diesels for that sort of performance so, yes, we are going to have to pay a lot more for them than we would if we bought electric trains pretty well off the shelf.

Q53 Clive Efford: Should we wait for cab based signalling before we go full on for electrification?

Mr Ford: Certainly not. The plans are that on the Great Western mainline, where the HST, the high speed trains entered service in 1976, these trains are still running on, becoming even more reliable and they are going to be fitted with cab signalling so that they can run through to 2020 pending the arrival of replacement trains.

Q54 Clive Efford: Do you think that electrification would increase capacity on the railway?

Mr Ford: Absolutely. For a start you do not have diesel locos or whatever at the end so every coach can carry lots of people, you get more power, more acceleration more reliability. Yes, it certainly would.

Q55 Clive Efford: Can I ask you what precisely is an infill project, and why are they so cheap?

Mr Ford: Let me give you an example. An infill project is where you have a short length of track which is not electrified adjoining two sections of electrified track. A good example is between Gospel Oak and Barking where the line is being upgraded to allow larger freight trains. This short section is not electrified. If it was electrified you could run electric freight trains from the new Shell Haven terminal and run them up the east coast or the west coast mainline. So infill projects - and ATOC has a list of about 25 prioritised - are small projects, small schemes where you electrify and you get a huge benefit. Through Kidsgrove, which I am sure Madam Chairman is aware, was electrified as a diversionary route and it makes a huge difference because you can run electric trains through when there is work going on. So they are small projects which do not cost a lot of money but bring a big benefit by enhancing the network.

Q56 Mr Martlew: Talking about the high speed line, or whatever, Mr Steer I have read the report from Greengauge and it is very interesting. I think we perhaps do the Department and Sir Rod Eddington a disservice, that they have come a long way from the press reports about the Eddington report. There is an actual acknowledgement that there is a place for high speed trains, there is not any go ahead for it. If we have, as it appears, major problems with capacity on the west coast mainline - and when we get cab signalling that will help for a while - the reality is that we will need another line. To me it would seem ridiculous if we are going to build another line on the west side that it is not a high speed line. Would you comment on that? And where do you think it would go - as far as Manchester?

Mr Steer: My comment on that is that the thing we are here to talk about, which is this White Paper, said that the schemes identified would provide sufficient capacity until 2030.

Q57 Chairman: We are not into visual bits, Mr Steer; would you like to announce the title of the document?

Mr Steer: Yes, indeed, "Delivering a Sustainable Railway - the Rail White Paper", July last year. Then in October last year a subsequent Department publication towards a sustainable transport system said that the west coast mainline would run out of capacity by 2024, which might still sound a long way away but in terms of project planning timescales that says, "Hang on, that is already shorter than the timescale if we are to start planning now than it took to implement High Speed 1." So we are really at a very critical point. I do acknowledge the point you are making that one can be too churlish about the Department's position; I just observe that it seems to be shifting and it seems to be coming forward in terms of recognition. As to where a high speed line should go and what it should do, clearly in the west coast it needs to serve the main markets. My observation at the beginning about looking beyond, as it were, the railway boundary suggests to us that it is very important we think about Heathrow as well as London; that we think about connecting to High Speed 1; that we think about serving the major cities - Birmingham, Manchester, Liverpool and so on. That does not mean to say that we have to build new sections of route over the entire distance. The lesson from many systems elsewhere and the early days of running over half of the Channel Tunnel Rail Link is that we can operate high speed rail over the existing network if it is suitably planned.

Q58 Mr Martlew: The final point is the issue of the cost. There has been put out a figure of �30 billion at some time by the Department, and that is a figure that means that nothing will ever be done. What is your estimation of the costs to go from, say, St. Pancras to Birmingham to Manchester?

Ms Mills: Could I take this one, please? The �30 billion I believe derives from a study carried out for the Strategic Rail Authority in 2002 that I led for Atkins Consultants, and that was the cost for a high speed network with two lines, including the Trans-Pennine Link, so much larger than covering one corridor such as London-Birmingham-Manchester. Greengauge 21's own proposal for High Speed 2, which would link Heathrow London with Birmingham and onwards to the north, we are costing at about �11 billion and that includes a 66% optimism bias adjustment. So I think the costs are a lot more reasonable than the �30 billion.

Q59 Mr Clelland: On the high speed rail point would the environmental impact of high speed rail be significantly different were it based on Maglev rather than more conventional systems?

Mr Ford: Can I catch this one, Madam Chairman? Maglev is a technology developed in Germany largely because the Germans could not match the TGV in exports. It is a technology looking for an application; it lacks the versatility of railways. If you are running at 500 kilometres an hour you are using a hell of a lot more energy than a train. When it gets to the end of its track it stops, the train can go on. I am not sure whether it can do regenerative breaking. Maglev is one of these things that keep coming around - technologies looking for applications. People think it is sexy and railways are old fashioned, but the old fashioned Stevenson railway is the transport system of the 21^st century; it is flexible, it is fast, you can have metros, you can have high speed trains, on top of which the energy issue while important I think is overrated. You do not buy a railway to cut your carbon, you buy a railway because it gives it what you want; it gives you transport, reliability and efficiency and the environmental benefits come from buying a good railway.

Q60 Chairman: I want to ask you about funding before you go. You have talked a little bit about it but is it realistic to say that the money from the travellers alone can balance the books for the franchise operators, because that seems to be the way we are going?

Mr Ford: The problem there is that the franchise operators do not pay their full costs to Network Rail; Network Rail gets something like 2.5 billion in direct grants. If all the money, as in the beginning of privatisation all Rail Track's money, came through the franchise operators, then in 2001 the government decided they would like to put some grants in to reduce the cost to the franchise operators. So the fare payers' money is laundered, as it were, through the TOCs to Network Rail, but Network Rail still gets 2.5 billion. If you actually put all the money through the TOCs none of them would be profitable - I think one might be profitable - and so really the contrast between taxpayer and fare payer is really all one pocket, it is just where it goes.

Q61 Chairman: I think what concerns us is the White Paper's approach; is it actually encouraging a modal shift to the railways or not?

Mr Ford: No.

Q62 Chairman: Is the cost of fares going to accelerate because of that decision by the government?

Mr Ford: The return to the historic norm is all well and good but of course the historic norm is based on a much cheaper railway, so while paying 70% of the railways' costs is one thing -paying 70% of a railway costing perhaps seven billion a year was one thing, paying 70% of a railway that needs ten billion a year is a lot more. So obviously although we are saying, "Fare payer, you are just paying a bit more percentage" it is the same percentage but of a much larger amount.

Q63 Chairman: Is this system being planned on the assumption that all railways run to London so that there is the emphasis all the time on running railways up and down the country, not across, not creating a network?

Mr Steer: I think, Madam Chairman, the answer is probably not, but the income that can be achieved by running services to and from London is very much higher than from elsewhere in the country and I am sure that has been an influential factor.

Q64 Chairman: Could you tell us why places like Reading and Birmingham have congestion problems that presumably are more acute than Manchester and Leeds?

Mr Steer: I am not sure that they necessarily are more acute.

Q65 Chairman: So how were they selected?

Mr Steer: I am afraid you would have to ask the Department that, Madam Chairman. I think there are significant congestion problems, certainly in Manchester because of the historic nature of the rail network; Leeds has been subject to it - a significant capacity expansion. So the problem of the network is less critical there but there is serious overcrowding on its commuter rail services.

Q66 Chairman: So if we expanded commuter traffic elsewhere in the country would that actually positively change the balance, both in modal shift and in environmental support?

Mr Steer: I think it would and I think it is going to be necessary because if the northern economy is to continue its path of rejuvenation there is going to be a lot more commuting, and if that is going to be accommodated on an overcrowded motorway network it is not going to be very satisfactory.

Q67 Chairman: The government is going to spend a lot of money on new rolling stock in the coming year. How can we protect the supply industry from this cycle of feast and famine - either too much or too little?

Mr Ford: I think we have both lived through lots of cycles of feast and famine. I am not convinced that the government is going to spend a lot of money on rolling stock. There are the alleged 1300 vehicles and there is an alleged plan of the rolling stock planned to be published this month, indeed. But just before Christmas they wrote to Virgin rejecting a proposal to add the extra two cars to every Pendolino, plus build three or four additional sets to provide more capacity. I understand, but have not had it confirmed, that they have rejected TransPennine Express's request to add extra coaches to the train, the 185, the new diesel trains on TransPennine Express. So if you judge them by their actions I think the supply industry is going to continue to suffer.

Q68 Mr Martlew: Mr Ford, are you not being a bit disingenuous? My understanding is - and we have the Minister in I am going to be pushing him to put the extra coaches on the Pendolino. But was it not the fact that they actually refused to extend the franchise of Virgin by two years, and that was the issue?

Mr Ford: Yes.

Q69 Mr Martlew: It would not extend the franchise, is that not correct?

Mr Ford: We are coming to the situation where if you are a train operator and Angel and ---

Q70 Mr Martlew: Is that not correct?

Mr Ford: It is indeed the case, but that is down to risk again. If you are running a franchise and you are committed to paying money to the government and you are going to start taking your trains out of service, pulling them apart, putting new bits in there is a risk there.

Q71 Mr Martlew: So you think it was a reasonable request for Virgin to ask for an extra two years?

Mr Ford: I think it was an eminently reasonable request particularly because there is a risk in taking very complex trains apart and putting them together.

Q72 Chairman: Mr Ford, with the greatest respect if for any reason they lost the franchise is there not a very clear indication that whoever came in would require the same rolling stock?

Mr Ford: Yes, indeed they would require the same rolling stock.

Q73 Chairman: So the risk is not exactly over great, is it, because most people running a business do not expect to have a guarantee that if they go out of business somebody comes in after them and will underwrite all their broken down pieces of equipment.

Mr Ford: It was a revenue risk. Trains have to be modified; you take the trains out of service, put two new coaches in, join them up, test them and everything and that could lead to trains being less reliable, that could lead to less revenue, more penalty, compensation paid by Virgin in the last years of their franchise. It is a monetary matter not a long-term risk. They could lose money in the last year of their franchise and they want compensation.

Q74 Chairman: Finally, I think what concerns us is that there is a distinct worry that we are returning to the situation were the train operating companies and Network Rail between them seem to regard the passenger as an embarrassment, to be considered at the last moment. Would you say that was the case?

Mr Martin: I would not, Chairman. Clearly there has been a considerable growth in the passenger and the freight use of railways over the past ten years, which we very much welcome. I think it is the responsibility of government and of Parliament as a whole to work with the industry to provide the capacity to meet that demand. We do not think within the Railway Forum that that demand should be constrained by unreasonable fare increases in the next ten or 15 years.

Q75 Chairman: So the money should come from the taxpayer?

Mr Martin: It has to be a balance but some of it will come from the taxpayer, absolutely. I think we have to recognise that the growth in passenger transport is much more substantial outside of London than in it and that must be reflected in the way that resources are allocated to the regions and not just to London.

Q76 Chairman: Therefore the new rolling stock should be disproportionately looked at in relation to the regions rather than the southeast?

Mr Martin: We have had growth of some 60% in Birmingham, Manchester and Leeds compared with 32% in London. If we are talking about 1300 new carriages - and various figures were wafted around - there must be a fairer share across the country, absolutely.

Q77 Clive Efford: Mr Streeter, would you add to that there should be efficiencies within the industry as well - it must look to itself in the future?

Mr Steer: Absolutely.

Q78 Clive Efford: We have seen a huge cash bonanza for a lot of private sector interest in the rail industry over the last ten or 15 years.

Mr Martin: I entirely agree. When Ian Coucher took over as Chief Executive of Network Rail he was absolutely upfront in saying that in its early hours Network Rail had done much to reduce costs but it had lost its way to a certain extent. It was his determination - and he is a pretty strong character - to put that back on to tracks and I trust that will happen.

Chairman: Gentlemen and Madam, thank you very much indeed.

Memoranda submitted by Institution of Mechanical Engineers,

Chartered Institute of Logistics and Transport and County Surveyors Society

Examination of Witnesses

Witnesses: Mr Cliff Perry, Vice Chairman Railway Division, Institution of Mechanical Engineers, Mr Martin Brennan, Chair, Strategic Rail Forum, Ms Mary Bonar, Member, Strategic Rail Forum, Chartered Institute of Logistics and Transport, Dr Ian Harrison, Deputy Director, Environment, Economy and Culture, Devon County Council and Mr Colin McKenna, Head of Highways and Transport, West Sussex County Council, County Surveyors Society, gave evidence.

Q79 Chairman: Good afternoon. Would you like to identify yourselves for the record, starting on my left?

Mr McKenna: Colin McKenna from County Surveyors Society, and I also work for West Sussex County Council.

Dr Harrison: I am Ian Harrison from County Surveyors Society and I work for Devon County Council.

Mr Brennan: Martin Brennan; I am the Chairman of the Rail Policy Forum of the Chartered Institute of Logistics and Transport.

Ms Bonar: Mary Bonar; I am past Chairman of the same Institute and I am also a rail lawyer and interested in promoting open access operations.

Mr Perry: I am Cliff Perry; I am the Vice Chairman in the Railway Division of the Institution of Mechanical Engineers, and also Chairman of the Railway Engineers Forum.

Q80 Chairman: Did any of you have anything you wanted to say briefly before we begin? No. Then who is going to tell me whether the White Paper provides a long-term vision that the railways need?

Mr McKenna: Chairman, I think it is deficient as far as the County Surveyors Society is concerned in that it does not concentrate sufficiently on local access issues and the integration of planning locally, our developments, our economies with the contribution that the railway can make. I think it needs to say a lot more about that in order to perform its function of a fully integrated transport system.

Q81 Chairman: Are you saying that we ought to think big because we have a big growth in passenger numbers and we have lots of environmental challenges; is that what is wrong?

Mr McKenna: Yes, I think you need to think big in terms of carbon footprint. I think it is the local access to the station. You will not get these passenger numbers occurring unless people can get easily to the station, or if they do occur they will cause lots of problems around stations.

Q82 Chairman: Has the White Paper set out a strategy which would shape developments rather than simply reacting to them?

Dr Harrison: No, Chairman, I do not think it has. In the White Paper the Department has been reactive to growth rather than responding to the challenges that are coming to the growth agenda, rather than picking up what the planning system is doing. The planning system is delivering more people who are potential customers to the rail industry. In our view the predictions which underpin the White Paper significantly underestimate the capacity that the rail industry will need to provide.

Q83 Chairman: Mr Perry.

Mr Perry: I think the answer to the first question, does it provide a big enough vision, is definitely no. I think the reason for that is that even in its own words it says that it bases its projection on current growth trends. The current growth trends have not produced reduction in CO₂in transport; it just has not done it and we need to do that. If there is commitment to that reduction then we need to do a number of things - not all engineering, although there is some engineering in there. We also need to change behaviour and we need to get people making their journeys on more carbon friendly modes than they do at the moment; in other words, the government needs a policy of supporting modal shift to rail and then providing for it, and the White Paper does not do that.

Q84 Chairman: Mr Brennan?

Mr Brennan: Madam Chairman, the Chartered Institute for Logistics and Transport was somewhat more welcoming of the White Paper than some of the other witnesses, perhaps, in that at least for the first time it is a White Paper that recognises that the rail industry is now a growth industry and that passenger and freight user-ship has significantly increased over the last ten years, and it says that it is planning to enable that usage to double. We feel that the White Paper and the embedded HLOS was good in terms of the prescription of activities that need to take place over the next five years.

Q85 Chairman: Did it go far enough in relation to things like other government policies, like energy policy and spatial policy?

Mr Brennan: We felt that there was certainly room for it to have done better in terms of the long-term vision, as other speakers have noted, and we were particularly disappointed at the tendency in the White Paper to say that because of uncertainty plans could not be begun now - electrification in particular has been mentioned in that regard.

Q86 Chairman: So are you really saying that, say, the RPAs and the franchises ought to have been told earlier on that these were the changes that were needed and the expansion that was needed?

Mr Brennan: I think there needs to be quite a lot of link-up between all of the various government policies so that it really truly is joined up and strategic in its vision across the whole of government and that the rail policy is seen in its wider context.

Q87 Mr Hollobone: Nowhere is that more relevant than in Kettering, which I have the privilege of representing, where the Department for Communities and Local Government has set a housing expansion target which will increase the local population by a third, whilst at the same time the route utilisation strategy on what used to be called the Midland Mainline means that the number of trains stopping at Kettering is going to be cut by a third. My question to the Panel, Chairman, is: is it true that the government's method of demand forecasting is failing to take into account areas of rapid housing growth dictated by other departments?

Mr Brennan: Madam Chairman, if I may answer? The demand for costing and methodology used by the Department is quite good at dealing with growth on the margin following GDP, but I agree fails adequately to take into account some of the other demographic issues, and that is a prime example of where there needs to be joined-up thinking between the different policies of different departments, to make sure that regional policy and land use planning and housing scheme developments are fully factored into demand forecasting, which has tended to rather underestimate the level of growth over recent years, and I see no reason, unless something changes, why it would not continue to do so.

Q88 Mrs Ellman: Network Rail created chaos over the Christmas and New Year period. Last year it was fined because of problems on the Portsmouth re-signalling system. What do you think is the reason for what happened? Is it an endemic problem within Network Rail? Would anybody like to offer an opinion?

Dr Harrison: Chairman, if I may start? It is difficult for us perhaps to understand the precise processes that are involved within Network Rail and between them and their contractors, but as local authorities we are obviously very aware of the impact of making changes on networks, in particular in our case on highway networks. I think it comes down to project planning and project management and clearly there seems to have been problems in this particular regard and not uniquely over this Christmas. I think that is also symptomatic of a more general lack of concern of perhaps all parts of the rail industry for the interests of the travelling public. Certainly in some local authority areas we have railways closed down for several weeks a year with, I think, scant regard to the interests of the public sometimes. So I think there needs to be better project management but also a more effective dialogue between the rail industry and it stakeholders, the passengers.

Q89 Mrs Ellman: In relation to the breakdown over the holidays as distinct from general maintenance does anybody have a reason why this happened? Do you think that having more work brought in-house would have made a difference? Does anybody have any view on that?

Ms Bonar: The view that many of the industry are taking is that this is a failure of management and of project management and even if the work were being procured in-house the question arises that Network Rail would need to be able to manage the job that it is committed to undertaking.

Q90 Chairman: Are you saying that it is both; it is not just Network Rail but it is also the people actually running the project directly? They are not the same management, are they?

Ms Bonar: They are not the same management; this was an outsourced job, for which Network Rail remains responsible but has an outsource party - in this case, as you have yourself mentioned, Bechtel - running the job. If Network Rail were to take the programme management in-house and therefore employ the people who Bechtel employ it still has to be able to manage this process.

Q91 Chairman: Are you saying that they would not be able to? That is what you are being asked.

Ms Bonar: I see no reason why they would do it better doing it in-house than by outsourcing it.

Q92 Mrs Ellman: What about the role of the Office for Rail Regulation; is it failing in its duties?

Ms Bonar: The role of the Office for Rail Regulation here, in this sort of situation, is almost inevitably after the event. The planning of the work over this period was something which had been agreed with the railway and with the operators and of which the Regulator was aware. The change that was asked for in terms of the extension, as I understand it, was something that the Office for Rail Regulation agreed to, but it can only rely on the information which has been presented to it by the stewarding party, in this case Network Rail, when it is asked to agree to that sort of thing.

Q93 Mrs Ellman: Are you saying then that the Rail Regulator is not proactive in trying ---

Ms Bonar: It is not.

Q94 Chairman: Mr Perry, do you want to finish on that?

Mr Perry: What I wanted to point to was an important move that is in the White Paper and it is very important that the Regulator keeps Network Rail to it, and that is a move to do very much more of the maintenance to the railway without shutting the railway - that is commonly referred to as the seven-day railway.

Q95 Chairman: But on this specific point as to whether or not the ORR is capable of holding Network Rail to their responsibilities, do you have a view?

Mr Perry: No.

Q96 Chairman: Anyone else? Dr Harrison?

Dr Harrison: No.

Q97 Chairman: We are all being tactful. Yes, Mr McKenna?

Mr McKenna: Simply to reiterate that it is about team culture and it is about longer-term relationships, whether they are in-house or between the in-house team and the external team, and you can make a difference - we know this from our experience in terms of highway works - as long as you keep at it, you get a good team, you have that stability of the team over time. The ORR barking at Network Rail for this particular failure will not actually solve the problem.

Q98 Mrs Ellman: The White Paper also looks to the future, to a 24/7 economy, when it is going to be more difficult to have planned maintenance that shuts the railway down. Do you have any ideas of how that could be dealt with?

Mr Perry: Madam Chairman, exactly how it is done will of course be developed by Network Rail. It is a very important shift in the way that we manage the railway. I think it is very important for our customers; it is very important for the development of getting people out of their cars so that they rely on public transport.

Q99 Chairman: Mr Perry, people do understand how important it is. You are being asked if you cannot shut down important bits of the railway system how are we going to move to a 24-hour society.

Mr Perry: The point I was coming to is that there is very good international experience on how to maintain your railway, closing it down much less frequently. Other railways are very good at that and I think there is a lot to learn from some of our European friends.

Q100 Chairman: Dr Harrison on this point.

Dr Harrison: Thank you, Madam Chairman. I think there are two issues: one is the flexibility of the network and one of the difficulties that we are experiencing is that the flexibility of the rail network was reduced by reductions in capacity, taking out alternative routes, limiting capacity on alternative routes. So there is a certain amount of mitigation measures which can be done to increase capacity of alternative routes to enable diversion. The second issue comes down to undoubtedly sometimes you do have to close the railway, and it comes back to the heart of the question that you were addressing. I think the public needs to understand and to buy into what is happening; so to recognise that there does have to be closure.

Q101 Chairman: But they do need to be told in order to understand.

Dr Harrison: They need to be told and to buy-in and then the rail industry needs to deliver. So if they are told that this has to happen, a closure has to take place for a week in order to achieve certain work then there has to be 100% delivery from the rail industry that it sticks to that bargain with the public.

Q102 Mr Martlew: It is a myth of a seven day a week railway. On the west coast mainline at the moment we have a five day week railway - in reality we should be going for probably a six and a half day railway. If we continue to say that we need a seven day a week railway there will be two things that will happen: one, maintenance will fall behind; and, two, if it does not fall behind the cost will be excessive of keeping it maintained. So are we not peddling a myth about a seven day a week railway 365 days a year?

Dr Harrison: I think on behalf of the travelling public the County Surveyors Society would resist that suggestion to the extent that social patterns have changed, as is recognised in both the White Paper and the Network Rail business plan, and therefore Sunday is now a key travelling day for many people.

Q103 Mr Martlew: Do you think people should pay more to have a seven day a week railway?

Dr Harrison: I think there has to be a clear understanding of what levels of service can be achieved and how maintenance can be interleaved with that. It may mean that we will have to pay more for maintenance by doing maintenance overnight, as indeed we find on the highway network sometimes.

Q104 Chairman: Dr Harrison, as anybody who uses the west coast mainline over the weekend knows, it is only on Monday to Friday that you get what you want. Saturday and Sunday it is quite entertaining because you never have the faintest idea when you are going to arrive or even where you are going! It does lend itself to the gaiety of life but is it not better to say, "We cannot run a seven day service" than to say "We will run a seven day service" and then have absolutely furious people decanted on to Euston or the other end calling down every curse upon the name of certain well known publicists?

Dr Harrison: I acknowledge, Madam Chairman and Members, that there has to be a recognition about what is realistic for the rail industry but I do not think it is acceptable to go back and to say that Sunday is a no-go day for rail travel.

Q105 Chairman: What we are asking you is something that happens now; does that not happen now? Mr Brennan, you are going to tell me that Virgin do not have that, they have a seven day railway?

Mr Brennan: Certainly not. I think that there may be different models of how and when to take engineering possessions to get the work done that needs to be done and different parties will argue about what is the best method. What seems to be clear from the debacle over the last week or two is that the issue is one of certainty, of people knowing what is happening, of the train operating companies knowing what is happening and the general public knowing what is happening. In a sense, people do not mind too much as long as they have the information to make alternative travel arrangements.

Q106 Chairman: I think, Mr Brennan, they do mind. If they are going to be uncomfortable in a coach for an hour and a half they would rather be uncomfortable from point of issue to point of delivery at about one-sixteenth of the money. If I am going to be uncomfortable at least at the other end of it I want to buy a very large bottle of perfume!

Mr Brennan: I think the least comfort is waiting on a platform and not knowing if there is going to be a train and where it is going to go.

Chairman: True; some of us get quite vocal before that!

Q107 Mr Clelland: There is a view that the White Paper is too much centred on London and the southeast and when taken together with the recent announcement about the investment in Crossrail that view was perhaps reinforced. Would any of our witnesses care to comment on that?

Mr McKenna: Yes, Chairman, if I may? Certainly our view from the County Surveyors Society is that there needs to be the appropriate balance, whatever that balance is. At the moment it does appear that most of the money is going into London and some of it to the rest of the southeast, and there are obviously good national economic reasons for a lot of that, but there is not sufficient information from the White Paper that it does represent a good balance in terms of the national economy, regional planning, regional economics, etcetera. That needs to be tested and the government needs to balance that properly.

Q108 Mr Clelland: So would a more proactive policy to improve and develop rail services in regions other than London help to improve modal shift in those regions?

Mr McKenna: Certainly we argued from our perspective that more funding should go into local transport and rail is a big component in many places of local transport. So we need to consider that investment as well as the rail investment, as well as where the rail investment takes place, and that needs to be better balanced than perhaps it appears to be at the moment.

Mr Perry: We have to put the appropriate solutions into the appropriate situation. It is very clear that there are very high flows around London that are not necessarily replicated in commuting flows in all of the other cities. Therefore, some non-rail solutions are sometimes more appropriate; and light rail is perhaps more appropriate. I think it would be nice to see better use of criteria of capacity and flow, for instance, because rail is very good at modal high capacity, high density corridors; it is not good at distributed tasks. I think the importance then of local influence and devolution of local transport planning is therefore quite important to take that kind of issue into account. It would be wrong for us to propose a system where heavy rail was the answer to everything - it is not. It is very good at cities, getting people in and out; it is very good at high density urban flows; it is very good at Inter-City; it is very good at bulk freight and those are the strengths that we have to use if we are going to have a sustainable transport system for this country.

Q109 Mr Clelland: In what sense are the long-term benefits of high speed rail uncertain, as claimed in the White Paper?

Mr Perry: I think the desperate need is for capacity. If we are going to have a policy to support modal shift to rail because it is good for CO₂ then that policy has to support the elimination or virtual elimination of domestic air flights; it is obscene, in CO₂terms to be doing what we are doing, catching a plan from Bristol to Plymouth - it is crackers and we should not be doing it. And we should be making sure that we are hitting the road journeys and we will not make the CO₂reduction that we need unless we make an impact on modal shift from road to rail, both in freight and passenger. We need policies that support that. Those policies clearly demand capacity and we should go as fast as is appropriate in order to attack the markets and provide an attractive service. Speed is part of the attraction. There are other attractions - how long you wait on a cold platform, whether you know the train is coming or not, all those things are part of the attraction of the journey.

Chairman: Whether the coffee is drinkable.

Q110 Graham Stringer: I would like to follow up Mr Clelland's questions about priorities. If the point is that investment should not just follow demand, which the White Paper seems to believe it should, then what priority should be given between commuting into the big cities, the main routes into London, and a part of the rail system that is often forgotten about, which is the cross-country system. This Committee did a report six years ago on the Northern Rail cross-country system which showed that the time tables would have embarrassed Gladstone they were so bad. What priority should be given to those cross-country services, or should they just be left to rot?

Dr Harrison: If I may, Chairman, I think the Members have raised a very good point. There are capacity demands across all different sorts of rail travel, most obviously seen in commuting journeys to London; but there has equally been significant growth in commuting into cities across the UK - not just Manchester and Leeds but also places like Bristol and even Exeter down in Devon. And significant increases in cross-country movements, for example, between Cardiff and Portsmouth; on the route there the passengers doubled over about five years. So I think it is appropriate that investment flows in part to all those different elements of the rail network. One of the problems in the White Paper is that it concentrates primarily on what you might call mega projects - things like Crossrail, which are very expensive - and there are smaller scale investments which can deliver equally good value for money on other parts of the network, and it is the view of County Surveyors Society that some of the investment should also flow to the regions, to those things which will deliver transport solutions locally as well as things which concentrate on London.

Q111 Graham Stringer: Just to follow that very specifically, is it sensible and should it be changed that the time to get from Doncaster to London is almost exactly the same time as to get from Doncaster to Manchester? Can you have a decent rail system if you have time tables like that?

Dr Harrison: Clearly the travel times and cost have an impact on economic development patterns and obviously one of the things that has happened by the concentration on London is the encouragement for people to make longer and longer journeys to London. In a sense that reinforces the economic dominance of London and the southeast compared with other parts of the UK, so you might say that higher speed rail journeys could actually contribute to making economic development more difficult in the north or southwest or other peripheral regions.

Q112 Graham Stringer: One of the witnesses - I am sorry, I cannot remember who it was now - said that part of the problem of keeping a railway going was that a lot of alternative routes had been closed down. Are you saying positively that those alternative routes should be opened up? In terms of capacity and getting people back on to rail, do you believe that some of the routes that have been closed since the sixties and seventies, like the Woodhead Tunnel at the moment on the Lewes route, should be protected with a view to being brought back into use in the future?

Dr Harrison: We are disappointed at the statement within the White Paper that there will be no rail lines reopened. On the other hand, we are pleased with the undertaking that there will be no closures. I think it is absolutely right that former rail corridors should be protected where possible by planning policies to ensure the opportunity is there in the future for reopening. Beyond that, I think every case has to be taken on its merits. Before we look at rail reopenings, there are many cases across the country of routes which have had their capacity significantly diminished by reductions from double track to single track railways and there are cost effective solutions in many cases towards increasing capacity there just by additional passing routes or sections of double track. That enables routes to serve as diversion routes which is obviously helpful for tackling the maintenance problems we were talking about earlier.

Q113 Graham Stringer: Is part of the problem with the railway system that usually the man from Whitehall does not know best? The civil servants are too involved in the detail of specifying the franchises. They are getting increasingly involved in the detail. Is that a problem as some of the train operating companies seem to think it is?

Dr Harrison: That has been a great frustration certainly for local authorities in the south west where the franchise specification imposed reductions in train timetables and reductions in the amount of rolling stock against a background of year on year passenger increase over the previous five years. One of the things that we are looking to as local authorities is to work with the Department for Transport to try and turn round that situation to make sure that we do not lose those people from the rail network. At the moment some people are being squeezed off or priced off the network.

Q114 Mr Martlew: On the specific question of whether there is too much government involvement, I am not sure which local authority you work for but I know that my local authority has written to the government complaining that, with the new timetable, the trains are not stopping in the area. They are demanding that the government do something about it. Is there not a bit of hypocrisy to the extent that we say, "Let the railways get on with it", but when something happens that we do not like we say that the government should do something about it? My own view is that the government should do something about it but they should have control of the railways as well. At the moment they do not have that but they are being accused of doing things which the train operators are doing.

Ms Bonar: You have to some extent gone back to the previous point about the specification in detail by the Department for Transport for franchises, which is generally the approach which is currently being taken. As far as the core services are concerned, the question of whether trains stop at particular stations or not is generally something which is specified by the Department, so it is back to the process which is undertaken by the Department for consulting stakeholders in relation to its proposals for new franchises and then whether the responses to those actually have any weight and what is done with those responses. It is not simply a question of train operators setting where they are going to stop.

Q115 Mr Martlew: On the existing franchise they have just changed the timetable for 2009. It was not in the original franchise. It is a matter for Network Rail and the operators.

Ms Bonar: If we are talking about the franchise which was granted some years ago or a new one, it will have a core specification which was set by government. That will include where services stop but not for every service.

Q116 Clive Efford: Can I just ask you about an answer you gave earlier on about the problems that Network Rail had recently? In addition to not delivering on time, one of the biggest problems was the late notice that services were not going to be resumed. Who do you hold responsible for that?

Ms Bonar: Network Rail is responsible for notifying the train operators. The train operators are responsible for notifying the travelling public.

Q117 Clive Efford: Do you think Network Rail themselves were notified by the people, to use your term, that they had outsourced the work to in time to do that?

Ms Bonar: I do not know whether they were but they should have had a contract which meant that they were being notified.

Q118 Clive Efford: My point is that you seem to have dismissed the possibility that things could have been improved if there were fewer tiers of involvement in the contract. Do you not think that Network Rail would have been better informed had they been managing the whole thing?

Ms Bonar: I would have hoped that they would have had no excuse for not being informed if they had been managing the whole thing. What I was saying was that I did not see that they would necessarily manage it better by doing it in-house rather than externally.

Q119 Clive Efford: You have repeated the same point again. In terms of future efficiencies within the industry, if we are going to get value for money, do you accept that we have to get more value for money out of the money that is being invested in the industry? To reduce the amount which the fare paying passenger and the taxpayer is forced to pay for the industry, it has to come from efficiencies in the people involved in the industry?

Mr Perry: I think that is fair. It is part of the engineering challenge, if you like, that we see as engineers to deliver more than we do for less. That is a constant challenge. I think it is interesting that, as Roger Ford pointed out earlier, by and large that has been managed around the rolling stock but we do seem to be struggling on the infrastructure. Having said that, I think it is unreasonable to expect that government has not got a significant role in improving the railway infrastructure to do more in terms of a sustainable transport system for this country. The laying down of infrastructure by and large is something that people look at governments to do with an eye to the future. If you do that with CO₂in mind, yes, we accept we have to do more but to imagine that everything is going to come from the fare paying passenger we will not get what we need in order to establish good modal shift and a sustainable transport system.

Q120 Clive Efford: Is there no case for electrification in England and Wales before the end of 2014?

Mr Perry: I think there is a huge case for electrification. On a rolling programme, it is the way that the costs come down. You get performance benefits, running cost benefits, regeneration benefits, so you get energy efficiency benefits and you get benefits from improving the energy mix. We talked about joined up government policies earlier and having an energy policy. To be honest, a simple way to think about this is that if you have an electric train running on green electricity then you are pretty well as sustainable as you can get for transport on the planet.

Q121 Clive Efford: How achievable is that, running trains on renewables?

Mr Perry: Very. The more renewables there are in your energy policy and in your energy mix, the better it is. Recently the industry did some work and we compared the energy used by trains in Essex with energy used by trains in Sweden. Surprise, surprise, it was a very similar train and very similar energy, but the movement in Sweden produced 5,000 times less CO₂ than the train in Essex. If you are looking for sustainable transport, we are talking about a 10% weight saving here and a couple of per cent on the load factor there and we ignore issues like multiples of 5,000. I think we are missing the point. There is a very important energy policy thing that goes along with electric railways and gives you sustainable transport.

Q122 Clive Efford: Do you think the appropriate policies are in place to achieve that?

Mr Perry: It is not visible from the White Paper.

Q123 Clive Efford: Does electrification allow for increased capacity?

Mr Perry: Yes.

Q124 Clive Efford: Over what length of time should investments such as electrification be amortised?

Mr Perry: Over the time that we are going to have a CO₂climate change problem. It is in that context I think that we should be looking at it.

Q125 Clive Efford: Do you think that the timescales that have been required by the government are ----?

Mr Perry: Yes, of course. We are going to have that problem for 50 or 60 years. If we do not do anything quickly about it, science is suggesting that we will not be here to discuss the rest of the 50 or 60 years so we have to get on the case here. It is a 21^st century problem.

Q126 Clive Efford: In terms of electrification, do you think that there is a strategic approach being taken - for instance, a rolling programme of investment?

Mr Perry: It is not visible yet. I hope it will come.

Q127 Mr Clelland: We heard earlier from our witness, Mr Ford, that the Maglev system would not necessarily be environmentally friendly because it used a lot of energy, but given what you have said about the increasing use of green energy does that not make the Maglev system more attractive?

Mr Perry: You have to think about the price of these things as well. Let us imagine we have green, cheap electricity. Go as fast as you like. Use as much as you like. Will we get to that position in the 21^st century in this country? I doubt it.

Q128 Chairman: We have not talked about hydrogen fuel cells. Have you considered those?

Mr Perry: We have but you have to bear in mind that it is much more efficient to use your power to put it straight into the train than to produce hydrogen to transport somewhere to put into the train. It is probably four or five times more energy efficient not to use hydrogen than it is to use hydrogen. We sometimes miss that well to wheel issue about hydrogen. It costs a lot of energy to produce it.

Q129 Chairman: Is the White Paper sufficiently active in promoting a modal shift to the railways?

Mr Perry: No, I do not believe it is.

Q130 Chairman: You are saying that it is possible to have an electrified system throughout the whole of the railway system in the United Kingdom?

Mr Perry: It is possible to have a lot more electrification than we currently have starting with infill and a rolling programme that would then embrace all of the outstanding major routes.

Q131 Chairman: Are you also saying that it is realistic to expect that the increase in the number of travellers can balance franchise operators' costs?

Mr Perry: I am not terribly fussed about how we do the sums.

Q132 Chairman: Careful, Mr Perry. Your public image is at risk.

Mr Perry: What I am interested in is a pricing regime that does not make the environmentally friendly modes carry a penalty. That is where we are at the moment.

Q133 Chairman: Is there a suppressed demand for extra rail services in cities other than London?

Mr Perry: I am sure the perception that rail is expensive suppresses demand, yes.

Q134 Chairman: Are there other areas of the country where, if there was a rebalancing in favour of the passenger, we would get that?

Dr Harrison: I am confident that there is suppressed demand at locations across the UK, either suppressed demand through lack of train capacity or through lack of frequency.

Q135 Chairman: Give us an example.

Dr Harrison: I briefly mentioned earlier the Portsmouth to Cardiff route where the franchise specification has reduced the train capacity from mainly three coach trains to mainly two coach trains. There are people who will not go travelling on the route now because they are not sure whether they are going to get on a train or get a seat. Colin earlier referred to our role in local transport planning. As local authorities, we are very keen to promote modal shift. There is an increasing demand for transport and we cannot do it by building more highway capacity. Therefore, it is a fundamental part of our planning and national, spatial planning that we should invest in alternative modes of transport and rail is obviously an example.

Q136 Chairman: Are the 1,300 new carriages that they are talking about going to do anything about congestion outside London?

Dr Harrison: We are very pleased to see recognition of increased capacity but out of 1,300 additional carriages, as we understand it, the focus is going to be almost entirely on London, 1,200 on urban areas and I think just 30 for rural and smaller areas. That is nowhere near enough. We believe that part of the capacity increase can be produced relatively cheaply in rail industry terms without requiring infrastructure by train lengthening and that that additional capacity should be spread more broadly over the system than just focusing on London.

Q137 Chairman: Is it true, as the government says, that journey time is less important than reliability and flexibility?

Mr McKenna: It will vary according to the market that you are looking at but if we look at the south east for example and longer distance south east travel, the reliability, given that journey times are generally quite poor, is much more important. Knowing that you will get somewhere in a certain time is much more important than shaving five minutes off an unreliable journey.

Q138 Chairman: What about the rolling stock? When we talk about Intercity 125s, are they the only ones that are approaching life expiry?

Dr Harrison: No. I can certainly give you experience from Devon where we have been the unfortunate recipients of Acer trains cascaded to Devon from the north of England. I can see some Members may have experience of these trains. We are disappointed firstly to have them replacing more suitable rolling stock but secondly to note that the White Paper suggests that they will be replaced some time towards the end of the next decade. In other words, we believe that there is a case for more local train units as well as replacement high speed trains.

Q139 Chairman: It is a punishment on you for giving up that system that Brunel thought of with leather straps. Is electrification inherently more expensive?

Mr Perry: It is expensive to put down but is running costs are less. You get improved capacity.

Q140 Chairman: Therefore do we have the order right when we say we will do the electrification after we have the cab based signalling?

Mr Perry: No. The two things should not be linked.

Chairman: You have been very helpful, gentlemen and madam. Thank you very much indeed. We are very grateful to you.

Memoranda submitted by ATOC, Eurostar UK and Virgin Trains

Examination of Witnesses

Witnesses: Mr George Muir, Director General, Association of Train Operating Companies (ATOC), Mr Richard Brown, CBE, Chief Executive Officer, Ms Louisa Bell, Head of Environment and Energy, Eurostar UK Limited, Mr Tony Collins, Chief Executive, Mr Chris Gibb, Chief Operating Officer, Virgin Trains, gave evidence.

Q141 Chairman: Good afternoon. Can I ask you if you would be good enough to identify yourselves?

Mr Muir: My name is George Muir.

Ms Bell: Louisa Bell, head of environmental energy for Eurostar.

Mr Brown: Richard Brown, chief executive of Eurostar.

Mr Gibb: Chris Gibb, managing director of Virgin Trains.

Mr Collins: Tony Collins, chief executive of Virgin Trains.

Q142 Chairman: Does anybody have anything they want to say briefly before we begin?

Mr Muir: May I make two points, please? Firstly, we welcome the White Paper as a statement of policy that recognises the huge demand in railway use that has taken place since 1995 and that provides funding support for increased capacity. We do want to go further and faster but the White Paper is a very good start. The second point we would like to make is that at the moment only Network Rail and the government can in practice promote enhancement schemes. The train operators have a good record of predicting demand and many train operators are willing to invest in schemes to meet extra passenger demand, particularly in rolling stock, but they are constrained at the moment by limitations of the franchising structure.

Q143 Mrs Ellman: The submission from Virgin Trains tells us that you would not want us to think there was not a good relationship between Virgin Trains and Network Rail. I notice that is dated October 2007. What would you be writing now if you were giving your submission now?

Mr Collins: The relationship is a good relationship. We have worked hard over the last few years to drive performance up together. I think we are hugely disappointed and angry about what has happened over Christmas. We could see the signs that that was going to be a problem over Christmas and so we have had a robust conversation with Network Rail, as you can imagine, saying we need to change the relationship. They need to be more transparent with us on what is going well and what is not going well.

Q144 Mrs Ellman: How have they reacted? Over the Christmas and New Year period, you felt it necessary to send out letters separating yourself from Network Rail and putting the responsibility for what was happening firmly on them.

Mr Collins: I think it was important we communicated with the passengers so we did that through taking advertisements out in the newspaper, through radio and television and writing direct to those passengers we could contact to make them aware of what had happened and what we were trying to do to minimise the problem with travel.

Q145 Mrs Ellman: What kind of communications went between you and Network Rail over the Christmas and New Year period? Were you told what was happening or did you just find out after the event?

Mr Gibb: We were in constant contact with Network Rail by the minute literally between Christmas and New Year and I handled most of those communications myself. You can imagine it was a moving feast.

Q146 Chairman: What was the first contact that you had which gave you an indication? When did you first know that your services were going to be materially damaged?

Mr Gibb: On 6 December Network Rail offered us a choice of closing the railway at Rugby on Christmas Eve or New Year's Eve. They found that up on 17 December, at deciding that they wanted to close the railway on 31 December. Within 24 hours we had been to the Office of Rail Regulation to try and stop that because of the late notice. At that stage we had over 6000 seat reservations on New Year's Eve and some 60,000 customers intending to travel with us so we tried to stop it. That was not successful. The Office of Rail Regulation decided it was in the best interests of customers in the long term for the work to go ahead so we immediately then turned to communicating with our customers via every possible means about what was going to happen on new year's eve. On New Year's Eve, when I was on the platform at Euston Station helping customers, I took a phone call to say that they were not going to finish the work at the end of New Year's Eve and it was going to go on until, at that time, mid day on New Year's Day.

Q147 Chairman: I need a timeline that is precise. 6 December was the first?

Mr Gibb: Yes.

Q148 Chairman: You were offered a choice then of the two important holidays?

Mr Gibb: Yes.

Q149 Chairman: You chose Christmas Eve?

Mr Gibb: No, we did not choose either. We objected to both.

Q150 Chairman: You were then told Network Rail had taken the decision and had decided on New Year's Eve. You were told that when?

Mr Gibb: I was told that on 17 December.

Q151 Chairman: On 17 December you went to the ORR?

Mr Gibb: Immediately, yes.

Q152 Chairman: This dispute continued until the Christmas period presumably. The first indication you had of the real overrun from New Year's Day was when you were actually there?

Mr Gibb: On New Year's Eve. At that stage, the overrun was only going to be to midday on 1 January. It then moved back and at one point on 1 January Network Rail told me they could not tell me when the railway would reopen. At that stage I was at Birmingham International helping customers with Tony on and off the coaches and I took a phone call from them to say that they did not know when the railway would reopen and they would let me know within the next few days.

Q153 Graham Stringer: This Committee is familiar with the rail industry and it is a very small group of people at the top who talk to each other regularly. Are you saying that before 6 December 2007 you did not know this work was going to take place?

Mr Gibb: I did not know that this work was going to take place.

Q154 Graham Stringer: At all?

Mr Gibb: We originally offered them New Year's Eve.

Q155 Graham Stringer: I am not talking about the formal notification. This is a major project of improving the West Coast Main Line. Are you saying that it was a bolt out of the blue when you were told on 6 December?

Mr Collins: No. The background is we had agreed in December 2006 a series of possessions over 2007 and 2008 to do the upgrade work with Network Rail.

Q156 Chairman: They are all public holidays?

Mr Collins: The possessions are targeted when there is the least amount of people planning to travel.

Q157 Chairman: I am not arguing the reasons. I am saying that you were given a list and they were all public holidays?

Mr Collins: For this particular one we had agreed in December 2006 a five day blockade.

Q158 Graham Stringer: You had actually known the work was going to be done 12 months in advance?

Mr Collins: Yes.

Q159 Graham Stringer: You just did not know when?

Mr Collins: We planned for that work and we had agreed a possession 12 months earlier to start on Boxing Day for five days. That work has not changed. It just ran four days longer than it should have and it is that overrun which we only started to understand the scale of right before Christmas Eve.

Q160 Graham Stringer: You had known that this work was going to take place for 12 months?

Mr Collins: Correct.

Q161 Graham Stringer: You were told about changes in the scheduling of it?

Mr Collins: That is right. It was supposed to have taken five days to do the work and it ended up taking nine days.

Q162 Mrs Ellman: What are your views on the work of the Office of the Rail Regulator?

Mr Collins: I disagree with some of the previous evidence. The ORR should not have been reactive to the problem. They have enough powers to investigate issues arising and I would have thought they would have done that given the problem with the Portsmouth signalling issue. One of the things we will be challenging the ORR on is why did they not put checks and balances in place as a result of that particular incident to make sure that these types of major upgrades were being managed properly. Another point is that they could usefully use the train operators as their eyes and ears and give us powers to keep Network Rail honest on these types of projects as well. We could start to see the signs of these overruns appearing as early as October last year. We were advising Network Rail that we were getting concerned about this problem. The ORR should have been more proactive given past experience and I think they could usefully use the train operators and the freight operators to keep an eye on Network Rail to make sure this does not keep happening again.

Q163 Mrs Ellman: In your written evidence you laid great emphasis on the fact that the public relate to the train operators much more directly than they do to Network Rail. They are more conscious of who is running the trains. Do you think that issue is dealt with properly in the Rail White Paper?

Mr Collins: I do not. The issue with the White Paper for me is it underestimates the amount of passenger volume growth that we are going to experience. We believe the passenger volumes that are quoted in the White Paper that are going to occur by 2014 well happen three years earlier. We will hit that volume level and overcrowding by 2011. The people developing these plans should look more towards the train operators and the freight operators. We have a better handle on what the passenger demand can be and what the passenger requires.

Q164 Mr Martlew: You are saying that to some extent the Office of the Rail Regulator is to blame?

Mr Collins: They have the powers. If I were them, given what happened with the Portsmouth signalling incident, I would have put special checks and balances in on major projects like this to make sure things were happening correctly.

Q165 Mr Martlew: We have a press release about their investigation into what went wrong. Do you really think that they are the people to be investigated if they could be part of the problem?

Mr Collins: They are the only people currently who can investigate under the rules. The point I am trying to make is that my view is that they should have put special checks in as a result of the Portsmouth problem to make sure that lessons had been learned and they usefully could have used the train operators and the freight operators to identify problems emerging on these types of upgrades.

Q166 Graham Stringer: Going back to the dialogue between yourselves and Network Rail, you said you were beginning to worry that this work would overrun and you did not believe that Network Rail and their contractors could finish it on time. What exactly did you say to them?

Mr Gibb: I sought assurances from Network Rail that they could complete the work in the time that they had asked for. They asked for this additional day on New Year's Eve. I said to them and so did the Office of Rail Regulation, "Can you complete the work in that time?" They were adamant they could. As it turned out, they clearly could not complete the work in that time. There was little more I could do than seek those assurances but I did have concerns going back over some months that the project was being properly managed but not specific concerns about a particular bit of the work in a particular place.

Q167 Graham Stringer: Can you tell us why you were concerned?

Mr Gibb: I was concerned because I knew the project at Rugby had been planned for more than 12 months and yet with just 18 days to go they were still frantically moving the amount of work around, moving resources around, replanning the job. It had all the signs of a project that was completely out of control.

Q168 Graham Stringer: What was Network Rail's response? You say they said, "We will have it finished by midnight on New Year's Eve." Did they give you any more detailed response than that?

Mr Gibb: They told me that they had reorganised resources, moved resources around between jobs and that they were adamant the work could be completed. I asked a whole series of questions that you would ask. For example, what happens if it snows? Will you still be able to complete the work? They assured me that they could.

Q169 Graham Stringer: With hindsight, is there anything that you think you could have done to influence anybody in the system - the government, the Rail Regulator, Network Rail - so that we would have had a happier outcome to this?

Mr Gibb: With hindsight, perhaps we should have been clearer to customers about the possibility of our concerns. We have in recent months increased the amount of communication to customers that says that sometimes engineering work will not finish on time. Please check at weekends at the last minute before travelling. We have increased the knowledge that we try to pass on to our customers about those possibilities. Perhaps with hindsight before Christmas we should have said even more.

Q170 Graham Stringer: What was the response time between you communicating with the public from when you knew it was going to overrun? How long did it take you to communicate with the public?

Mr Gibb: About three to four hours in most cases. I needed to have things like websites set up because I knew that the moment we communicated through the media people would hit our website to see what was going on, so clearly we needed to have something there. It took three to four hours to plan an outline train service and then go to the media. Clearly during the engineering overrun I had no trouble with that because I was at Birmingham International and I had all the media there so I literally walked out of the phone conferences straight to the TV cameras and gave the information which found its way to the customers very quickly. I found in the last couple of days of the overrun at Birmingham International that most customers knew what to expect because they had heard what was going on.

Q171 Graham Stringer: Given your worries and concerns about Bectel and Network Rail, had you got your contingencies in place of buses and other transport arrangements?

Mr Gibb: I had contingencies in place. A lot of my staff came in specially to work on those extra days. A lot of people from the bus industry came in. We were able to source coaches and buses to shuffle and our contingency plans mercifully worked pretty well.

Q172 Clive Efford: When you started to answer Mr Stringer's questions earlier on, you referred to a request for either Christmas eve or new year's eve. That does not seem to fit with the answer that Mr Collins about the work starting from Boxing Day and running for five days and then overrunning. What was the reference to Christmas Eve?

Mr Gibb: There were no trains planned to run Christmas day or Boxing Day. The work was planned to start after the last train on Christmas Eve and run through until the morning of New Year's Eve. That was the block of work. The options were to start 24 hours earlier and shut the line on Christmas Eve or to run ----

Q173 Clive Efford: 48 hours earlier?

Mr Gibb: No, 24 hours, to close the line on Christmas Eve or to run later by 24 hours and close the line on new year's eve.

Q174 Clive Efford: Is there something I have misunderstood? I thought that Mr Collins said that the work was due to start on Boxing Day, which it did.

Mr Gibb: It was due to start on Boxing Day, such that the railway was closed already on Christmas day and Boxing Day because there were no trains.

Q175 Clive Efford: I understand that.

Mr Gibb: The work was always due to start on Christmas Eve.

Q176 Clive Efford: They wanted to start two days earlier on Christmas Eve?

Mr Gibb: Yes.

Q177 Clive Efford: Did that not give you any indication that the work was likely to overrun?

Mr Gibb: Not at that stage but I could see by the fact that they were asking for an extra day at the very last minute in this way that clearly the project was not under proper control.

Q178 Chairman: Did you ring up your boss and say, "Ring Sir Ian McAllister"?

Mr Gibb: There were numerous communications between Tony and Ian Coucher in particular.

Q179 Chairman: Did you ring up the chairman and congratulate him on his knighthood?

Mr Collins: The news had passed me by so I did not feel that well informed. I was in regular dialogue with Ian Coucher during the whole period.

Q180 Chairman: I do not think we are surprised that you were not well informed. I do not think anybody was exactly well informed.

Mr Collins: I was in regular dialogue with Ian Coucher to try and get through this problem.

Q181 Clive Efford: On this overrun and being told that it was going to be 24 hours and then it ended up being four days, what do you put that down to, the fact that they got that so wrong?

Mr Gibb: The communications between the project management team, whether they were Network Rail or Bectel or other parties and Network Rail itself, were not good. In the end, a team of operators from Network Rail was sent in to manage the project at the last minute, take control of it and decide how the railway was going to be reopened.

Q182 Clive Efford: You do not know who would be responsible, whether it was the contractor or Network Rail themselves?

Mr Gibb: Frankly, I do not think my customers minded where the boundary of responsibility rested. They just wanted to see the railway reopened and I look forward to the rail regulator's investigation as to exactly what the outcome was because I want to avoid a repeat.

Q183 Clive Efford: I appreciate that. To avoid a repeat, you might have asked Network Rail what went wrong. Why did you not know? Why could you not tell us sooner that it was going to overrun by four days, not one?

Mr Gibb: They do not seem to know is the short answer.

Q184 Clive Efford: You have asked them?

Mr Gibb: I have asked and they are relying on their own internal investigation and that of the ORR in order to inform them as to the causes.

Q185 Clive Efford: There was nothing in your experience, knowing the scope of the work that was being undertaken, that would have told you from the outset that they were never going to do it in that period of time?

Mr Gibb: I knew it was a huge project but there are numerous huge projects going on on the railway network at the moment. Most of them do successfully complete on time. I had repeatedly sought assurances throughout December that this was going to complete on time and I had been told that it would.

Q186 Mr Martlew: On the issue of the extra coaches on routes, I have been asked various questions over a number of years now and it seems that we have come to a dead end or we have hit the buffers on this. It appears that Virgin has asked for an extra two years from the government on the franchise and the government have refused that. Is there any indication of a plan B so that we can get these coaches ordered and on the track before we run out of capacity?

Mr Collins: The proposal we made was to invest �300 million in the additional coaches and more car parks. We have to modify the depots to accept the trains.

Q187 Mr Martlew: Is this you investing or Angel Trains?

Mr Collins: Angel Trains would fund the vehicles. We would then look to find investment for the car parks. It is a big investment project. The reason we are very keen to do it, as I said earlier, is we believe we will hit the 2014 DfT predictions on volume and crowding levels by 2011. What we proposed was to start bringing the additional cars in in 2010 and completing the project by 2011. Yes, we have asked for a two year franchise extension but we believe in our proposal there would be a significant reduction in the subsidy requirement that we would ask for compared to a competitive process in 2012 by the tune of around about �100 million. The other advantage is we would then have the capacity that would allow us to put lots more cheaper fares on because we would have the seats to sell. In terms of the second part of the question, is there a plan B, I do not know.

Q188 Mr Martlew: The government have written to you and said they do not agree with that?

Mr Collins: They said to us we would either get an answer of no or maybe. We have had the answer no. The letter, which is relatively short, says that they believe they will get better value for money by waiting until 2012 when the franchise is up for relet.

Q189 Mr Martlew: That means that these trains will not be ordered?

Mr Collins: I do not know. We have requested a meeting with the DfT to understand their reasoning and how they have evaluated the proposal but we do not know the details if there is a plan B.

Q190 Mr Martlew: You can guarantee that we will be asking the Minister when he appears before us on that. Mr Brown, with regard to the high speed train, it is seen to be very successful. Do you believe that there is a case for extending high speed one from St Pancras or building another line to the north?

Mr Brown: Yes, I do. I think there is a very case not just to extend the line but over a period of, shall we say, 20 to 30 years to build a network of high speed lines, a high speed two and a high speed three. If you look at the rail policy from a wider perspective, a criticism I would make of the Rail White Paper is that it just essentially looks at the rail industry. It does not look at the wider transport markets. It does not look at the role of transport in helping regional development. I think there is a very strong case on environmental, regional development and on reducing congestion grounds for other high speed lines in Britain.

Q191 Mr Martlew: Which next one would be your priority?

Mr Brown: What is needed is the production of a 30 year strategy for railways which I do not think is contained in the White Paper. It is a very good HLOS statement but it is not a 30 year strategy as compared for instance to the Aviation White Paper which I think was produced three or four years ago now which produced a clear strategy for the expansion of airport and airline capacity within the UK. There is a real, urgent need to look at the development of rail capacity, the potential scope for high speed and which are likely to be the best corridors. I think there is an emerging agreement that London, Birmingham, Manchester would be the first but that needs to be part of a wider vision as to what the network could be to make sure you do not build bits which then do not contribute to a wider network in the longer term.

Q192 Mr Martlew: Do you think the reluctance from the Department of giving us a clear steer for the next 30 years is something to do with where the money would come from?

Mr Brown: I think that has a significant part to do with it but it is also frankly that we in this country are not used to planning for continuous growth in the rail mode. It is only in the last ten years or so that we have seen substantial growth. We have to reinvent the ability to plan, to produce clear strategies going ahead. I am quite optimistic. If you look at the Transport White Paper published in November, it has already moved from saying that there is likely to be a need for an additional north/south rail link at conventional speeds to saying there could be a case for high speed and we need to look at this in the context of corridor demand for transport as a whole and the impact that would have on the cities that would be served. I think there is quite a moving picture here in terms of government policy. We just have to keep moving it forward.

Q193 Chairman: Could you tell me about the new rolling stock because the White Paper promises 1,300 new carriages for the entire network. Is that enough?

Mr Brown: I am not really in a position to judge whether that is enough. I would agree with my colleagues from Virgin. I think the White Paper has taken probably an overly cautious view of the amount of growth that is to happen. I think there is suppressed demand. Whilst 1,300 is a very good start, the network is likely to require more. That is a relatively short, medium enhancement to capacity. Even the White Paper acknowledges that the rail industry on slow rates of growth is likely to run out of capacity by the early 2020s, say, which is only 12 years away. We need to be planning now for the enhancements to capacity for the longer term.

Q194 Chairman: Do you agree with the government that passengers are less concerned with speed and time than they would be with reliability and flexibility?

Mr Brown: No, I do not. I think reliability and journey time are very important to passengers. To existing passengers, reliability and punctuality are probably more important because they have already made the decision to choose rail. They have already decided it is a reasonable journey time. If we want to see significant modal switch, journey time is also very important to encourage people to get out of their cars or planes but punctuality is important. One of the key things about investment in high speed lines is not only are they faster, reducing journey times; they improve punctuality as well because they are purpose built for the particular need. You get both. It should not be a choice between one or the other.

Q195 Chairman: Why is it that the government thinks that the economic benefits particularly of high speed rail are not reliable? Why do you think they have that view? "Uncertain" I think they said, which is a nice Civil Service way of saying "Bloody useless".

Mr Brown: Looking at continental experience, it is simply not the case. We cannot be the only country in Europe who have got it right in terms of investing in high speed rail. Most other European countries are investing in high speed rail. They see it as part of a wider transport policy. They see it as an important contribution to developing regional economies, bringing cities and regions closer together. Clearly, they are convinced of the economic argument which I think is strong. We need to get better at making those arguments within Britain.

Q196 Chairman: Do you think their conclusions are based on flawed data, a report from the Rail Safety and Standards Board?

Mr Brown: I am quite clear they are. After I saw that data, I got in touch with the Rail Safety and Standards Board and they agree that certainly in respect of the emissions data it is wrong. I am trying to hurry them to issue what the data should be. In the case of Eurostar they have got our load factor out by a factor of more than 100%. That more than halves emissions per passenger kilometre compared with their numbers. It is also the case that in the UK electricity at the moment is a great deal more carbon emitting than most of the rest of Europe so the electricity used in France and Belgium is considerably cleaner and less carbon producing than in the UK. It is also the case that Eurostar trains are relatively old technologically. A new TGV duplex for instance would have significantly lower electricity consumption and emissions per passenger than even a Eurostar, which is much, much better than the data in the White Paper. I think they have bad data.

Q197 Chairman: Have you done cost benefit ratios on things like the west coast main line?

Mr Brown: I have not personally. Eurostar has not, but there has been quite a full study which I think Mr Steer referred to earlier by Atkins two or three years ago. I think there is an urgent need to update this data to take account of carbon emissions and regional development. If you add those in, it would be strong.

Q198 Chairman: Would high speed rail increase capacity as well as speed?

Mr Brown: Yes, because with high speed rail you can operate much bigger trains with higher capacity. As we have heard from previous witnesses, electric trains have better acceleration so you can run more trains in a given space of time on the same section of route. It would add more capacity than other ways of doing it.

Mr Collins: It then frees up capacity on the existing, classic lines. If you produce a high speed railway you could then free up more capacity on the current railway to better serve other cities. Key journey times apply to Birmingham, Manchester, London and Manchester so there is an added advantage. People will put more capacity into the existing system where you can improve journey times to attract more people. There is a win win. It is not a question of shall we have a high speed line at the expense of the current system; I think we need a high speed line and we need to continue to invest in the current system as well to put more capacity in. I think there is a huge amount of suppressed demand in the market because we are already at the limit of capacity. In environmental ways, we are still much more environmentally friendly than the car or the plane when we compare ourselves to them. There are also some examples of journey time and reliability in terms of attracting volume. If you look at the Manchester/London trip now, rail ha