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


Examination of Witnesses (Questions 1040 - 1065)

TUESDAY 12 DECEMBER 2000

RT HON LORD MACDONALD OF TRADESTON, CBE, AND MR BOB LINNARD

Mr Bennett

  1040. On the West Coast Mainline, are you really confident that the Government got a good deal with Railtrack about the modernisation?
  (Lord Macdonald of Tradeston) That is a judgment, of course, that has been made by the Regulator, whom I know you have interrogated at great length on this. The Regulator assures us that he has gone very thoroughly through all of the figures and the calculations made here and we have accepted his judgment.

  1041. It is a blank cheque, really. What guarantee is there that this management that you have just described is going to deliver the West Coast Mainline modernisation on time and to budget the very substantially increased budget?
  (Lord Macdonald of Tradeston) I would hope that the Regulator would be involved in a much more rigorous way than would have been the case in the past. The strategic role of Sir Alastair and the SRA gives us the reassurance that, perhaps, was lacking in the past. I am grateful for the work this Committee has done in setting up that new architecture for the railway.

  1042. Are you also confident that the Government has not been hard done by, by Virgin and by Railtrack over the West Coast Mainline?
  (Lord Macdonald of Tradeston) We, of course, were unhappy with the very significant increase in the cost of work that was going on on the West Coast Mainline. In view of the analysis made by the Regulator we felt that in the interests of getting a more effective and more efficient railway that was a price that should be paid.

  1043. In modernising the railways, generally, do you see more of a role for third parties rather than Railtrack?
  (Lord Macdonald of Tradeston) It is something that is being explored through the rail modernisation fund and the special purpose vehicles that Sir Alastair has been talking about. We hope that Railtrack will play a central part in joint ventures or other financial constructions that were put together in there. Of course the train operating companies, through the franchising process, are being encouraged to invest in developing their own services alongside Railtrack, alongside the SRA and, perhaps, other financial institutions.

  1044. In the metropolitan areas are you happy the Strategic Rail Authority is going to take the lead? Would it not be more logical for local transport experts to be having much more say on modernisation?
  (Lord Macdonald of Tradeston) I believe that the SRA and the PTEs will work well together.

  Mr Bennett: Are you sure about that?

Chairman

  1045. Why do you think that, my Lord?
  (Lord Macdonald of Tradeston) From the contact that I have had with PTEs I do not hear a great volume of concern about it. There was a time when the Transport Bill was going through that people were particularly concerned to lose the aegis of the Department over the grants. I feel that that concern has lessened. Mr Linnard has been more involved with the PTEs in some of these areas.
  (Mr Linnard) Yes, I think that is right. Clearly there has to be a balance struck. It is very difficult for the Government and Parliament to set up a Strategic Rail Authority and not give it a purview which extends across the country. There will be discussions, particularly between the SRA and the PTEs, when franchises involving the PTE, or which will cover PTE areas, come up for replacement or renegotiation. The test will be whether those discussions and those negotiations can be concluded successfully. We have no reason to think they will not be.

Mr Bennett

  1046. The franchise replacement programme is going pretty slowly, is it not?
  (Lord Macdonald of Tradeston) It is going at a pace that Sir Alastair and Mr Grant judge to be appropriate for it.

  1047. Do you think that is appropriate?
  (Lord Macdonald of Tradeston) At the moment we have no complaints about the pace of it. It delivers the kind of investment and improvement and services that are required. We have to keep in mind that many of these franchises would not be expiring anyway until 2004.

  1048. The second phase of the Channel Tunnel link, is there going to be some more money from Railtrack?
  (Lord Macdonald of Tradeston) That is obviously an option that Railtrack have open to them up until 2003, to be involved in the financing and purchase of the Channel Tunnel rail link part two. Preliminary work has already started there and we should be able to press on with that, irrespective. We will be looking for meaningful discussions in the early New Year.
  (Mr Linnard) They have told us very recently they would like to come and talk to us.

Chairman

  1049. How much money are you going to give them?
  (Mr Linnard) I do not know.

Mr Bennett

  1050. Are you feeling generous, entering the Christmas spirit? When you shake your head we need it for the record, you are definitely saying no to the Christmas spirit.
  (Mr Linnard) We are not feeling generous.

  1051. We are told that Railtrack is going to produce an efficiency saving of 17 per cent over the next five years, that is a bit of nonsense, is it not?
  (Lord Macdonald of Tradeston) The Regulator has looked into this in great depth we are assured. It is not 17 per cent of present costs, of course, because the Railtrack revenues will go up very significantly. What we are looking at there is an improvement in efficiencies across the board, which the Regulator will argue in comparison to other formerly publically-owned companies is not overly demanding.

Chairman

  1052. Until Hatfield we did not know how inefficient they were, did we?
  (Lord Macdonald of Tradeston) The Regulator believes that this will not put undue pressure on the company.

  1053. It may be that there are others of us who think that a little undue pressure on the company might produce some results.
  (Lord Macdonald of Tradeston) Indeed. As Mrs Gorman says, this is a company that is under pressure from many different angles, that is understandable.

  1054. That is not very accountable, is it?
  (Lord Macdonald of Tradeston) We believe that it is clearly accountable inside its regulatory regime.

  1055. Are you satisfied that is a tough enough regime? It is your money, our money, that they are walking way with.
  (Lord Macdonald of Tradeston) I am sure Mr Winsor will have assured you that he is running a much tougher regime than previously.

  1056. You will have seen from the questions, the last thing I asked him was why it was that he talked tough but gave more money that he intended in the first place.
  (Lord Macdonald of Tradeston) He has done that after a very thorough analysis.

  1057. I do not doubt that. The reality is that he, in fact, has given more money.
  (Lord Macdonald of Tradeston) That is because we are finding out the true cost of running an efficient and expanding railway.

  1058. That is how you were able to "up" the dividends they were paid.
  (Lord Macdonald of Tradeston) It was a very marginal increase in their dividend. In presentational terms it was not something I would have done had I been in the chief executive's or the chairman's position.

  1059. You do not think they are very accountable.
  (Lord Macdonald of Tradeston) I think the declaration of dividend is something that they do in the light of what they hear from their shareholders and from the City generally. Some of those factors may go into the financial strength of the company on which it will borrow for the future. It may be that it is looking for that strength to try and expand and develop the railway.

  1060. They obviously do not know you have this sum of money tucked away in the ten year plan and they are going to be able to get their hands on it, do they?
  (Lord Macdonald of Tradeston) If they read the plan it should be very apparent to them.

  1061. Finally, my Lord, will you report back to us on the question of electric trains. Can we have a written note once you have seen this article. It would also be helpful if you could give us one or two up-to-date reports on how many of the rolling stock problems are going to be solved within the next six months. Do not worry, you are not going to escape without me asking something about aviation. You are foolish enough to come and I am foolish enough to ask you the question. There are a lot of people who will be very dismayed when they arrive at the stations this Christmas with a valid ticket (which in most cases is costing them a considerable amount more than it used to) and they discover that they are unable to get on a train because GNER has insisted that all the trains are booked in advance. As you know, in aviation it is quite common for companies to overbook and insist on people booking beforehand and many of the rail companies would like to move to that system. Would you make it quite clear to them that the passenger comes first and it is not for the convenience of the companies and would you also be prepared to ask them what they intend to do for those passengers who are left at Christmas on the stations unable to find a train to take them to their destinations.

  (Lord Macdonald of Tradeston) I will certainly put that on the agenda of the next Rail Recovery Action Group meeting.

  1062. Will that be before Christmas or after Christmas?
  (Lord Macdonald of Tradeston) It will be this week.

  1063. I am sure we will be delighted to hear the results. Of course you will tell us?
  (Lord Macdonald of Tradeston) I shall indeed.

  1064. Could I say one thing to you in passing. This Committee is very concerned about not just the future of transport in this country but that the passengers should receive the highest, the most comfortable, and the safest form of transport. We believe this is a Government that is investing for the first time for many, many, many years in a way that will make that possible, but it is absolutely vital to us to know that there are not people benefiting from the public purse without performing their duties responsibly, sanely and, in the ultimate, to the comfort of their passengers. May I ask you to keep that very much in mind not only when you come to see us but when you go to one of these many working groups. Finally could you tell us why the aviation consultation document was given to everybody except the Transport Committee?
  (Lord Macdonald of Tradeston) Madam Chairman, I think it is being published today and I hope it is on its way to you.

  1065. Perhaps, my Lord, you would enter every member of this Committee as a member of the press and then we can ensure we get copies of documents coming from your Department in the future.
  (Lord Macdonald of Tradeston) I shall certainly take that on board, Madam Chairman.

  Chairman: How kind. Thank you very much for coming.





 
previous page contents

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 27 April 2001