Examination of Witness (Questions 820-830)
WEDNESDAY 20 MARCH 2002
820. The Secretary of State told us three weeks ago, I think, that within the public sector budgets for the 10 Year Plan there are only around four to five billion pounds' worth of capital from the public sector plus an allocation of money to meet interest costs and so forth to raise £34 billion from the private sector to fund the improvements in the SRA plan and so forth. Do you think that is realistic?
(Lord Berkeley) I am not sure that I am qualified, madam Chairman, to talk about the passenger side of it. On the freight side it is worth pointing out that the freight industry has already invested over a billion pounds in the last five years on rolling stock, traction equipment and terminals and things like that. From the freight point of view the ratio is different. It is £3.4 billion from the Government and £600 million from the private sector and that is achievable. I am not sure I am qualified to answer on the passenger side.
821. Do you not need the infrastructure improvements that are there for the whole network to avoid freight becoming totally clogged up?
(Lord Berkeley) You need some of it. I am not convinced that the private sector is yet ready to invest in the infrastructure with the way things are at the moment.
822. Your memorandum said that the financial provisions within the Plan were inadequate to achieve the objectives.
(Lord Berkeley) I think that is probably true given the mix on the infrastructure, but things are moving quite fast and maybe the companies that are limited by guarantee will be able to solve some of the problems. I am not sure.
823. Does that mean you think it will not be able to?
(Lord Berkeley) It might not but it could do. I am not even sure about the question of Government guarantees for the CLG. I suspect that is a question that will come back to haunt us and they may want something for the letter of comfort which we are told London Underground may or may not have had
Chairman: We are not getting up into the Underground, my Lord.
824. Last question. Central Railway: your view?
(Lord Berkeley) I believe a project like Central Railway is going to be necessary in the period 10 to 20 years' time if the growth carries on. It has been developed to a certain level of detail and I believe it should be developed more but I think it is up to the SRA to say whether they want a new freight railway or a new high speed railway or putting more freight on the existing line or a bit of both. That is a job for the SRA but it is something that needs to be looked at and I believe the demand is there from 10 years onward between London and the North West. There will be a need for more capacity than is available on the existing lines even with the improvements planned at the moment.
825. Sticking with the SRA, the Freight Strategy states that the 80 per cent increase in the freight target did not take account of the recent reductions in fuel duty and in vehicle excise duty for HGVs. How critical will such be change to the comparative position of rail freight?
(Lord Berkeley) It has been quite serious and it is the equivalent of about a billion pounds over 10 years which the Government cut at a stroke. It has been mitigated by the Regulator reducing the track access charges for freight by half in the autumn. The first bit was in the autumn; the final bit is in April. I do not believe it is enough, though, and I think the Government should take into account those things before making such drastic policy decisions.
826. Have any assessments been done of how the proposed distance based charging for goods vehicles will impact on rail freight demand?
(Lord Berkeley) No detailed assessment except that we believe in the industry that it is a good thing because it is basically paying at the point of use, rather like rail freight does, rather than having a big vehicle excise duty where you pay at the beginning of the year.
827. Have we not got too much freight travelling around anyway? If we want a sustainable society ought we to be trying to encourage people to buy locally, to use sustainable energy and things like that? Is it really such a great idea that you would like to see freight travel increase steadily?
(Lord Berkeley) If you start from a blank sheet of paper you can say that it does not matter much what the cost of freight movement is. The higher the cost the more local manufacture there may be. It is like building a new road to a town. Is it a benefit or a disadvantage? What goes in has to come out. What the industry tries to do is to respond to what customers want in the most cost effective way. If it is decided that freight will be moved around we want to be able to compete properly with road.
828. Are you concerned about the European directives, the suggestion that we are going to adopt a European rail traffic management system?
(Lord Berkeley) I think it is a very good idea, madam Chairman. I am not quite sure why ministers believe that giving 20 per cent of European money to Trans-European Network (TENS) projects is a bad idea. My only worry is when they bring in one of these European policies like on safety. Of course we all want everything to be safe but it must be affordable safety. Adding 12 different railway administrations' safety rules on top of each other could mean a railway that is so safe that no trains will run, so we have to be careful. I think on the whole it is a good idea.
829. So you do not think it will add enormously to the question of cost?
(Lord Berkeley) I believe it will reduce costs if the industry gets its act together and encourages interoperability, in particular cheaper waggons because you have a longer production run, provided you have got the same approval process in each country.
830. It sounds slightly unlikely, my Lord, but I am prepared to believe you. Tell me: do you think the Government has got the right balance between road and rail?
(Lord Berkeley) I think it has at the moment, yes. We were pleased with the 10 Year Plan as it came out. We were not very pleased with the VED changes and everything but the industry believes it can deliver this 80 per cent growth.
Chairman: On that cheerful note, my Lord, can I thank you for coming.