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

Examination of Witnesses (Questions 603 - 619)




  603. Good afternoon gentlemen. I am very grateful to you for coming this afternoon. Would you be kind enough to identify yourselves?

  (Mr Grant) Mike Grant, Chief Executive of the Strategic Rail Authority and Mr Jenner, who is Director of Corporate Services at the Strategic Rail Authority.

  604. Before we begin we have to declare interests. May I now ask anyone who has an interest in transport to declare their involvement? I myself am a fully paid-up member of the Rail, Maritime and Transport Union.

  Mr Stevenson: I am a member of the Transport and General Workers' Union.

  Mr Donohoe: I am a member of the Transport and General Workers' Union.

  Miss McIntosh: I am a member of the dwindling number of shareholders of Railtrack First Group and Eurotunnel.

  Mrs Ellman: I am a member of the Transport and General Workers' Union.


  605. Did you have something you wanted to say?
  (Mr Grant) Yes, please. Just a short opening statement. First of all a bit of background. The SRA was not involved in the considerations which led the Government to place Railtrack PLC into railway administration on 7 October. The Authority welcome the Government's decisive action as Railtrack's difficulties over funding had become a major issue. We were also facing difficulties in progressing infrastructure enhancements whether through franchise replacements or other means. This had been recognised in the statement of principles entered into between the Government and Railtrack in April 2001 which established first that the funding and delivery of major enhancement schemes could rest with other companies or consortia, although Railtrack with its responsibility for network integration would continue to be actively involved. Second, enhancement should be managed separately from operations, maintenance and routine renewals. However, one recognises that it needs to be planned and co-ordinated together. Third, a new procurement and funding framework would be developed by the SRA, the DTLR, Treasury and Railtrack to enable third parties in addition to Railtrack to undertake enhancement project development and to bid competitively for specific projects to be undertaken as joint ventures. We consider that this approach is crucial for the development of the railway, which the ten-year transport plan and our forthcoming strategic plan envisage. Railtrack administration offers the opportunity for consolidating the new mechanisms and importantly in addition securing through the successor body an attitude of commitment to and enthusiasm for this approach in improving the railway. We are pleased that the Secretary of State included in his guidelines to possible bidders for Railtrack a willingness to facilitate enhancement by special purpose vehicles. On a more personal note, I welcome the appointment of Richard Bowker as Chairman of the SRA and I look forward to working with him. At the same time I should like to record my thanks to Sir Alastair Morton, who I believe has made a significant contribution in developing a vision for the railway future. Sir Alastair has made his views known on the policy issues. My job as Chief Executive and Accounting Officer of the Strategic Rail Authority have been to make the SRA an organisation useful to Ministers and one which meets the objectives set by Government. One of our principal, and I believe central, roles going forward it to inform and guide the debate to ensure whatever comes out in administration improves the railway for passengers and freight and is able to raise large sums needed to finance the railway for the future.

  606. That is all very admirable, but you were not consulted, is that what you are telling us?
  (Mr Grant) That is correct.

  607. Has anybody asked you whether you intend to leave your job?
  (Mr Grant) Nobody has asked me to leave my job.

  608. No-one has suggested it to you.
  (Mr Grant) Other than the press, no.

  609. There has been no discussion with you on the future of the Authority directly.
  (Mr Grant) I have had some initial discussion with Richard Bowker since he has been nominated as Chairman of the SRA.

  610. Have Ministers consulted you on the shape of the new Authority?
  (Mr Grant) Not as yet.

  611. Are you intending, or are you aware of any meeting which has been fixed?
  (Mr Grant) For the last two weeks the SRA has been invited to take part in the governmentside discussions in a steering group on which I am the SRA representative. The whole question of the industry going forward, the SRA's role, regulation, performance regimes, are all on the agenda but they have not been discussed as yet.

Mr Stevenson

  612. The DTLR have indicated that they would like to see emerging in any new organisation to replace Railtrack a single entity company with the same licence obligations. In evidence to us Sir Alastair Morton suggested that this would be a mistake and a lost opportunity. He argued that there should be a slimmed down Railtrack with regional structures and equity stake for train operators. Which of those two do you think may be correct for the future of the industry or neither of them?
  (Mr Grant) It is very difficult to take things in isolation. The whole of the structure, regulation, performance, the structure of Railtrack, structure of the SRA, cannot be designed separately. They have to go forward. It is absolutely crucial that the influence of the train operating companies does take place on whatever body comes out of the administration. Whether that is through a shareholding or representation is too early to say.

  613. The difficulty some of us have with that concept of regional companies and special purpose vehicles and their like is that it could add to the blight of fragmentation which the industry has suffered from for so long. Would you agree with that proposition?
  (Mr Grant) As far as special purpose vehicles are concerned, the whole idea going forward has been to try to align interests. Special purpose vehicles are just part of the process of trying to enhance the railway. May I take it in four stages? The first stage is that we need some sort of master plan where we can identify enhancements, major renewals, maintenance, which co-ordinates that work going forward. The second stage is to develop the projects to a good enough state that they can be bid for by special purpose vehicles or anyone else. The third stage would be the actual special purpose vehicle delivering the enhancement and the fourth stage would be handing it back for integration and for the operator.

  614. My question was more to do with the fragmentation rather than the mechanism. This is an issue which bothers us, as you well appreciate. You have given evidence before on that. We have heard from officials of the DLTR that there could be—could be—15 special purpose vehicles. There could be half a dozen regions operating under this new system. Would that not inevitably lead to more complication, less co-operation and more fragmentation without worrying too much at this stage about the mechanism?
  (Mr Grant) The two issues to be addressed are: are the problems around the railway structural or are they managerial? It is a mixture of both. In lots of places a lot of people are doing good work across these structures. Yes, there is some need to address some of the structural points, but the whole approach is that from a managerial point of view it needs to be more co-ordinated through people. In some places structures need to be amended, but it is about management.

  615. Can you confirm that your strategic plan is due to be published this month? What guidance will it offer to the railway industry?
  (Mr Grant) The strategic plan is in its final throes of preparation.

Andrew Bennett

  616. It is very late, is it not?
  (Mr Grant) We have always said that the strategic plan would be ready in November and it will be ready in November.

Mr Stevenson

  617. Guidance?
  (Mr Grant) We have tried to split it in a number of ways. We have looked at the periods: first of all short term, which is four to five years in railway terms; medium term is up to ten years; and beyond the ten-year period. We have also looked at various scenarios, we have done the analysis of how each franchise and each project contributes to the objectives set for us by the Secretary of State, that is 50 per cent growth in passengers, 80 per cent growth in freight and to deal with the overcrowding. It will give the guidance of which projects we think we need to achieve those objectives. It will also deal with future franchising.


  618. When you say that the industry needs an overall plan, is it a different plan from the one you are going to publish?
  (Mr Grant) No, sorry, I did not mean that at all. The strategic plan will lay out our views on what the industry needs over the next ten years.

  619. When Sir Alastair says he thinks that the SRA's credibility has been damaged you would not agree with him.
  (Mr Grant) Not producing a strategic plan at an earlier stage was probably a mistake.

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