Q259 Mr. David Clelland: Realistically, what percentage of freight which is currently carried by road could be shifted to rail?

Mr Smith: The Planning Ahead document, which I referred to earlier, said that rail could easily get a 20% market share which will be nearer to 30% or 35% for long-distance freight.

Q260 Mr. David Clelland: What percentage do they have now?

Mr Smith: 11.5%.

Q261 Mr. David Clelland: So you are talking about another 9%?

Mr Smith: Yes, particularly in the long distance traffic from Europe through the Channel Tunnel and inter-modal traffic through the deep sea ports around the country. That is one of the reasons for example that the Port of Felixstowe has committed to invest in doubling the branch line from Ipswich to Felixstowe and to increasing the gauge of the network so as to enable more deep sea containers to move by rail from Felixstowe throughout the country.

+++

Q323 Mr. David Clelland: I take it from what you have said, Minister, that you believe that the balance between government investment in London and other regions is fair and appropriate.

Chris Mole: If you look at the fact that something like 70% to 80% of rail journeys start or end in London, you can understand why an awful lot of investment goes into the infrastructure to enable those journeys to get people to and from other parts of the United Kingdom.

Q324 Mr. David Clelland: In the past five years transport spending has risen by 57% but by 25% in the Midlands and the North. Do you think that is appropriate?

Chris Mole: I look at the comparison between the different regions By and large they all lie somewhere between £200 and £300 per capita.

Q325 Mr. David Clelland: It is £836 in London.

Chris Mole: That is not the figure that I have.

Q326 Mr. David Clelland: That is something like three times as much.

Chris Mole: The figure I have for London is £781. If you compare the North West with my own region, which is Eastern, the North West gets £276 and Eastern gets £211, so they are all broadly in the ball park, but London obviously is special. It is the capital, it has significantly more public transport needs than other parts, and those needs meet national requirements.

Q327 Chairman: Minister, if you just look at one of our recent reports, you will see there that we record quite clearly, taking our figures from published statistics, that London receives more than three times the amount of funding for transport that goes to the North and to the West Midlands. Those are very strong figures. The Committee expressed great concern about that differential. It would be of great concern to us if we were to feel that ministers thought that was a satisfactory situation. Are you telling us that you think it is?

Chris Mole: We try to ensure that the investment goes to meet the needs of all the regions appropriately, to ensure that the outcomes in terms of service for all of the regions are balanced.

Q328 Chairman: You think it is appropriate that three times as much is spent in London than in the North - and the gap is widening. Do you think that is appropriate to meet the needs of the whole country, including the needs of the regions which are part of the whole country?

Chris Mole: If you look at the pressures that are on the rail network and, indeed, the transport network in general in the capital, then you need a serious amount of investment to ensure that our capital is able to function in the way that people expect public transport systems in capitals to function but, also, to provide that interconnectivity and through-connectivity that is so much of a part of the role of the transport system in London.

Q329 Mr. David Clelland: We can all accept that London is a special case, but it is a question of whether the balance is right. For instance, there have been no new carriages delivered to northern trains in the last five years, whereas the southern train operating companies have received 500. There is a complete imbalance in the treatment for the regions and London in this respect, is there not?

Chris Mole: We have a very high commuting demand in London - with a peak that lasts for three hours - in comparison with peaks in other parts of the country. There is much longer-distance commuting into London than in other parts of the country. But the reason we had the high level output specification via the White Paper in 2007 was to ensure that we get additional capacity across all parts of the network, in order to address the growth in train ridership in all regions of the country.

Q330 Mr. David Clelland: When can we expect to receive new carriages in the North?

Chris Mole: That high level output specification is a commitment to 2014 to additional carriages. The arrangements by which additional capacity is delivered is quite complex and depends, in a lot of circumstances, on the cascading of rolling stock that might be in use in one part of the rail network that, for example, can be freed up by the developments in Thameslink or the electrification of the Great Western Main Line, all of which change the requirements for rolling stock in some parts of the country, that allow some of those vehicles to be used in other parts of the country.

Q331 Mr. David Clelland: Would the North perhaps fare better if investment decisions were taken regionally? If the power was devolved to the regions to take investment decisions.

Chris Mole: I am trying to think how you would do that in a practical sense and still have the capacity to be able to manage exactly what I have just described to you, which is the complexity of the use of the rolling stock around the whole of the United Kingdom. I am not sure if you had that devolved arrangement you would be able to manage that in the same way.

Q332 Chairman: One way could be to change the process of consultation. The ITAs say that they are not involved in franchises; that the whole process cuts them out. That could be a start.

Chris Mole: I am quite surprised if the ITAs have given evidence to you to suggest that they are not involved in the next round of the preparation of high level output specification. The next round is designed to have deeper engagement with all of the stakeholders, to ensure that we have a clearer understanding in terms of what people think the growth in demand is going to be in different parts of the network and how that can be met. It is not just about carriages. The requirement of new rolling stock can also be that new network capacity is required as well as length of stations. You cannot just say, "We'll bolt on an extra carriage or two to a train and all the problems will go away."

+++

Q341 Angela Smith: In accordance with the documents that you put out to them, inviting them to bid.

Chris Mole: We set out what we want from the franchise, but that does not include, "We want a premium of £x." They will come to us and say, "We can deliver what you have laid out, your specification," and then they could offer us premium or they could say, "But this will require subsidy."

Angela Smith: Let me put it another way: Is there a commitment from DfT to ensure that a realistic assessment of the possible premium will be put in place and that there will be no temptation to build too high a level of premium into the new contract, thereby undermining possible future spending commitments?

Mr. David Clelland: Could I follow up on that, Chairman? It is the same point.

Chairman: Can it be very quick.

Q342 Mr. David Clelland: Minister, you have just said that the Department would need to be assured that the company can deliver on the franchise. Obviously with GNER and National Express, the Department grossly underestimated the ability of the companies to deliver. How can they be confident next time that they will get it right?

Chris Mole: I do not think that is strictly true. In the case of GNER it was what happened to the change of ownership of the parent company which undermined the position of GNER In the case of National Express, I think everyone has been surprised that that group was not prepared to see through the commitments that it made. Knowing that it is a major transport business, we would have thought that it would have wanted to stick with it.

Q343 Mr. David Clelland: How can we be sure it is going to be right next time? How can you be confident of that?

Chris Mole: We can only make an assessment of what the position of the business looks like, as we do in every other franchise. We have had a lot of other franchises which have happily gone along where this has not been a problem.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

The full transcript may be read here.