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

Examination of Witnesses (Questions 300-314)



  300. We can, but have you done that?
  (Mr Rosser) The other thing we can do, which we have certainly advocated, and I would have to say we pointed out at the time the ten-year plan was first announced that the skilled staff were not there to deliver on it, and one of the things we have said is that so long as you have an industry that is based on short-term contracts you are never going to get, say, the civil engineering companies, who get these contracts, they are not going to start to invest a lot of money in training if they do not know whether in two years' time, three years' time, they are still going to have the contract. And that is the problem in this industry, too many short-term contracts, people take a short-term view; they do not invest in the way they should in training and development because they do not know whether they are still going to have that work flow, there is no guaranteed steady work flow for them in the years ahead.

  301. That is the employers' point of view that you are looking at now, are they going to have the contract. Whoever gets the contract, we are going to need skilled workers in the railway industry for as long as we can see; train drivers, engineers, signalmen, all of them?
  (Mr Rix) Mr O'Brien, I think you are making a very good point but that actually you are directing it to the wrong people. We have been championing the cause of trying to bring in national training programmes and training schemes; however, we are not the product of failure out of that, we have been championing the cause. The problem is, it is the employers' responsibility to ensure that these things are in place; after all, they have received a lot of public funding, at the end of the day, to operate in the industry they are. But Richard has made the point very clearly, there is too much short-termism within the industry and not enough long-term planning that could probably deliver the point you are making.

Mr Stevenson

  302. What is your attitude about the report that there is a German bank having a consortium that may want to put in a bid to purchase the successor to Railtrack?
  (Mr Hince) My view straightaway, and my organisation's point of view, is that we want a publicly-owned, publicly-accountable railway system, and that includes the Train Operating Companies as well; and so we would not be in favour. We are, shall I say, happy with the good opportunity that is there at the present time to get a proper board; we certainly do not see that shareholders, and this has been stated in the House, I understand, and safety and service can be in the same packet.

  303. The report also indicates that discussions may be taking place between Government officials and railway companies about those railway companies taking over the track as well, so vertical integration. Have you been consulted collectively on that prospect?
  (Mr Rix) No, we have not been approached at this moment in time about the future structure of the industry since the announcement was made in the last couple of weeks. However, I do understand that there is to be a meeting, through the auspices of the TUC, to which we are to be invited, where discussions will be held, and I have been led to believe that we will be allowed to make the same full representations as everybody else in the industry.

  304. It is also reported that the Government is intending to endow the successor to Railtrack, the company limited by guarantee, with £1 billion worth of public money. If this is the case, how do you see the public interest protected in that company limited by guarantee?
  (Mr Rix) There is an issue with a company limited by guarantee, it has only one obligation in mind and that is to the company and to the successful delivery of the company. If you have the situation which we had with Railtrack, their obligations were to their duties in the interests of the shareholders, in that sense. So there are some reservations about some of the issues to be dealt with, because it is only a part of the restructuring plans. I think the Secretary of State has mentioned quite clearly, nearly every time he has mentioned the statement on it, that it is also the first step in the restructuring of the industry. At the moment, I do not think the Government have a clearly-defined approach, and one of the things that we have been championing is that most Government Departments, when they are looking at a review of a situation, send out a consultation paper and ask for viewpoints. I think it is high time that the Department of Transport, Local Government and the Regions actually sent out a consultation paper to all stake-holders and users and asked what their viewpoints are on the future structure and the needs of the railway industry. I think they would be surprised that quite a lot of people are of the same opinion and attitude as to how to deliver the problem we have at the moment.
  (Mr Rosser) Can I just say, we do not wish to see a return to what we have just had, it is not the fact that it is a German bank but if basically it is going to be the same structure with a different owner then there does not seem, to me, much to be achieved from that. Clearly, what the Government appear to be envisaging would be a different structure, which ought to bring, frankly, a different culture and a different approach. But just on the general issue of shareholdings, could I say this, that certainly I have been in the position, and I think it applies to Vernon as well, where obviously members in Railtrack who have shares in Railtrack are certainly approaching us and saying what are we going to do about it, because they have lost, or the shares that they hold no longer have the value that they hold. And certainly to say, on that, that employees of Railtrack have been paid performance payments and bonuses in the form of shares, they were not given the option of taking cash instead, so you can imagine how staff in that position feel, or why they are approaching us, now they see the value of what to them was their performance bonus has apparently disappeared, at least in part anyway.

  Chairman: Yes, one understands that. The original Rolls-Royce workers went through exactly this trauma, which is one reason why this Member of Parliament has never supported schemes like that.

Chris Grayling

  305. I have really got two or three very brief questions. The first is just to pick up on Mr Rosser's point then. Would you say then that the Government was wrong effectively to remove Railtrack shareholders from the financial equation in the way that it did?
  (Mr Rosser) I would not say they were wrong. Obviously, I can understand the feelings of our members involved. I would not say they were wrong, because, to me, as I understand the situation, Railtrack appeared to be taking the attitude that the Government would provide them, or effectively have to provide them, with whatever money they wanted, and it depends whether you are looking at it as a shareholder or as a taxpayer.

  306. I am talking very specifically about your members. Do you then, as a union, believe that the Government was right effectively to confiscate your members' money; those of your members who are shareholders in Railtrack have lost their money, do you believe the Government was right effectively to take away the business and the ownership of the business from them in the way it did?
  (Mr Rosser) It remains to be seen, does it not, whether the shareholders concerned do end up without anything; clearly, some steps have already been taken and it is one of the issues that we shall be raising on that score. As I say, I only come back to the point I made, that, clearly, Railtrack had an attitude, and I think that is probably what finally led to the decision, of appearing to think that the taxpayer would provide them with whatever money they wanted.
  (Mr Rix) May I just make a point on this, because I do hold a different view, to be quite honest. I represent a trade union that has a substantial interest in stocks and shares, most trade unions do have investments; all trade unions have lost an enormous amount over the last 12 months, and not once have we gone to the Government asking to have a subsidy out of that. And I have to say also, because of different things that were taking place in the industry, there are different fashions that people go through, that try to employ different work-related issues, there are some issues of performance-related pay, and I know questions have been thrown at people over the performance of certain Railtrack directors and the way they have received remuneration over the past. Equally, trade unions are responsible; if we have accepted in the past that some of our members' money has been in the remuneration of shares, I would agree with that argument, it would be our fault, if we have not dealt in cash terms. But these were people that were in different positions where actually it was imposed upon them, in certain respects. But I do believe that if you have held some sort of shareholding in a company and you lose it, well, to be quite honest, there is a responsibility with the individual there, and not with the Government.

  307. So the employees just lose out, period, it is just unfortunate?
  (Mr Rix) To be quite honest, everybody has lost out in that respect. I really think it is not an issue that is about the welfare of the industry and how the industry has developed. I really think it is, to be quite honest, a really very narrow argument, because people in some respects are trying to justify what has been taking place with the privatised industry over the last six years, which has not delivered, has not provided a public service, has not provided any delivery whatsoever.

  308. That is a different point?
  (Mr Rix) Well, I think it is the point, I think it is a very narrow argument.

  Chairman: With respect, I do not want to get into private shareholders versus, and, of course, it is true that the shares, in the ordinary, private way, through the stock market, had descended to £2.70, so we are not exactly talking about a good investment.

Chris Grayling

  309. Can I then ask you, are you collectively, effectively, advocating therefore either, firstly, the recreation of a British Rail type organisation, or, secondly, that we should retain the current franchise structure perhaps in a different form, but the difference between the track operations and the franchise operations?
  (Mr Rix) I would prefer to see a return to a national railway network, under some form of Government supervision that provided a strategic direction for the industry. I would also like to see some form of regional involvement in that, because I do believe that railways can play an important part in developing the economies of regions. And I also believe in local conurbations where there are large populations, and we have experience where there are Passenger Transport Authorities who have managed to enhance local railway provision by providing funding, and things like that, to enhance local networks. All that has been done with public money. I believe though that the real issue of delivery and ensuring that delivery of public money is delivered in a proper, accountable way, that can deliver a service, is by proper public ownership. Now if there is an advocation which it strikes me, as it is at this moment in time, will be taking control of Railtrack, they are looking at the restructuring of the industry to reintroduce a wheel-rail relationship, well, at the moment, that is a halfway house situation; I would agree, that is better than what we have at this moment in time.

  310. A last point. Do you accept that some of the franchise operations have provided a much better service than British Rail, and I give you three examples; one is GNER, the second is Chiltern and the third is the longer-haul South-West Train Services from Waterloo?
  (Mr Hince) No; and, as far as it goes, what you have got to look at is not just three out of 26, you have got to look at the whole national network in relation to connecting services, public services, timetabling, ticketing, and everything else. And it is easy to say that, the long distance on South-West Trains; remember when they first took over, within 12 months they did not have enough drivers to drive those trains. If we then look at GNER, what has happened in relation to some of their services; and again with Chiltern. You look in the short term rather than looking over, and really the train operators should all be looked at in the same context, as to the service that they provide, for all the public, not just in defined areas.

Miss McIntosh

  311. I do not know if the witnesses heard the statement that the previous witnesses made, that the shortage of drivers, in particular, was not due to the length of the franchise but the difference in the attractiveness of the route. Do you believe that there is a difference in so attracting that one?
  (Mr Rix) Good grief; is that what they said?

  312. They said that it was sexier, if you will pardon the expression, to drive a train that had fewer stops and went longer distances, where the driver was locked away up front, than the shorter, omnibus routes. I am paraphrasing.
  (Mr Rix) I was a driver in the railway industry for some time, and I worked under the nationalised structure, and towards the latter days I worked under the privatised structure, the structure that we have now. There is an element that dissatisfaction took place with drivers, and especially senior drivers, because when they split up the companies they also split away the drivers and created mini depots where there were larger depots. And people who had worked up through a command structure of seniority, who would then get on the better work, or what was seen as more attractive work, went through that; all those aspirations were taken away, so a form of promotion was taken away. However, there have been that many drivers that have entered the industry in the last couple of years, because of the shortages scenario, they will not understand those days where people worked up through that structure. So you might say there might be an element of some truth with older drivers, but with the younger drivers, or the less experienced, they will only know what they see now; and, to be quite honest, they are moving from Train Operating to Train Operating Company because there is better pay and better conditions of service and better treatment with certain Train Operating Companies than there is with the others, and that is one of the reasons why there is a major problem.

  313. So it is market forces?
  (Mr Rix) It is market forces.
  (Mr Rosser) Can I just come back, because I might give a slightly different answer, to a question that Mr Grayling asked. I recognise that a number of Train Operating Companies are actually running more services than were run before, there are more passengers around. I do take the view that one can look at what has been happening in the railways over the last few years and one can see plus points, I do not take the view that the picture is all negative. But I suppose the question is, to what extent has that been due to the expertise of those managing the companies, and clearly that has played a role, and to what extent it has been due to the growth in the economy, because we have had low unemployment, we have had low inflation now for a few years, we have had growth, in my opinion we have had a Government that has been pro public transport, we have had increasing congestion on our roads.

Chris Grayling

  314. But before 1997?
  (Mr Rosser) So there is an issue as to what would happen, and let us hope it does not happen, if we had a recession or nil growth for a period of time; would we, in fact, see many of those services that were put on to cater for the increased traffic flow, would we see attempts to withdraw them, or would they still remain. As I say, I think the question is to what extent those additional services and additional passengers have been due to factors like growth in the economy, low inflation, low unemployment, and to what extent they have been due to expertise by the Train Operating Companies. But, as a basic stance, presumably, one would say that one would expect any industry to progress as the years go by, new technology, advancement and progress, and one would have expected, if BR had remained in existence, to see BR progress as years went by. Whether it would have been where some of the Train Operating Companies are at the moment is a matter of conjecture.

  Chairman: Gentlemen, you have been extremely patient with us. We have enjoyed it, as always. Thank you very much indeed.

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