Examination of Witnesses (Questions 140
WEDNESDAY 30 JANUARY 2002
140. So, therefore, we have the capacity study
postponed beyond 2010, for Manchester and the West Midlands, but
phase two of the West Coast Main Line is still in the picture?
(Mr Bowker) I am seeing them as separate issues; but
there are discussions under way at the moment between Virgin,
Railtrack and the freight operators.
141. In your opinion, will the West Coast Main
Line phase two fall foul of postponement beyond 2010?
(Mr Bowker) I could not honestly say. I believe that
there is a significant risk that phase two of the West Coast Main
Line will certainly not be completed by May 2005.
142. Two questions, if I might, following on
from that. When will you know, your Authority, so that we all
know when you know; are we talking about weeks, months, years?
(Mr Bowker) We are not talking years, but we may not
be talking weeks. Discussions are under way at the moment; there
is a lot of work going on between them. And, I would say, within
a matter of months, the position will be much clearer.
143. You will appreciate the importance of us
(Mr Bowker) Absolutely.
144. So it is within months?
(Mr Bowker) It is within months, where there will
be more clarity.
145. My next question then is on that. What
is the main reason why phase two of the West Coast Main Line is
now in some serious doubt?
(Mr Bowker) It is a combination of factors, and I
am not sure it is possible to say there is one main reason. Certainly,
the scoping of the project in the early days by Railtrack was
not adequate, the project management of the process has not been
adequate and decisions that were taken during the course of the
project, for example, not to go for in-cab signalling, have had
significant impacts on capacity. So it is not one simple factor,
it is a combination of things.
146. I accept that; is one of them cost?
(Mr Bowker) Outturn cost, certainly, has been a product
of a failure of those other things.
147. I understand all that, we have been round
this before. I am simply trying to identify the main ingredients,
not the history, really, but the main ingredients, as to why it
is that prior to the production of your Plan we were anticipating
the West Coast Main Line complete upgrade being completed, we
realise the difficulty; along comes the Plan and the West Coast
Main Line phase two is now in serious doubt. The costs have escalated
considerably, the anticipated costs. Therefore, I am trying to
tie you down a little bit. Is the significantly increased costs
of the projects a significant factor, in your view, the view of
your Authority, that phase two of the scheme is now in serious
(Mr Bowker) It is a factor; but the most important
thing is the deliverability of the project itself, and the parties
to the project are saying they have serious doubts over deliverability
within the time frame that was originally estimated.
148. Thank you. Following on from that, there
has been considerable concern expressed about the apparent regionalisation
of investment plans in your document, concentrating more, not
exclusively, but more, on the South East. Would you accept that
(Mr Bowker) It is in danger of being a slightly one-sided
observation. It is true that the major capital investment that
is contemplated in the Plan is focused on London and the South
East commuter networks and the inter-city networks, that is true;
and that really is a reflection of the fact that we do have such
a high proportion of total journeys that do use those networks,
and the fact that issues around overcrowding, for example, are
very serious on those networks. However, what we have done is
made major provision in the Plan for the base services that we
operate currently, throughout the UK, to continue; so, for example,
the average subsidy per journey in London and the South East is
only about one-thirteenth the average subsidy across the rest
of the regional networks, and yet we have made provision for the
services that those networks have. So support should be considered
for both revenue and capital, I think it needs to be said.
149. Yes, I would like to come to that. But
if, as you have said, you see your appointment as being primarily
to deliver the targets in the Plan, I wrote that down earlier
on, then there is an almost impelling logic in that, that if the
50 per cent increased target is going to be delivered, or that
40, 50 per cent is going to be delivered, then concentrating on
the South East is where it can be delivered, in terms of increase
in passenger parameters. Would you accept that observation?
(Mr Bowker) I think, to be honest, one of the reasons
why there is so much capital in the South East is because we have
significant overcrowding issues as well. It is true that, when
70 per cent of all passengers use routes in and out of London
and the South East, including commuting, that is the market that
we are addressing.
150. Yes, exactly; that is very helpful. I want
to put it to you that, when the 10 Year Plan was produced, had
there been a paragraph in there that said, "Oh, and, by the
way, to reach these targets we are going to have to concentrate
on the South East," there would have been a completely different
political, and public, reaction to that document. Now your document
comes along, the Strategic Plan, that actually says that is going
to happen. It is therefore difficult not to conclude that you
are more interested in getting the targets delivered than you
are in producing a Strategic Rail Plan?
(Mr Bowker) I think the Strategic Plan is actually
quite balanced. It says that, in terms of addressing the major
capacity and capital investment needs, those are concentrated
in London and the South East. That does not mean it is a Plan
for the South East of England's railway. There is a huge amount
of things in here, for example, we have extended very considerably
something called the Rail Passenger Partnership Fund, which has
been a very successful thing, it is directed primarily at much
more targeted investment on the regional networks, and it can
have a huge impact. It could be that £half a million, or
£5 million, in perhaps the North West, or the West Midlands,
can have as significant an impact on the journey experience for
the customers that use the network as £500 million might
have putting a new bridge across the River Thames, for example.
So there is a danger in assuming, I think, that the bigger the
capital number the more you are actually doing; actually, it is
possible, through quite a lot of the methods that are here, to
give a real benefit for much smaller numbers.
151. Thank you. My colleague, Brian Donohoe,
asked about private sector investment, on which, of course, the
Plan is predicated, and you commented that, I think you said,
it is already happening, we have investment by the TOCs, we have
investment in the ROSCOs, and so on; yes, that is true. But, specifically
on the infrastructure side of it, according to evidence we received
from Railtrack in the past, not one penny of private capital has
come into the major infrastructure projects, as yet. What happens
if you do not get that private sector investment in the infrastructure;
have you any contingencies, in that event, which is perfectly
(Mr Bowker) I must be quite candid and say that I
do not think it is likely, because the process
152. What is not likely, Mr Bowker?
(Mr Bowker) I do not think it is likely, Madam Chair,
that we will not get private sector investment.
153. Double negatives; you say "We will
get the investment from the private sector"?
(Mr Bowker) I believe we will; and I believe that
the reason we will do that is because we will set about doing
it in a very disciplined and very clear way, and I am not convinced
that that has been done so far.
154. I would not, for one second, attribute
any criticism to your undoubted ability, determination and ambition,
I have no doubt about that whatsoever; but we have had a series
of very professional people in front of this Committee saying
exactly the same thing. And, as we sit here, not one penny of
private sector money has come into major investment projects on
the railway so far. So you will excuse me for being a little bit
sceptical. On a scale of ten, your confidence would be, what,
(Mr Bowker) I am really not sure that I will gain
much by making that sort of assessment. I am very confident, if
we do it right, it can be done. I must say, there is significant
private investment that has gone in; for example, the CTRL project
is a major railway infrastructure project where there is a lot
of private capital going in. So it can be done. We are about to
make some announcements shortly that show it can be done. I have
looked at, for example, some of the SPV work that has been done,
and it is clear to me that some of the risk allocation issues
that have not been properly resolved can be properly resolved.
And it will be like, I believe, when the PFI projects were first
done, ten years ago, and I was heavily involved at the time, the
first one was very difficult and you were creating a new mechanism;
once the first ones were done, it became clearer to all the parties,
they understood what was happening, and the production line started.
And I believe it can be the same here.
155. Would it be fair of me then, finally, to
assume, in your answers, that you have no contingency plan whatsoever,
or are you thinking of one, in the event of the private infrastructure
investment not being forthcoming to the degree that the Plan envisages?
(Mr Bowker) I believe that the assumptions that we
have used, in terms of how much private sector money can be brought
in to railway investment, are robust and deliverable.
156. Do you have anywhere in your calculations
the information based on the fact that many of the commuter services
are making a profit only because they are badly overcrowded? Is
that an element you have taken into account?
(Mr Bowker) We need to address overcrowding, that
is clear, and the significant investment that is in here to do
that and get crowding levels, particularly on commuter services,
to acceptable levels, that is certainly here. So, to the extent
that overcrowding is an issue, I believe we have addressed that.
157. But it is an issue in terms of cash, as
(Mr Bowker) I am not sure I entirely understand the
158. It is very clear that there are some of
the companies that are only making money because they are prepared
to accept a degree of overcrowding, which makes their cash-flow
position better, but which would be completely reversed if they
had to produce high-quality services?
(Mr Bowker) I think, if you are a passenger, you want
to get on the train.
159. I am not arguing with you, Mr Bowker; all
I saying is, have you taken this element into account when you
are thinking about the future planning and the viability of some
of the companies with whom you will be dealing?
(Mr Bowker) Certainly, we have taken account of viability,
and we have made some forecasts of what we believe it will cost
to run Train Operating Companies in the future; that has been
taken into account.