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

Examination of Witnesses (Questions 800 - 819)



  800. Which is less than one per cent?
  (Mr Byers) That is separate from the debt of Railtrack.

  801. As you probably know, many train operating companies are also unprofitable, are you not concerned that this is going to undermine the industry's ability to meet the objective you set for the next 10 years?
  (Mr Byers) You are right to say that a number of the train operating companies have difficulties with the franchises, and the Committee will need to look back at when the franchise were awarded and the circumstances of them being awarded. I think the industry will benefit from having a smaller number of train operating companies.


  802. Do you mean some of them going bust?
  (Mr Byers) No, as we go through the franchise process we will see, this is said clearly in the strategic plan, there will be a reduction in the number of franchise holders. That will be good because it will reduce the fragmentation, which has been a real problem in the industry. It will also mean that out of main termini in London we may have just one franchise operating and that will improve efficiency dramatically as far as those stations are concerned.

Mr Wiggin

  803. Can I clarify a few things, from an investor's point of view what you are talking about sounds fairly draconian, how much private sector funding are you hoping to attract?
  (Mr Byers) The private sector is still keen to be involved in the franchising process.

  804. Allegedly?
  (Mr Byers) We have a very good example today where the GNER franchise has been announced this morning. The Committee will find out that represents about £100m in private investment in a two year extension alone, money which has been committed today by the private sector. Not just allegedly, hard headed business people today are putting in £100 million on a two year extension to one franchise.

Mr Betts

  805. Let us come on to this issue about franchising and investment in the track. Everyone accepts that there are certainly problems in fragmentation of the railways on an on-going day-to-day running basis, is there not still a fragmentation in terms of strategic planning? I draw attention to the problems of Midland mainline and what happens there. The long term plan is to get investment in the line, to upgrade it and speed up the train times to Sheffield, that does not appear in the 10 Year Plan, as I understand it. In the long term franchising arrangements there are proposals to upgrade the rolling stock on the Midland mainline, but as far as I understand no requirement to put tilting trains on, which could have the desired effect of speeding the times up without necessarily investing in the track. On the other hand, we have franchising delayed proposals for the East Coast line, which will eventually be extended beyond two years. There are proposals floating round from Virgin to run to Sheffield from that line, and then proposals to upgrade the whole of the East Coast mainline as part of the infrastructure developments over the 10 Year Plan. You have four different possibilities there of getting improved train times to Sheffield but no one seems to be joining them up, even in the 10 Year Plan, into any coordinated thinking.
  (Mr Byers) Sheffield clearly is the place to be, that is why all of these trains need to be running there. I think the important thing about the Strategic Rail Authority now under new leadership is it needs to give a lead, that has really been lacking.


  806. Could you just repeat that? "It has been lacking".
  (Mr Byers) The Committee have said this as well. I am reflecting the good advice of the Committee.

Mr Wiggin

  807. Over the last five years!
  (Mr Byers) The Strategic Rail Authority has lacked leadership. The Strategic Rail Authority operating effectively would actually be able to overcome that sort of duplication process, and using the franchise process is a way you can do that. I have been disappointed that the franchise process has not been used in the past as a key way of driving up improvements as far as passengers are concerned. That has to change for the future.

Mr Betts

  808. While the 10 Year Plan actually leads the way forward in certain issues it is not absolutely set in stone, and because things are not mentioned in it, is there still scope for them to be developed during the 10 Year Plan?
  (Mr Byers) The 10 Year Plan, and this was said by the Deputy Prime Minister when it was published, so it is not just me saying it today, is a flexible framework. It would be barmy to set in concrete a 10 Year Plan for transport, because there will be changes during the course of the 10 years which we are going to have to respond to. That is why it is a framework within which we operate. We will review it and revise it in the light of new demands and pressures being made. We will have three Spending Reviews that will be conducted during the lifetime 10 Year Plan and that can build in, perhaps, new money, if we can get it, and make a case to the Treasury. That is what we need to be doing. It is a flexible framework. There are things that can be added to the 10 Year Plan if there is a demand there for it.

Dr Pugh

  809. Two very quick questions, forgive me if you have answered this one already, the Automatic Train Protection System how much will it cost and will it be implemented within the time scale of the plan?
  (Mr Byers) There is a clear commitment for its introduction. Can I let the Committee know the precise cost of it.

  810. An odd feature of the strategic plan is the decision of the SRA, apparently, to consider handing over franchising to the Merseyside PTE, which I think is a unique arrangement. Do I take it that the mention of that is not a definite commitment to that as a green light for that idea?
  (Mr Byers) There has been some discussion about this. We have said that the franchise process is basically horses for courses. It may well be as far as Merseyside is concerned that having the PTE involved and responsible for it would be the best way forward for that particular franchise.

Mrs Dunwoody

  811. I think if the Strategic Rail Authority are going to make the plan work, firstly, we have to accept they are beginning very late, this should have been done at the beginning of the last Parliament, not now. Given that we are where we are, can I ask you if you are really satisfied that the SRA have enough muscle to get the companies to deliver what they promise? You said in your press notice, "Systems set up of privatisation place no performance requirement on long distance operators" you are talking about GNER, they are the first one, "and a requirement on other long distant franchises as they are replaced or extended". That is presumably what you have in mind. The reality is that unless the SRA has enough muscle to insist on delivery then frankly we are running so far behind we are going to be in real trouble, we are in trouble today.
  (Mr Byers) Two things have to happen. You are right to point out that the SRA has to be in a position of strength in its negotiations for the new franchise holder. The government needs to give the SRA our backing to achieve that. Secondly, we do need a new approach to franchise, this is a point raised in the House the other day, which will allow the SRA to take into account previous performance by franchise holders in deciding whether or not they are an appropriate holder of the franchise. Their record should be used, for some it will be of benefit, because they have worked well, and for others it will be a real disadvantage. They should recognise that it is how they perform with franchises they already have which will be used in judging whether they are appropriate people for franchises in the future. That is a very powerful message when we are, perhaps, thinking of reducing the number of franchise holders.

  812. You will realise that the award of a franchise to somebody like Stage Coach was greeted with almost unmitigated horror by the passengers. We will need some very firm commitments on these matters. Can I also say to you that bus substitution is a matter of very grave concern. As so many of these companies are fundamentally bus I hope the SRA is going to make it clear that the substitution of buses on rail services is not an alternative that is acceptable.
  (Mr Byers) My reply is going to be that a bus is not a train. I know that will be written in the newspapers tomorrow, "Secretary of State, Great Revelation". It was a point raised by the honourable member for the Vale of York in the House on Monday. If you get a route like Thirsk up to Newcastle—and I know because I have done that route before when I have lost money at Thirsk races—you can travel reasonably quickly by train, but the idea of having a bus!


  813. It makes the loss even worse.
  (Mr Byers) It is a serious point, a bus is not a train.

Mrs Dunwoody

  814. Are we going to make it very clear to these companies that they have to comply and things like removing lavatories from rail rolling-stock will not do? Can I also ask you, Secretary of State, are you going to insist on a proper staged programme, a proper timetable for replacement of rolling-stock? There is absolutely no point in people announcing they are going to take on new rolling-stock if the length of time taken on the safety case and the length of time to bring them into operation is such that passengers are still waiting two years after the event, as has been announced.
  (Mr Byers) I believe that lessons have been learned by what has happened over the last few years. You are right to point out that the quality and the technical ability, and so on, of rolling-stock has been poorly lacking. I am afraid it is a consequence of decisions that were taken 10 years ago, when many good manufacturers went out of business because of the orders on stock in privatisation.

Mr Donohoe

  815. Secretary of State, given your performance today do you think your mother will be calling a radio station?
  (Mr Byers) My mother has never called any radio station. I am afraid once again it is a question of, do not believe all you read in the newspapers. She is 78 years old and she should be left alone by the press actually.

Mrs Dunwoody

  816. 78-year-olds quite often have things to say.
  (Mr Byers) I can say that my mother has a lot to say to me.

  Mrs Dunwoody: Quite right.

Miss McIntosh

  817. I am rather hoping that his mother and my mother will not get together. Can I say that I do welcome the announcement about GNER. The Secretary of State has raised an important point about bus service replacing trains. Can I ask a further question, obviously one of the companies involved is going to be subject to strike action, where we gather that 18 out of the 25 train operating companies are facing loses which total substantial amounts of money, can we have an assurance from the Secretary of State today that any company which falls victim to industrial action will not be made more vulnerable to rail franchise changes?
  (Mr Byers) I think it is important that companies that have failed on performance—for example, replacing Thirsk to Newcastle by a bus—is something that should be taken into account when it comes to refranchising. Industrial relations is an issue that will be taken into account, not in a negative way. The important message in all of this is that we want both sides to talk and to negotiate a settlement. The message to railway workers is that it is not in their long term interest to have disputes on railways, because people will find alternatives, and they risk putting their jobs on the line as a result. It is in their interest to get a solution as well.

Mrs Dunwoody

  818. It is also true that if there exists a machinery by which individual workers in the rail industry can be consulted before any action is taken then that democratic right is not going to be removed from them.
  (Mr Byers) I have made the position very clear as far as the government is concerned in relation to that. The important thing is that those individual railway workers through their unions and the management get together and talk and try and arrive at a solution.


  819. Secretary of State, you referred several times this morning to the key areas of your Department, I was tempted to wonder whether you could give a list of the areas of your department which were not key areas? Perhaps you would not want to do that. How far do you feel that the rail issues and one or two others are really distorting the overall performance of the Department?
  (Mr Byers) It is clear that at the moment there is a great concentration, and rightly so, on issues to do with the railways. Railways are used by 2.5 million people per day and the quality of service is not good enough and we have to improve it and we have a responsibility with the industry to do precisely that. There are big decisions about to be taken on London Underground. I was very clear when I was appointed in June that I would have to take these difficult decisions in relation to the railways and London Underground and to do it quickly. I have done that and people have criticised some of the decisions. I am clear that to muddle through and to tinker round at the edges would have been the worst thing to have done. Decisions are going to be taken and we are going to get on with it. I hope that by doing that we can stabilise the position in relation to transport and then those other big areas for which we have responsibility, which I am still very closely involved with, the local government White Paper we had before Christmas, the planning Green Paper, a new initiative on housing, the whole regional agenda, all of those issues, all very important, are being worked on at the moment and they will be worked on over the period ahead. The media does not focus on them as much but the work is going on and we are making a real difference as far as they are concerned.

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