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

Examination of Witness (Questions 920 - 934)



Andrew Bennett

  920. The ten year plan was desperately needed. How much time has now been lost as a result of these problems with Railtrack?
  (Mr Byers) I do not believe that we have lost any time as a result of the decisions that were taken in relation to Railtrack. I believe that the ten year plan and the objectives within it can still be met. We are now probably, as far as rail is concerned, in almost a stronger position to meet the commitments we made in the ten year plan than we were before railway administration.

  921. How soon do you expect Railtrack to come out of receivership?
  (Mr Byers) That will obviously be a matter for the administrator and I would not want to think that the administrator feels under any pressure to come out of administration by a particular date. I think he knows and has said before this Committee that he would like administration to be as short as possible but clearly he has his own legal obligations and he must discharge those to his own satisfaction. It would not be helpful to put a deadline or a timetable as far as the administrator was concerned.

  922. Not even a hope?
  (Mr Byers) As soon as possible, but that is not very helpful.

  923. You say that the ten year plan is not going to be jeopardised. Can you guarantee to us that all the improvements on safety, the slam doors, the fail safe systems on the signalling, none of that is going to be delayed as a result of this?
  (Mr Byers) The commitments that have already been made will not be affected by Railtrack going into administration.

  924. One of the problems is no one is quite clear what each person is doing. Could you clarify that? As I understand it, the problem with the east coast main line refranchising was that you were trying to compare bananas with eggs. The two bids were not really comparable. That appears to have been the fault of the Strategic Rail Authority. Are you going to try and make sure that the Strategic Rail Authority makes bids comparable in future?
  (Mr Byers) Comparing bananas with eggs sounds a pretty fruitless exercise. Mr Bennett highlights an important point which is that what we need to do with any franchise—and the east coast main line is a very good example of this—is to have a core of outputs that we expect to be the minimum that a new franchise owner would deliver on. Then one can compare like with like.

  925. Is it your job to do that or is it the Strategic Rail Authority's job to do it?
  (Mr Byers) I think it is for the Secretary of State giving guidance on a new franchising regime and we are consulting on that at the present time. If time is available, it would be very useful to have the recommendations from the Committee to inform our decisions at the end of this process. It is my responsibility to give guidance on the franchising process. What we are trying to do is to have a core of outputs against which bids can be judged. What we should not try and do is to constrain new ideas and innovation. I would not want to stop that happening. It might be that you have almost additional proposals coming from a bidder saying, "For an extra sum of money, we would be able to provide this."


  926. We have been there; we have done that. I hope you will think very carefully. What has happened since you have come in is that, first of all, there has been an announcement of a standstill on the franchises so that some which were expected to be awarded were not awarded. Various operators have said this will affect the way that they go for rolling stock. Whether that is accurate or not we can judge but that is what they have said. It is obvious the SRA itself is in considerable disarray. They have not yet published their report and there has been this complete chaos with Railtrack. What we need to know from you is: is the successor to Railtrack going to be in the same shape as its predecessor? Is it going to have the same assets? Is it going to be able to take decisions? Are you going to go for the same sort of structure or are you going to try and find something different? If you are going to find something different, are you going to accept that Railtrack was incapable of bringing enough engineering expertise within its own board in order to assess what was happening with its contractors? Are you going to push forward these changes? If not, are we going to have three more years of chaos while somebody makes up their mind what we should be doing? Please consult but give us a few answers and we will give you a straightforward plan.
  (Mr Byers) What I have sought to do in the time that I have been Secretary of State is to identify the steps that will need to be taken to create a structure within which we can see genuine improvements in the railway network. My own judgment is that we needed to look at the whole franchising regime.

  927. Fine. You have told us that in considerable detail. Now?
  (Mr Byers) I have not reached conclusions yet. I will reach conclusions and that will be informed by some of the recommendations which have come from this Committee over the period. As far as the successor to Railtrack is concerned, we have laid down guidelines which should apply. It will be for the administrator to make recommendations to me, but it will not be a body which will be controlled by the government. As far as the Strategic Rail Authority is concerned, I think it is right that I give it directions and guidance but keep an arm's length relationship with it. Most importantly - and I think this is crucial - is that the strategic plan which they are now about to produce at long last will be an agenda on which the industry can move forward. Part of that will be the way in which they are going to approach the whole principle of how franchises are to operate. This is why I was trying to make the point that although understandably people are concentrating on Railtrack there are a lot of other parts of the jigsaw that we have to get absolutely right.

Andrew Bennett

  928. What about the regulator because you have the regulator regulating on the one hand and you have the Treasury regulating on the other.
  (Mr Byers) There does need to be a form of independent, economic regulation. What form that takes is something we need to consider in the light of the new structure that might well be emerging.


  929. How long are all these considerations going to take?
  (Mr Byers) We do not have too long.

  930. We have not got any time at all. We are working on borrowed time now.
  (Mr Byers) I have only been in this place a matter of months.

  931. Believe me, none of this is having a go at you. There are some of us who say that if these decisions had been taken in 1997, if there had been a Transport Bill then, we would not be talking in these terms, but the reality is that the railway industry is not clear about its franchises; it is not clear about its rolling stock; it is not clear about Railtrack and it is not clear about where the commitment for its new investment is going to come from. We have the SRA apparently having a collective nervous breakdown and ATOC is not far behind it. We need some answers but we need them fast. What timetable are we talking about?
  (Mr Byers) I agree with your call for urgency. It was one of the things that struck me when I was first appointed, that time was not on my side.

  932. That is the truest statement you have made.
  (Mr Byers) We have to take decisions. Some of them will be tough. Some of them will be controversial and will be disagreed with, but the only way we will get a railway system which is fit for the 21st century is if those tough and difficult decisions are taken. They will be taken and sooner rather than later. I would hope that—I am not sure when I am next giving evidence before the Committee on railway matters—by the time I next come before you in a few months we will have resolved these outstanding questions, but it will be a matter of a handful of months rather than six or nine months.

Mr Stevenson

  933. In your Department's response to our March report, published in October, on the issue of company limited by guarantee, it says in paragraph 47 that the government believes this—that is, to make the railway industry work in a safer and better manner—can best be achieved by transferring Railtrack's network responsibilities to a private sector company limited by guarantee; not a preference; not a suggestion, but one might conclude almost a decision. I am wondering how consistent that is with what you have said about considering the options. Could you clarify that? This is not a decision that has been taken, I assume; it is government's preference as things stand to date.
  (Mr Byers) What was very important was that we had in place a vehicle, if I can use that word, which would be able to take over the responsibility of running the network. That is what we have done through a company limited by guarantee. It is not a decision. I think it would have been foolhardy and a mistake to have ruled out any other proposals that might come forward. There may be other interesting proposals that are made and I think they should be given due and proper consideration. That is really what we are doing at the moment. We are working up the details of the company limited by guarantee but we will also give proper consideration - indeed, I welcome expressions of interest. Let us see what other ideas there are around but the key test has to be whether, at the end, we can have a new licence operator that can overcome the difficulties that we have experienced as far as Railtrack is concerned.

  934. May there not be a conflict between the need for urgency that is consistent with getting the new system correct, the administrator's proposed timetable and your considering what other options may be put on the table for your consideration in terms of what may succeed Railtrack?
  (Mr Byers) We have to recognise that the administrator has a particular set of legal duties and responsibilities. As I think I said earlier, I do not want in any way to put him under pressure in terms of laying down a timetable. During this period, he will need to consider the proposition that we have put forward for a company limited by guarantee; he will need to consider the proposition which might come forward from other interested parties. I think you noted an interest being expressed by WestLB. He will need to give detailed considerations to those particular proposals but, given that there is this period of administration anyway when obviously he and his teams are looking at the assets, looking at the value which is in Railtrack plc which is a part of Railtrack which is in administration, there is this time when we are not losing anything because Railtrack is in administration.

  Chairman: Secretary of State, you have been very tolerant and you have been giving us evidence for a long time. I think all the Committee are grateful to you for that. Speaking entirely personally, were it to be the case that we finished up, at the end of all our deliberations, with a company run by Deutsche Bundesbahn, some of us might think that was mildly ironic. I simply leave you with this thought. As you have been kind enough to say that you hope to have the answers by the next time you come before the Committee, I am delighted to hear that and I will just remind you that that is on 16 January. Thank you very much indeed.

previous page contents

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 7 December 2001