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

Examination of Witnesses (Questions 400-419)



Mr Stevenson

  400. Minister, it has been reported that Bechtel have produced a draft report which indicates that the cost of the West Coast Mainline is now reaching £10 billion. Have you seen that draft report?
  (Mr Spellar) I have not seen that report yet, although I have seen reports of that report.

  401. Is such a draft report in existence, although you have not seen it yet?
  (Mr Spellar) I know that Bechtel have been working very intensively on this and they are in discussions with obviously the main actors in this, but I have not as yet seen the report.

  402. Have you any knowledge at all, Minister, of when you may see that report?
  (Mr Spellar) I do not think I as yet have a date for that, but obviously we are hoping to get a report as soon as possible so that we can then get a clearer view of the options for the way ahead and the various trade-offs to be struck on that.

Chris Grayling

  403. You might not have seen it, but have you been told what is in it?
  (Mr Spellar) As I have said, I have seen reports of it.

  Chairman: Yes, you did answer that.

Mr Stevenson

  404. These reports about the report also indicate two other things, that Bechtel cannot work out how much the changed specification of the West Coast Mainline and the modernisation may cost because of this distinction between renewals and enhancements. They are not able to do that. Is that your understanding of the situation?
  (Mr Spellar) I have not seen that report yet, but, as I said, we are waiting to get the report from Bechtel, plus the discussions which have taken place between the actors principally involved.

  405. The options which are being considered that you refer to, do they include an option of reduced performance and reduced capacity on the West Coast Mainline?
  (Mr Spellar) Well, I think one key area which has already been discussed is not to proceed through to 140 miles per hour and looking at the gain in journey time or the cut in journey time as a result of that against the cost of such a project. Now, that does have a knock-on effect potentially on the number of train-sets required particularly on the main route operated by Virgin and obviously discussions are taking place between the SRA and Virgin on that.

  406. In the light of that situation, what do you make of the reported comments of Mr Graham Eccles, the Executive Director (Rail Operations) with Stagecoach Holdings who of course own 49 per cent of rail at Virgin Trains, who said in the original report, "The original Virgin business plan is now in complete tatters. The emerging railways that we can see will operate at 125 miles per hour rather than 140. There will be little or no opportunity to compete head-on with airlines and the train plan that was envisaged of franchising has had to be completely redesigned". Pretty strong stuff.
  (Mr Spellar) It certainly was not what the boss of Virgin, Sir Richard Branson, was saying the other day when he was standing alongside Brian Souter of Stagecoach where he was being very positive about developments, but also the much better working relationship that he has with Railtrack and with the Strategic Rail Authority under their new management, and was being very upbeat about the prospects of success for the new Pendolino trains.

  407. Finally, clearly the uncertainty about the upgrade, modernisation, renewal, whatever it may be, of the West Coast Mainline is in no one's interests and given the timescale that already this project has taken, are you in any position at all, Minister, to advise the Committee when you anticipate that some definitive plan will emerge that actually will be implemented for the West Coast Mainline?
  (Mr Spellar) Well, the SRA are hoping to publish their proposed West Coast Strategy in the next month or so, but they are in pretty intensive negotiations with the main companies and organisations involved in this and there are a whole number of interests, and indeed in some cases not necessarily with compatible interests which have to deal with the outcome of this very unsatisfactory affair, namely the failure of previous Railtrack in any way to manage, budget for or price the West Coast Mainline.

Mrs Ellman

  408. The Ten-Year Plan says that it will boost the economic competitiveness of all regions, yet the SRA have confirmed to us today that they do not take regional economic strategies or regional transport plans into account in making their decisions. What are you going to do about that?
  (Mr Spellar) There are a number of aspects of the Ten-Year Plan and targets and aspirations in that, including the increase of 50 per cent in passenger traffic and also 80 per cent in rail freight.

  409. I am asking you a direct question about the regions. Now, the SRA say that they are not looking at that.
  (Mr Spellar) Well, I am actually answering it because particularly if we are talking about rail freight and the 80 per cent increase figure for rail freight, that is very much tied in with the operations across the regions and particularly in trying to enhance rail freight capacity within the regions of the country, particularly those main manufacturing regions, and obviously an enhancement of that rail capacity is a significant part of economic regeneration in those areas.

  410. Are you satisfied then? The SRA tell us that they do not take this into account, you have given me an answer to do with freight, but we are concerned about passenger transport as well, so are you telling us that you are satisfied that the SRA are saying that they are not taking the regions into account in making their decisions?
  (Mr Spellar) But they are taking into account—

  411. They said they were not.
  (Mr Spellar) No, they are taking into account the need to increase again the percentage of those travelling by rail and the regeneration then of many major city centres in the regions of the country. They are directing themselves to enhancing services, for example, the improvement in the Crossrail service in Birmingham, the enhancement of capacity at Leeds, which is precisely to improve the access of Leeds to London, but also dealing with suburban rail services and also the enhancements of Piccadilly. All of these are looking at the changing employment patterns in the regions of the country and actually providing capacity in order to be able to enhance that. Equally, the proposals for the Trans-Pennine Express are for that franchise looking at achieving a faster and, therefore, also a higher-volume service which will enable transport between the main towns of the north precisely in order to be able to enhance the regional competitiveness of the regions.

  412. The SRA told us today that they do not assess the impact of their decisions on the north. They make a statement that said they did not do any work to substantiate that. Are you aware of that?
  (Mr Spellar) Well, they will obviously be looking at the work that they undertake with the rail operators in order to be able to make a comparison between different bidders for the franchises in order to be able to make an assessment. Of course Ministers also look at that as well and are very much aware of the need for regeneration of the regions of the country.

  413. Are you saying then that you are satisfied that SRA's plans as presently constituted will deliver regional improvements as put forward in regional economic strategies?
  (Mr Spellar) I certainly think that and of course I am always willing to entertain representations where people may indicate to the contrary, taking into account of course that we are talking about the mobility of passengers and there are a number of mechanisms for achieving that in all cities. In some cases light rail may be more appropriate and I think my recollection is that the SRA's estimate is that the Manchester Metrolink is carrying more passengers than the other suburban lines put together in Manchester, which may be an indication that there is a package that actually works more effectively within that environment and also in a number of areas bus priority systems may also meet the need. So from the point of view of the Department, it is looking at transport requirement and transport need in areas, not necessarily just meeting it by one mechanism.

  414. Are you going to support light rail in Merseyside?
  (Mr Spellar) Light rail in Merseyside, there is an application in for that and that is being evaluated at the moment by the Department along with the officials from Mersey Travel.

  415. Are you going to propose any changes in regulated and non-regulated fare agreements?
  (Mr Spellar) In which, sorry?

  416. Fare agreements, regulated and non-regulated.
  (Mr Spellar) In which area?

  417. Passenger fares. I think it is the case that for some fares going from Liverpool to London, they have been increased to around nearly 80 per cent over the last four years. Do you feel that is satisfactory?
  (Mr Spellar) I think that there is a real difficulty here because one of the successes of the privatisation of passenger rail has been a more market-orientated focus of the rail system, and actually looking at the capacity that rail is carrying and attempting to fill a greater percentage of that capacity, which is more analogous to the way in which the airlines operate rather than the more rigid formula that we had previously.


  418. So you go along with this idea that we should no longer turn up and go, but it should be a service much more closely aligned to the way the airline industry operates?
  (Mr Spellar) What I feel is that there are advantages and disadvantages to both schemes.

  419. I think we are aware of that, Minister. We are asking you for your opinion.
  (Mr Spellar) Well, one of the driving forces behind the increase in the number of passengers using rail has been the more effective marketing of the new companies compared with the old British Rail, and I do not think that that is really deniable. There is on the other side the high premiums charged for services which are over-subscribed and, therefore, that market mechanism operating, and I know that that causes concerns particularly for business in a number of areas as to whether that is actually achieving the best balance. It does also of course lead to estimates of comparisons between fares in the UK and rail fares in other European countries which do not necessarily capture the full range of fares which are available in the UK. I do not think we should underestimate the impact that the much cheaper fares have had in enabling mobility of people across the country.

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