Select Committee on Welsh Affairs Minutes of Evidence


Examination of Witnesses (Questions 80 - 99)

TUESDAY 20 NOVEMBER 2001

MR CHRIS AUSTIN AND MR CEDRIC PIERCE

  80. So it is passing the buck.
  (Mr Pierce) Yes, I think so.

Chris Ruane

  81. There were some further criteria which I shall read out to you and I want to know to what extent the following local criteria are to be applied in Wales. I mentioned one about service quality. Others are: "the service reflects demand flows—the through services to Manchester, Birmingham and Bristol will continue as these are important destinations and appropriate "cut-off" points for adjacent franchises; the franchise is sufficiently large to be operationally possible and achieve economies of scale, but be managed locally to achieve maximum market growth; services on several currently peripheral routes (e.g. via Wrexham) will become major services—in a Wales-based network improved frequencies will lead to increased demand". To what extent are those local criteria to be applied in Wales?
  (Mr Pierce) The existing franchise and the new franchises will be based on what is known as a PSR, a passenger service requirement, which sets out the minimum levels of train service that we operate. The new PSRs will be based on the existing PSRs. There is no question of the Manchester service, for example, or any other route disappearing. The intention with the replacement franchises will be that we shall ask for bids based on what is going on at the moment and we shall ask for a series of enhancements which they can price and we can then do a value for money analysis on. Clearly the ones which give good value for money, which take into account the external factors as well as simply the money ones, will be the ones which go through.

Mr Owen

  82. I am interested in the creation of hubs, particularly at Chester, Shrewsbury and Cardiff and also the north/south routes and how they link in to Bangor, Manchester and Birmingham. Is your forward planning to include these, to improve them or to have more through trains? Is it through trains or hubs or both?
  (Mr Pierce) We shall be asking the counterparties to give us their ideas on the hubs. We have said that we want these hubs. Clearly Shrewsbury, Cardiff and Chester are important places and we want to hear from the counterparties what their proposals are.

  83. The National Assembly is pushing for the Holyhead direct to Cardiff. What is your preference? Is it through trains? I know you want to listen to other people, but what is your opinion? Do you prefer through trains or do you prefer more hubs and more frequent services on local routes?
  (Mr Pierce) Any passenger will always prefer a through train, because they do not like changing and that is my own experience as a traveller myself. These things always have to go through value for money judgements and decisions have to be made on the basis of what gives the best value for the money. It may be that a service with connections would give better value for money than a through one which did not necessarily have a lot of people on it.

Chairman

  84. The draft Directions and Guidance to the Authority say that all the bidders should be aware of the criteria upon which their bids are being assessed. Have you reached the situation where all the bidders are aware of the criteria on which you are assessing their franchise bids?
  (Mr Pierce) The process with the Wales & Borders franchise has not been moving forward in recent months, but when it is restarted then we shall ensure that the bidders are aware of all these things.

  85. But they are not yet.
  (Mr Pierce) No.

Mr Williams

  86. Can you briefly set out what you see as the benefits of the new Wales & Borders franchise?
  (Mr Pierce) The first thing is that it brings a focus on Wales to Wales. There will still be First Great Western and Virgin trains operating into South and North Wales respectively, but for the rest there will be one operator covering all the services in Wales. That brings the focus which you were looking for and which is good for the Principality as well. The services are principally east/west and many of them will continue to run into and out of England, as they do at the moment and as many of the passengers actually want. A focus for Wales will be very helpful.

  87. What has caused the delay in selecting the preferred bidder for the franchise?
  (Mr Pierce) All the franchises which we had not reached heads of terms on earlier in the summer have been delayed, so it is not a particular issue around Wales & Borders. The things which have caused the delays are the funding situation, affordability and the new draft Directions and Guidance and the Minister's statement on re-franchising which he published in the summer.

  88. What is your view on continuing with a shadow franchise for two years or going ahead and selecting a preferred bidder immediately?
  (Mr Pierce) The first thing I need to say is that it is not a shadow franchise. It is a franchise. It is real, it is there, it is working, we are paying them real money, they are running real trains today. Most of it has come out of the former Wales & West franchise. It is currently being operated on what we call a cost plus basis. The terms under which it is operating at the moment have not been competitively tendered. Essentially we have single party budget negotiations with them in order to keep it operating. That is not a situation we want to continue. For that reason we need to proceed with re-franchising as quickly as we can.

Mr Wiggin

  89. Realistically, how much service improvement can be delivered by two-year extensions to the existing franchises?
  (Mr Pierce) We want to proceed with re-franchising and it is in the context of that.

  90. So you would agree that two-year extensions cannot really bring investment into the railways.
  (Mr Pierce) No, that was not what I said. What I said was that on this franchise we need to proceed with re-franchising because of the nature of the contract we have with them at the moment.

Mr Caton

  91. Is a modern efficient railway achievable in Wales under the present financial regime?
  (Mr Pierce) I was present just now when Mr Gibb was speaking and I would echo most of what he said. Much of Wales has a comparatively modern railway network, much of the rolling stock is ten to 15 years' old and I say that in the context that rolling stock tends to be built with a life expectancy of between 25 and 40 years. New rolling stock is appearing now in North Wales through Virgin and very shortly First Great Western in South Wales. There is a very mixed bag of infrastructure in Wales, some of which is in good condition, some of which will be due for renewal in the next few years. I would not argue that there is not a modern system in Wales. It probably reflects what there is in the rest of the country: a mixed bag.

Mr Owen

  92. You talk about a modern, efficient service at this moment but what about line speeds? We talked about investment to improve the North Wales line from 80 to 100 miles per hour but that has now been put back. It is not an efficient system if you run at 80 miles per hour when the rest of the country is doing 100 plus.
  (Mr Austin) That is right and we are looking at opportunities to increase line speed both on the north and west line through Hereford and Shrewsbury and on the North Wales Coast Main Line. To some extent that work has been held up initially through funding although that is now resolvable. Latterly though, the lack of resources, the lack particularly of skilled signal resources which Railtrack require to implement these projects is an issue we shall want to return to at some stage. In terms of efficiency, there is no doubt that with growth year on year of around seven per cent, the system is operating a great deal more efficiently than it was five years ago, in the sense that it is carrying a significantly larger number of passengers on the same network using the same resources.

Chris Ruane

  93. On the issue of train speeds along the North Wales coast, why has the North Wales line not been electrified?
  (Mr Austin) You need to go back quite a way into history for that. At various stages it has been looked at by British Rail; certainly in the context of the main line electrification programme which was developed in the late 1970 and early 1980s. BR was quite an advocate of electrification then and I was involved with it in lobbying strongly for funding for electrification.

  94. For the North Wales line?
  (Mr Austin) Yes, including the North Wales line. Since then, particularly during the late 1980s and 1990s, the development of newer and more efficient diesel trains means that it is actually quite difficult now from a passenger's point of view to know which one you are on because a modern diesel train has similar characteristics and looks the same inside. They are also far more fuel efficient, they have lower emission levels. It is now quite difficult to make the case out for electrification because the capital cost of installing the equipment and the power supply is enormous and the benefits are relatively small: very little in terms of journey time and less and less in terms of operating and maintenance costs. The case for electrification has become progressively more difficult because of the development of more efficient diesel trains.

Mr Caton

  95. As you have pointed out, you were here when Wales & Borders' representatives were giving their evidence and you remember that Mr Gibb pointed out that there was a problem west of Swansea with single track causing delays. I think there is a similar problem in the Wrexham area. What sort of priority is this for the SRA to deal with?
  (Mr Austin) The one to the west of Swansea is one of those which is being looked at as one of these so-called incremental outputs. The process involves the identification of a number of sites around Wales where increased capacity is required. The scheme has been defined with the train operators and with the National Assembly and is now being costed by Railtrack. When we see what the final cost is going to be, and we know from previous bitter experience that costs can double or even triple during the estimating process, we shall know whether we can afford to go ahead with any individual scheme. That should be first quarter of next year when we are in a position to come to a decision on that.

  96. If you decided, that you did not have the resources to do that for, say, Swansea and Llanelli—I do not want to be too parochial even though I do have a constituency interest but take that as an example—what sort of timescale are we talking about before there could be another round?
  (Mr Austin) Then we need to discuss that with the stakeholders and particularly the National Assembly to see what could be done, whether it could be handled in any other way or whether there were indeed other ways of tackling it.

  97. I am afraid this is again parochial, but it is an example and follows on about the station and the multi-modal approach, the integration of different modes of transport. What about Swansea? Are you satisfied with the situation at Swansea where the railway station is so far away from the centre of the town and the main bus terminal and most people would say that although there is a bus service there it is not always adequate and does not meet every train.
  (Mr Austin) There is a bus link between the two but they are quite a long way from each other. A lot of these things go back a long way into history. Trying to put that right is going to take time and effort. I do not know particularly about the circumstances at Swansea, that is not something I have been personally involved in discussions on, but clearly the improvement of integration at a centre as important as Swansea is going to be pretty important.

  98. It is something which in your evidence you said that you pressed for or you looked for. Where you have one company or more than one rail company and maybe more than one bus company, at least one bus company, how do you bring those together and try to encourage that integration?
  (Mr Pierce) Just taking the Swansea example for the moment, my guess would be that what is going to be needed there, at some point when there is a major redevelopment going on, is to bring them all together into one place, but that is really about facilitating discussions between the various parties at the appropriate time. In terms of bus links generally, it is something we encourage through ATOC, the Association of Train Operating Companies. It is something we do ask for or we have asked for in invitations to counterparties and it is something we are anxious to facilitate.
  (Mr Austin) It is something which the companies have largely taken forward on their own initiative, under the auspices of ATOC. Around Britain there are about 500 rail/bus links now, of which about 100 are kitemarked by a company called Journey Solutions which has been working with ATOC. The kitemarking means that there is a proper integrated service with through ticketing, provision of information for both bus and rail services and some sort of connectional policy in place. It is a reasonable sort of dependable quality link. That is something which has been developed by the industry itself and particularly by its trade association. We have encouraged that but we have not needed to intervene to direct on that.

Mr Owen

  99. May I press you a bit more on electrification, because I am not clear? We are talking about a modern efficient service. I take your point that when somebody is on board the train and they are travelling they are not really bothered whether they have an electric engine or a diesel engine, but when you get to Crewe you have a 15-minute wait so it is less efficient when you are stuck in some station for 15 minutes. The case has been made by the Irish Government to Europe for the electrification from London to Holyhead and the Irish involvement there and an efficient service linking up European capitals. Are you saying that it is the British involvement which does not want it? Do the train operators not want it? Does the Rail Authority not want it? Who does not want it if these major players are saying we need it?
  (Mr Austin) I am just saying it is not value for money, there are other priorities which need the expenditure more.


 
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