Examination of Witnesses (Questions 1
WEDNESDAY 5 JULY 2000
1. I apologise to our witnesses for keeping
you waiting, I am afraid affairs of state detained us, as they
say. May I welcome you this afternoon and ask you, firstly, to
identify yourselves for the record.
(Mr Corbett) I am Gerald Corbett, Chief Executive
of Railtrack. On my left I have John Smith, our Director of Public
Affairs and Regulation, and on my right, Richard Middleton, our
2. Thank you very much, Mr Corbett. Do you have
some general remarks that you would like to make?
(Mr Corbett) Yes, a couple of general
points. This is what we call a summer of opportunity for the railways.
We have the ten year transport plan which is coming up in the
next couple of weeks, the Comprehensive Spending Review, we have
our regulatory review and we have the Strategic Rail Authority's
Strategic Plan. We are basically pretty confident that the investment
that the railways have been screaming out for for the past 20
years is going to materialise and there is going to be good news.
That is particularly important for us, obviously, as the infrastructure
owner and provider because, as you will see from our submission,
the fantastic growth that we have seen on the railways in the
last four years has been funded mainly by Railtrack. The common
perception is that we have under-invested in the network but the
factual reality is that we have spent a great deal of money. Last
year our programme was £2 billion, this year our programme
is £2.5 billion, that is more than twice anything ever done
by British Railways. The reason the programme is at that level
is because there are 25 per cent more trains on the network than
there were four years ago. When we were set up five years ago
we were funded basically to deliver a flat railway and the incentives
and the structure that was put in place was a structure designed
to maximise the proceeds to the Treasury, not a structure designed
to deliver a bigger, better railway. In the last four years, although
there is still a hell of a lot to do and a lot more work to be
done, we have factually delivered a bigger, better railway. There
are 25 per cent more trains, we have doubled the level of investment,
the infrastructure delays are down by almost 50 per cent, we have
delivered output way ahead of what we were set up to deliver and
way ahead of what we were funded to deliver. That is why this
year's regulatory review is particularly important for us because
in the last five years we have spent £2 billion more than
we were set up to do on renewing the network, largely because
of the growth that we have seen that no-one had foresaw. In the
next couple of months we look forward very much to resolving the
issues with the Regulator and getting a funding regime in place
with the appropriate incentives and the appropriate amount of
money so that we can continue to deliver the bigger, better railway
that everybody wants.
3. Thank you for that. I am glad that you have
mentioned your record because I want to ask you do you think you
were justified in accepting a £25 million performance bonus
in 1998-99 when you were responsible for one-third of the total
time that passenger and freight services were delayed in that
(Mr Corbett) Yes. The level of bonus from the performance
regime is linked to the delays that were caused by the infrastructure
which we are responsible for. It is linked to those delays relative
to a benchmark that was set back in 1994-95. Over that time period
there has been a reduction in delays of around 40 per cent; it
is around 50 per cent now. It is because of that reduction in
delays that profits from the performance regime came in.
4. Yes, but 70 per cent of the delays were attributed
to Railtrack in 1998-99, were they not?
(Mr Corbett) No, they were not.
5. Maintenance and renewal problems were the
source of 70 per cent of the delays.
(Mr Corbett) I hate to correct you but factually in
1998-99 around 50 per cent of the delays were caused by the infrastructure.
6. Seventy per cent of those delays were maintenance
(Mr Corbett) Yes.
7. So what target do you have for reducing that?
(Mr Corbett) In that year around half the delays were
due to Railtrack. Of Railtrack's half of delays, you are quite
right, Chairman, 70 per cent was due to our maintenance contractors.
I think that is where the 70 per cent number comes from.
8. So you intend to reduce that figure presumably.
What target do you intend to reduce it to?
(Mr Corbett) Our share of delays for the year just
past was down to 42 per cent. We achieved a performance improvement
of 10 per cent last year. Our plan for this year is a performance
improvement of 5 per cent. Every 1 per cent increase in passenger
train miles, every 1 per cent growth on the railway, does typically
translate through to a 2.5 per cent increase in delays, it is
the congestion effect. It is like cars on the M25 in the rush
hour, if you add 10 per cent of the number of cars in the rush
hour you get a disproportionate increase in delays.
9. I think we understand that trains run on
(Mr Corbett) That is why our plan this year is 5 per
10. The HSE are very concerned about the number
of broken rails and so am I when I come home and get turned off
at Watford Junction. These are very worrying figures and, although
you seem to be astonishingly confident about what you are actually
doing, can I ask you what is happening in relation to things like
broken rails? If the HSE says it is a significant cause for concern,
are you satisfied that you are giving sufficient priority to it?
(Mr Corbett) Yes. Broken rails is a huge issue and
it is extremely important and is one of the top priorities. In
the year 1998-99 the number of broken rails went up to just over
950, which was not acceptable. The main reason for the increase
in broken rails was the extra number of trains running on the
network. We put in place a special recovery programme last May
of just over £100 million which involved additional maintenance,
ultrasonic testing, a whole raft of measures. By the end of the
year we had got on top of it and the reduction over the whole
year was 4 per cent, which is not a lot but we had turned the
corner. In the first three months of this year the reduction in
broken rails on the network was running at over 20 per cent.
11. You think it is only just extra trains that
are causing the broken rails, is that what you are saying?
(Mr Corbett) Yes, we believe that is the main cause.
12. You really think you are doing enough to
improve that beyond your 4 per cent?
(Mr Corbett) We have the recovery programme I just
alluded to, we have the results for the last quarter which is
a 20 per cent plus improvement. The proof of the pudding will
13. Twenty per cent on what?
(Mr Corbett) In the first three months of this financial
year, that is April, May June, the number of broken rails was
over 20 per cent less than the number of broken rails for the
same months the previous year. Broken rails is a seasonal thing,
in the winter you always get more broken rails because of the
cold weather. It will not be until we have got through the winter
that we will really be able to put our hands on our hearts and
say yes we have cracked it and got on top of it. We have got programmes
in place. The initial signs are positive. It is terribly important
and that is the current status of where we are at.
14. Could I ask you a couple of quick questions
first for clarification, Mr Corbett. On investment you say that
next year £2.5 billion
(Mr Corbett) This year.
15. 2000-01. Just looking at the chart in your
evidence, most of that seems to be £500 or £600 million
for the CTRL, rather than other areas of your investment. Would
you accept that?
(Mr Corbett) If you take out the Channel Tunnel Rail
Link, the investment in the core network is just over £2
billion which compares with 1.69 which we did last year. So the
increase in investment on the core network is about £300
16. My next question of clarification concerns
the subsidy in your chart here. You take us back to 1997. Would
you care to advise the Committee what the subsidy levels were
in the two years prior to privatisation?
(Mr Corbett) I believe in the two years before privatisation
the subsidy was quite a bit lower.
17. Could you be more specific?
(Mr Corbett) I think it was between £1 billion
and £1.5 billion.
18. Could I now ask a couple of questions again
for clarification. In your evidence on page 8 you urge the Regulator
to take a balanced view on the cost of the West Coast route modernisation
project. What do you mean by "balanced view"?
(Mr Corbett) 80 per cent of the costs of the West
Cost project is renewals. The initial plan for renewing the West
Coast, which was conceived when Railtrack was in the public sector
1994-95, was to base the renewal on what is called moving box
signalling which was a brand new idea being put into the Jubilee
Line. In theory moving block signalling is great and cheap because
it is a computer in every train communicating with one centre
and you do not need line side signals. In practice, as we all
know, it is almost impossible to do. It was problems happening
in the Jubilee Line in 1998 which were the main reason that forced
us to re-think the strategy because the last thing you wanted
to do was to launch forth on renewing the West Coast Main Line
on a signalling system that might look good in a textbook but
was not going to work in practice. That is why we came up with
the revised proposal which does cost more but is basically traditional
technology that we can get to work.
19. In your evidence again you say: "There
are many rail projects which do not have a clear commercial case
but which would bring considerable social and environmental benefits."
You say: "We have shared with government the work we have
done on this area to help prioritise schemes." Is that information
available to the Committee? Could you give us today any assessment
of where that split may be, 50/50, 60/40, 70/30?
(Mr Corbett) Yes. In our network management statement
which we published in March, which was a 450-page document outlining
all the options as we saw it for the railway, we did go into some
detail on the major projects and for those major projects we have
done the social benefit analysis and the commercial analysis.
We have a ranking of them and we have shared that ranking with
the Strategic Rail Authority and with the Department and we would
be happy to share it with the Committee.
1 Note by Witness: Detailed information on the
number of broken rails across the network in the first quarter
of 2000-01 was not known at the time of Railtrack's appearance
before the Sub-committee on 5 July. It was subsequently announced
by the company on 13 July that the number of broken rails in this
period had reduced by 37 per cent from the first quarter in 1999-2000. Back