Examination of Witnesses (Questions 320
WEDNESDAY 6 FEBRUARY 2002
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
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.
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
(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.
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
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
(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
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
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
(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
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
(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.