Examination of Witnesses (Questions 220-236)|
WEDNESDAY 24 OCTOBER 2001
R KILEY AND
220. Yes, but they did not have an ownership
(Mr Kiley) They did not have an ownership role.
221. Could I then come to that. In your evidence,
Mr Kiley, it is interesting reading, you talked about, understandably,
London, because London is extremely important, not only for this
region but for the whole of the country, the rail network, we
can understand all that; ownership and direction of Railtrack
in the London and South East Region should be transferred to Transport
for London and the SRA. Now that is ownership, ownership and direction,
that is the whole kit and caboodle?
(Mr Kiley) Yes.
222. If it is good enough for London and the
South East, as a region, why is it not good enough for the rest
of the regions in the country?
(Mr Kiley) It may well be good enough for the rest
of the regions.
223. So you do not rule that out; you think
that the criteria and the issues that you have considered before
coming to that judgement, whereby they have some special relevance
to London, because of its uniqueness, those basic criteria could
be successfully transferred to the rest of the country?
(Mr Kiley) Any metropolitan area that is now experiencing
fairly extensive commuter service, working out of the national
rail network, yes, could use this model.
224. I have one more question, Mrs Dunwoody,
and that is, listening to the first part, particularly, of your
evidence, your reaction to questions from my colleagues, I got
the distinct impression that one of the major problems that you
perceive has led us to the current situation vis-a"-vis
Railtrack and the industry was fragmentation?
(Mr Kiley) Yes.
225. Indeed, you said, "If I had my way,
there'd be either one or a maximum of seven franchises in London,"
in other words, you would get it down. If we go along the regional
dissection of Railtrack, or its successor, if we have, as we heard
from evidence last week, something like 15 Special Purpose Vehicles
to deal with the major developments, how is that going to reduce
the dangers of fragmentation?
(Mr Kiley) I take your point. When I hear a number
like 15 Special Purpose Vehicles, the hair on the back of my neck
starts to crawl a little bit. Special Purpose Vehicle; we have
to avoid the temptation to leap at the most current fashionable
226. Oh, come, Mr Kylie, that might be asking
much too much.
(Mr Kiley) It serves a very useful purpose in that
it has the potential of being a very clearly-defined company,
as long as it is understood that those who really need to make
the financial commitment, and who will then bear the operating
results of it, are also involved in the specification of what
it is the Special Purpose Vehicle is going to do. The one that
we are most familiar with, because we have been spending a lot
of time on it, is the one that has been created for Crossrail,
and that will be a full-time undertaking, a very expensive project,
no matter what configuration we end up doing, it will require
superior management skills; that was what this discussion was
all about, by the way, getting really superb, major project managers
into our country to do this work. But if we begin multiplying
the number of Special Purpose Vehicles that we have we will run
into this very management issue that we are trying to recover
from right now. I believe that there is a limit to what we are
going to be able to do over the next 15 years with the rail system;
rebuilding the existing system so that it actually delivers what
people want is an expensive and major undertaking, as we are finding
out with some of the cost overruns that we are already experiencing.
So I think that has to be the first priority, whether that is
the rail network or whether it is the London Underground. That
leaves us with the need to build more capacity, but, in a certain
sense, it has to be secondary to rebuilding the existing system.
So I would want to go very carefully at the major new enhancements.
Crossrail, for example, in the London region, will be a major
activity, will absorb a tremendous amount of resources, both financial
and human, it will not leave a lot of room left over for doing
other things. And one of the reasons why almost nothing gets done
in the enhancement area is that too many things are floating around
in the ether world, competing for scarce human and financial resources.
So we have got to make the hard choices, which ones are we really
going to do; and it cannot be 15.
Dr Pugh: It was very interesting, what you said
about the integrated approach, and I like phrases like `regional
infrastructure, owning, operating companies, if they bring more
harmony and more coherence,' and particularly how that applies
in the regions. Because I have used two commuter railway systems
very commonly, one is the tube and the other is the Northern Line
of MerseyRail, and I can assure you, if it is any comfort, that
the Northern Line of MerseyRail is in a different league altogether
from the tube, the tube may be bad but the Northern Line is something
else. And part of the problem we have is that responsibility is
shuffled persistently between Railtrack and the operating companies
when breakdowns occur, nobody seems to know quite who is to blame,
and therefore the idea of a regional infrastructure owning an
operating company makes sense, if there is just one port of call
for your complaint. What I am concerned about though is, in a
case like that, if you were to offer the operating company an
involvement with the track, that they really would not want that
involvement until they had assessed, and the assessment currently
is not available, the actual state of the track and the investment
required; and, therefore, they would back out under those circumstances
unless a guarantee was given, or unless the Government got involved
in some other way. And my analysis is, basically, that in a situation
like that either Government have to get further involved, or some
public body has to get further involved, or somebody has to write
a blank cheque. Is there an alternative?
227. I think Mr Kiley has got the point, yes.
(Mr Kiley) I have never been entirely comfortable
with this balance sheet argument, the borrowing requirement, and
I am still having trouble dealing with it. I have a bad habit
of thinking of it as an accountant's preoccupation, and I am probably
wrong about that, but if it gets in the way of Government being
able to make a long-term capital commitment to renewal of the
network, or of the Underground, then we have got a big problem
on our hands. And that has been an issue here, and we cannot get
away from it; we keep trying to find mind-bending schemes that
get us around this, when, in fact, maybe we should just face it
228. Can I just press that final point. Is there
an alternative, a workable solution, that will not have further
public involvement in the railways than is currently envisaged?
(Mr Kiley) I think, actually, if we got the assessment
of the condition of the plant, established priorities, in a plan,
of five to seven years, came up with vehicles for doing these
things, making sure that we integrate the operations and no longer
separate the maintenance from train movements, that the Government
will find that the nature of the commitment that it makes over
time will not be enormous, that there is only so much that can
be done in any given year, that it stayed with it over a long
period of time, such as 15 years, that really makes the difference
in the end, and that on the balance sheet this is just not going
to be that big a problem. And, to me, it seems simple, but then
I am still a stranger trying to learn his way.
Chairman: Yes, Mr Kylie, we believe that one.
229. You have just poured a fair amount of cold
water over the prospects of Crossrail; does that also mean that
Thameslink 2000 is very doubtful, in your view?
(Mr Kiley) I know that, obviously, Thameslink, as
it was originally conceived and to be accomplished through Railtrack,
is pretty much a dead- letter now. And Railtrack, in its last
plan and budget, put a nominal figure in for Thameslink, which
was really the default figure, which I think is £150 million;
obviously, it will be a lot more expensive than that. But, I think,
because of what happened, it is not clear who will be able to
step up to the bar, so to speak, and take responsibility for it.
230. Who should?
(Mr Kiley) I think it falls into that area of the
whole community having to make some tough choices about what realistically
can be built in a 15-year time-frame. Crossrail and its extension
will take 15 years to build.
231. And you think that is more important than
(Mr Kiley) I would not say that it is more important,
but it has evolved to the point where it is very close to being
buildable, and that is why it has taken the front of the queue.
I think it is very important myself, because what it does is it
gets substantial transport capability into a corridor that is
maybe the fastest developing commercial, I mean that in the broadest
sense, economic corridor in all of Europe, and it is underserved
with transport. So Crossrail is a good way to serve that corridor,
and it is also a major investment in economic development. And,
in that sense, I think, Thameslink takes second place.
232. You also made the point that one of the
important things was that everything was to be transparent; is
that possible with commercial confidentiality in so many of the
(Mr Kiley) That is a good question. I think, as these
contracts are being negotiated, and some of these take an extraordinary
length of time, the PPP is about to enter its fifth year, that
it is important that confidentiality be respected, so that you
can keep the bidders in the game, otherwise they will just flee.
I also think confidentiality is abused, it is overextended, and
it is frequently overwrought, and it does get in the way of public
debate about the merits of some of these things. And I think those
of us who use confidentiality sometimes as an excuse not to disclose
things that could be embarrassing, or are just not ready to talk
about publicly, have got to think very carefully about that.
233. Mr Kiley, can I start by asking you to
look forward, forgetting all the political considerations, and
ask actually, in logistical terms, given all the congestion problems
in London, what is logistically possible to ease those congestion
problems, both on the existing network and with potential additions,
what could be done if the right decisions were taken?
(Mr Kiley) There is a raft of things that could be
done. The trick is to make them a more or less coherent whole
so that they make sense to the people who have, in some cases,
changed the way they do things, the way they travel, the way they
behave. One such proposal is congestion charging; the one that
is moving along here is for central London. You can also take
a step back and think of congestion charging on a broader basis
than just central London. Central London proposal, the best estimate
we can make at this stage is that as many as 15 per cent of people
who are coming into London by auto now will change modes, they
will get onto something else.
234. But if there is no room on the something
(Mr Kiley) If we can provide bus service, and we are
making some dramatic strides in providing more service itself,
and service that is better is more frequently used, there have
been some dramatic increases in bus ridership just in the last
year, upwards of 6.5 per cent, there is more service on the street
now than at any time since 1965, and we are going to propose next
year to put £100 million more into bus service, we are making
a major bet there, and there are 20 major routes in London that
basically service central London. We want people to be in a position
where that decision will not necessarily be one they will be overjoyed
at but one that they will be comfortable making in the end, after
they have tried it. So we have been working on this for six months
already and we will continue to work until early 2003, when congestion
charging is introduced. So the combination of limiting car access,
in certain parts of the city, and providing much more street service
of another mode, namely buses, it could also be taxis, or vehicles
for hire, is, I think, a way to go; making it more attractive
to walk, to cycle, in some parts of the city, can also be useful.
The fact is that we live in a country where there is an unrequited
love affair with the automobile, and that is a psychological factor
that we have to face in dealing with every single one of these
initiatives; people will not easily be induced to leave their
automobiles, even though you can show that you are going to move
just as fast and that it is less expensive.
235. In terms of the rail industry in and around
London and the South East, you have described the projects you
think would be most effective, but what can actually be done,
how much capacity can we add to the network, how many extra corridors
can we logistically provide in the foreseeable future?
(Mr Kiley) The Docklands Light Railway is an example
of, shall we say, a tram, a lighter rail vehicle and network that
is emerging very rapidly, that does offer an alternative in a
very rapidly growing part of London's economy; we are getting
a 20 per cent increase per annum on DLR and it shows no signs
of stopping and is not even sensitive to economic change. The
Croydon Tram is not getting quite the numbers that the PFI consortium
said they would get in the early going, they were much too ambitious,
but they are growing at an ever-increasing rate, and they are
an increasingly popular service. We are looking at other tram
opportunities along very heavily-trafficked automobile corridors
around London. So these more discreet rail initiatives are also
236. But it is the road-related, as trams are,
based systems that provide the solutions. Can I just take you
finally to the question of the common infrastructure and operating
companies. One of the things we have seen with the franchising,
and I use the example of the Chiltern Line, for example, is the
way in which there have been very significant service enhancements
on individual lines going out of London. Chiltern has created
services to Birmingham and through to the Midlands that were simply
never there before. That has happened because of competition between
different operators on different routes. If you take away the
competition that exists between operators on different routes
from London to a second centre then you risk losing the benefits
of that. Equally, one of the concerns that has been raised by
South West Trains, for example, about the creation of a new long-haul
franchise, the Wessex franchise, is that with multiple operators,
long distance and short distance, competing for space in tight
termini, there is a question of precedent, how do you actually
allocate slots in the termini?
(Mr Brown) Just two points on that. One, the competition
point is very valid, but in terms of commuters the competition
is with the motorcar, which is a very difficult issue. For instance,
the last year, traffic on commuter rail increased in London; despite
the awful service that is provided with the collapse of the network,
the passengers kept coming. Chiltern, I think, is a star performer
on that; the very thing Chiltern did was form a partnership with
the infrastructure provider and funded that infrastructure themselves
as part of the franchise situation. On DLR, where we are faced
with coping with expansion, we have the same situation. When I
was asked to franchise the DLR, I put the maintenance and the
upgrades in with the franchise, so it is exactly the same as the
Chiltern model, and both Chiltern and DLR have grown very fast
Chairman: Thank you very much. Can I say to
you both I am very grateful. You have been, as always, extremely
informative. Thank you for coming.