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


Examination of Witnesses (Questions 660 - 679)

WEDNESDAY 7 NOVEMBER 2001

MR MIKE GRANT AND MR TERENCE JENNER

  660. But with the agreement having been finalised that seems unlikely.
  (Mr Grant) We shall contractualise it within the existing franchise so we shall contractualise a lot of those benefits early on. They will sign that agreement, but obviously because we are going to pay them for those additional benefits which would have been paid for through the 20-year franchise anyway.

  661. Last week the Chief Executive of GNER, Mr Garnett, said to us that he believed that the current transitional situation in the industry would delay—by that I mean not just the Railtrack situation but I also mean the two-year franchises—the implementation of new investment by around two years. Do you share that view?
  (Mr Grant) I do not share that view. On the major projects we are trying to keep them moving. The two-year extensions have been proposed to try to deal with some of the earlier problems. I am not trying to say the investment on the major projects will not be delayed but we shall keep them moving against the background of the administration.

  662. He gave us one specific example in terms of rolling stock investment where he said that what the two-year franchise had done was to make it impossible to order new rolling stock because the rolling stock suppliers will not supply new rolling stock to an organisation which cannot guarantee to be still holding the franchise on the delivery date. What advice have you received on that front and what are you doing about it?
  (Mr Grant) I am not sure I understand that because on the Mark 1 replacements, last year we were not sure who the new franchisee might be, the rolling stock manufacturers were very willing to sell us the rolling stock which we would then make sure the new franchisee would use. There are methods available to us to order rolling stock which we can then novate to a new franchisee.

Dr Pugh

  663. Arriva Trains Northern were granted a two-year extension on their franchise and in effect that service has deteriorated rather than improved. Arriva have been granted a two-year increase on their franchise on Merseyside and it is still a chronic service and I can assure you of that from personal experience. Given that sort of body of evidence and given that it seems in principle unreasonable to try to deliver a ten-year plan through two-year franchises, what counter examples can you show me which would persuade me in any way that there is any sense in persisting with two-year franchises?
  (Mr Grant) We have to look at the Arriva Trains' position. The Arriva position was against a background of NTL who were the franchisee at the time running into a lot of trouble. We did agree to a two-year position with Arriva Trains Northern. As you know, we have not been satisfied with the management efforts which have been put in place in terms of cancellations and driver training and we are proposing to fine them. The example I can give you on a two-year extension is Midland Main Line where significant benefits have been negotiated on a two-year extension. It is the case that depending which franchise it is, whether it is in profit or loss, a two-year extension may work.

  664. That means it is counterintuitive. You are actually saying there may be real benefits in a two-year franchise. It is not just a necessary evil which takes place sometimes when a previous company cannot deliver as in the case of NTL. You are actually saying that there is a desirable factor attached to two-year franchises.
  (Mr Grant) There could be benefits.

  665. Within a ten-year rail plan.
  (Mr Grant) Within a ten-year rail plan.

  666. To go back to the Merseyside situation, the Passenger Transport Authority showed some enthusiasm for taking a part in the franchising activity and taking the burden off what are hard-pressed Strategic Rail Authority resources. Sir Alastair Morton said he was reasonably sympathetic to that. Are you in principle against it or do you have no in-principle objection to it?
  (Mr Grant) Mr Jenner has been dealing with it in detail. We have never been against the idea of Mersey travel PTE taking over the underground lines. There have been some discussions. There are two ways we could achieve this. One is through primary legislation and the other is through a transport works order. We have had a lot of discussions with the Department and Mersey travel PTE to try to move that ahead.

  667. Turning to the West Coast Main Line, last week Virgin Trains mentioned the issue of compensation if the investment programme does not go ahead. I asked them directly whether this would have any consequences for the fare paying passenger. They said they were unrelated issues. A few days ago they indicated that they were intending to put up their fares by 30 per cent. Are they unrelated issues and should they be?
  (Mr Grant) I suppose at the end of the day, when you look at it from the Virgin business side, if the compensation is not enough then they will look to see how they can survive and fares may be one issue. That is very premature until we have had a good look at what the business case is on the Virgin side, because at the end of the day we hold the franchise with Virgin and they in the future will have to pay considerable amounts of money.

  668. If they chose to relate the issue, if they said they were not getting the compensation so they were going to put up the fares, would you be understanding of that position?
  (Mr Grant) We would not be understanding. We would want to understand why they had to do it or why they wanted to do it. At the end of the day we are also trying to make sure that we do achieve the 50 per cent growth in passengers.

  669. A 30 per cent fare increase would not help that very much, would it?
  (Mr Grant) That was exactly the point I was going to make.

Andrew Bennett

  670. It would solve the overcrowding problems, would it not?
  (Mr Grant) Hopefully the overcrowding problems will be solved with the additional capacity on the West Coast Main Line and additional trains.

  671. You do not think the fares are too low at the moment.
  (Mr Grant) What we are proposing in the strategic plan is to consult next year on four issues: passenger service requirements, fares, capacity allocation and Channel Tunnel through trains.

Chairman

  672. Again?
  (Mr Grant) Mr Jenner will tell me that this is an ongoing requirement left over from the old days that we have to consult again on it.

  673. You have to do it. You do not reach conclusions, but you have to do it. Is that it?
  (Mr Jenner) It is a specific statutory requirement on us to have a Channel Tunnel through train strategy.

  674. A through train strategy; not a through train service, just a through train strategy. I see. Had you thought of reaching any conclusions beyond your strategy?
  (Mr Jenner) Not yet, Madam Chairman. That is what we intend to consult on next year.

  675. How long has the SRA been looking at a through train strategy?
  (Mr Jenner) We have not started it yet. It is for next year.

  Chairman: You have not started it. You are going to start next year. I shall come back to that in a minute.

Miss McIntosh

  676. Returning to the question of Arriva trains, Arriva replaced Northern Spirit for one year up until February 2001 and then had a two-year extension. My constituents are now having to travel by bus as a result of this. I do not know whether you blame the managers or a lack of drivers, but may I ask what reassurance you can give us today that whenever franchises are being renewed passengers will not be asked to travel by bus in future? On the question of the £2 million, I understand that the fine the SRA imposed was on deficiencies earlier this year. Are we looking at a further fine on Arriva for this further deficient service?
  (Mr Jenner) The draft order we have published is in two parts. There is a proposal for a £2 million for deficiencies in driver provision over the past few months. There is also a proposal that if they fail to train a sufficient number of drivers per period going forward then there is an additional fine for each driver of a failed train. Why we took the action we did on Arriva Trains Northern was very much because we felt that consideration of the passenger was not being given sufficient thought to. Services were being cancelled on a completely random basis. What we are trying to do is get back to the situation where although your constituents may have to travel by a bus, at least there is a robust service, they know what the position is, they do not turn up at the station—

Chairman

  677. They do not have a train but they know that there is no train. Is that your definition of a robust situation for a train service?
  (Mr Jenner) They know they have a service.

  678. Come on, I am sorry, joking apart, Are you saying that if they know there is a bus service instead of a train service they know there is a bus service.
  (Mr Jenner) They know that they are able to travel, which I suggest is better than not knowing whether they can travel.

  Miss McIntosh: First of all, they need to get to work in Newcastle by a particular time. Employers do not accept a bus service replacing a train service as a good excuse for turning up late for work. Secondly, the Committee has heard evidence—I am paraphrasing slightly but the word was used—that train drivers find it less sexy to drive an omnibus service such as the Arriva Northern Service than the coastal service on either the East or West Coast route. Is your ten-year plan going to take that into consideration in trying to attract sufficient drivers of trains in future?

Chairman

  679. Whilst you are on it, what is your attitude to Arriva poaching other people's drivers if you are actually saying that you want them to train their own people? What timescale are you giving them to do all this?
  (Mr Jenner) On timescale, I think we are giving them to the middle of next year to get back to a full establishment. It takes over one year to train drivers. It is a long drawn-out process, purely because they have to learn the route, they have to be safety trained. Drivers do not appear overnight.


 
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