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

Examination of Witnesses (Questions 620 - 639)



  620. How can your credibility be re-instated?
  (Mr Grant) Hopefully by producing the strategic plan, by getting the buy-in from the industry and producing a blueprint to go forward with.

Andrew Bennett

  621. Whose fault was it that it was not produced earlier?
  (Mr Grant) Clearly it is the SRA's fault. At the time everything seemed very difficult, even in writing this strategic plan it has been very difficult to find some solid ground to stand on.


  622. Everything seemed very difficult. Did you think it was a simple industry when you came into it?
  (Mr Grant) I did not really realise how complicated it was. I have a railway background and was trained as a railway engineer but that was before privatisation.

Mrs Ellman

  623. What discussions have you held with Virgin about the West Coast Main Line organisation?
  (Mr Grant) We received two documents via the Department about two weeks ago; the documents were dated 8 and 12 October. There is no agreement on that document. It is a document which has been signed by Virgin and Railtrack but pre-administration. We were asked by the Department to look at it. We had been expecting to look at the West Coast Main Line. Where we are at the moment is that we have asked a number of questions of Virgin. We have also asked a number of questions of the administrator. Our primary focus is to make sure that phase one is delivered as quickly as possible, that is the 125-mile-per-hour running and reduction in journey times. Phase two looks more problematic and we are doing the analysis for that. It is too early to say where we shall end up on phase two but at the end of the day we recognise that the West Coast Main Line is a mixed use railway. We need to optimise that use and that is the analysis we are doing at the moment. There is no agreement whatsoever in any proposals put forward from Virgin and Railtrack. Even the status of the document is not absolutely certain as to whether it is an agreement between Virgin and Railtrack.

  624. Do you feel any concern that apparently there is no agreement about something which should have been delivered already?
  (Mr Grant) We have always been concerned about the West Coast Main Line. What we are trying to do now is to focus on what needs to be done, first of all for phase one and then to focus on phase two.

  625. What will guide your decision on both phase one and phase two? Who would be making the judgement about whether phase two was important?
  (Mr Grant) We shall be making recommendations to the Secretary of State but ultimately if you assume that there is a limited amount of money and if phase two is considerably more than anyone is expecting, then a judgement has to be made as to whether that is the best way to spend public money. Today there are only two pockets left with Railtrack in administration: one is Virgin and the other is the Government.

  626. Do you think it is right that Virgin should receive compensation because Railtrack have not delivered as promised?
  (Mr Grant) I could not really judge that but within the analysis we shall obviously make those sorts of recommendations when we have seen all the facts. We were not party to the facts before about two weeks ago.

  627. What principles will be guiding that analysis?
  (Mr Grant) In terms of whether they are entitled to compensation or not?

  628. Yes.
  (Mr Grant) The contract; the contract they have and now the one the administrator is interfacing with Virgin and the Government standing behind the administrator. At the end of the day, what we are looking for from the West Coast Main Line is the optimum use for passenger and freight; that is Intercity and commuter as well.

  629. In your evidence in paragraph 4 you say that where major infrastructure improvements are necessary you consider that long-term franchise replacement is not the only delivery mechanism. Do you think such long-term improvements are required on the West Coast Main Line? What are you going to do to bring them forward?
  (Mr Grant) It is absolutely essential for the West Coast and East Coast Main Line that these improvements take place because they are the main arterial routes. They are absolutely crucial to delivering the ten-year plan. They need to be upgraded, we need further capacity and we shall be doing all we can to expedite it as quickly as possible.

  630. What do you think the relationship should be between the Strategic Rail Authority and government?
  (Mr Grant) I see our role as advising Ministers on railway issues and keeping officials up to speed.

Chris Grayling

  631. You talked about meeting the goals of the ten-year plan, but you are also talking about your strategic review coming out. It would be helpful to understand the relationship between those two as we go through the discussion.
  (Mr Grant) The strategic plan's focus is on delivery of the 50 per cent passenger growth and the 80 per cent freight growth and dealing with overcrowding. Those are the objectives which have been set in the instructions and guidance and that is the core of the ten-year plan and how we are going to try to get there.

Miss McIntosh

  632. Were you not surprised that neither your previous Chairman nor the SRA were involved in the decision to put Railtrack into administration?
  (Mr Grant) Yes, we were surprised.

Andrew Bennett

  633. Disappointed?
  (Mr Grant) Maybe disappointed at the time; I am not so sure now. Certainly disappointed at the time.

Miss McIntosh

  634. You would have expected it to be part of your strategic responsibilities.
  (Mr Grant) We have quite a bit of experience of restructuring companies.

  635. You have just said in answer to Mrs Ellman's question that the East Coast Main Line and the West Coast Main Line are absolutely core to the future of Britain's railways. Are you absolutely convinced that the new Chairman of the SRA is going to be entirely impartial in deciding who the franchisee should be of those two routes?
  (Mr Grant) I certainly hope he will be and that is probably a question you should ask him. As accounting officer, I have responsibilities which are separate from the Chairman's and we shall be looking for value for money on East and West Coast and every other project we do.

  636. I would have hoped to put those questions to the new Chairman but I am told we do not have time in this inquiry to do so. In the new structure the Government envisages, what do you imagine the role of the Rail Regulator would be and what do you believe the new relationship between yourself and the new Rail Regulator should be?
  (Mr Grant) We found regulation quite difficult in some aspects in so far as knowing where the money is spent. There has been a number of issues where the Regulator decided that Railtrack are entitled to more money, which meant less money for enhancements. There is no doubt in my mind that there needs to be an independent body as an arbitrator or as a regulator going forward because there will be disputes and if we are to attract private capital they will look to that person or that body to make sure there is fair play.


  637. The Committee will have the opportunity to question your Chairman but he is not being appointed until December I think.
  (Mr Grant) I believe it is 1 December.

Mr O'Brien

  638. In the light of the Government's new approach to franchising which we have witnessed recently how many long and short-term franchises have you recommended there should be?
  (Mr Grant) May I take a step backwards and talk about what we have been asked to do by the Secretary of State through his statement in July? He asked us to look short term at how we could improve passenger performance, investment services, improve rolling stock and improve passenger facilities. We then took those issues away and we looked at the franchise replacement programme and we broke it down into six categories. Some of this may be commercially sensitive so I shall give you a general answer on the six categories as we have looked at them and give you an idea of how many there are in each category. There are those whose future has already been determined and they include Chiltern, South Central, a total of five. There are those which in the mapping process we have got onto a cost/plus basis and they need to be dealt with quickly. Then there are those franchises which we believe could wait until expiry. We need to phase these things in terms of priorities.


  639. Expiry including the extra two years or expiry at their existing contractual date?
  (Mr Grant) Expiry at the existing date. Then there are those franchises, probably one or two, where they are possibly going to run into difficulties as the subsidy profile declines. Then there are those franchises where there is a potential to extend for two years, East Coast Main Line, Connex South East and First Great Western, but again they have to come forward with proposals if that is what they want to do. The remaining ones are long-term franchises which are Gatwick, C2C, West Coast and Cross Country. It is not short-term franchises. It is a case of horses for courses. Some will be extensions and there will still be long-term franchises.

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