Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence


Examination of Witnesses (Questions 340 - 359)

WEDNESDAY 15 NOVEMBER 2000

MR JAMES KNAPP AND MR STEPHEN YANDELL

Dr Ladyman

  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.

Dr Ladyman

  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 that.

  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 that?
  (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.

Miss McIntosh

  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 and when.

  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 1991—I do not want to talk down about management of GNER, there are some good people there—but 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 in that.

  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.

Mr Donaldson

  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 from.

  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.



 
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