Examination of Witnesses (Questions 142-159)
MR GRAHAM SMITH AND MR ALLEN MARSDEN
WEDNESDAY 24 APRIL 2002
142. Would you be kind enough to tell us who you both are?
(Mr Smith) My name is Graham Smith and I am the Planning Director for English, Welsh & Scottish Railway. My colleague is Mr Allen Marsden. It was a little unclear whether he would be able to join me because of family issues, but he has been able to.
143. Do you have anything you would like to say to us first?
(Mr Smith) Very briefly. English, Welsh & Scottish Railway is the leading rail freight haulier in the United Kingdom. It is fair to say that freight on rail has been one of the transport success stories of the last few years and in no small measure because of the relationship of rail freight with ports. We have seen 50 per cent growth in rail freight since 1995, much of that from ports, including the ports newly connected to rail such as Bristol, Boston, Grangemouth and Barrow. In the current year we are hoping to see Chatham connected as well through the work of Paul Clark, MP. Forty per cent of EWS business comes from ports and port-related industries. That probably rises to 50 per cent for all of rail freight when you take into account Freightliner, the other main freight haulier which focuses particularly on container traffic from ports. As an example, 20 per cent of EWS business comes from one port, the port of Immingham. That relationship with the ports has been cemented by the significant investment in rail freight in the last seven years; around £1 billion from the private sector, including £750 million from EWS. We are looking to grow in line with the Government's growth strategy of achieving 80 per cent growth in rail freight in the next ten years and we believe ports are crucial for doing that. There are a number of issues. We raised a number of these in our submission. The first is that ports need to have an even-handed approach to roads and rail. At the moment a road system seems to be a free good, but the provision of a rail system involves endless arguments about who pays, who invests and who maintains. An issue that the Committee has already raised with previous witnesses today is the infrastructure serving ports. There are issues around the capacity of the rail network and to quote some, but not all of those of which the Committee are already aware, the capacity on the West Coast and East Coast Mainlines, the capacity and quality of the route on South Humberside from the East Coast Mainline to the ports of Immingham and Grimsby and also to Hull north of the Humber, the route from Felixstowe across country to Nuneaton, bypassing London, and the route from Southampton to the West Midlands does the same. We also need to build on the specific links to ports. A success story in the last 12 months has been the opening of the Portbury dock at Bristol with a re-instated rail link, which was originally closed 30 years ago. That said, we do not serve all ports. Eighty per cent of ports are served by rail and by EWS. We used to serve Dover and Harwich and we stopped serving those when the Channel Tunnel was opened; maybe that was not such a good decision in retrospect. In general it is fair to say that the relationship between ports and rail freight is a good one. It can only lead to more freight on rail and achieving the Government's objective of rail freight growth.
144. You talk about new port developments needing to generate volumes of hinterland freight movement, so you say they ought to incorporate rail access from the outset. Do you think that the Strategic Rail Authority's plan reflects that?
(Mr Smith) Yes, I do. The SRA freight strategy very clearly recognises the importance of ports, both for handling containers, which are a key part of the growth strategy of the SRA, but also bulk goods, imported coal, imported timber and iron ore and we would hope to see more exports as well. The SRA strategy and the overall government transport policy need to pick up from the SRA freight strategy. We still need to fight rail freight's corner through the Department of Transport and into government to ensure that the £4 billion identified for rail freight for upgrading links, including links to ports, in the ten-year plan is ring-fenced and is maintained, but at a time when the Department of Transport's budget is under pressure.
145. Is there light at the end of the tunnel? The Secretary of State told us that there would be 72 train movements through the Channel Tunnel by Monday of this week. Has that happened?
(Mr Smith) No, it has not. Last week we moved 46 trains through the tunnel. I am sure that the Secretary of State, as were we, was relying on comments from the French authorities that they would be providing sufficient security to enable 72 trains in each direction to be run, albeit that is less than the pre-November level of services of 96 in each direction. The reality is that the provision of policing at SNCF's yard at Fréthun has not been consistent, has not been adequate. The asylum seekers have recognised that policing takes place during the hours of darkness, therefore they are invading the yard during the hours of daylight when the police are not present, so that by the time the police arrive, they are in fact encircling asylum seekers inside the yard. The French police believe it is not their duty to remove the asylum seekers from the yard, that is the responsibility of the French railways, who are not particularly well resourced to do that and arguably, like ourselves, never envisaged having a role as an unpaid security force. I regret to say that we have not seen 72 trains, we do not expect to see 72 trains and it is my understanding that the French authorities have recognised the reality of this and are now planning a level of service, certainly for the near future, of perhaps no more than 40 to 50 trains a week.
146. Have they made that clear to you?
(Mr Smith) We have not had any communication from the French authorities. We met the French railways and they said they had concerns about the level of policing and have asked that over the next two days we work with them to provide a plan which will guarantee moving 40 to 50 trains a week.
147. My understanding was that it was SNCF and the French authorities who moved all the security arrangements to the evening in November, which compounded the situation. Is that correct?
(Mr Smith) SNCF provide their own security guards in the same way that we do at the yard at Folkestone. However, they have no powers of arrest or detention and the provision of the security with powers of arrest and detention rests very much with the local préfet and under instructions from the Interior Minister in France to provide gendarmes. Unfortunately the gendarmes tend to come and go depending on the demands for their services elsewhere. Prior to Christmas it was escorting the movement of new euro notes around France, followed by escorting the movement of old franc notes around France. Recently they were removed, for very serious reasons, to guard synagogues from attack at a time of unrest and there is a suggestion that with civil unrest in France at the moment, given the French elections, we may well lose all of our policing for a little while. That has not been confirmed, but, shall we say, it has been suggested.
148. Are you able to put a figure on what the economic cost has been to you since November of last year?
(Mr Smith) Yes. We have lost £500,000 a week, so we are looking at around about £9 million in total. That is because the revenue is immediately lost as our customers either cease moving goods, or, more realistically look at other less interrupted modes. We cannot save very many costs other than our direct variable costs because we want to stay in this business, we want to get back into this business. We are not in the business of immediately withdrawing locomotives, making employees redundant, closing facilities, because we hope and continue to hope that this will be solved, that we shall be back in the international rail freight business. We are just having to take the hit on the loss of revenue and yes, I estimate between £8 and £9 million since November.
149. What would you like to see the Government do to get up to 72 trains?
(Mr Smith) After a slow start the UK Government recognised the seriousness of the issue. I believe the Secretary of State expressed his concerns before you previously and the Transport Minister, Mr Spellar, has been very vocal in the matter with references to security at a village féte being better than he has seen at Sangatte. It would not do any harm if the Home Office, the Foreign Office and the DTI, all of whom have an interest in the matter, were to exert further pressure on their opposite numbers in France. We also know that the Prime Minister exerted pressure on Mr Jospin, so maybe there will be someone else he can have a go at in a couple of weeks' time. Meetings, letters, an awful lot of administration has happened, but somehow that final link seems to be missing, that final piece of pressure. I would not be privy to what that piece of pressure might be that the UK Government could exert on the French. Maybe there is nothing, but constant pressure, constant vigour, constant enthusiasm to solve this problem; none of that would do any harm.
150. What does SNCF lose if your trains do not run?
(Mr Smith) They lose the revenue as well, in fact they stand to lose more revenue than we do because for a train from Italy, revenue is by and large allocated on the distance the train travels on the owning network and trains will travel further in France than they will in the UK. So they stand to lose a good proportion of revenue. They have a growth strategy as we do and we have a lot of sympathy for the French railways. A bit like EWS, they get to the point of saying yes, we will provide security, we do need to provide funding, but actually we are a train operator not a security firm, we are trying to operate a service and we are not succeeding. I have some sympathy with SNCF's view that really we have to look to the French authorities, the French customs authorities, the French police and French Government action to get this result.
151. Yes, that is not only sensible, that is logical. However, SNCF receives vast amounts, in fact almost all of its funding, from the Government.
(Mr Smith) It does.
152. Would it not seem sensible for them to have rather more direct effect on the Government?
(Mr Smith) You might think so.
153. Have you put this point to them in Anglo-Saxon terms?
(Mr Smith) Very basic Anglo-Saxon terms.
154. What was their reception of that?
(Mr Smith) They agreed and a number of their actions since November have been to put pressure on their own government.
155. The important part of your business is moving freight quickly from ports to the destination. Where do you find the problem, the congestion on the railway system?
(Mr Smith) It varies from port to port. It can be trying to get out of the port onto inadequate infrastructure. For example, the lines in and around the port of Liverpool are not as adequate as they could be and I am glad to say that the Strategic Rail Authority has a scheme to be implemented shortly to improve the connections in the Liverpool area to make the connections off the mainline into Liverpool into the dock area at Seaforth much more effective. In other places such as Immingham, where the infrastructure along the south of the Humber is used by a lot of freight, it needs restoration. There are many speed restrictions on that infrastructure and they need to be restored and the Strategic Rail Authority has a plan working with Railtrack in administration to resolve that particular problem. Then there are other places where ports are coming out immediately onto the mainline where it is the capacity of the mainline which is the problem.
156. Which one are you referring to?
(Mr Smith) Both the West Coast Mainline and the East Coast Mainline, both subjects which I know this Committee has considered before. There is a huge demand. There is not sufficient capacity. The West Coast Mainline capacity issue is being addressed afresh by the Strategic Rail Authority and Richard Bowker and recognising the importance of both high-speed passenger and freight needs to be resolved. The East Coast Mainline upgrade has been around for a while and needs to be addressed. It needs to resolve just what the demand is for the route and whether it is solved by upgrading the core route or whether diversionary routes need to be upgraded to accommodate for example slower rather than faster freight services and local passenger services. That all costs money. I am glad to say that with the advent of the Strategic Rail Authority in its new found guise and with new found enthusiasm we are now seeing those problems being tackled. However, a plan, a working group and a discussion group are no substitute for actually getting some concrete in the ground.
157. Are EWS contributing to any of this structure?
(Mr Smith) EWS has invested £750 million in rolling stock. We buy things with wheels and computer systems. We look to others to invest in the track. We are contributing in terms of putting a lot of effort into, take the West Coast for example, recognising that there is a variety of solutions to the West Coast. There is no single solution. The West Coast is solved by better timetabling, improved infrastructure, higher running speeds, improved traction. We put a lot of effort into making that happen, but it is our view and has always been our view that we buy things with wheels and other people buy things with concrete.
158. You heard me comment about the road links between the East Coast and West Coast through the Yorkshire/Lancashire region. Are you making representations to try to get rail links in that direction?
(Mr Smith) We certainly are.
159. What progress has been made?
(Mr Smith) I know we are being listened to and it comes together as part of the re-letting of the trans-Pennine franchise, which will involve an upgrade of infrastructure and the passenger franchisee needs to take into account the needs of rail freight. The South Humberside route and the North Humberside route are the beginning of that but clearly once we hit Doncaster there needs to be an upgrade between Doncaster through Leeds, Huddersfield. Which route across the Pennines? Perhaps even re-opening the Woodhead tunnel. That would be excellent.