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


Examination of Witnesses (Questions 500 - 519)

WEDNESDAY 31 OCTOBER 2001

MR CHRISTOPHER GARNETT AND MR CHRIS GREEN

Chairman

  500. Mr Green, would you like to give us your view on the matter?
  (Mr Green) He is the right man for the job at the time. He has been forbidden to deal with any Virgin activities for the next 18 months is my understanding, and I believe his personal integrity is beyond doubt in doing that.

  Mrs Ellman: Could I ask Mr Garnett to respond.

Chairman

  501. Mr Garnett, Do you have a different view to that?
  (Mr Garnett) I think that he is straight. I am clearly concerned that he has no role whatsoever in any negotiation relating to Virgin's settlement of its argument on West Coast given there could be implications on to the East Coast, and that needs to be totally divorced.

  502. Have you made that clear to the Secretary of State?
  (Mr Garnett) Not at this stage. It has only recently come up within the last 24 hours.

  503. Did you not make that clear at the time?
  (Mr Green) Instructions have already been issued, Chairman.

Mrs Ellman

  504. Mr Green, are you seeking compensation for Railtrack's failure to modernise the West Coast Main Line as promised?
  (Mr Green) If we do not get phase two of the West Coast, which is now in doubt, we would have to have our finances balanced because we have to keep paying back the premium we promised in our franchise agreement.

Chairman

  505. Is that a yes or no?
  (Mr Green) So we would be seeking compensation for that loss of money, yes.

Mrs Ellman

  506. What sort of amounts are you looking at?
  (Mr Green) There are several options. You will gather there have been debates. What has been said to us is that phase one is safe so we shall get the 125 mph railway; trains will be running next spring, and by the latest spring 2003 we will have achieved stage one. That is the good news. What is not clear now is how much money is going to be spent on phase two. There are several options. The worst option is that we would have to be given about £300 million to balance our books.

Chairman

  507. £300 million?
  (Mr Green) Over ten years, so that we could pay back the billion pound premium which we have committed to pay back over the ten years.

Mrs Ellman

  508. Where are those options being discussed?
  (Mr Green) I think they are renewals and signalling. This is Railtrack's area for questioning because we simply buy access to the track. Our understanding is it is on signal renewals.

  509. What kind of communication is there between Railtrack as it is running now and yourselves?
  (Mr Green) At the moment there is a very detailed series of discussions going on between ourselves and Railtrack and the Strategic Rail Authority and Government. That will become public in front of the Regulator at some stage.

  510. Is there any form of consultation with anybody outside those parties?
  (Mr Green) The Regulator will be the form of consultation to which all users, as GNER, can come and learn the facts and state their views.

  511. Do you have any links with regional development agencies or regional assemblies looking at the regional implications of failure to modernise?
  (Mr Green) Yes. I have been very closely involved with the Welsh and Scottish Assemblies.

  512. What about the North West?
  (Mr Green) Not enough.

  513. Have you had any links with the North West?
  (Mr Green) Yes, but not recently.

  514. And do you intend to have them?
  (Mr Green) I am happy to come and get closer on this one because it is a huge issue for the North West.

  515. Do you not feel it is grossly unfair for the public to suffer because they have been let down by Railtrack and then to be expected to pay out again in compensation to you as a private company?
  (Mr Green) It is hugely sad that we may not finish phase two in 2005. It is still "may not", nothing has been decided yet. At the end of the day somebody has got to spend a lot of money to finish phase two.

  516. How much money?
  (Mr Green) No-one knows the final number but it is more than £6.3 billion.

  517. Can you give us any better indication than that?
  (Mr Green) No more than the numbers you heard at the beginning of the Committee. One hears rumours that it is as high as 7.5.

  518. When do you expect that you and the public will know what is happening, will it be after the event?
  (Mr Green) I think we are talking weeks and perhaps a month but no longer because the issues are so important and contracts are not being let and the work will slow down.

  519. Would you say there is sufficient consultation with public representatives on matters as important as this?
  (Mr Green) These are huge private contracts, that is the first problem, and large sums of monies are swinging around here, so you would expect the private people involved to be looking at their facts very carefully. The SRA and the Regulator are the people who make it public.


 
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