Examination of Witnesses (Questions 60
WEDNESDAY 21 NOVEMBER 2001
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.
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
(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;
(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
(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
(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.
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,
(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.
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.
72. And you do know, you have got it written
down and recorded, their condition?
(Mr Smith) We have, indeed, and categorised.
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
74. I will come back to my first question. Are
we going to spend money on changing that equipment or modernising
(Mr Callaghan) We are going to do both, because it
is possible to do both; the priority is on the service to the
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
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.
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.