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


Examination of Witnesses (Questions 700 - 719)

WEDNESDAY 7 NOVEMBER 2001

MR MIKE GRANT AND MR TERENCE JENNER

  700. How much does that come to?
  (Mr Grant) The agreement so far between ourselves and Railtrack is for £28 million of development work.

Mr Donohoe

  701. As part of the ten-year programme it is suggested that there is going to be £34 billion of private money. How confident are you at this stage that that is going to be achieved?
  (Mr Grant) At this stage it looks very difficult. It comes back to the whole industry structure going forward. Regulation, the structure of whatever comes out of administration, all of that has to be conducive to private investment otherwise it will not turn up.

  702. The SRA is going to be the lead body, is it not, in trying to key in private money? That is virtually why you are in existence. How difficult, if achievable at all, do you think it will be to get that flow of capital going?
  (Mr Grant) Starting from where we are, it is going to be difficult. For the right sort of investment and the right environment, that private money will be available.

Andrew Bennett

  703. Why did you adopt a strategy for franchise replacement which left you unable to select the best overall value for money or operational solutions?
  (Mr Grant) I am sorry, I do not understand the question.

  704. The Department criticised you fairly strongly in its evidence saying that you really did not know what you were doing about the franchising.
  (Mr Grant) We have looked at franchising very carefully in light of the 50 per cent growth and the overcrowding. We have analysed each franchise and its contribution to that 50 per cent target. We have looked at it, we have been very thorough, worked very hard with the Department to make sure they understood our analysis of each franchise.

  705. They said you were unable to combine elements to form the best overall value for money or operational solutions and could only accept or reject the offers made.
  (Mr Grant) Take the East Coast as an example, the Secretary of State wanted more certainty around the infrastructure numbers and that is why he asked us to look at them again. Where we are today is that we have made assumptions on each franchise, explained those to the Department and the Treasury and the contribution that would make to the 50 per cent growth.

  706. Were you short of funds to do the basic work to analyse the profits which were made?
  (Mr Grant) No.

  707. You had enough money to do it.
  (Mr Grant) To do the analysis?

  708. Yes.
  (Mr Grant) Yes.

  709. May I press you again on the strategic plan? As I understand it you did a survey of the passenger transport needs in Birmingham and you half did one in Manchester. That is part of the information which is going into the strategic plan. You are now doing a consultation next year on various elements. How robust do you think your strategic plan is?
  (Mr Grant) The strategic plan makes a number of assumptions that things will be working. It has been very difficult to find a solid piece of ground, with administration and where regulation is. We have put in place a number of tests which we believe have to be put right if the ten-year plan is going to be achievable.

  710. As I understand it in Birmingham you looked just at what people wanted to be able to do and presumably that is built into the plan. You did the analysis of how to do that in Manchester, and then decided not to do it because it was too expensive. For the rest of the country you know what services exist but how do you know what people would like to be able to do if the services were there?
  (Mr Grant) In the strategic plan we have focused on the 50 per cent growth in passengers and 80 per cent growth in freight and the overcrowding issues. In places like Manchester and Birmingham, consultation with the PTEs is absolutely crucial about what the local needs are. On the Manchester side, particularly through the Trans-Pennine Express and Northern franchises, we are in that consultation process now.

  711. You are on the consultation process now, but you are about to publish the strategic plan. Presumably the strategic plan and this consultation are disjointed.
  (Mr Grant) We are going to have to produce a strategic plan every year. Our instructions and guidance say that we have to produce a strategic plan in November of this year and that is what we shall do on the best information available to us at the time. Clearly in three months', four months' time, as the industry structure may hopefully get a bit clearer, then we shall revisit the strategic plan and produce it again in November 2002.

  712. This time round it is going to be very much centred on solving London's problems rather than the rest of the country.
  (Mr Grant) It is going to look at the instructions and guidance on those three things. It is also going to look at the success of the rail passenger partnership schemes and how we can improve and widen that. We have just put in place more streamlined processes on trying to get these small enhancements put forward. I believe within the regulatory review there was something like £500 or £600 million for small schemes around the network.

Chairman

  713. I trust you are not letting Railtrack do the calculations.
  (Mr Grant) I think the calculations are going to be done by the Regulator.
  (Mr Jenner) That is correct.

Andrew Bennett

  714. Can this go ahead while there is this uncertainty of Railtrack being in receivership?
  (Mr Grant) They have to go ahead otherwise we are going to stand still and it is really for the administrator and the Department to make sure they are funded.

Mrs Ellman

  715. Do you have any consultations with regional development agencies or regional assemblies on the economic impacts of what you are planning?
  (Mr Grant) We do have a lot of contact with external relations department, with all the RDAs.

  716. What do you mean "with external relations department"?
  (Mr Grant) Our external relations department deals and different executives are allocated to different RDAs.

  717. Does that influence what you do?
  (Mr Grant) Of course it does. It certainly influences what we think and how that feeds in to the strategic plan.

  718. Does it influence what you do?
  (Mr Grant) Yes, it influences what we do, because it will influence the strategic plan and the strategic plan will be our blueprint and therefore that is what we shall aim to do. It does have an influence.

  719. What are the major changes you would like to see now in the rail industry?
  (Mr Grant) What I should like to see coming out of administration is more transparency, where the money is going, certainly the transparency of contracts and most of all a change in attitude of the infrastructure operator to make sure enhancements are possible.


 
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