9820. What you say at 15.8 and 15.9 is in fact that you are pleased to note that the Regulator had come up with a much tougher regime which you thought suitable for purpose to resolve conflicts.
  (Mr Smith) That is what it says.

  9821. You set out what the concerns were and you said that it would not necessarily work transparently and predictably, it could enable Crossrail to use up protected capacity, there would be an ability to change the model without agreement, and you say that, given these concerns, this is 15.9, "EWS firmly supports ORR's proposed changes to the change control mechanism as set out in paragraph 35 of the proposed decision, particularly that, if there is a conflict with existing rights or there is a problem with a model which gives rise to a conflict with existing rights, then the Crossrail conflicting right is removed permanently and not just until the existing right expires". In other words, what the position had been before is that the model had suggested that, if there was a conflict, the conflict might have simply put the Crossrail path into abeyance until the paths that it was in conflict with came forward again for renewal for their own access options.
  (Mr Smith) That is correct.

  9822. But what the change control mechanism in fact now does is say that, if there is a conflict which cannot be resolved, then the Crossrail path which is in conflict is lost.
  (Mr Smith) That is the new position.

  9823. So, in other words, not only do you have the capacity of the output-led model which assumes infrastructure improvements, but you have a protection for your own paths, do you not, and for those for the rest of the industry, both passenger and freight, that, if the Crossrail model cannot resolve conflicts with protected paths for freight and freight growth, the Crossrail paths are lost permanently.
  (Mr Smith) The concern—

  9824. Could you answer my question first?
  (Mr Smith) Certainly. You have correctly stated the position that we expressed in our letter. The concern that we have, and which emerged only yesterday in a discussion at the Timetable Reference Group, is that Crossrail asked or suggested to the Regulator that the two off-peak paths that the ORR had asked should be removed should be reinstated into the timetable model and that not all of the freight rights of paths should be included. I am sure that this will be resolved in further discussion, but it is an indication that, whilst we appear to have a mechanism to be tested at some point in the future, there are already attempts being made to try and adjust the underlying assumptions in that mechanism.

  9825. Let us just get this clear. So far as the modelling is concerned, the modelling still continues under the Regulator's decision on the basis of the full number of paths applied for and the infrastructure improvements that would have accompanied the full number of paths applied for. The modelling does that, even though the Regulator has said, "You may not at this stage have two off-peak paths".
  (Mr Smith) It is very reassuring that the modelling will continue to assume that all the infrastructure improvements—

  9826. Well, that is what the decision says. The modelling continues to assume that the paths that have not been granted to us are still in there. Of course there could be no objection if, in due course, it became clear that those paths could be accommodated without undue impacts on other protected paths and other appropriate capacity. It may not, but there is nothing to prevent Crossrail from seeking to persuade the Regulator that the two off-peak paths that had been lost could be reinstated if sufficient capacity was found to exist with further modelling.
  (Mr Smith) And the Regulator acknowledges that in his decision.

  9827. So there is nothing wrong with that process; it is built into the industry mechanism, is it not?
  (Mr Smith) I was surprised that some of the freight rights were being suggested should be removed, but I am sure that that will be resolved in discussion as well.

  9828. Well, the modelling inputs can only be changed with the agreement of the parties or, in default of agreement, by the independent adjudication of the ORR. That is right, is it not?
  (Mr Smith) That would be very reassuring.

  9829. Well, that is what your letter says.
  (Mr Smith) Yes.

  9830. So we cannot do it unilaterally. We can only do it if we either persuade you and your colleagues in the freight industry or we can persuade the ORR independently to do so, so you have protections through the output mechanism, which assumes infrastructure enhancements, you have protection through the change control mechanism, which will lose Crossrail paths if there is unresolvable conflict with your protected paths, and changes to the modelling assumptions can only be made either by agreement within the industry or by the independent adjudication of the Regulator.
  (Mr Smith) Your statement, including the fact that the infrastructure is assumed to be there, is correct.

  9831. MR ELVIN: Can we just look at the change control mechanism very briefly just so that their Lordships see it very briefly before I sit down, and I am sure you will be pleased to hear that! Can we go to Exhibit 05-113.[5]

  9832. LORD SNAPE: We have laid awake most of the night, Mr Elvin, thinking about it!

  9833. MR ELVIN: I will refrain from comment! This is all part of the final decision dealing with the change control mechanism and their Lordships can see at paragraph 91 where it moves on to the next page in paragraph 8(2) and says, "These concerns", and these are the concerns that you identify in your letter as well, "led to our decision that we should change the CCM", the change control mechanism, "to give effect to the following key principles", and we see clarity, setting out the consequence of conflict for Crossrail and third parties, but, if we go to the next page where the real teeth are, the first bullet point, "The effect of an irreconcilable conflict between a Crossrail right and the rights which we require to be included", and we know what they are because paragraph 79 tells us, it is existing freight paths and paths to accommodate freight capacity to 2015 and other passenger paths, do we not?[6]

  (Mr Smith) Correct.

  9834. "The effect of an irreconcilable conflict would be that the Crossrail right was lost permanently not merely for the duration of the conflict", so an irreconcilable conflict, we cannot sort it out, Crossrail loses a path. Similarly, the effect of a conflict arising because of an error in the model or the model assumptions or because of the descoping of the project would be that the Crossrail right was lost permanently. In other words, if there remain unsatisfactory elements in the model which do not deal with the issues properly, then again Crossrail is penalised by losing any effective paths.

  9835. CHAIRMAN: What does "descoping the project" mean?

  9836. MR ELVIN: I was hoping to avoid answering that question! Let me see if I can find out. (After a pause). It means removing elements of the project.

  9837. LORD YOUNG OF NORWOOD GREEN: For example?

  9838. MR ELVIN: For example, if there were insufficient infrastructure works to generate the capacity necessary to deliver the outputs. That is why we say there is sufficient security for the assumptions and for the infrastructure built into the mechanism.

  9839. LORD JAMES OF BLACKHEATH: Who would be the judge as to whether the removal of any such action caused a worsening of the safety implications?

6   Crossrail Ref: P67, Correspondence from EWS Ltd to the Office of Rail Regulation, Change Control, 17 March 2008 (LINEWD-34_05-111) Back