Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence


Examination of Witnesses (Questions 160 - 174)

WEDNESDAY 5 JULY 2000

MR GILES FEARNLEY, MR CHRIS GREEN AND MR ALEC MCTAVISH

  160. I think you are very lucky it was only 24 per cent.
  (Mr Green) We cannot apologise perfectly to every single person on the day.

Dr Ladyman

  161. The point is you cannot get on another train next week.
  (Mr Green) But your question was how does a customer get his voice heard and there is more going on behind the scenes than you may see in the Committee room.

Chairman

  162. I got on the same train last Saturday and, Lord help me, you threatened to put me off at Watford again. I have to say my language at that point was "plain" is probably the best term. Due to the ability of a railwayman on the train that was not necessary and we staggered on to Euston. I think the point that is being made—and I am sorry but some of us live with railways—is that all this afternoon we have heard about everything but not about the passenger and about how the passenger is treated or the passenger gets to respond to this or the passenger is able to—
  (Mr Green) We have 22 extra staff booked out at weekends for this particular problem for the passengers, no-one else. We have six extra locomotives hired out in case anything breaks down. We have a major operation of buses and coaches and taxis to support people in trouble.

  163. Lovely, but on the hottest day of the year people do not want to get out at Watford with their luggage and go by bus to Euston. They did not have to on that occasion, they had two whole Sprinters to cram into.
  (Mr Green) We are at risk until 23 September when the whole of the Euston work is finished. We could not be doing more in the short-term. We are passenger oriented and I am doing almost nothing else myself at the moment.

  Chairman: Fine. I hope you had a lovely time at Watford. I will look for you next time I am thrown off there. Sorry, I beg your pardon. My goodness, this Committee is bad for my blood pressure. Mr O'Brien?

Mr O'Brien

  164. Reference has been made to the review of the franchises and these are now being replaced, the process is in being. ATOC have said that some of the bids are expensive. What steps are the SSRA taking in order to provide a clearer lead to bidders about what it wants from the franchise replacement process?
  (Mr Fearnley) We do welcome the fact that bidders are being advised to put forward a vision for that part of the railway and not be constrained at the early stages in the bidding process by very firmly fixed views. We believe, as I am sure the SSRA do, that is the way we will best achieve the right solution for each part of the railway through this process. The process itself as a result of that is a long one because the SSRA are having to evaluate a range of bids submitted under different criteria and then going on to a short listing process before they are narrowed down to two final bids. Two or three of the franchises are at that stage and we know that our members who are bidding are spending two to three million pounds in costs and fees just to get to that stage. That clearly is a huge sum of money when there is no certainty of success. Whilst applauding what SSRA are trying to do, the very fact that it is an open book process means it is going to be expensive and there has to be a fear that because of those costs certain bidders may not be attracted to go forward because of the risk of losing. What we have proposed is when the SSRA have got down to the final two bids and start evaluating those two and have negotiations with those two before they come up with a preferred solution, a process which itself could take some months and involve each of those two bidders evaluating a whole range of new proposals to them, the SSRA will underwrite the reasonable bidding costs of the bidder who would then lose.

Chairman

  165. Why should they do that?
  (Mr Fearnley) To incentivise people to come forward and to stay in the process and to put their best foot forward.

  166. You are seriously saying that you think people are going to have a go at getting these franchises but they might be so put off that they are going to run away because they think they are not going to get all their attempts at doing the calculations underwritten by the SSRA?
  (Mr Fearnley) There is no question that the early stages of the bidding process should be underwritten, but once the SSRA have developed the process down to just two bidders—

Mr O'Brien

  167. Is not the cost at the early stages? People have got to do research, they have got to go into the details, so the cost is at the early stages. You said earlier that some people are saying "we cannot go out for this because it will be too expensive". It is the early stages that they are looking at.
  (Mr Fearnley) I am not so sure. Whilst there are clearly costs at the early stages I would be surprised if SSRA felt comfortable underwriting all bidders because they would want to see the quality of the bids coming forward. Once they have evaluated the top two in terms of quality, what those bids will do for the customer and the value for the taxpayer then the experience we are seeing so far, and I accept it is still the early days of the process, is there seems to be a long torturous process once those two come into play whilst each is asked to look at the other's proposal and put their own in. It is that that is racking up the cost to a level that is making bidders feel uncomfortable. I think everyone who is bidding accepts there is a base cost.

  168. Did I hear you correctly, that each will look at the other's bid?
  (Mr Fearnley) Not the bids themselves but my understanding is if the SSRA are faced with two proposals for the same line but with very different base cases, very different ideas, they are asking the other bidder to put their views forward on a particular aspect. They would not see the bid, I am not suggesting that for one moment, but to then have to evaluate at short notice other aspects of the bid so that the SSRA can come to a level playing field on which to make a decision.

  Mr O'Brien: Can we just go back to the question. What should the SSRA be doing to make it clear to the lead bidders about what it wants? What should they be doing at the very beginning?

Chairman

  169. Should it be related only to cash?
  (Mr Fearnley) No, it certainly should not be related to cash. The SSRA are developing all the time what they are requiring from bids generally in terms of meeting the needs of customers, in terms of value for money and so forth, but the process is wide open in terms of asking bidders to say how they would meet the needs of customers on that line, which we welcome, and that is what is becoming expensive.

  Chairman: We have got the message, Mr Fearnley. Whether we accept it, of course is another matter. Mr Bennett?

Mr Bennett

  170. When you were asked about freight you very neatly moved on to the question of the co-operation of the freight operator to reduce one of the pinch points. A lot of the pinch points are going to be in place for quite a long time. How should priority be worked out between passengers and freight for access time along those pinch points?
  (Mr Green) I think the word co-operation is going to come into the answer. For example, when we re-organise the cross-country timetable for double the number of trains, we volunteered to go on to a clock face interval around the country and give up all our other rights. That will give a lot more slots for freight at predictable times around the country.

  171. Should not the Regulator be looking at some way of balancing the demands of freight against the demands of passengers purely for profit?
  (Mr Green) It is going to be the "Judgment of Solomon" because I think the railways have got to the stage now where it is becoming so full that you are either going to stop people going to work as commuters or stop freight moving to the docks. I think we have got to put more capacity into the railway.

  172. Apart from Solomon making the judgment, you have no advice?
  (Mr Green) I have got no "one line" which would solve the problem.

  173. Can you very briefly explain to me these special purpose vehicles which your members and Railtrack seem to be disagreeing about? What is one of these special purpose vehicles?
  (Mr Fearnley) I do not think a framework has yet been developed, to precisely answer your question, but it is vehicle by which there can be an asset brought on to the railway network or an asset enhanced, whether it is a station or some track, which attracts external investment, not from Railtrack, and not from the train operating companies. to support that investment. It is a contract which will enable third party investment to come forward to assist and to add value to the railway.
  (Mr McTavish) And the reason for it being called special purpose is that it is not like a normal company that may have a diverse series of outputs it is trying to achieve. It is designed for a specific special purpose—the building of a piece of track, the building of a new station—hence the name special purpose vehicle.

Chairman

  174. Gentlemen, you have been very tolerant. Thank you very much indeed. We shall cogitate upon your many misdemeanours.
  (Mr Fearnley) Thank you, Madam Chair.






 
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