Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witness (Question Number 140-156)




  140. It is written into the legislation and, of course if anything goes wrong you will have that responsibility.
  (Sir Alastair Morton) We are the operator of trains of last resort; I had not contemplated being operator of the network of last resort.

Mrs Ellman

  141. Who should be responsible for the state of the railways in future?
  (Sir Alastair Morton) For the physical condition?

  142. The running of the service from the public point of view. Should anybody be in charge of the state of the railways?
  (Sir Alastair Morton) There should continue to be franchises or contracts specifying performance requirements and offering incentives and penalties, which will continue to be issued by the SRA, or its successor, to the train operators, which I think should be fewer and stronger, as I have often said before. That is that part. If the party who is paying the piper is calling the performance requirements, and indeed the structure is SRA for the infrastructure as well, which is what I am suggesting, the successor to the SRA would be responsible for getting value for money for a very large quantity of government money which is reduced from its maximum size by the amount of private money that is brought in, or by generating a successful operation. As these train operators become more successful they earn larger profits, unless it is all going away in reducing subsidies, which it has done in the past.

  143. You may have heard Mr Linnard confirm to us that Railtrack's costings for the West Coast Mainline scheme were chaotic, non-existent and wrong and they had not been very forthcoming. Was the SRA aware of that?
  (Sir Alastair Morton) No that is not the SRA's job until now; that is the Regulator's job. He put his Consulting Engineers into Railtrack in 1999-2000 and they came up with this figure of £5.8 billion which was in currency until just about a week or two ago. That is the Regulator's job. What I am saying is that it would become the SRA's job. If we have to pay the non-private sector part of that then my successor should be in there knowing what those costs are and are likely to be.

  144. What should the relationship be between the Strategic Rail Authority and the Sponsorship Department? We are told it is called the Rail Sponsorship Division.
  (Sir Alastair Morton) A good deal more distant than it is, I venture to say. If you examine Mr Linnard's organisational chart, he is the Director of Railways. You will find any proactive activity currently in the SRA, probably—although not necessarily—has a division of Mr Linnard's Directorate watching over it. If you read the draft instructions and guidance issued in July for the SRA, which have not yet been published as final, you will see that almost every breath we draw has to be cleared with Ministers, which actually means with Mr Linnard. This is not a useful relationship. I think the Government has to remember that in times past in this country there have been authorities. Think of the Atomic Energy Authority for one, told to go away and build a nuclear power programme. I do not believe that civil servants were party to every decision along the way. Government is there to give policy directions and to recruit and ensure the existence of a competent agency. They are certainly entitled to say "we don't think they are getting the job done", but then they should put somebody else in to go away and do the job. You cannot have two doing the job of one, it is pointless.

  145. Should there be any individual organisation ultimately responsible for the state of the nation's rail system? Should there be any such thing?
  (Sir Alastair Morton) I accept I am covering a lot of boxes and names and activities in such a short time. I am sorry if I am causing confusion. I think I am saying in the Mark II SRA the second black hole that needed to be addressed was the Regulator, the ORR, and the SRA and also safety regulation. I think the Mark II SRA should be both the franchisor and the economic—if that is the right term, I am not quite sure about that term—regulator of price, performance and access and of standards, which is part of access; and should be the promoter, I think is the best word, of the infrastructure development that the network so badly needs. If all that were to come to pass, then I think you would be looking at the SRA Mark II under my successor.

Dr Pugh

  146. Listening very careful to what you said, the word "delay" crops up time and time again. The delays in trains are matched by a delay in clear-cut decision making for the railways as a whole, and we look in the same forlorn way that passengers stand on a platform except without the amusing messages on the tannoy. What I am going to ask you about is specific delays which were under your remit at one point in time. Some transport authorities approached you—I am thinking specifically of Merseyside Passenger Transport Authority—with a view to delegating some of the franchise activity, to delegate the franchise itself to get a more locally constructed product that would satisfy the people of Merseyside more than the current service. I understand that you gave a fair wind to that and considered it thoughtfully and recommended it, but since doing so nothing has happened in terms of information back to Mersey Travel or information coming out of a government department. Have details like that passed into some decision limbo or are they on somebody's desk awaiting determination?
  (Sir Alastair Morton) They did pass into a limbo. We did give a fair wind to the proposition that the Transport Authority of Merseyside should become the franchisor of what actually is the equivalent of London Underground, a hermetically sealed separate network off the national network. We were saying "get it off the national network" and "yes, indeed, it is your local system, you should have it and supply it and provide for it and say what you want from it". That was passed to Lord Macdonald. I think the limbo did end because I think he did say he did not want to do it and I think there were reasons given and I would have thought they were given to Mark Dowd, the Chairman, but I was not in that conversation.

  Dr Pugh: I will follow this up privately.

Andrew Bennett

  147. Vertical integration; do you think it has got any part to play in the future?
  (Sir Alastair Morton) I am very concerned that we restructure—and this is of fundamental importance—the railway structure we have, that we do it in one agreed programme of doing it—it will not all happen on one day - with the maximum amount of consensus around it and we do it with great firmness and definition. The reason I say all that is that if we muddle along doing bits of it at a time and getting into arguments, I believe the patient will die and the ability to run a network will collapse. Therefore, unless you can explain to me how to get there from here, who should be the board and management and owner of a vertically integrated national network in the private sector, I am against doing it. What I am favour in of—and I did not get to this part of what I was saying about future organisation—is that there be regional Railtracks, regional Newtracks. I would suggest there could be six (and I could defend that statement at length with diagrams on a board) and one of those should be Scotland, and Scotland would be the place to pilot the idea of vertical integration because it is a manageable bite, one TOC, except for a few services in from the south, and just one Railtrack region. They can co-operate.


  148. A return to the old British Rail?
  (Sir Alastair Morton) If it works perfectly, others will have confidence in it, private capital might be very interested in it —

Andrew Bennett

  149. How long would the pilot have to run?
  (Sir Alastair Morton) Until it either collapsed or succeeded.

  Chairman: You will remember British Rail re-organised at considerable expense and great pain and was known as OFQ, organisation for quality I think it meant, but that was not what they had in mind.

  150. I can understand the argument for a pilot but what you are saying is you have a restructuring and everything else and you have a pilot with ScotRail and then, if that succeeded, after a certain length of time, you would start restructuring?
  (Sir Alastair Morton) I did not say that. I said you would have created an example and others might follow. If you take this successor to Railtrack and put its regions into separate subsidiaries, you can—and I think you should—sell shares in those to TOCs. The TOC boundaries, which are pretty close, should as far as possible be made to fit within but not necessarily the same as Railtrack's regions. There are a lot more than six TOCs. You would start to get a commonality of interest between certain TOCs in this area and this region. The question of TOCs having shares, but minority shares I imagine, in the Railtrack zone region might be taken forward. That figure might go to 100 per cent in Scotland. It could follow upwards in other areas where they had sufficient confidence in each other to sell their theory to private sector financiers, for example. In other words, I see what I would call a corporate finance process evolving that can do a lot to pull the parties together across the wheel rail interface rather than having some legislative big bang, which is not an idea I fancy.

  151. Short-term extensions to franchises; a disaster?
  (Sir Alastair Morton) I do not see the point. I would not call it a disaster. I do not think it gets us further forward. There was a paper that Mike Grant and his team pulled together to the Secretary of State at the end of August which set out TOC by TOC, all 25 of them, whether they could be extended or not and for what reason. It was a complete analysis and I think an excellent analysis—


  152. At the end of August?
  (Sir Alastair Morton) So far there has been no reply so I am not sure what happens next.

Andrew Bennett

  153. When would you have expected it to be reasonable to have had a reply? By now?
  (Sir Alastair Morton) The instructions and guidance issued to me when I took over (that is the previous lot to the shadow SRA) said that Ministers would reply within three weeks so long as they had been kept informed during the development of those ideas.

  154. Were they kept informed during the development of these ideas?
  (Sir Alastair Morton) Absolutely: constant meetings with officials. The SRA knows what it is doing. It may not be the best in the world at the job but at least it knows what the job consists of. It explained very carefully the evolution of this memorandum and presumed when it arrived at the other end officials would be in a position to explain it immediately to the Secretary of State who would then have three weeks, under the three weeks rule, to tell us whether he wanted to go down that road or not.

  155. How often did he manage to reply within the three weeks?
  (Sir Alastair Morton) I cannot be absolute but I have difficulty remembering a single case.

  156. The PTE Group really feel that you are too dominated as a Strategic Rail Authority by the South East and London and not conscious enough of the regional problems?
  (Sir Alastair Morton) I think you should go back and ask them about their last meeting en masse with me. I travelled to Birmingham and I wound them up, saying, "You chaps are going to have to fight your corner otherwise that lot down there in the Department and the Treasury are going to see you do not get enough money to do what you want to do." Is that favouring the South East? I do not think it is.

  Chairman: Some of us might suspect that you are quite good at winding people up, I do not know why. Could I say to you that this Committee will be the poorer for losing your evidence as the head of the SRA. Doubtless we shall think of some very good reason to haul you in in some other capacity. Can I before you go thank you for being always very interesting and entertaining. You have given us all sorts of ideas which we have found worth investigating and we are very grateful to you.

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