Priorities for investment in the railways (HC 38-i) Transport Committee 25 Nov 2009

Q264 Mr. Eric Martlew (Carlisle): Stobart are in my constituency and obviously with EWS they are starting the movement in from the Continent, but when you say about costs, does rail freight pay its way on the railways or is it very heavily subsidised? I am very conscious of it because unfortunately I live right next to the railway and big and often very old coal containers go by and the pounding that that gives the West Coast Main Line is tremendous. Are you really paying your way on the railways or are you highly subsidised by the fact that there is a lot of damage done to the track by yourselves?

Mr Smith: We receive no subsidy other than an environmental grant of £20 million a year. The track access charges that we pay are determined by the Office of Rail Regulation and the information from Network Rail, but we pay every penny of wear and tear that we cause to the railway.

Q265 Mr. Eric Martlew (Carlisle): Unlike the passenger side you are not subsidised?

Mr Smith: Not subsidised. We are on a franchise. We bought it for good or for bad. I think it is also fair to say that the 1962 coal wagons that you refer to, of very low capacity, are very near the end of their lives and all freight operators move coal in wagons with low track force bogies conveying 100 tonnes per wagon, so the amount of damage that freight vehicles do to the track is very much less than it used to be but it is all covered in the access charges that we pay to Network Rail.

Q266 Mr. Eric Martlew (Carlisle): On the issue of coal and taking coal to the power stations, as we go towards carbon neutral we accept that business is going to disappear to a great extent. Do you accept that?

Mr Smith: I do not accept that coal will disappear.

Q267 Mr. Eric Martlew (Carlisle): It will reduce considerably.

Mr Smith: It may well reduce depending on the success of the carbon capture programme that this Government has initiated. Coal and coal by rail has been written off many, many times in my 30-year railway career and it still keeps going, and it is the staple diet of all the rail freight operators. One anticipates that with the carbon agenda being what it is, then the demand for coal will reduce but could well be replaced by, for example, biomass and the need to move that kind of material to power stations, which has roughly double the volume that coal has.

Q268 Mr. Eric Martlew (Carlisle): I could get into an argument about where biomass should be changed into energy, but that is another one. You say that the traditional market may reduce, and I am suggesting it will: where is the new market for rail freight?

Ms Simpson: Just on the coal point, the forecast that Graham referred to earlier underlying that, if you look at the predictions for coal, it is basically level and tails off towards the end of the forecast period, so when we talk about doubling market share that is not coal. It is not even aggregates significantly, although depending on how the economy picks up in the construction world obviously aggregates goes up and down with that. The sectors that we predict can grow are continued growth out of the deep sea ports because every piece of analysis that is done suggests that we continue to be an import economy and there is market share to be had out of the deep sea ports, if the new developments at Tyne Tees and Bristol, for example, go ahead as planned from those ports as well as the conventional ones. In the movement of supermarket goods on their primary distribution haul between rail-linked warehousing up and down the UK. We already see that successfully on the Daventry to Scotland flows which were one train a day when I first came into rail freight a few years ago; there are ten plus trains a day now. There will also be growth through the Channel Tunnel from the Continent. In the last few months we have seen three new services start. There is more optimism in that market than there has been for a number of years now, so those three sectors are where we would expect the growth to come.

Q269 Mr. Eric Martlew (Carlisle): The other issue is about the speed of freight. We are talking about the electrification of some of the lines. Would that be of assistance to you in not only being able to use electricity but would it speed up the travel times?

Mr Smith: We have argued not only for electrification of the main lines, and we are very supportive of the electrification of the Midland Main Line, in part because of course electrification brings with it gauge enhancement as well, which is advantageous to us. We have also argued strongly for infill electrification such as the route from Barking to Gospel Oak in London because most electrified routes in this country are radial routes from London whereas freight flows tend not to be very compliant and just follow passenger trains, they will cross boundaries and cross routes, so there are many routes in London, in the West Midlands and in the North West where one could electrify just a mile or five miles and in so doing enable us to use electric haulage where we are not able to at the moment.

Q270 Mr. Eric Martlew (Carlisle): That would speed it up?

Mr Smith: It would speed up the train. We would not need to change the locomotive and with the change in the nature of fuels used in electricity generation would also enhance our environmental credentials.

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Q295 Mr. Eric Martlew (Carlisle): I have listened very carefully. One thing you seem to have given up on is the traditional parcel traffic, the mail. What is happening now is more and more people are buying through the internet, it is put on from the depot into a large arctic, it is taken up to an area and split up and white van man takes it about. Basically you are saying you cannot compete in that particular market?

Mr Smith: I am delighted to say, on the contrary, DB Schenker will be operating services for the Royal Mail from next year, and we hope that we can agree with Royal Mail an expansion of the existing small number of services, so whilst mail was lost to rail a few years ago, it is now coming back on to rail, and if we can demonstrate that mail can be moved effectively by rail again, then parcels companies will be interested, whether that is domestic parcels traffic or international parcels traffic, from using rail once more.

Mr. Eric Martlew (Carlisle): That is good to hear, thank you.

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Q353 Mr. Eric Martlew (Carlisle): Minister, I have some sympathy with you today. First, you have inherited the flawed franchise system from the Conservative Government, and you would have been under serious attack if you came here and told us today that you had decided that National Express had offered too much and instead of taking over £1 billion it had only taken £850 million. You would have been rightly criticised for that. I think at that point I will stop being nice. There are two issues you have mentioned. One is the point that Mr Clelland has mentioned of the rolling stock cascades. The problem for those of us in the North of England is that by the time it cascades to us on Northern Rail it is clapped out, so we do not really appreciate the system with us getting all the poor stock. To give Northern Rail its due, it has done an excellent job of working to the present time, because the only way through into the towns is by the rail route. The second point, again, Mr Clelland made, is about whether decisions can be taken at a regional level. You did not seem to say how this worked. When you compare what is happening in Scotland with what is happening in the rest of the UK, we seem to be coming off second-best. They are opening up new lines in Scotland: the Waverley line is opening up, the Alloa line is opening up. Does that not prove that on a smaller scale - if you talk about the North West region, for example, it has twice the population of Scotland - this could be done on a regional basis?

Chris Mole: I thought there was a bit of contention about the fact that the Scottish Executive had just cancelled the Glasgow Airport line.

Q354 Mr. Eric Martlew (Carlisle): That is internal politics, because if we had had a Labour Scottish Government we would not have cancelled it, but you are right.

Chris Mole: Just to come back to your point about the stock, it is not the anticipation necessarily that the HLOS process will deliver stock which is clapped out. Indeed, whilst it would not be new, the anticipation - and the secretary of state was indicating that it would be his expectation - is that that stock would be refurbished and fitted with air-conditioning and all those sorts of things before it went to the North. Apart from that, I do not think your caricature is entirely fair. Whilst Mr Pritchard might like to try to paint me as somebody who has never been north of the Watford Gap, I can assure him that not only do I have a plaque with my name on it at Watford Gap since being a Transport Minister, I did journey into the North during my summer holidays in order to visit various bits of the rail network, including Sheffield, Manchester, Liverpool, Leeds and York. Indeed, one of the things I was most struck by was the quality of the new trains that the TransPennine Express operate and maintain out of their Ardwick depot in Manchester. They were absolutely fabulous. I can only say that I have never seen a facility looking more like a Ferrari garage at a Formula 1 racetrack than the Siemens depot at Ardwick and the quality of the maintenance of the rolling stock that they operate.

Q355 Mr. Eric Martlew (Carlisle): I would not disagree with you, but, of course, for those of us like Mr Clelland and myself who live up in the North of England, the cities you have mentioned are almost in the Midlands.

Chris Mole: I cannot win, can I, really!

Q356 Chairman: Minister, just for the record, you are here today as a minister and that means it is about the whole country.

Chris Mole: Indeed.

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.

On behalf of Eric Martlew, 3 Chatsworth Square Carlisle Cumbria CA1 1HB