Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 220-236)



  220. Yes, but they did not have an ownership role?
  (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 phrase.


  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 head on.

Dr Pugh

  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.

Andrew Bennett

  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 Thameslink?
  (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 contracts?
  (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.

Chris Grayling

  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 else?
  (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 indeed.

  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.

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