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

Examination of Witnesses (Questions 320 - 339)




  320. Let me ask you something that ties in with that. Are you now clear what your priorities are?
  (Mr Armitt) Oh, I know what our priorities are. Our priorities are to maintain and renew the existing network first and foremost, to deliver on a day to day basis an improved efficiency to the network as it stands today. That is our prime objective. I was asked the question by a member of staff in a staff meeting yesterday, "What is your primary target, Mr Armitt?" I said, "My primary target is to reduce the number of delay minutes on the network".

  321. Your primary target?
  (Mr Armitt) Is to reduce the delays on the network because that goes straight through to customers and to customer satisfaction.

  322. Give or take a small thing like safety and one or two others.
  (Mr Armitt) We take doing the job safely as a given.

  Chairman: Oh, I do hope so, Mr Armitt.

Mrs Ellman

  323. If the Government is successful in reducing congestion on the roads and if on top of that road transport reduces in cost, will that have an impact on rail travel?
  (Mr Armitt) Yes. I think any economist would say that you get to a point where in fact if you reduce congestion you have an impact which says that fewer people will travel on the train because they will be encouraged to go back on the road. It is the kind of circular argument that economists love. If you keep reducing congestion you will get to a point where people will say, "I would rather go by car because that is the way I prefer to travel".

  324. What assessment have you made on that in your plans?
  (Mr Smith) We have done work to make our own forecasts of passenger demand on the network. We have worked closely with the train operators in doing that. Our forecasts are broadly in line with those of the Strategic Rail Authority and indeed with the Government's 10 Year Plan. However, what they do show is that the key drivers of growth of rail demand are GDP growth, traffic congestion, as John has indicated, and costs of motoring relative to those of rail. The key factors are levers within Government control very largely. Added to that is road congestion charging, road pricing, so they are policy levers. Clearly what we do in terms of the quality of service that we provide on the network and additional capacity on the network also has an effect. Making the train run reliably makes the train a more attractive mode of transport but the key drivers of growth on the network are levers which Government largely controls.


  325. Can we have a supplementary note on that?
  (Mr Smith) Certainly.

Andrew Bennett

  326. Mr Bloom, you started off by stressing that your key responsibility was to get as much money for the shareholders as you can. How do the passengers fit into your equation?
  (Mr Bloom) Our primary responsibility is to operate the network. In relation to our other responsibility, which is to organise and give effect to a transfer, we have got to have regard to the interests of the creditors and the shareholders. That is our responsibility in relation to the transfer. Our primary obligation is the maintenance of the network.

  327. So if maintaining and running the network costs money then that is perfectly all right as far as you are concerned? It does not matter that the shareholders and creditors may get less?
  (Mr Bloom) Our primary obligation is to maintain the network and to the extent that it costs money to maintain the network we will borrow that money and we will apply it in that way, yes.

  328. Mr Armitt, how far have we under-invested in the railways over the last 20 years and what proportion of GDP do we really need to be putting in if your job is going to be bearable?
  (Mr Armitt) To say how much we have under-invested, you could only really try and make some broad comparisons with other countries and, if you like, similar countries in Europe. For a long time we were investing, I believe, something like 0.1 per cent of GDP on average over a 15-year period. France and Germany were investing between 0.25 per cent and 0.28 per cent of GDP, so broadly speaking we have been investing half of the level of competing nations.

  329. Do you think the 10 Year Plan enables us to catch up?
  (Mr Armitt) When you look at the 10 Year Plan, if the total amount of money goes in from both the public and private sectors then you are up to as high as 0.35. We fall back towards the end of the 10 Year Plan. It is not a growth which then stays at a higher level. It does start to tail off back down towards the end of the 10 Year Plan.

  330. And the extra money you would like, is that for the short term or is that for the longer term?
  (Mr Armitt) In terms of the money which Railtrack would like, ideally we would like sufficient money to be able to invest to produce a steady state railway where we get into long term thinking rather than short term, if you like, patch and mend thinking, and clearly if we get more money that will enable us to get more into a long term cycle of investment and a key part to that is the asset register and the condition register because once you have got your condition register you can then start to apply some long term thinking. If you have got the money to go with it you will then build up a steady state, good quality railway.

  331. With regard to the long term and train safety systems, are those systems fully understood and so therefore they can be costed, or is there still a huge doubt as to what the systems will cost?
  (Mr Armitt) In terms of TVWS, which we are installing at the moment, that is clearly understood.

  332. Is it clearly understood?
  (Mr Armitt) Yes. We know exactly what we are spending, we know the unit costs of what we are putting in, we know it works. It is working out there on the network today. We are 42 per cent through the programme and we are on programme to the target set by the Health and Safety Executive for the installation.

  333. And within the cost that was originally estimated?
  (Mr Armitt) The costs if anything are slightly over.

  334. Slightly over.
  (Mr Armitt) As far as ERTMS and ATP are concerned it is a different issue. There are experimental projects being carried out at the moment with that in Italy and clearly, as those develop, we will know more about firstly the performance of that system and then secondly start to build up some information about the cost. Any cost forecast today on what it is going to cost to install the ERTMS would be a broad band estimate and not a precise one.

  335. On the suggestion that the Government might be delaying that system, is that because of the technical problems or is it because of the cost problems?
  (Mr Armitt) I do not know. The Government is reviewing that. We are working with Government putting information as far as we have it into that review. We know what our European partners are doing who are taking a long term approach to the installation, 20 to 30 years in some instances. We know what has been suggested in this country by Cullen and it is up to the Government at the end of the day to decide what timescale it would like, whether it is within 10 years and, if it is, then we would have to get on and do it.

  336. Do you think on the technical side Cullen can be achieved? A nod of the head does not go on to the record.
  (Mr Armitt) We have no experience at the moment of installing the system because it is being carried out experimentally at the moment overseas and there is discussion about an experimental section in the UK which we are still discussing with the SRA as to where that should be. That is clearly going to take, being sensible, a year or two, I guess, to carry through, and then you look at the remaining period. We are installing TVWS over a two and a half year period, so the installation of the ERTMS with the right resources I am sure could be delivered within 10 years.

  337. Do you have the same sort of clarity as far as disabled access?
  (Mr Armitt) The issue there is a continuous one of taking possessions on stations and doing the work that is necessary. The constraints on Railtrack delivering any of these things are three-fold. There is the physical restraint of resources within the industry. In the case of signalling systems it is one of the tightest constraints with the number of signalling engineers available in the industry today. The second constraint is money, and the third constraint is possessions on the railway. We are running a railway which has got a lot more traffic and a lot more people on it than it had two or three years ago, and therefore going back all the time and saying, "Can we have more time to stop trains running in order to put new things in?" is clearly a continuous debate and balancing act with the train operating companies and those possessions can be planned as much as two years in advance.

  338. Can the skill shortage be met by attracting people back from other parts of the world?
  (Mr Armitt) I think skill shortages require concerted effort by the clients and by the contractors in any industry, wherever you have got a skill shortage. Skill shortages are a challenge which has to be addressed and met through training, through re-training and Railtrack are doing that at the moment with different universities, in taking people already trained as engineers and retraining them into the railway systems and seeking people who are working in other countries, not necessarily of UK nationality, to come to the UK and help.


  339. I just want to ask you finally, because we have so many fascinating questions to ask you, whether you have considered the effect of the Commission's proposals for the future of railways, whether you have looked at the cost of the implementation of European directives, and whether you have any estimate of how long it would take you if you were faced with these problems.
  (Mr Armitt) No. I think it would be fair to say that the most recent statements from the Commission which we have looked at in a superficial way would clearly cost extra money and would have to be slotted in against all the other things we are trying to do within the constraints I have just mentioned.

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