Examination of Witnesses (Questions 1-19)|
WEDNESDAY 10 JULY 2002
1. Gentlemen, the clock on the wall says four
o'clock and so four o'clock it is. Can I wish you most warmly
welcome and ask you first to identify yourselves.
(Mr Sweet) Michael Sweet, Tibbett &
(Mr Blencowe) Steve Blencowe, Tibbett & Britten
(MrSmith) Graham Smith, Planning Director for English,
Welsh and Scottish Railway.
(Mr Woodcock) Andy Woodcock, European Relations Manager
Chairman: Thank you very much. Before we start
we have a little bit of housekeeping. Any declarations? I am a
member of the Rail, Maritime and Transport Union.
Miss McIntosh: Interests in Eurotunnel, First
Group and Railtrack.
Mrs Ellman: Louise Ellman, member of the Transport
and General Workers' Union.
2. Do any of you wish to make an opening statement?
(Mr Smith) I would, madam Chairman. English, Welsh
and Scottish Railway operates the UK side of rail freight traffic
through the Channel Tunnel and has been very badly affected by
the events that have taken place since last November. In our evidence
to you we supplied you with the numbers of trains that have run
and asylum seekers that we have discovered. If I may, with your
permission, madam Chairman, update you on those figures, since
last November we would have run normally between France and the
United Kingdom 3,116 trains. We have actually been able to run
1,221 trains. Therefore we have been able to run 39% of services.
During that time our own security staff at the EWS yard known
as Dollands Moor near Folkestone have found 1,605 clandestine
entrants. In our evidence we described to you what has been happeningor
rather not happeningover the last 10 months. It has been
a sorry tale in which we have suffered significant loss, as have
our customers, as have our suppliers and our associates such as
Tibbett & Britten. There has been a significant safety impact
on our staff who have been having to work in very unpleasant conditions,
being inundated with asylum seekers attempting to board trains
in Calais. Yesterday we appeared before the European Parliament's
Petitions Committee in association with our petition to the Committee
in our complaint to the European Commission, and the Commissioner
for the single market, Mr Bolkestein, expressed great sympathy
and stated that unless there was a significant recovery in services
by the end of this month the European Commission would take action
under the so-called strawberry regulation.
(Mr Smith) Strawberry regulation, so named because
it related to the inability of Spanish farmers to transport their
strawberries to market, this being an issue of the free movement
of goods. The European Commission under that regulation would
take action against the French Government. His particular concern
was that many promises from the French authorities that interim
measures would be put in place had not happened. As I said before,
we are facing significant losses, in excess of £10 million,
in addition to which we are continuing to have to pay repatriation
costs for clandestine entrants over whom we have no control. Earlier
this month there was a meeting between the Secretary of State
for the Home Office and his opposite number in France where the
French gave a commitment to have a full service operating from
the beginning of September. To do this they are implementing long
overdue security measures and I and Andy Woodcock, who is my eyes
and ears in Calais, have seen the work that is being done. It
will be the decision of the French authorities and the French
railways whether they feel they are safe enough to run a full
service. It is crucial that we have that full service. Without
it we will miss the build-up for the Christmas stockpiling which
is one of the major sources of traffic through the Channel Tunnel.
In conclusion I would like to look ahead and say that when this
service can be resumed we need to look at a fairly high profile
marketing re-launch, and we are going to need support. We have
taken significant financial hits, as have our customers and suppliers,
and we are going to need assistance to enable our services to
be re-launched, and indeed to grow the business which is both
the Government's and the Strategic Rail Authority's objective.
In the European Commission yesterday one MEP suggested that the
Commission should suspend its rules on state aids to ensure that
all terminal operators and customers can reinstate this service
as quickly as possible. Whom we should look to for that support
I am not yet clear. Should it be the United Kingdom Government,
the French Government or the European Commission? I am not sure
but we must now look ahead to rebuilding the service and restoring
it to full operational value.
4. Thank you for that. Do you wish to say anything,
(Mr Blencowe) Yes, madam, just a brief comment. Tibbett
& Britten is a large logistics company operating in Europe
and rail has formed part of our strategy for the past five years
and we have been very committed to it. We are keen to see it fulfil
the future needs of our customers and we are keen to work with
our partners, EWS, to get the freight off the roads. We have experienced,
as Graham said, a great amount of disruption. The freight terminal
that we operate up in the Midlands is the largest one in the UK
privately owned. We have invested a lot of time and effort into
building it and we are seeking help now at the latter stages of
this crisis from the highest levels to try and rebuild the business.
5. That is very helpful, Mr Blencowe. I think
we will want to question both of you on various aspects of your
statements, but could I ask you, Mr Smith, to begin with, what
did Herr Bolkestein say as regards a timetable or was that not
part of his statement yesterday?
(Mr Smith) He stated that he was extremely concerned
at the failure of the French authorities to fulfil their promises
about implementing interim measures.
6. Yes, I am sure he did, but what timetable
did he put out?
(Mr Smith) He said, after being pressed by Members
of the European Parliament, that if there was not a significant
recovery in services (which he did not quantify) by the end of
July then the Commission would take legal action against the French
7. Yes, but what did he then say about the timetable
for implementing whatever action he was alleging he was going
(Mr Smith) He said it could take years.
8. Oh, very encouraging. So nothing would happen
before the end of July and then whatever action the Commission
wanted to take would take years. Presumably he based this on the
history of action that was taken under the strawberry rule?
(Mr Smith) Yes. He said that he had very limited legal
powers available to him, in part because Member States had wished
to reserve those rights to themselves. He bemoaned his fate and
said what he could do. If we could have put the fence in place
with the amount of paper that has been written on this subject
we would have been well protected long ago, and I think that the
Commission are producing a little bit more.
9. Have you had any assistance in any form from
the Strategic Rail Authority?
(Mr Smith) We have had meetings with the Strategic
Rail Authority regarding the build-up of services when they are
restored but we have not sought, nor have we been offered, any
financial assistance during the current period.
10. What could they do or what could the Office
of the Rail Regulator do to encourage more integration on rail
(Mr Smith) I think the Office of the Rail Regulator
is fairly limited in this respect. He has already published conclusions
on track access charges and similar issues relating to the whole
business. The focus is very much on the Strategic Rail Authority.
It is my view that the SRA, using its existing powers to give
grants on the basis of environmental benefit, could perhaps take
a leaf out of the road investment and passenger investment lobby
and also look at the grants that can be awarded for user benefits
and to reduce congestion, and might well give consideration to
offering start-up assistance to rebuilding services, enabling
us to restore full services as soon as security is in place.
11. Are you saying you have had talks asking
(Mr Smith) We have had outline discussions with the
Strategic Rail Authority and we are currently looking at what
would be required to get the service going again. That leaves
aside the whole issue of historical compensation, which may or
may not be tied up with legal issues, although I would really
rather not have to go to court to get compensation for this.
12. That is quite relevant. Given your experience
do you want to see your franchise agreement changed so that it
has got some reflection of the force majeure disruption?
(Mr Smith) We are not a franchise. We bought our rail
freight business for good or for bad, and sometimes on the international
side it is for bad. I think I would far rather have discussions
with the SRA perhaps about compensation, certainly about restarting
the business, and in due course we will need to talk to the Strategic
Rail Authority about the tolls for using the Channel Tunnel. At
the moment the Strategic Rail Authority fund tolls for using the
Channel Tunnel. Their funding for that will cease in April 2005.
I will be blunt with you, madam Chairman. The international business
would not be able to survive if it had to pay tolls to go through
the Channel Tunnel.
13. Have you got any estimate of what it has
cost your customers so farnot you, your customers?
(Mr Smith) I have no specific estimate. I know that
the customers' representative group, Rail Freight Group, has suggested
that there are thousands of jobs at risk but I am not aware, unless
Steve has got it, of a value placed on customer loss.
14. Any estimate, Mr Blencowe?
(Mr Blencowe) Not of our customers, no. Only of our
15. Do you want to tell us what they are?
(Mr Blencowe) The latest estimate for this year, as
long as things do not deteriorate, will be circa £300,000
for our one terminal in the Midlands.
16. And that is assuming that there is a resumption
of full traffic by the end of July?
(Mr Blencowe) Yes. If there is a resumption of full
traffic the estimate could get better. If it does not deteriorate
any further, and obviously it only takes a split second for these
guys to deteriorate it, we are working on the estimate of £300,000
loss for the rest of this year.
17. Could I ask EWS: the SRA grant that has
been referred to is presumably in addition to the contribution
the Government have said SRA will make payable to the strengthening
of the fence? Is that the Rail Freight Board?
(Mr Smith) Yes, it would be. The contribution offered
by the Secretary of State I know is being considered by the SRA,
if it is still in place. What we are talking about here is funding
associated with a marketing relaunch to enable us to put back
into service all the services. That is between 15 and 18 a day
rather than the seven that we can run at the moment.
18. You referred to repatriation costs. Are
you able to quantify as of today what the repatriation costs have
been in total?
(Mr Woodcock) Last year it was £110,000 or in
(Mr Woodcock) Pounds, yes.