UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 284-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

TRANSPORT COMMITTEE

NETWORK RAIL ENGINEERING DELAYS OVER THE NEW YEAR PERIOD

Wednesday 23 January 2008

SIR IAN McALLISTER, MR IAIN COUCHER, MR SIMON KIRBY and

MR THOMAS M McCARTHY

Evidence heard in Public Questions 1 - 145

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Transport Committee

on Wednesday 23 January 2008

Members present

Mrs Gwyneth Dunwoody, in the Chair

Clive Efford

Mrs Louise Ellman

Mr Eric Martlew

Mr Lee Scott

David Simpson

Graham Stringer

________________

Memoranda submitted by Network Rail and Bechtel

Examination of Witnesses

Witnesses: Sir Ian McAllister, Chairman, Mr Iain Coucher, Chief Executive, Mr Simon Kirby, Director, Infrastructure Investment, Network Rail; Mr Thomas M McCarthy, Senior Vice-President, Managing Director, Rail, Bechtel Limited, gave evidence.

Chairman: Good afternoon to you gentlemen. You are most warmly welcome. Members having an interest to declare?

Clive Efford: I am a member of Unite.

Mr Martlew: I am a member of Unite and the GMB.

Chairman: Gwyneth Dunwoody, ASLEF.

Mrs Ellman: I am a member of Unite.

Graham Stringer: I am a member of Unite.

Q1 Chairman: I am going to ask you firstly to identify yourselves for the record and then ask if anybody has anything they want to say briefly.

Mr McCarthy: My name is Thomas McCarthy. I am senior vice-president with Bechtel and managing director of their rail business.

Mr Coucher: Iain Coucher, chief executive of Network Rail.

Sir Ian McAllister: Ian McAllister, chairman of Network Rail.

Mr Kirby: Simon Kirby, director of infrastructure investment at Network Rail.

Q2 Chairman: Does anybody have anything they want to say briefly?

Mr Coucher: I have a few introductory comments for the Committee. I would of course like to start by repeating my public apology to all who use the railway for the disruption that was caused on the network at three locations over the new year period. It was unacceptable and we know that we must work hard to address the situation. We know that these incidents reflect badly, not just on Network Rail but indeed the whole rail industry. Later this afternoon we shall have an opportunity to discuss the government's White Paper and the industry's strategic business plan in which we talk about the challenges of a successful and growing railway. It is an industry plan that recognises a need for sustained investment in the railway and which has been welcomed by most people. For this reason, anything that damages public confidence in the railway and the ability to deliver much needed improvements in rail services is deeply regrettable. After decades of under investment, Network Rail has been working steadily to remove the backlog of engineering works designed to improve and expand the railway. Every year, we manage an investment programme of around £4 billion. That is half a million pounds for every hour of every day, 365 days a year. We have also worked hard to reduce the day to day costs of running the railway by hundreds and hundreds of millions of pounds a year. As a direct result, much needed money is now going back into the railway to provide better services and therefore we are now delivering more projects than ever before, some 5,000 a year, all whilst the railway is being used daily by millions and millions of people. This means that there needs to be a balance between the urgent need to address the challenges of increasing demand for rail services and the basic fact that we need to gain access to the railway in order to do so. Our job at Network Rail is to work hard to find a sensible balance. The effects of the overrun at the new year show all too graphically the weight of that responsibility and a responsibility of which I am conscious every single day. We welcome the opportunity to appear before you today. It gives us an opportunity to talk about what is best for the railway in the longer term and it provides us with the opportunity to present the facts to Parliament with a chance to have an unbiased and objective assessment of the issues surrounding the overruns at the new year as well as of course to discuss the wider investment programme. We would if it is possible like to highlight the issues associated with industry processes that can in some instances conspire to increase the possibility of overruns, especially on lengthy programmes with immovable end dates such as that on the west coast. Every day, every weekend and particularly every Bank Holiday, we are under extreme pressure to deliver incredible volumes of engineering work in very short periods of time. Every one of the 5,000 projects that we do every single year has the potential to cause the same amount of disruption that we saw at Liverpool Street, Rugby and Shields Junction should they not complete on time. We believe we have a good track record of delivery but we got it wrong at these locations at the new year and that is unacceptable. In an extension of the parallel drawn by Roger Ford at this Committee, every time we take an engineering possession to invest in the railway the industry processes force us to sail closer to the rocks than we would like. Of course we would like longer to do engineering work but in the longer term we believe that would be worse for passengers and freight users. We intend as always to talk to you openly today about the issues that caused these overruns as well as the actions that we have taken and will be taking. However, the last thing we believe we must do is to make changes that would be wrong for the passengers and freight users. Thank you.

Q3 Chairman: Mr Coucher, I think we should get out of the way the fact that this Committee acknowledges that you have an enormous amount of work to do and that you are trying to update a very old railway.

Mr Coucher: Thank you.

Q4 Chairman: There cannot really be any disagreement on the fact that what happened at Rugby and Liverpool Street was extremely damaging for the industry and no matter how good you are, life being unfair, people will remember the bad things you do and not the good things you do. What were the factors that were common to the situation at Liverpool Street and at Rugby?

Mr Coucher: Both of these were extraordinarily complicated pieces of engineering work squeezed into very short periods of time. We do not allow a great deal of contingency in our programmes because that would deprive the users of the railway for longer than we would need. In both these two locations when we experienced some slippage in the programme, as we normally do from time to time on a project, when we sought to bring in additional resources to help us through the problems we faced, we found that we were unable to bring in additional resources and therefore could not complete the work in the time available.

Q5 Chairman: Mr McCarthy, on behalf of Bechtel, can you tell us what in your view were the key reasons for the severe overrun at Rugby?

Mr McCarthy: Quite fundamentally, when we went into the all line block, we relied on our contractors' plan to be able to secure the right amount of resources to be able to carry out the works. As we got into the first two days of the blockade, it was clear our contractor was not able to staff up to the committed resources he had committed to to deliver the plan. We then took contingency measures to try to help him through that to such a point where we eventually had to take over the work and complete the work ourselves.

Q6 Chairman: You had direct responsibility, did you not? It would be interesting to know when the first member of your senior management team visited Rugby. The same question to you, Mr Coucher. At what point did the first member of your Network Rail senior management team visit Rugby?

Mr Coucher: The first time I was aware that there were issues at Rugby was at 11 o'clock on 27 December. I had been made aware that there were issues with the overhead line but at that point in time the team were confident that the slippage that had been experienced in the early part of the possession could be contained inside the available time. Robin Gisby, the operations director, visited the site between then and the next point when I was contacted on 30 December where it was identified that it was a possibility - only a possibility at that stage -that there may be an overrun. That is when we advised both London Midland and Virgin of the case.

Q7 Chairman: Was Mr Gisby the first one there on 27 December? Did you have a senior team on standby all the way through Christmas?

Mr Coucher: Over the Christmas period is the most intensive period of work that we ever do. This year we had £125 million of work at 35 locations where we were doing similar bits of work. The senior team is always on call to attend if necessary. We spread around the responsibility of visiting those work sites but all of them at that stage were progressing in accordance with the plans so we would not send people necessarily on site the first time that there were reports of a problem because it is normally within the power and responsibility of the project managers on site to manage it inside the regime. We had no sign that there would be a problem at that point

Q8 Chairman: You had direct responsibility, Mr McCarthy, for the project management. When was your senior management team on site?

Mr McCarthy: My senior management team was on site throughout the blockade very specifically. We were being kept updated on the progress twice a day. We were monitoring the progress of our contract to every four hours so we knew exactly where they stood against the schedule. As I said, it became apparent on the 25th and 26th that they were not meeting this schedule. It was clear that they were not able to mobilise the resources necessary. On the 27th, we talked to Simon Kirby at Network Rail asking for additional help around the network to be able to secure additional, very specific resources on the overhead line. Those discussions carried through the 28^th and the 29th and we still believed at that point, had we got all the resources, we would be able to deliver the blockade by 1 January. It became apparent on the 30^th that the contractor still was having a decline in resources and even worse problems with resources. We took over control of his works and worked with Network Rail to secure the remaining resources.

Q9 Chairman: When we say "resources" are we talking about engineers who have personal track safety certificates?

Mr McCarthy: That is correct. We are talking very specifically about overhead linesmen that are capable of working on 25kv overhead line as well as the supervision and management.

Q10 Chairman: I ask you again: what was the first stage at which you realised there were not enough overhead line engineers available?

Mr McCarthy: We began realising on 26 December.

Q11 Chairman: Did you by any chance commission a firm called Oracle Global to recruit for these jobs?

Mr McCarthy: No, we did not.

Q12 Chairman: Mr Coucher, who is responsible for the recruitment through Oracle Global?

Mr Coucher: I believe that Jarvis, the contractor for this particular job, did secure additional overhead resources.

Q13 Chairman: There is some evidence, is there not, that they knew very early on that they had not enough overhead engineering personnel available?

Mr Coucher: We had concerns about the level of resource at the beginning of the project and we sought assurances from the contractors that the people we needed had been specifically identified by name and that these people would be made available for the blockade.

Q14 Chairman: We will come back to that but I need to talk to you about Liverpool Street. When did your senior management first visit Liverpool Street?

Mr Coucher: We had our route director on site at regular moments throughout the possession to keep an eye on the works.

Q15 Chairman: When did he first indicate that there were problems? Is it true that Liverpool Street was thought to be on target and on programme until large numbers of your staff departed to Rugby?

Mr Coucher: That is not true. At 10pm the night before the train service was due to start the following morning, we still believed that the work that was necessary to open the rail service on the following morning could be delivered. It was not until two o'clock, four hours before the first trains should depart, that we realised the amount of work still left to do meant that we could not start the train service for the morning peak.

Q16 Chairman: Why was that? Normally, presumably, you were working to a programme and you have some idea how far you are along?

Mr Coucher: Yes. We were following the programme precisely. We track these things on a half hourly basis. We were tracking both the installation of the overhead line gantries and the wires strung between them and it was progressing in accordance with the programme. What was happening though unfortunately was a number of alignment and snagging problems that we still had to correct and it was those pieces of work which took longer than we had first thought.

Q17 Chairman: You had only discovered that two hours before you were supposed to go back on track?

Mr Coucher: We started to realise that round about midnight, about six hours before, the number of snagging pieces of work that we had to do could not be completed in the remaining six hours.

Q18 Chairman: Sir Ian, if for any reason Mr Coucher is not able to act as the public face of Network Rail, would you not normally expect to stand in and make statements on behalf of the company?

Sir Ian McAllister: We decided very early on that there were two issues we needed to deal with. The first was to correct the situation and get the necessary resources in place as quickly as possible to rectify the problem and fix it as quickly as we could. The second part of that was to ensure that correct information was being passed out to the public with respect to the recovery of the situation. Both Iain and I talked about that and decided that the best way ahead was to have Robin Gisby do the necessary presentations to the press because he was the executive responsible. He was in charge of customer operations. He was also linked and hard wired into Simon Kirby who was on site and getting the necessary information so he could take the appropriate decisions to give the correct information when it was required.

Q19 Chairman: The difficulty about that is that this was a major failure, both at Rugby and at Liverpool Street. Did it not seem to you that it would have been better for the company if a very senior executive, namely yourself, was on site in order to make a public statement? It is not true, I am sure, that you stayed out of the headquarters for the first four days of January, is it?

Sir Ian McAllister: My office is where I am. I was in constant contact with Iain and with Robin Gisby on the recovery situation.

Q20 Chairman: Why was it that you did not feel as Chairman that you should be contacting everybody concerned, making public statements and making it clear that you had direct responsibility?

Sir Ian McAllister: Because it was agreed between us that the most appropriate person ----

Q21 Chairman: Who is the "us" in this instance?

Sir Ian McAllister: Myself and Iain Coucher. The most appropriate person to make those statements was the person who was in direct contact with a very rapidly changing engineering situation. The situation was changing almost hourly and it was important that the person who was in contact with those engineering changes could make the necessary calls with respect to the information that was provided to the public. We felt it important that the correct information was being given out and that was the responsibility of Robin Gisby. We felt that he was the most appropriate person to give that information at that point in time.

Q22 Chairman: Is he the one who is ultimately responsible for the overall programme of engineering and modernisation, for example, on the west coast main line?

Sir Ian McAllister: The person who has overall responsibility for the programme is Iain and he works through our contractors which of course are Bechtel.

Q23 Chairman: Forgive me. I understand that. I think the Committee are aware of that but the point I am making to you is that this was a shambles different in kind and in size. This was not the sort of overrun that you get for a couple of hours at the weekend when there is a difficulty. This was a major station, at Liverpool Street, servicing large numbers of people in the city who were coming back to work after a holiday. There were problems which we understand with the CO's ability to be the public face at that time. No one criticises that but did it not occur to you that you should be talking directly to the public about what was happening?

Sir Ian McAllister: When it comes to Liverpool Street, I was contacted on the morning of the overrun by Robin Gisby to inform me what was happening. You have heard that the information only came very late. That was on 2 December. Robin at that time told me that these services would be restored by lunch time. The situation at Liverpool Street was a bad situation. It should not have happened but it was resolved very quickly within a very, very short time period. The issue however at Rugby was rapidly changing, almost hourly, and it was important that the information was properly assessed by those competent to do it. Robin was the person that we had agreed was in the best position to do that.

Q24 Mr Martlew: If you had your time again, would you do exactly the same thing?

Sir Ian McAllister: With hindsight, who knows? As a result of all these events, we do a post mortem to understand what happened. Could we have done it differently? If we had done it differently, would the results be different? That we will do and we will decide whether or not changes need to be made in the processes. The point I would make is that the structures we followed and the person we appointed was exactly the person who has handled most of the events over the past five years. That is not to say that it could not change but it was an operational problem and the best people to sort that out and give information to the general public ----

Q25 Chairman: It was not an operational problem at that time, was it? It was a major publicity disaster, not to put too fine a point on it. It was a situation that was going to cost Network Rail enormous amounts of goodwill. It was going to destroy all the hard work you have done at the 33 other sites. We are not talking about just a routine overrun. These particular locations were going to cost you enormous amounts of public support.

Mr Coucher: Of course, if we had our time again, we would probably do things differently. Ordinarily, when there is an operational incident on the railway, we always use a director of operations. He is the person with information absolutely at his fingertips and he has the breadth and depth to answer all the questions about all the situations. I would have done it myself. I would have been on site there if I could have been. I was certainly available for all the subsequent days after that. In any normal circumstances, it would have been me standing up there. I made the decision that it was better to use Robin Gisby because he knew the detail rather than, in this case, using the Chairman but we will reflect upon that and perhaps reconsider for future occasions. Of course, we would like not to get into future occasions.

Q26 Mr Martlew: Sir Ian, is it right that you were not in the office for those four days?

Sir Ian McAllister: I was in constant contact ----

Q27 Mr Martlew: Were you in the office or not?

Sir Ian McAllister: I was not in the office. As I said earlier, the office is where I am. I am in constant contact. I travel the country and I am in constant contact with the office. At that point in time I was talking to the office and finding out what was going on. I was also talking to Iain and I was talking to Robin Gisby. I was getting regular updates.

Q28 Mr Martlew: You were not in the office. That was all I wanted to know.

Sir Ian McAllister: No. I have an office at home.

Q29 Mrs Ellman: Do you not feel you should be the public face of Network Rail in circumstances like this?

Sir Ian McAllister: I think we have covered that point.

Q30 Mrs Ellman: I am asking you the question.

Sir Ian McAllister: I was quite willing to do that. We decided however that in the interests of providing the correct information to passengers Robin Gisby should handle the questions because he was in direct contact with Simon Kirby, who was on site and updating exactly what was going on.

Q31 Mrs Ellman: You did not think this was something very special that had happened?

Sir Ian McAllister: I thought it was extremely serious. I was very concerned and very worried but when we talked about what we should do that is the decision we made.

Q32 Mrs Ellman: Network Rail contracted Bechtel as programme manager for the work in Rugby and Bechtel then contracted other companies to carry out pieces of work where it all went wrong. Why did Network Rail not do that contracting directly?

Mr Coucher: Network Rail does contract but Bechtel are our programme managers. They work alongside us managing the programme. This is the most complicated project we have ever undertaken and Rugby in itself is the most complicated bit of that so we bring in resources like Bechtel, who are probably the best programme managers in the world, to assist us in doing that.

Q33 Mrs Ellman: Do you now think that they are the best programme managers in the world?

Mr Coucher: I still believe that. They have a fantastic track record. They have delivered for us over the last six years £7.7 billion on the west coast, largely without issues, and it is this type of experience that we need. There were reasons but not excuses for what happened at Rugby and we will correct those but the contracting decisions are between Network Rail and the contractors, not through Bechtel.

Q34 Mrs Ellman: Do you not think this is a very complicated system?

Mr Coucher: No, this is entirely normal. This is what happens in any other civil engineering organisation in the world.

Q35 Mrs Ellman: What went wrong then?

Mr Coucher: In this particular case, we started to experience problems in the early part of the possession on the most complicated piece of work on a six day blockade. When we sought additional resources to help us out at this point in time, there were not additional resources that we could bring in and an overrun became inevitable.

Q36 Mrs Ellman: Was it the same contractor who had difficulties recruiting the overhead line workers at both Rugby and Liverpool Street?

Mr Coucher: No, they were different.

Q37 Chairman: Perhaps we can ask Mr McCarthy. You say on your website that your expertise has saved customers millions of dollars whilst meeting tight schedules on the most challenging projects. What did the taxpayers save on your Rugby engineering possession over Christmas?

Mr McCarthy: We are deeply disappointed in the fact that we were not able to bring this one in as scheduled.

Q38 Chairman: I am sure you were. I think this Committee shares that view.

Mr McCarthy: Quite frankly, we thought we went through a very robust process. We had three readiness reviews ahead of the day arranged to start the blockade. In those readiness reviews we went through the detailed plans on an hour by hour, minute by minute basis with each of the contractors going forward. We did have a concern about the overhead line staffing. We required contractor to give us the names of each of the individuals to be able to support the staffing plan, to be able to reach that commitment. Those names we recognised. It gave us some comfort that they had the competent resources to be able to deliver the programme. The names that were on the list did not show up for the work. We have not been able to get a good reason why they did not show up and for that reason we had to solicit outside support from the rest of Network Rail and from other contractors in the OLE business.

Q39 Mrs Ellman: Had the contractor who was dealing with this, the contractor who failed to utilise the staff properly, given rise to any concerns before?

Mr Coucher: Not on this particular job.

Q40 Mrs Ellman: No, not on this particular job but in the past?

Mr Coucher: Sorry; not on this particular work package.

Q41 Mrs Ellman: Ever? On any other work that they had done for you which you knew they had done elsewhere?

Mr Coucher: For all of our pieces of work that we do, we look at the capabilities and delivery capabilities. We only pick those people that we have confidence in who can deliver all of our bits of work, whether it be overhead line, track, signal or whatever. We look at that as part of a risk assessment. In this particular case we sought assurance about the resources. We believed we had secured those assurances but as the work started it became apparent that these resources did not show up and we had to seek additional help from outside the contractor.

Q42 Mrs Ellman: Had those contractors done work for you before?

Mr Coucher: Yes.

Q43 Mrs Ellman: How had they performed that?

Mr Coucher: That they performed satisfactorily.

Q44 Mrs Ellman: There were press reports that one of the reasons the disaster happened was that workers turned up having been drinking and were unable to take up their jobs. Is that true?

Mr Coucher: No, it is not. We have uncovered no evidence of that in our investigations. It is true that for the work being done at Rugby the agency labour had only been secured or allocated until the end of the job which was 31 December. We had no assurances that they would work beyond that so we started to see a drop off in resource against that which we had because they were never planned to be there in the first place. We have no evidence of what you are suggesting.

Q45 Mrs Ellman: When you made your initial comments, you said all work like this had the potential to go wrong and you were closer to the rocks then you would have liked and you did not make much room for contingencies because of the time limits. That does not really give us much confidence about the future, does it?

Mr Coucher: I think we should look in the wider context. We do 5,000 of these projects every year and we deliver them successfully. Our measure of success is complete invisibility. The work that we do every weekend, every time we pick up a spanner, we design to get in there and get out without disrupting any passengers so you would not see anything of the successful projects. We have successfully delivered, delivered and delivered. When it goes wrong, as it did here at these three locations, it can disrupt the passengers for which we are deeply sorry. I will give you an example, if I may. Just outside of Edinburgh Waverley, we were lowering the track bed. We were digging down and replacing all the track in a tunnel. It went absolutely perfectly. Had that not been delivered on time, the whole of Scotland would have been disrupted between Edinburgh and Glasgow. Those are the sorts of risks that we take every time we pick up a spanner. We are engineering a Victorian railway and trying to get it back in terms of its services. Of course we would like longer to do this but that would deprive the users of the railway for longer than we believe is necessary.

Q46 Mrs Ellman: Are you entirely satisfied with the current arrangements in relation to who is responsible for what?

Mr Coucher: Yes. It is a delivery model that we have seen successfully deliver project after project. It has worked very successfully. There were reasons here but not excuses. We need to make sure that the reasons here are not repeated in the future. We need to redouble our efforts in ensuring that everything is perfect before we start the work and indeed in our readiness reviews the go or no go decisions that we make on every single project. There were a number of instances just before Christmas where we did have a no go situation and we said, "We are not confident we can do this work in the time" and we did not proceed with the work, so it is a proven methodology. In this instance, we genuinely believed that we could do the work. All of our investigations that we have done so far suggest that the work was deliverable, could have been delivered and it was right for us to start.

Q47 Mrs Ellman: If you were fined for what happened, who should pay it? You or Bechtel?

Mr Coucher: There is a commercial arrangement between ourselves and Bechtel and the contractors involved but at this point in time any decision about a fine is something you would need to refer to the ORR. They have not yet concluded.

Q48 Clive Efford: There are 575 people on the management group, 100 from Bechtel, 313 from Network Rail. Who are the other 162?

Mr Coucher: Engineering consultants that we bring in and designers from other consultancies.

Q49 Clive Efford: How does a group that large operate? I fail to understand how a management group of 575 people could meet, which I assume they do not, but how does it operate?

Mr Coucher: As you may or may not be aware, the west coast programme is a project which stretches from Scotland right the way down to Euston and there are individual project teams that look after Rugby, Nuneaton, the Trent Valley four tracking, Milton Keynes and Bletchley remodelling, so they are all allocated to projects. Sitting above that is a programme office of people so each of those 575 people is allocated to one of the programmes.

Q50 Clive Efford: So we do not have a full picture of the structure here. It is not a flat 575. Above them, there is an over arching project team. Who is that?

Mr Coucher: The 575 is the entire programme management team that looks after the entire west coast. A number of the 575 are allocated to Rugby; a number of them are allocated to the Trent Valley four track.

Q51 Clive Efford: Who is above them? What is the next tier up? Who do they report up to?

Mr Coucher: The programme director of the west coast programme reports to Simon Kirby.

Q52 Clive Efford: How is that made up? Is there one person responsible for each of those teams that reports to Mr Kirby?

Mr Coucher: There is a programme director for the west coast route modernisation. That individual reports to Simon Kirby, as with all the big programmes that we do. Beneath the west coast route modernisation programme are individual programme managers that look after the work packages of which Rugby was one.

Q53 Clive Efford: How many staff does Bechtel have working on the entire west coast modernisation?

Mr Coucher: 100.

Q54 Clive Efford: The answer for you would be 313 and that is the entire team on the west coast main line modernisation?

Mr Coucher: Yes.

Q55 Clive Efford: Of the programme management team, who is ultimately responsible? Is it Bechtel? Is it Network Rail?

Mr Coucher: It is a programme director from Bechtel working in accordance with Network Rail's systems and processes as with any other programme that we would undertake. In this instance, given the size and complexity of the job, we believed it was necessary to bring into the organisation some world class, experienced, heavyweight project managers to manage a programme of this size and they do so alongside our people managing in accordance with our systems and processes.

Q56 Clive Efford: We have established that the ultimate responsibility for this lies with Bechtel.

Mr Coucher: The ultimate responsibility lies with Network Rail.

Q57 Clive Efford: In terms of reporting what was going on, on the ground, the responsibility for managing that is Bechtel's?

Mr Coucher: On our behalf, yes.

Q58 Clive Efford: I took some notes earlier on. If I am right, you said that 30 December was when you were first made aware of the possibility of an overrun.

Mr Coucher: Yes.

Q59 Clive Efford: Mr McCarthy, you said that you became aware that there were problems between the 23rd and the 26th and on the 26th you were clear that there was a distinct possibility of an overrun.

Mr McCarthy: That was between the 25th and the 26th. At that particular point, we did not have a distinct possibility of an overrun. We were taking mitigation measures to meet the end date of the blockade.

Q60 Clive Efford: How crucial are the overhead line engineers to the completion of this project?

Mr McCarthy: In the Rugby blockade itself, there was a significant portion of the work allocated down the line. In essence, it was the demolition of existing track, existing overhead line and existing signalling and the reinstatement of that in a new layout at Rugby. The overhead line was a significant amount of effort and that is why we put a lot of front end planning into that particular work effort. We scrutinised the plan and whether the amount of works included in the blockade could be done within the blockade time frame.

Q61 Clive Efford: Prior to the blockade starting, you were not aware that there was any possibility whatsoever that the engineers would not turn up?

Mr McCarthy: We were concerned whether the contract had the engineering resource secured for the blockade. We went to the extra measure based on our past experience of having them name the resources and where they were coming from. They provided that list and we very distinctly reviewed whether they were a go for the blockade. We received that confirmation from the contractor.

Q62 Clive Efford: We had experienced, named individuals that everybody was aware of the track record for. You felt that you could rely on those people so you were confident that, at the time of the project review where you finally gave the go-ahead, those staff were in place and would turn up?

Mr McCarthy: Yes.

Q63 Clive Efford: During the course of the project, it became clear that these line engineers were not turning up. Given that they were so crucial to the completion of the Rugby project, how is it, Mr Coucher, that you were not notified until 30 December that there was a possibility of an overrun?

Mr Coucher: On Thursday the 27th at 11 o'clock in the morning, I received a call notifying me that the overhead line work was running behind schedule. At that point in time, the project team was not forecasting an overrun. They genuinely believed at that point in time that the work could still be completed, even though there were overhead line problems, inside the time available. It was not until Sunday the 30th when I was notified that there may be an overrun, but the project team was still trying to find a way of completing so there was early notification that there was a possibility, not a certainty, of an overrun.

Q64 Clive Efford: I appreciate that there may be reasons why you were not personally contacted in that period. The evidence that we have had is that the biggest problem you faced was that engineers were not turning up and that seems to have been from the moment the blockade started.

Mr Coucher: We do rely on named individuals to turn up. If they do not turn up - and it is not the first time that people have not turned up - we go to the normal pool of resources and bring in additional people at short notice. That has worked very successfully every time we have had to do that. If there is a shortfall, we can reach out and bring additional people in. During this particular work period, bearing in mind that there was overhead line work being done not just at Liverpool Street but at Trent Valley, Nuneaton and on the east coast, when we reached out for extra resources there were not any available. One of the lessons we will learn is that we will make sure on a national basis that we never find ourselves in a situation like that again.

Q65 Clive Efford: In your absence over the Christmas period - I accept there were reasons for that - who were Bechtel reporting to in Network Rail to say, "We have this serious problem"?

Mr Coucher: Simon Kirby, the person entirely responsible for all of our investment programme overseas. There were 35 of these projects. There were projects ebbing and flowing. We were looking at all of the risks. The airport junction for example was over- running eight hours and we managed to recover that inside the time. All of them are like that.

Q66 Clive Efford: This is not hours behind schedule, is it? This is days.

Mr Coucher: On Sunday 30 December, the first time we looked at it, there was a possibility at that point of perhaps a seven hour overrun.

Q67 Clive Efford: When the blockade started, when were you anticipating reopening the line? Can you remind us?

Mr Kirby: The overhead line activity should have been completed before signal testing on the 30th.

Q68 Clive Efford: Throughout the period, you were in touch with the project managers, Bechtel, and to monitor progress on the blockade?

Mr Kirby: I was in touch with effectively 35 projects across the country. I was getting regular updates every 12 hours and exception reports where there were problems or issues. On the 27th in the morning, I chaired two meetings to assess what overhead line resource could be taken to Rugby from other work sites and engaged in those two conference calls were contractors and managing directors from other contractors who had potential overhead line resource. We also had Network Rail maintenance people engaged in those phone calls and that allowed further resource to go to Rugby progressively over the next two to three days.

Q69 Chairman: You told your own maintenance people that there would be no work over the Christmas/new year period and you only had two staff on call but I understand that on the 30^th you asked them to assist at Rugby and keep on until the 4^th and you were asking them to work for all shifts, 24 hours a day. You went also to Bletchley. Is this the indication that you knew exactly what was going on? Did you not say to them, "You will not be required" and then call them in on the 30^th?

Mr Kirby: We had senior maintenance management engaged in the phone calls as soon as we understood there was an issue and we had maintenance staff mobilised and sent to Rugby from the 27^th.

Q70 Chairman: Did anybody suggest to you that there should be extra payment to bring people into Rugby? Is it true that people from Liverpool Street were being offered £1,000 bonus on top of their double time?

Mr Kirby: We have found no evidence of that. We are investigating.

Q71 Chairman: Let us do it the other way round: is it true that the people who were working at Liverpool Street left that job and moved to Rugby for whatever reason?

Mr Kirby: We pay a standard bonus for working Christmas and new year to all of our contractors.

Q72 Chairman: Did you not hear this rumour that £1,000 was being offered on top of double time?

Mr Kirby: I have heard a number of rumours on all sorts of thing.

Q73 Chairman: Did you ask the contractors if this was so?

Mr Kirby: We have. We are fully investigating where the staff from Rugby and Liverpool Street went to. I think you do need to put the context. We were managing projects on a number of locations with this type of staff.

Chairman: Mr Kirby, we are not questioning your ability to manage a number of projects; we are concerning ourselves with the management of two specific projects.

Q74 Clive Efford: On this point about managing the staff, in the readiness review what contingency do you have for the eventuality that there are staff that do not turn up? It seems to have been very slow to react to this lack of staff. Is there a contingency in the readiness review?

Mr Coucher: Yes, there is. The readiness review looked at all our staff. We thought we had secured the staff. We always know that one or two people may not show up for genuinely good reasons. They may fall ill or whatever so we have to prepare ourselves for the possibility. We plan our work in such a way that it is not assuming a full turn out. In this instance, we got fewer people than we would have liked and when we sought to bring in additional resources because of the work programme there was a shortage of spare resource and therefore it was difficult to recover the lost time inside the available time.

Q75 Clive Efford: Why is it in Bechtel's evidence that the readiness reviewed that the decision to go is subject to the OLE resources being validated?

Mr Coucher: One week before we said, "There is a risk here." That is why we needed to explicitly identify each person that is going to turn up for the required work. Once we had started the work, the track had been ripped up and the lines had been brought down, some of these people in the original list that had been identified did not show up. We went to our normal sources to bring in additional resources but there was none available.

Q76 Clive Efford: I am sorry; I am having trouble with this. We have the readiness review which determines whether the blockade should go ahead. It seems to be saying here that you took that decision without knowing whether you had the staff in place. Is that right or is it not?

Mr McCarthy: We took the decision very specifically on the basis that our contractor could demonstrate with named resources that they had secured the resources to go into the blockade. During the week prior to the blockade, they produced that list. We reviewed that list and they gave us assurances that they had secured the resources going in and therefore we were comfortable that they had the resources to be able to deliver the works.

Q77 Clive Efford: That is the normal procedure?

Mr McCarthy: We went to the extra step for a contractor to have them named. We typically would not have our contractors name specific resources. Quite frankly, we have never had a problem with OLE resources in the five years of the previous blockades we have delivered before.

Q78 Mr Martlew: Mr Coucher, is it a fact that you were over-ambitious? You had too many jobs on and that is why there were not any reserves, if that is what you call them?

Mr Coucher: We were over-ambitious for the right reasons. We were desperate to try and deliver all of this work in a way which did not require any additional time. We knew it was tight. When unfortunately these programmes ran into early difficulties and we looked to get additional resources, we could not bring them in at short notice and still deliver the work on time.

Q79 Mr Martlew: Because they were working somewhere else on the railway?

Mr Coucher: Yes. Now we will have a complete review of the overhead line resource category. We will see much greater use of Network Rail people doing this rather than relying on agency people who are not loyal to the company. Certainly when we called out the Network Rail maintenance people with experience in overhead line work, they came, they worked and they were loyal. They worked so hard that we had to almost send them home for their own safety as they were working too hard. Going forward, we will be doing much, much more of this ourselves rather than relying on agency people because that is what let us down in this instance.

Q80 Mr Martlew: Is there a skills shortage on the railway or is it because we have not trained people in the past?

Mr Coucher: No, there is not a skills shortage. We need people we can train and develop. In the past, we have never exhausted the pool of available overhead line staff. This was the first instance where we came across it. Whilst we believe there is a greater case for wider electrification of the railway, we will increase our resources in this and we need to do so probably through Network Rail rather than relying on agency people to do it for us.

Q81 Mr Martlew: Mr McCarthy, you say it was due to people not turning up. What sort of numbers? How many turned up? What was the absentee rate?

Mr McCarthy: We had a very specific number of people required for each shift. The total resource for the experienced linesmen and supervision was around 65, which are broken up into two shifts a day of about 30 to 35 each. At its lowest point, we were getting less than 50% of those resources showing up for the contractor, at which time we had to take control of the job and work with Network Rail.

Q82 Mr Martlew: Only half of the people turned up at the worst time.

Mr McCarthy: At the worst time it was less than half, yes.

Q83 Mr Martlew: Could it be that some of them were working somewhere else on the railway?

Mr McCarthy: We could not establish that fact at the time. Quite frankly, we had to do what we could to get the other resources in outside the contractor.

Q84 Mr Martlew: Are you trying to establish it now?

Mr McCarthy: We are trying to establish it right now. Our contractor has not given us satisfactory justification for the resources although that is still under investigation.

Q85 Chairman: Were you offering people with suitable certificates £5,000 for three days' work?

Mr McCarthy: Not to my knowledge. Network Rail has a standard bonus ----

Q86 Chairman: Was your contractor offering staff without the certificates £3,000 with £500 deducted for the training?

Mr McCarthy: Not to our knowledge.

Mr Coucher: Not to our knowledge but as you have raised it we will add that to the list of things we need to investigate.

Q87 Graham Stringer: Who was the contractor?

Mr Coucher: The contractor for Rugby was Jarvis.

Q88 Graham Stringer: Who was the contractor at Liverpool Street?

Mr Coucher: Coless.

Q89 Graham Stringer: You seemed to indicate that it was a shortage of people nationally that led to this problem. Was the analysis for Liverpool Street and Rugby the same? Did you believe that people were not turning up for the same reason?

Mr Coucher: The issues at Liverpool Street were slightly different. We were progressing in accordance with the programme. We had the full complement of staff. The overhead lines were being put up at the rate at which we thought it was going to be, but when we came to do the final snagging, turning things on and testing it, we were uncovering more problems and it was the fixing of those problems which took more time than we had anticipated. We had slightly more problems and it took longer to fix them, which meant that we were unable to deliver the railway back in time for the morning peak on the day after new year.

Q90 Graham Stringer: The number of snags was more than you expected. Was that because the engineers had been working long hours and were not doing the job as well?

Mr Coucher: It is certainly an area that we are looking into, the quality of workmanship there, because in hindsight yes, it looked like we were producing more snags than anticipated. The rate was good but when we came to turn these things on and test them, bearing in mind that this was probably the most complicated piece of overhead wiring we had done since we rewired Euston in 2000, this was a hugely complicated job. When we came to commission it, we were uncovering more problems than we anticipated and it took longer to fix those. Whilst we returned the train service back later on the day, it was not in time to start the morning peak.

Q91 Graham Stringer: For just these two overruns, how much extra cash have they cost?

Mr Coucher: At this point in time we are not entirely sure but it will be £10 million plus, bearing in mind the compensation that we give to passengers and train operating companies for the disruption caused.

(The Committee suspended from 3.36pm to 3.51pm for a division in the House)

Q92 Mr Scott: It has been alleged that there was a derailment of a ballast train during works at Rugby. Is that correct?

Mr Coucher: There was an engineering train that had derailed in a possession before the work at Christmas. It was a separate weekend. It did not impact either on that possession or indeed the Rugby one.

Q93 Mr Scott: Were there any other accidents that occurred or contributed to the overrun at Rugby or Liverpool Street?

Mr Coucher: Not that I am aware of.

Q94 Mr Scott: Mr McCarthy, you state that the time period in which works could be carried out was compressed by decisions outside the control of the programme management team. What were those decisions and who made them?

Mr McCarthy: The process for planning the access takes place anywhere from 18 months to two years ahead of the planning of the engineering and the engineering works and possessions, so in many respects the access windows are locked down as we are still engineering the works to be completed. Therefore, we try to fit in the works inside those windows.

Q95 Mr Scott: Were you concerned about this compression in the time available to do the works?

Mr McCarthy: We were not concerned. We have a very ambitious programme to deliver between now and December 2008, so we were trying to strike the right balance of delivering as much as we could without any undue risk for an overrun. That is a balancing act. We have to strike a balance on how much work we can get done in the window itself, so we are trying to get as much work as we can inside the window without adding too much risk of an overrun on the outside. That is what we review when we go through the readiness reviews for how much work we can deliver and have a good probability of achieving those works.

Q96 Graham Stringer: We were talking about costs and you were saying that there would be compensation to be paid to the train operating companies and the passengers. What I was trying to get at was what is the extra cost of the engineering work itself. It must have cost more because there were people there for longer.

Mr Coucher: We have not yet assessed whether or not they are due any more under our compensation regimes that we pass on to our contractors. That will take several weeks before it flows through.

Q97 Graham Stringer: The ten million is the compensation plus whatever extra costs there were for being on site longer?

Mr Coucher: Like I said before, this is in excess of ten million. I am not entirely sure of the precise figures but there is compensation due to train operators, freight operators, anybody who is affected by the disruption and by that additional cost incurred in paying contractors to finish the work, our own people. That in total will exceed £10 million.

Q98 Graham Stringer: Mr McCarthy, you did a sort of due diligence to make sure that the people the contractors said were there actually existed. Are there penalty clauses in the contractors' contracts?

Mr McCarthy: There are no penalty clauses in this particular case as it relates to the resources themselves.

Q99 Graham Stringer: The people who were supposed to be doing the work, the people they said were going to be doing the work, are those contractors going to be penalised in any way or is it just tough?

Mr Coucher: We use a whole range of mechanisms with our contractors. Some are fixed price. Some are target costings. Some are time and materials, where we just pay as we go and we use a balance of those throughout all of our contracts. Some here are different. There are some instances where the contractor does not bear any risk and others where they bear a lot more risk. It varies throughout the contracts.

Q100 Graham Stringer: There is no penalty for them not turning up. They just did not get paid for work they did not do. Is that what we are being told?

Mr Coucher: The commercial arrangements on this contract are between ourselves and the contractor. There are some clauses where they will get paid for some work but not all of it, but there is no penalty. We cannot flow down the extra costs that we incurred back on to them for this particular one. Other contracts are different.

Q101 Graham Stringer: Is that a sensible basis on which to set up a contract which is so time dependent and when there are very critical paths to go down? Is it sensible not to have penalties in there so that if somebody does not turn up there is no consequence to them?

Mr Coucher: There is a balance of contracting models that we use. The costs incurred here would completely dwarf what we would pay the contractor for non-delivery. You cannot transfer all of that risk onto them without them either declining to do the work in the first instance or being unprepared to contract for that work. We have to find the right mechanisms here. Normally they engage because they know failure would mean they would not get any additional work. That is the big risk that they take.

Q102 Graham Stringer: Mrs Dunwoody mentioned Oracle Global at the beginning of this session. I am not quite sure whether they fit in or do not fit in to the flow of responsibility. Can you tell the Committee who they are and what they do for you?

Mr Coucher: I am led to believe that this company recruits agency people for the principal overhead line contractor, in this particular case Jarvis. They were engaged by them to go out and get additional agency people for this blockade.

Q103 Graham Stringer: If somebody was offering the kinds of sums of money that Mrs Dunwoody was talking about, it would be Oracle?

Mr Coucher: I believe so, yes.

Q104 Graham Stringer: Have you checked with them?

Mr Coucher: Not as yet.

Q105 Graham Stringer: Really, the answer to the question before was you do not know and you have not checked. When will you know if they were offering those kinds of sums?

Mr Coucher: These are still conversations we are having with our contractors as to where these people were, who they were and the agency arrangement they have in place. I would like to reassure this Committee that in future we will be using a lot more of our own people in-house. We will not allow contractors to have a very high proportion of agency people to support their work because that is what has let us down here. There will always be a role for agency people to come in and provide labour at short notice because we cannot afford for every single contractor to have a huge level of resource for the two or three times a year when they are required. There will always be an agency pool but we will not be contracting with anybody where the agency is such a large proportion and of course we will be looking to do more ourselves. In the last few days we have made offers to at least 50 agency people to come and work directly for Network Rail in our expanding overhead line team.

Q106 Graham Stringer: I can understand you might not know what incentives a recruitment agency is giving but one of the accusations that was being made was that they were not only offering bonuses but they were training people on site. Would you know if they were taking non-qualified people on and training them on site?

Mr Coucher: Anybody who comes on to the work site must be fully qualified. We certify them through a system called Sentinel. All their competences are registered and you cannot bring people onto site unless they have the appropriate qualifications. It would be remarkable if people were doing on site training in a blockade like this. As you have raised it, I will go away and check to find out whether that was the case or not.

Q107 Graham Stringer: I would be grateful if you could tell us. When you say that they have to be qualified before they get on site, if they turn up at midnight, as I assume some people would be doing, how would that be checked?

Mr Coucher: They have a plastic card with their photograph on it and all their competences, which lists what they are qualified to do and what they are not qualified to do, and that is checked at the possession gate.

Q108 Graham Stringer: By Bechtel?

Mr Coucher: By the programme team, the person on site.

Q109 Graham Stringer: Who were actually employing? Is that Bechtel or is it Southern Rail or subcontractors actually checking the passes?

Mr Kirby: We would employ somebody called a COS (controller of site safety) who would basically check the competence and the credentials of each person signed on to site through the process that Mr Coucher has just described.

Q110 Graham Stringer: Would Network Rail employ them just for the duration of this four, five or six day contract?

Mr Kirby: In many cases the contractor employs the controller of site safety; it depends on the particular instance, but they would be independent of the people actually doing the activity.

Q111 Graham Stringer: It sounds as though it is out of both Bechtel's and Network Rail's control.

Mr Coucher: We put this requirement on our contractors that anybody who comes on to site is properly qualified and has registered their competence through the system. We spot check compliance with that and those spot checks will go on unannounced throughout the country. We ensure through that. There is a possibility here that this might not have been done by Network Rail.

Q112 Graham Stringer: If this is an emergency, the gate may well have been wider open than it normally would be.

Mr Coucher: No. This is getting partly into the reasons now for the longer overrun. When things are starting to overrun, we need to bring additional people on to this work site. They are unfamiliar with the work site; they unfamiliar with the tasks. This is a very busy work site running 24 hours on two shifts. There is lots of big yellow plant and we have to train those people - not train them but we have to brief them as to what their tasks are. That adds extra time and so that is always a risk. I can assure you that we make sure that everybody complies with the safety processes required to do work safely, both for them and to make sure the railway goes back on line safety. I share your concerns that the gate might have been slightly wider than we suggested, but we are very meticulous that the people who come on to the site must go through the controller of site safety certification process.

Q113 Graham Stringer: Was the safety record on these two contracts as you would have expected it to be? Was it better or worse?

Mr Coucher: We have had an excellent safety record on the West Coast programme as a whole. It is probably the safest programme that we are running in terms of the accident frequency rate. There has been a very good delivery.

Q114 Graham Stringer: I am asking about these two particular contracts. It is potentially dangerous work, is it not?

Mr Coucher: There are risks involved but everybody is properly trained and certified and we make sure that the work planning is done so that it can be done safely. There is no evidence to suggest that these contracts have a safety record that is any worse than that of anybody else.

Q115 Graham Stringer: That is on these two particular contracts?

Mr Coucher: Yes. There is plenty of evidence on where we have suspended contractors, where we have not been entirely happy with their safety record until they have put in place mitigations, and we did that to one of our mainstream contractors last year.

Q116 Chairman: You said that the overrun at Rugby was caused by poor manpower planning, too little scope for slippage, poor control and co-ordination on site. I think that is a direct quote from Network Rail. Why did you not realise that while the project was underway and showing signs of slippage?

Mr Coucher: It was progressing. There were slippages inside the programme. It looked like those slippages could be contained. When we hit further problems and we needed to reach that and get additional resources, the re-planning exercise meant that we could not complete it in the timescales.

Q117 Chairman: Were there the same problems with the overhead line engineers in Liverpool Street as there were in Rugby?

Mr Coucher: No, they were completely different.

Q118 Chairman: And yet in fact Liverpool Street, which appeared to be on time, slipped back because a lot of the overhead line engineers left Liverpool Street?

Mr Coucher: No, that is not the case.

Q119 Chairman: You can assure me that that is not the case?

Mr Coucher: The overhead line people at Liverpool Street remained. We did supplement it with Network Rail people who had come off renewals work they were doing on the East Coast. So we put additional resource into there, and it simply took longer to fix the snaggling problems we got. Whilst we had four hours to fix it, inevitably it took a little bit longer, which meant we missed the morning peak on the Wednesday.

Q120 Clive Efford: Can I clarify this? When were Virgin first contacted by anyone to inform them that there was a likelihood of a delay?

Mr Coucher: First of all, Virgin and Network Rail and the train operators share an integrated control centre in Birmingham, so they are constantly aware of what is going on because they get exactly the same information for running trains. They are in the same office. The first time that we notified the train operators to create contingency plans for a possible overrun was after the conference call on Sunday, 13 December at 12 noon.

Q121 Clive Efford: So they would not have been aware of Mr Kirby's meeting on 27^th?

Mr Coucher: No, because at that point in time we genuinely believed that we could still complete the work in time for the overrun. The first thing we did when we realised that there may be an overrun was to speak to Virgin and London Midland to advise them to put in place contingency plans for the possibility of an overrun.

Q122 Clive Efford: At any time prior to the work starting, to the blockade starting, or whilst the work was going on prior to 30^th, did Virgin raise any concerns about the possibility of delay?

Mr Coucher: There were constant project meetings. I met with Tony Collins and the Virgin team the week before the start of the work when we were talking about the possibility of extra days. There was a constant dialogue between Network Rail and ---

Q123 Clive Efford: I think the answer is yes or no? Did they raise any concerns about the possibility of delay?

Mr Coucher: Yes.

Q124 Clive Efford: Prior to 30 December?

Mr Coucher: Before we even started the work, they wanted to be assured that we could get in there and get out and do the work, and that is the normal standard. We always take all of our customers through the work we are going to be doing so that they are aware of what we are doing.

Q125 Clive Efford: So there were nothing other than the normal concerns for a train operating company in this particular set of projects and they did not express specific concerns to say that you will never get this work done on time?

Mr Coucher: No. There were no new circumstances. Of course whenever we do a piece of work like this there are always risks that we may not complete the work on time. We cannot afford the luxury of padding our possession simply to protect ourselves from an overrun. We knew that this was tight but we also knew that if we did not do this work over the Christmas period we would no deliver the December 2008 timetable upgrade. If we did not proceed, that was the rest of the work programme for the rest of the year.

Q126 Clive Efford: Sir Ian, you seem a bit irrelevant in this. What are your role and responsibilities?

Sir Ian McAllister: There is a complete separation of responsibilities between the non‑executive Chairman and the executive. The executive are responsible for operating the company and I am responsible for managing the board and reporting on our performance to our members. The board holds the executive management of the company to account.

Q127 Clive Efford: What is your role in all this?

Sir Ian McAllister: I have no operational role whatsoever.

Q128 Clive Efford: In terms of your appearance before this committee, what have you got to say to us about the situation that occurred over the New Year and Christmas?

Sir Ian McAllister: I think the situation was a very difficult one. It should not have happened. I expected and I was assured and I accept that the necessary mitigation measures were in place well before the blockade took place. It was in fact a discussion that we held at the board in December. We were not expecting an overrun. When the overrun occurred, then it is the operating responsibility to sort it out as quickly as possible.

Q129 Clive Efford: When did your phone first ring in your office at home?

Sir Ian McAllister: My phone first started to ring on 31 December.

Q130 Clive Efford: When you were referring to the situation changing hourly, in your answers to the Chairman earlier on, what were you referring to?

Sir Ian McAllister: I was referring to the changing situation with regard to the likelihood of a recovery taking place. In the initial stages, the recovery was not forecast to be three days; it was forecast that there would perhaps be a seven to eight hours overrun. That was bad in itself but the situation developed as the time went on.

Q131 Clive Efford: We have a situation here where Network Rail potentially is exposed to quite a substantial fine for what has gone on. Is that right?

Sir Ian McAllister: Yes.

Q132 Clive Efford: Where is your responsibility in that and do you feel that you have been well served in the information that has been provided to you about the ongoing situation at the time?

Sir Ian McAllister: The situation was changing very, very rapidly indeed. As I said earlier, the principal objectives we had were, first of all, to get the problem sorted out as quickly as possible. Iain and I discussed it. He took on that responsibility and Simon started to get additional resources into the Rugby area. The second part of the issue was to ensure that the information provided to passengers was as comprehensive and as accurate as it could be. That was why Robin Gisby was doing that because he was hard-wired into Simon and therefore knew exactly what the situation was that was up to date. These are very fast‑moving situations as they develop. As I mentioned earlier, I was first advised of the Liverpool Street issue on the morning that Liverpool Street should have returned to work and in the same conversation Robin advised me that the restoration of the lines would start from around, if I recall, noon to 2 o'clock that afternoon as the InterCity trains were coming into Liverpool Street and the whole station would be back in operation for the evening peak. So it was a very quick situation.

Q133 Clive Efford: Everything was fast-moving but the trains! On the inquiry into what has gone on there are gaps in what is in Network Rail's evidence to us. They seem to have found conclusions about the supply of engineers and the fact that you need to have a bank of engineers available, particularly at public holidays, but there are not any conclusions. We are a month on. You are a multi-million pound operation. You are one of the biggest public organisations - you are certainly one of the biggest in transport - and yet a month on you have not come to any conclusions. Have you been sleeping on the job? I am asking Sir Ian because I think this is a responsibly of the board of Network Rail.

Sir Ian McAllister: The board has asked for a full report on what has happened. That report will be provided by the executive team.

Q134 Clive Efford: Do you think it is timely? Do you think you have been working ---

Sir Ian McAllister: I think they are going as fast as they possibly can. As Iain was saying, we discussed this at length at the board meeting last week but what we had was a preliminary report rather than a complete report. It does take time to get to the bottom of these issues. You have suggested that certain payments were being made by contractors. That will have to be investigated. These things do take time.

Q135 Mr Martlew: Can I take you back to the board meeting in December, Sir Ian? The plans for Rugby, the plans for Liverpool Street and all the other plans for the work over the bank holiday were presented to the board, were they not?

Sir Ian McAllister: No, they were not. The issue there was that at the time the company had asked for an additional day to do the work at Rugby. Virgin had objected to that and had applied to the Office of Rail Regulation for a ruling on whether or not that extra day should be given. The Office of Rail Regulation agreed that that day should be given. The board were advised of all the necessary details supporting that and at the same time the executive team have all these major reviews that take place to determine whether there is a go/no go decision. Ian sought assurances from the various companies that the blockades would take place and the work would be delivered.

Q136 Mr Martlew: At any point was the board told of all the works that were going to go on over this period?

Sir Ian McAllister: The board was aware of all of those, but the board does not get a regular schedule of every single possession that is taking place because there are about 100,000 possessions a year. What the board is looking for is assurance on certain issues. At the December meeting, or rather shortly after the December meeting, I asked for a paper to be presented to the January board that was going to look at the whole of the possessions on the West Coast Main Line throughout the whole of 2008 and what the appropriate risks were to the delivery of the December 2008 timetable. That paper was overtaken by events over Christmas.

Q137 Mr Martlew: I am sorry, Sir Ian, I have probably not explained myself very well. It is becoming apparent that Network Rail had overstretched itself throughout the rail network over this period. Did your board sanction that work at any point?

Mr Coucher: Can I just add ---

Q138 Chairman: No, I think the Chairman was being asked. Mr Coucher, we would be delighted to talk to you in a moment.

Sir Ian McAllister: The answer to the question is: no, the board did not go through every single possession and review the work.

Q139 Chairman: You did not think it was surprising that you were only told four hours before the services were resumed? You told us that you were given the information then.

Ian McAllister: That was Liverpool Street. The information about the overrun, as I recall, only occurred around 2 o'clock in the morning of that day. I was called first thing in the morning and told that there was going to be an overrun. It was very late-running information.

Chairman: A lot of it was late-running, yes.

Q140 Mrs Ellman: Mr Coucher, in the written evidence from Network Rail you say that you need to involve key stakeholders, such as train operators and passengers, for an earlier and major blockade. How are you going to do that?

Mr Coucher: What has happened in the past is that largely we have advised train operating companies and freight operating companies that we are taking this piece of work and they have been assured that we will return it back to them in good time. Our track record is such that we do this week in and week out. What I think we would like to do more of is talk to train operating companies about the design for the specific work that we are doing so that if there is the possibility of an overrun, we could provide some train services, if not the full service. For example, if you take Liverpool Street as an example, rather than have the whole lot come back on line in one go, we could do it in two halves so that if the second half overran, then at least half the train station would be operational so we could get some services, or we could design the train service which would rely on diesel trains rather than electric trains. I think we want to have an early conversation which is a lot more along the lines of planning for the possible failure rather than always assuming that we will be successful.

Q141 Mrs Ellman: What do you do now? Do you have no discussions of that nature?

Mr Coucher: We do have lots of discussions about what we are going to do but I think there is a lot more involvement we could have with the train and freight operating companies about what we would do if it goes wrong, or could we design what we do in a way that makes it easier to run a passenger service in the event of something going wrong. It is something that we have not done enough of in the past. We have discussed with train operating companies how we might do that in the future.

Q142 Mrs Ellman: You say that in the future you want contingency plans to be signed off by the train operators. Would they be in a position to do that? Would they have enough information? Is that just a way of trying to put your responsibly on their shoulders?

Mr Coucher: No, not at all. We want to sit down with the train operating companies and talk about the specific piece of engineering work that says, "What would we do if the work ran over two hours? Would we cancel trains or would we use buses? Would we divert passengers to a different station? Have we got spare capacity on that line to do that? What would we do?" We would scenario test that a lot more robustly as to what we might do with them.

Q143 Mrs Ellman: So it was simply about how to solve a specified problem. You would not be involving the operators in assessing whether there is likely to be a problem?

Mr Coucher: I think we would like to make them aware of the size and complexity of the challenge we have, but I am not entirely sure that the train operating companies have the skills to understand the engineering work that we are doing and the risk involved. We would happily share that with them.

Q144 Chairman: Mr Coucher, if you are going to give people information earlier on, it would be helpful if you knew what was going on yourself, would it not?

Mr Coucher: We were trying to get both train services back on time with no overruns. When things need to be re-planned at very short notice, it is difficult to be absolutely precise about when things will come back on line.

Q145 Chairman: You accepted all the contractors' estimates of the numbers of overhead line engineers they had, although you knew that you had been employing fewer and fewer yourselves for some years and relying almost entirely on contractors. Is that right?

Mr Coucher: No, that is not right. We have been gradually increasing the number of overhead line resources we have internally. We have very significantly ramped up the resources that we have for overhead line engineers in the East Anglia area and on the East Coast, and we have a rolling programme of renewals that we have been doing with our own people, so we have been increasing numbers rather than decreasing them,

Chairman: We should like some more notes from you all. Gentlemen, we will conclude this session. Thank you Mr McCarthy and Mr Kirby. Sir Ian and Mr Coucher will remain in their places.