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


Examination of Witnesses (Questions 60 - 79)

WEDNESDAY 21 NOVEMBER 2001

MR DEREK SMITH, MR MARTIN CALLAGHAN, MR MIKE STRZELECKI AND MR TONY POULTER

Mr O'Brien

  60. Will this generate the increase in performance that you are looking for, to take out the humps and the bumps, will that give you the increase that you are looking for?
  (Mr Callaghan) That is what that will achieve, yes.

Chairman

  61. And you will judge that improvement from those low figures that Mr Smith was talking about, where some are good boys and some are really very, very inadequate to positively bad?
  (Mr Callaghan) There are two factors. There are the improvements that can be made through investing in the underlying assets, and there are improvements that can be made for other reasons; and so, as Mr Smith said, the figures that you see are a composite of both of those. We are looking here at making sure that the assets are fully available to be used for the service of the customers.

  62. Yes; I am not asking that, Mr Callaghan. What I am saying is, you start from the existing base, and we have just been told that the base is lower than it was before; yes?
  (Mr Callaghan) On the District Line, as far as the assets are concerned, that is true; in general, it is not.

  63. So, in theory, if these Infraco companies start from a lower base than usual, they will be able to demonstrate a big improvement, will they not, even if they do quite minimal things?
  (Mr Callaghan) No. Where they start from is the point at which they take over responsibility.

  64. Yes; and you have just told us that that is lower than it used to be?
  (Mr Callaghan) In some cases, it is, and that is entirely because the assets, if we take the District Line as an example, the District Line is performing worse than it has, and, if you look at the areas, the top three stations, where we have got the problems, they are all stations where the signalling equipment, which causes the problems, is over 70 years old, so it is exactly why we are doing this.

  65. Yes; but this has happened since you set up the present structure, has it not?
  (Mr Callaghan) But it is an accumulative effect of not investing enough in the railway.

  66. No; forgive me. The difference in standards, because that is what we are talking about, we are not talking about the fact you are operating a system that is 70 years old, we are talking about how you have reached the different standards from which you will reach an assessment on whether the companies are successful or not?
  (Mr Callaghan) We have reorganised the company in the way that Mr Smith described.

  67. And the standards now are worse than they were before?
  (Mr Callaghan) And the infrastructure companies that exist now do not have enough money to invest in the system, and the infrastructure companies that will exist in the future will have enough money.

  68. So I now ask you, and the reason is that it has performed worse since you split it up?
  (Mr Callaghan) It performs worse because of the underinvestment.
  (Mr Smith) I should be clear though, Chairman, if I may, that our railway is not performing worse, in terms of its assets, we picked out the District Line, which is, but I mentioned other lines which are not, they are vastly improved.

Andrew Bennett

  69. But I understand that you do not actually know what assets you have got; you have not got a really up-to-date asset register, have you, so how on earth can you measure the 7.5 per cent improvement if you do not know what you have got in the first place?
  (Mr Smith) We are measuring two things; we will be measuring, in terms of the contract, the failure in the assets, and we would be measuring, of course, the effect upon passengers, the customer benefit, as it were.

  70. But you do not know what the assets are, do you?
  (Mr Smith) There is a classification of assets, which are known as `grey assets'; these, generally speaking, are in the civils, as we call them, where they are hidden and we are not easily able to inspect them.

Chairman

  71. So that means you do not have?
  (Mr Smith) It means we know about the vast majority of our assets, and we certainly know about our track, our tunnels, our signals, our trains, and so on, because we can see all of those and we can inspect them and we know their condition.

Andrew Bennett

  72. And you do know, you have got it written down and recorded, their condition?
  (Mr Smith) We have, indeed, and categorised.

Mr O'Brien

  73. Can I just ask one final question. The 70-year-old equipment, that you refer to, which is causing the delays and harassing the travelling public, when will that be changed?
  (Mr Callaghan) It is not just a question of when it will be changed, it is also a question of the amount of money you can afford to spend on maintaining it, because you have got to put the money in; upgrading a line and changing a signalling system and replacing a fleet of trains is about an eight-year programme. So what you have got to have is not only that but the money to put into the maintenance of the existing equipment while it happens.

  74. I will come back to my first question. Are we going to spend money on changing that equipment or modernising stations?
  (Mr Callaghan) We are going to do both, because it is possible to do both; the priority is on the service to the customers.

  75. You have just said, Mr Callaghan, that it is the money that you require to change this equipment; and so I am asking, do we spend the money on modernising stations or changing equipment; you cannot do both?
  (Mr Callaghan) You can do both, and we are going to do both.

  76. If you can do both, why are you saying then that you are short of money to change the equipment, or that is the important factor?
  (Mr Callaghan) The problem is not just—

  77. Well, tell me when it will be done, Mr Callaghan?
  (Mr Callaghan) The increase in the maintenance of the old assets will start as soon as the PPP is implemented.

  78. When are you going to start changing them; are you going to maintain them and keep them for over 70 years, or are you going to take them out and dump them?
  (Mr Callaghan) We are going to maintain them for about another eight years, and that is to get to the end of the programme of changing them.

Chairman

  79. So the eight years happens to coincide, the seven and a half years is the end of the contract anyway?
  (Mr Callaghan) What we are doing is going as fast as we can.


 
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