Supplementary memorandum for the Transport
Sub-Committee in response to their letter of 29 November 2001
1. How was the work of the Office of National
Statistics on the classification of RenewCo affected by "discussions
The work of the Office of National Statistics
(ONS) was independent of discussions with Railtrack.
2. What were the conditions not met by the
RenewCo proposals on 1 October 2001?
By 1 October it had not been confirmed that
RenewCo would not count as public sector borrowing, which was
a necessary condition for proceeding with the proposal.
3. When was Railtrack informed that the RenewCo
proposals had not satisfied the necessary conditions? What discussions
were held between the Department and Railtrack between 1 and 5
October about payment of the £162 million available under
the October 2000 determination?
In discussions with the SRA during September,
Railtrack was aware that the ONS was considering the classification
of RenewCo. Railtrack was warned by officials of the Department
on 3 October that there was a risk that RenewCo would be classified
as public sector borrowing. At the same meeting Railtrack was
told that the Government needed to consider the RenewCo proposal
in the light of Railtrack's request for additional support under
the Rainbow proposal. On 5 October Ministers informed Railtrack
that it had decided to reject the Rainbow proposals, so there
was no further discussion of RenewCo.
4. What did the Department do between April
and October 2001 to facilitate the delivery of RenewCo? What was
the Department's role in mediating between the parties to the
The Department agreed in April that the SRA
should use its best endeavours to implement the RenewCo scheme.
The SRA led the discussions with Railtrack, including on legal
documentation and financing arrangements. The department was aware
of these discussions, but did not mediate between the parties.
5. What was the Treasury's role in the classification
of RenewCo being in the public sector?
The ONS is an independent body, and the Treasury
has no role in ONS decisions on classification. The Treasury submitted
the RenewCo scheme to the ONS, based on material supplied by the
6. What discussions were there between the
Department and the Treasury between 1 and 5 October about the
possibility of applying to place Railtrack plc in railway administration?
The Department discussed the Rainbow proposals
with the Treasury, and the options for responding to them.
7. What was the precise nature of the Department's
role in the decision-making process with regard to the RenewCo
As explained in the previous answers, the Department
agreed in April that the RenewCo proposals should be developed,
but that RenewCo could not go ahead if it was classified as public
sector borrowing. The decision on classification was for the ONS
alone. The Department also had to consider RenewCo in the light
of Railtrack's request for further support under Rainbow. This,
together with the classification issue, meant that the final decision
had to be for Government, rather than the SRA.
Department for Transport, Local Government and
5 December 2001