Examination of Witnesses (Questions 340
WEDNESDAY 15 NOVEMBER 2000
340. Were you aware that of the 13 members of
the Railtrack Board only two of them had experience of working
in the railway industry before they joined the Board?
(Mr Knapp) No, I was not aware of that, but I am not
surprised. People like me are not in the running for jobs like
that any more.
Chairman: If it was up to the Chair you would
be the managing director, I assure you.
341. Do you think the railway would be more
safe or less safe if there were?
(Mr Knapp) I think you need a bit of experience like
that. You have to have a levelling of that type of input from
people who know the industry. I do understand that you need a
lot of figures there, but I still believe that the answer to your
question is to change its structure, because it does not matter
who you put on the board, they will still be residing over the
structure as it is put, and we are being far too timid about changing
342. You have come neatly to where I wanted
to question you next. I wanted to know a little bit more about
your idea of what you called the "more integrated core."
Is what you were saying, given that you were opposed to privatisation
anyway, I accept, that if the railway had to be privatised you
would have preferred a structure where the trains and the track
were owned by the same company, so that the railway may be broken
up into regions and given off to franchises, but they would have
been integrated in those regions?
(Mr Knapp) It is a basic fundamental question. The
old private railway companies of pre-war days were structured
in a vertical way, they owned everything, they owned the track,
the signalling and the work force, if I can put it like that.
If you went to the chief executive or the president of an American
rail freight company and said, "We are going to split the
infrastructure from the operations", they would have you
out the door very fast, and these are the mandarins of private
capital in the US, but that runs on a vertical system as well.
343. What you are asking for is for the Government
to move the structures of the railways to a more vertical structure
and to use its current investment into the railways to buy a public
component, a stake in each of those vertically integrated companies?
(Mr Knapp) I am not even going that far at the moment.
As a first step we need to have an integrated core of Railtrack
and the infrastructure companies, because you then begin to remove
some of the pressures and the difficulties that gave rise to Hatfield.
344. Why did you, as a Union, have an objection
to the regulator increasing the asset base of Railtrack?
(Mr Knapp) Because we think they are getting credit
they do not deserve. The asset base should be increased and recognised,
I would suggest, only where it has been enhanced, and there has
been very little enhancement.
345. What you are saying is the increase in
asset base over the next few years will largely come about as
a result of the Government's investment. That increase in asset
base really should belong to the Government.
(Mr Knapp) You can follow that line of argument, yes.
As I said a minute ago, the problem with the regulators valuation
of the asset base is we do not think it is merited.
346. The efficiency savings of 3.1 per cent
that the Regulator is trying to achieve, do you think they are
achievable without further cutbacks on safety issues? Do you think
they will have a positive effect or a negative effect?
(Mr Knapp) There are different figures for each year,
which I believe come to a total of 17.8 per cent, or something.
There are different figures for different years. I do not that
is the answer to the problems that we face. I think in trying
to achieve these targets the same pressures will be there. That
is the basic underlying, fundamental problem we have at the moment.
347. You would argue that the Regulator himself
has made a misjudgment in imposing efficiency targets. Can you
see any alternative way he could have tried to drive down costs
or increase safety in his Report, that he has not included in
(Mr Knapp) Let me say, first of all, to me the present
Regulator has been much more effective than his predecessor. His
problem is that he only operates in the framework that is laid
down for him by law. That is what has to change. Whatever targets
he sets will be subject to the same pressures.
Dr Ladyman: Thank you.
348. Can I just remind the Committee of my declared
interest in Railtrack, First Bus, which is now known as First
Group and the Euro Tunnel. Mr Knapp, are you aware that the system
that was adopted in this country was a blueprint that has been
adopted in other European Union countries, notably Germany?
(Mr Knapp) I do not think that is correct. There is
no country in Europe which has indulged in the degree of fragmentation
that we have in this country, no country.
349. I agree with you.
(Mr Knapp) In fact they are usually horrified by what
is going on here.
350. I think we are all agreed it is too fragmented.
My understanding is that in Germany they did look to separate
the train operating companies from the company operating the track,
so we are not unique in that regard.
(Mr Knapp) This is one of the mistaken policies of
the European Commission, that they are trying to propagate this.
You have already accepted that the degree of fragmentation in
Germany is nothing like it is here. The other point is that the
railways are still in state ownership.
351. In your evidence to the Committee this
afternoon, Mr Knapp, you stated that modernisation does lead to
increased revenue, would you also accept it could possibly be
due to both the increased investment since privatisation and what
many would see, particularly on the East Coast Main Line, as an
improved service to the customer?
(Mr Knapp) I think you have to look at these things
in the overall context. It is true that there are increased services
in places like you have just mentioned. People very often forget
that rail travel does well when the economy is doing well. If
there is a slump, heaven forbid, you will see a drop in rail travel,
that to me is an undeniable fact. Your best efforts are being
totally defeated by what has been going on in the last few weeks.
Virgin cross-country have lost 50 per cent of their passengers
and we are facing redundancy in the freight business. Unless that
underlying structure changes in the way I have been talking about
your best efforts are going to be defeated.
352. Mr Knapp, I cannot be responsible and no
Government can be responsible for the flooding. If you see the
devastation on the East Coast Main Line, with the collapse of
the embankment, that is an act of God no one can envisage.
(Mr Knapp) You may say that, but we might need to
have a closer look at the embankment to see who last touched it
353. We will go together.
(Mr Knapp) We will go together. I do appreciate that
the floods are an act of God, but I think you would accept in
turn that there was absolute chaos out there without the floods.
354. The East Coast Main Line prior to the Hatfield
disaster was a flagship line. Mr Knapp, you also said in your
evidence that the only way to avoid disaster is to reduce speed,
that is a proposition that is very difficult to disagree with.
If the railways are going to remain profitable and if they continue
to employ as many people as your Union would wish them to do,
they are in the long-term going to have to compete on routes like
the East Coast Main Line and West Coast Main Line with the airlines.
Do you believe this is feasible in the long-term?
(Mr Knapp) I think it is feasible where we are now.
The East Coast Main Line was modernised with public money in 1991I
do not want to talk down about management of GNER, there are some
good people therebut the point I was making earlier is
that if we are going to take full advantage of the potential of
the railway in the next ten years, because there is a big potential
there, then we will not do it with the structure that we have
now. The state the industry is in now is just like making no repairs
at all to your house at all for ten years and then you suddenly
realise if you do not fix the roof it is going to fall in. That
is what is happening now.
355. Mr Knapp, you are slightly contradicting
yourself because you said speed was the biggest factor and now
you are saying it is structure.
(Mr Knapp) I am not contradicting myself. The point
I was making about speed was, if you have a defective track the
only way you can maintain safety is by reducing speed. Where there
is no contradiction to that, the necessity to reduce speed has
been brought about by the way the industry has been run in the
last five years, that is the point, and there is no contradiction
356. In track maintenance, Mr Knapp, do you
believe that the role of contractors, whether they are in-house,
employed directly by Railtrack, or employed by independent contractors,
can make a difference to the level of maintenance on the track?
(Mr Knapp) I think at the moment it is having an adverse
effect. The professional full-time work force stood at 30,000
in 1994. It is now something like 15,000. We are still closing
maintenance depots. We heard only today that Penzance was going
to close down in Cornwall. There are now 100,000 individuals that
have got personal track safety certificates. Now, who these people
are, I would not know, and who looks after them and sees that
they are doing the right things, I would not know, but that is
a staggering figure and it underlines the degree to which sub-contracting
is penetrating the actual day-to-day work in the industry. All
that has to change. There are 100,000 individuals with personal
track safety certificates. I find that staggering.
357. Just to follow on that, do you think there
should be set standards for anybody near a track, other than just
for safety? It is all very well issuing out these certificates,
but you will probably find a fair proportion are handed out in
pubs. Would it be to the advantage of the industry if you were
to create some form of basic training that would have to be passed
by an individual before they were let loose on the track?
(Mr Knapp) Where I stand they squared it out after
the Clapham Junction disaster in the early 1990s, but I think
a lot of that has slipped away as a result of the fragmentation
and privatisation and all the rest of it. There is a standard
issue to be applied before somebody gets a personal track safety
certificate. It would be impossible for me, or anybody else, I
would suggest, to find out where these 100,000 got their certificates
358. We heard last week evidence to the point
that there are people being recruited off the street and put on
the line that night, particularly over the last three weeks because
of the problems?
(Mr Knapp) That is dangerous.
359. How is that possible if they supposed to
have some form of standard training?
(Mr Knapp) Well, it should not be possible.