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

Examination of Witnesses (Questions 400 - 419)



  400. Do you think you will be able to do that and retain the present board with the exception of Mr Marshall?
  (Mr Bloom) I am confident that we will be able to do that.


  401. You are confident that you will be able to do that?
  (Mr Bloom) I am confident that a combination of the Railtrack staff and we are able to do it.

  402. The Railtrack staff.
  (Mr Bloom) The team, the workforce and the board at Railtrack combined with the administration team.

  Chairman: The workforce and the board.

Mrs Ellman

  403. Mr Marshall, according to press reports which quote city sources we are told that Railtrack promised to pay Virgin £250 million because Railtrack had defaulted on its obligations on West Coast Main Line organisation. Is that true?
  (Mr Marshall) There is a great deal that appears in the press but —

  404. Is it true?
  (Mr Marshall) If I may. We had a series of options that, as I have already remarked, were to be presented to Government, we never got there. They were not binding. They would have had impacts on other customers and the SRA were not party to those discussions either.

  405. Is it true that you offered compensation to Virgin for Railtrack's failure to deliver modernisation on the West Coast Main Line?
  (Mr Marshall) Compensation of varying amounts would and could have been payable to Virgin if we had got to the point where we could have tabled those to Government and involved the SRA and got a deal. We never got to that point and that is why I am hedging. They were commercially confidential so, if you will forgive me, I would prefer to step back from quoting specific numbers.

  406. So, Mr Marshall, does that mean that Railtrack had accepted that they did default on their obligations on West Coast Main Line with Virgin?
  (Mr Marshall) Not a matter of default at all. We are powering ahead as we sit here today with phase one and we had significant commercial concerns, as we already flagged, on some output journey times, and we were looking to get those adjusted. They would have required compensation but I should not go into the detail because we are bound by commercial confidentiality.

  407. On the legacy you have left in Railtrack, when would Virgin's trains, the tilting trains, be able to run on the West Coast Main Line at 140 miles an hour? What date would that be possible?
  (Mr Marshall) That is as yet unclear and will need to be, as I have already said in this hearing, now resolved by commercial negotiation with Virgin, other users of the route, the SRA and the Government who now have a course for more direct funding.

  408. Does that then mean that on the legacy that you have left, the promises that were made that those tilting trains would be able to run on the West Coast Main Line would not have been met?
  (Mr Marshall) A contract was signed in 1997 to ultimately, in 2005, run 140 mile an hour trains. We, in commercial negotiation, with our partner were seeking to vary that contract. That process is incomplete.

  409. You were not able to meet that contract?
  (Mr Marshall) We would have chosen to have varied that contract.

Andrew Bennett

  410. In other words the trains would not run that fast?
  (Mr Marshall) No, in our view, and I can only set out Railtrack's view because the commercial contract is there until it is changed —

Mrs Ellman

  411. Did you seek a discussion on compensation?
  (Mr Marshall) — in our view, 140 mile an hour running was not appropriate value for money for the use of resources.

  412. Therefore, you were not going to be able to deliver that?
  (Mr Marshall) We would not have ceased to proceed on that basis until we had negotiated a new commercial agreement.

  413. You believed you would not be able to deliver that?
  (Mr Marshall) We believed that the cost would have been prohibitive to doing it but we have done everything we should do to proceed in that direction until we reach the point where by mutual agreement we do something else.

  414. You are not going to be able to do it now. Now, Mr Bloom, there are also reports that Virgin are considering approaching yourselves to seek compensation for failure to modernise the West Coast Main Line. Would you consider it appropriate to pay compensation to Virgin in such circumstances?
  (Mr Rollings) Perhaps I can answer that. We have arranged to meet Virgin but there is no agenda to that meeting. I do not know if they will be asking for compensation or whether or not the discussions will follow along the lines that Mr Marshall has made.

  415. In principle, would you consider it appropriate to pay from public funds compensation to Virgin?
  (Mr Rollings) I think we will look at all the options very carefully and in discussion with DTLR assess what is the most appropriate for the public purse and good value for money.

  416. In principle that is something you might consider?
  (Mr Rollings) I think we have to look at all the options and evaluate those on the basis of ability to achieve and to the public purse.

  417. That could be one option.
  (Mr Bloom) Just to clarify. The position of the administrators is not different, they do not have a different set of contractual arrangements with Virgin to the set of contractual arrangements that Railtrack have. There is merely a different group of people that Virgin need to speak to as well as the people they have been speaking to at Railtrack. We have been involved with this for three weeks now. It is a highly complex set of arrangements that have been going on for a long time and, indeed, the negotiations that have been going on with Virgin have been going on for a long time. For us to have a different view at this stage—at this very early stage of assessment—would be very difficult.

  418. Mr Rollings, you said in reply to an earlier question that you were reconsidering or considering major projects on a project by project basis.
  (Mr Rollings) That is right, yes.

  419. What does that mean for West Coast Main Line?
  (Mr Rollings) I meant in addition to the West Coast Main Line we are looking at, obviously, Thameslink 2000 and other projects in the round. I was looking at projects including West Coast Main Line, Thameslink 2000 and others, looking at them in the round. Clearly these things are not entirely without consequential effects on each other to the extent that there is limited resource and funding available for them.

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