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


Examination of Witnesses (Questions 600 - 619)

WEDNESDAY 22 NOVEMBER 2000

SIR PHILIP BECK, MR STEVEN MARSHALL AND MR RICHARD MIDDLETON

  600. We just want to clear up how it is that you had a Chief Executive who presumably put the written evidence to the Board, unless it was done entirely off the cuff, as you say, that presumably the Board knew about the written evidence, after all this is the House of Commons and, you know, it is going to be published, and you were the Finance Officer at the time, so presumably he also consulted you.
  (Mr Marshall) Yes, absolutely.

  601. Because, after all, I do not think Mr Corbett, brilliant though he may have been in the matter of all sorts of finances, was automatically going to do it all off the top of his head, so I assume he asked you, as the Finance Officer—
  (Mr Marshall) We did an analysis.

  602. That is right; so it was your analysis, as the Finance Officer, you helped prepare the evidence, the evidence is then submitted to this Committee, and then, by the time you come to see us again, there seems to be this sort of underlying assumption that, "Yes, we looked at that, but it was only one of many options and we rejected it." What we want to know is, it looks as though this decision was taken in July, it was signalled to the Committee, it was suggested if not to the Government then certainly to the SRA, and then when we question you about it in November we are told, "Well, of course, we've changed our minds since then." There is no disgrace in having changed one's mind, but it is unwise to suggest that, somehow or other, the Committee are making it up?
  (Mr Marshall) If I can be clear though, it really was not a question of changing our minds, although, as you say, there is nothing wrong with that. The reality is that it was very briefly considered because there was no appetite in Government for that position to be taken at that time.

  603. Now we are getting to it, really. What you are saying, Mr Marshall, is that the Board thought this was the best option, you put that in your written evidence to us, it was then submitted to Government and the Government said "No"?
  (Mr Marshall) The Government were not interested in it; but it was not, clearly, the best option, there are pluses and minuses about it, but at the time it was an attractive one.

  Miss McIntosh: May I remind the Committee of my declaration of interest.

  Chairman: Yes, we will accept your declaration.

Miss McIntosh

  604. Thank you. May I congratulate you, Chief Executive, on your new appointment.
  (Mr Marshall) Thank you.

  Miss McIntosh: We took evidence from Mr Knapp last week that said that, and I quote: "My suggestion that ourselves and other European countries have separated the operation of the track from the provision of services on it was not unique, it had been copied in a number of other European countries." And he is on record as saying that this is one of the mistaken policies of the European Commission, that they are trying to propagate this, and perhaps even trying to join the Conservative Party soon. One of the most successful countries was one of the first countries to do this, and I have got some research here from the House of Commons Library that says Sweden was the first country in Europe to separate the management of infrastructure on operations in 1988, and in evidence that the Swedish Railways gave to the—

  Chairman: To the previous Committee?

  Miss McIntosh: No, not this Committee.

  Chairman: We have a whole report on this; if you wish, I can detain you for the next seven hours.

  Miss McIntosh: This was to the European Communities Committee, Sub-Committee B; but the results of the restructuring of the Swedish railway system is evident, that they actually have that, in spite of stiff competition, they have increased the railway transport share of total goods transported from 34 per cent in 1993 to 54 per cent. What do you think they are doing right that perhaps we could—

Chairman

  605. Well, Mr Marshall, I do not know whether you know how the Swedish system is . . .
  (Mr Marshall) No.

  Chairman: No; well, frankly, I am very happy to have your views on the Swedish companies, but you are not actually running it, and, you will forgive me, but—

  Miss McIntosh: Can I phrase the question differently?

  Chairman: Please, yes, and rather more briefly, because, in fact, of course, it was denationalised a completely different way. This Committee took detailed evidence, which is available in the Select Committee Report, with a Conservative Party Chairman, who is turning in his grave at what is happening at the present time; but that is entirely beside the point. Would you like to ask your question again, Miss McIntosh.

Miss McIntosh

  606. Do you, at Railtrack, believe there is anything inherently wrong with the separation of Railtrack and the provision, the way that we have done it in this country, from the provision of services on it?
  (Mr Marshall) No.

  607. And do you agree with Mr Brown, from ATOC, who said that what the industry needs at the moment is a period of stability?
  (Mr Marshall) Relative stability, certainly; that does not mean there should be no change, but we have the structure we have, we need to improve it, rather than radically shake it all up again.

  608. Thank you. Is there any truth in the rumour that Railtrack is considering pulling back its maintenance service in-house, and leaving the contractual relationships that were built up?
  (Mr Marshall) We have made no secret of the fact that, following the accident at Hatfield and all the learning from the inquiry that has followed, we are going to have a hard look at our maintenance and renewal contractual arrangements. We would not want to prejudge those at this stage, because actually there is a considerable period of analysis that has got to follow. We need to explore all of the options, from one end of the spectrum, which would be, as you say, potentially, to take everything back in-house, I think, personally, at this stage, that is very unlikely, through to broadly the structure we have, but making sure that our processes and the arrangements we have never allow something like that to happen again. I believe probably the solution is somewhere in-between, and that we will look at areas such as inspection and maybe feel the need to take direct control of that.

Chairman

  609. What trained engineering staff have you got who would be capable, since you have only got the same number of engineers involved now that you had before, and you certainly did not have enough to monitor carefully either the work of the contractors or the general safety level, how would you evaluate whether it would be a good alternative to bring back maintenance in-house or not?
  (Mr Marshall) In the short term, Madam Chair, clearly we will allocate some resource on a project basis, and we can do that, to really look at the issue and do a detailed analysis.

Miss McIntosh

  610. What timescale are you looking at, for that type of study?
  (Mr Marshall) The work starts now, and in the new structure that we announced earlier on—it was yesterday, it feels like a long time ago—that we announced yesterday, we have got a particular, very large job, whose entire purpose will be to look at the entire maintenance arrangements we have. Once we have resourced that up, and that is a high priority, we will do the analytical work. Looking forward, partly to Madam Chair's question, though, we will have and we will resource up and finance a great deal more engineering resource in the company, so that whatever the solution is we can go for it.

Chairman

  611. "Resource up" is a phrase meaning that you will employ more engineers?
  (Mr Marshall) We will employ more engineers.

Mr Donohoe

  612. How many?
  (Mr Marshall) Too early to say, Sir, but we will employ whatever we think we need.

Chairman

  613. Mr Middleton, you are an engineer, do you want to make a guess; how many people, since you do not have the resources to do this at the moment, how many extra people would you require, and what kind of budget? Presumably, since you are dealing with an ex-Finance Director, if you are going to do an exercise of this size, you will have to produce a budget which incorporates not only numbers but finance?
  (Mr Middleton) Yes, I will have to do that. The way the industry is structured currently, the responsibility for the engineering of the network sits in the contractors, that were formed from within British Rail infrastructure services. Madam Chair will recall that structure at the time of privatisation.

  614. Only too well.
  (Mr Middleton) So the bulk of the engineering resource that was in BR went into those companies at that time. What we will be looking at, very urgently, this is not something that is going to take a long time, is where the split in the engineering resource should actually be; and if we decide that more inspection, or the inspection, and engineering decision-making should be made within Railtrack, rather than within the contractors,—

  615. You have the legal responsibility, of course, Mr Middleton?
  (Mr Middleton) Yes, we do. I am explaining the structure and what we are going to do about it. If we decide that the engineering decision-making is not being carried out appropriately within that contractual framework then we will make arrangements to move that decision-making inside Railtrack. The resources, therefore, will come in part from Railtrack, in part from the contracting industry and in part from growing our own resources by recruiting separately more engineers. In answer to your direct question of how many more engineers that will be, it is too early to answer that question, but it is certainly not a small number, it would be certainly in the hundreds.

  616. Yes, Mr Middleton, so if you are going to rebuild confidence in the industry, this is not something that can be an academic exercise over a number of months.
  (Mr Middleton) It will not be.

  617. Also, because of the evidence that was given earlier, about the continuing numbers of months that you are still talking about before the entire regime gets back to any kind of normality, there is going to be considerable pressure on your organisation if it appears that you are not instantly taking action in relation to safety and maintenance and the improvement of the existing services?
  (Mr Middleton) Yes, you are absolutely right, and we have already brought in additional resource by going to the consulting industry, we have brought in additional resource from American consulting engineers, to strengthen our own resources, because that is the quickest way of getting additional engineers into the company, working on these very difficult issues. We also have to face the fact that a lot of our engineering resource right now is out fixing the problem we have got on the network.

  618. And they have been since the accident.
  (Mr Middleton) And that is the absolute number one priority. Further changes to the structure must follow that recovery plan, we must get that recovery plan done first, and by the time that recovery plan is completed I will have completed my review of the structure and I will have made recommendations to the Board as to how we should organise going forward.

  619. So that is mid January or probably February, from the kind of timetable we have been given?
  (Mr Middleton) Yes. It does not mean we are not doing anything in the meantime, because we have got resources in place.



 
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