Examination of Witnesses (Questions 80
TUESDAY 20 NOVEMBER 2001
80. So it is passing the buck.
(Mr Pierce) Yes, I think so.
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
flowsthe 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 servicesin
a Wales-based network improved frequencies will lead to increased
demand". To what extent are those local criteria to be applied
(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.
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
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
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.
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
(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.
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
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.
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
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.
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 LlanelliI do
not want to be too parochial even though I do have a constituency
interest but take that as an examplewhat 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
(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.
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
(Mr Austin) I am just saying it is not value for money,
there are other priorities which need the expenditure more.