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

Supplementary memorandum for the Transport Sub-Committee in response to their letter of 29 November 2001 (PRF 35E)

1.   How was the work of the Office of National Statistics on the classification of RenewCo affected by "discussions with Railtrack"?

  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 RenewCo proposals?

  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 SRA.

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 proposals?

  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 the Regions

5 December 2001

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