Examination of Witnesses (Questions 260
TUESDAY 27 NOVEMBER 2001
260. That is not a real answer you are giving
(Mr Coulshed) I accept it is a general answer. Part
of the franchise process is designed to generate passenger benefits,
indeed part of the Secretary of State's policy statement in July
was precisely to focus the SRA more on obtaining passenger benefits
in the short as well as in the long term from franchise propositions
invited. In a way it is very difficult to be specific about the
Wales and Borders franchise or any other one at this stage. The
SRA have told us that they believe that this reshaping of the
franchise map will deliver passenger benefits and we said, "fine,
go away and do it".
261. Forgive me for being very, very late Chairman,
I was on the International Development Committee. Forgive me if
my question has been touched upon before, my understanding is
that over the next 10 years £60 billion will be spent on
the rail part of transport. Using the Barnett formula £3
billion should be coming to Wales, but it has never been stated
that we will be getting that. How can franchises be drawn up,
how can bids be accepted if the bidders do not know how much investment
is going to be put into those railways over the next 10 years?
(Mr Coulshed) I think there are two separate parts
to that question, one about Barnett, which I will come back to,
and one about how bidders know. I think that second part is a
very good question and it is part of the reason behind the Secretary
of State's franchising policy statement, that the process the
SRA had started was so open-ended it was very difficult for bidders
to make a very clear judgment of what it was they were being invited
to do. The Secretary of State whould ask the SRA in future franchising
processes to be a bit more specific to help the bidders shape
their proposals with an eye to the budget available. So far as
Barnett is concerned I do not want to be particularly controversial,
especially in an area I am not a great expert in. I do not think
Barnett does necessarily apply to the allocation of railway funds
within the 10 year plan. The SRA has been asked to go away and
draw up a strategic plan which delivers the primary output, the
10 year plan that sets out what the government wants to achieve.
That is something which the SRA will have to look at on GB as
a whole. No doubt there will be issues all round the country,
England and Wales, and to some extent Scotland for this purpose,
about whether the SRA in determining its priorities for its investment
plan is being equally fair to every part of great Britain. The
task it was given was quite clear, it was to deliver the output
required by the 10 year plan, that was the primary objective,
and it was not about to split its budget into particular regional
262. In Wales we do not know if we are going
to get a good deal, a bad deal or a poor deal?
(Mr Coulshed) I guess from your point of view no,
you do not.
263. When will we know?
(Mr Coulshed) The SRAs Strategic Plan when it comes
will set out its view on the priorities for investment that will
deliver the output that the 10 year plan asked for and that should
be in the next few weeks.
264. Is this going to be a case of much gets
more, in other words London and the southeast once again are going
to get that infrastructure on the top of the Channel Tunnel, on
top of the Jubilee Line, on top of the investment in the past
10 years and Wales is going to be left on the fringes?
(Mr Coulshed) I do not think I ought to anticipate
what the SRA may say in the strategic plan.
265. In the draft Directive, the guidance for
the Strategic Rail Authority it does say "all bidders must
be made aware of the criteria on which their bids are assessed",
whilst I appreciate it is the responsibility of the SRA are you
satisfied that the department that achieved?
(Mr Coulshed) I think the reason why it is in the
directions and guidance was that the bidders for some of the early
franchise bids came back and said it had been difficult to get
to this answer, in the end they had not got there but the process
had been made complicated by the very open nature of the SRAs
process. We have not really reached an equivalent point with any
franchises since the Secretary of State's franchising policy statement
and the draft directions and guidance which were issued in June,
we do not really have anything concrete to look at from the SRA
to look at and say, "yes, that is fine", we will do
when the next franchise comes up, which might be Wales and Borders,
and there are one or two others.
266. The SRA say that the criteria was to select
bids as set out in the instructions to the bidders, it is a Great
Britain wide document. How are local criteria to be taken into
account in the franchising process?
(Mr Coulshed) I think what the SRA were referring
to was the process by which initial expressions of interest are
reduced to a range of bidders invited to submit initial proposals.
What they were looking at there fundamentally was credit and credibility,
I think there is something in their written evidence explaining
that as far as Wales and the borders was concerned, all of the
initial expressions of interest they had were from reputable companies
who had been engaged in the franchising process on some occasion
before. If it had not been somebody of that kind clearly their
background capability would have to be looked into further. When
it comes to the local input what the SRA is engaged in, at that
stage is just basically basic capability of the company, nothing
do with what they are proposing. The next stage, when they invite
proposals from the long list, if you like, is the point at which
they would expect the proposers to come forward with ideas on
the back of or on the basis of consultations that they would have
held, discussions they would have had with local and actual and
potential users, local authorities and the like. This is one of
the areas where I think the SRA may want to say a little bit more
for the guidance of bidders in future. At each stage, the qualification
stage, the long listing stage, then when the SRA is considering
proposals from short listed bidders it will be looking for evidence
from them that they are properly taking account of the wishes
of local stakeholders, local authorities, and people who might
want to use the railway line.
267. Like the National Assembly?
(Mr Coulshed) Your question was expressed in local
terms, of course they would expect the bidders to have regard
to whatever the National Assembly said as well.
268. If I can come back to the original question,
what do you have against the National Assembly actually nominating
a board member for the SRA?
(Mr Coulshed) I am not sure there is anything much
I can add to the answer I gave previously. Ministers considered
this issue at the time, they took the view that it was not appropriate
for a person to be appointed by the National Assembly as a sort
of representative for Wales, this is a national body which is
responsible for railway strategy for the whole of GB. Ministers
are looking for members of the body to have expertise in a number
of different areas, but that does not mean they are representatives
and they did not think it was appropriate for a representative
to be appointed by somebody else.
269. Can I ask you, maybe, a personal question,
as head of the division within the department you have an input
and you sometimes, often I would imagine, advise ministers and
secretaries of state, whether it is taken on board is another
matter. What is your view about the question of that?
(Mr Coulshed) You are putting me in a really difficult
spot here because the advice we give to ministers is confidential.
I think I must appeal to the Chairman for protection on this point.
Chairman: If you wish to keep mum on that issue.
Chris Ruane: We will not tell anybody.
Chairman: That was the closest I have ever seen
to that particular protocol being breached.
270. If I can take you back to Martin's earlier
question about the successor body Railtrack, it is a point of
information really, you refer to the team within the department
that is drawing up the not-for-profit company based proposal,
am I right in thinking that at least two private sector companies
or groups have already expressed a possible potential interest
in bidding for the successor?
(Mr Coulshed) I know no more than you have read in
the papers actually.
271. A possibility. There may be alternative
(Mr Coulshed) There is certainly a possibility.
272. Does the department have in place a system
for manning any potential conflict of interest then as the department
that is developing the proposal and the department that ultimately
has ministerial responsibility for choosing the successful business?
(Mr Coulshed) I am going to have to ask my colleagues
to write to you on this. I do not know enough to give you a detailed
answer, I am sorry.
273. If I can move on to what I hope is going
to be our last question. Thank you for being so brief and succinct
in your answers in your memorandum. We asked about Objective 1
funding on transport issues. I understand there was a problem
in your reply, there was a mistake.
(Ms Phillips) There is. I have to apologise to the
Committee, we muddled up Objective 1 and Objective 2, we misunderstood
your question on moving assets, apart from that we got it right.
I have to say I really do apologise, this was a complete oversight
on our part. If I can ask Garry White to tell you what the correct
answer should have been to the first two questions, 15(a) and
15(b), that will then help you with any supplementaries you might
(Mr White) Yes. The correct answer to 15(a) should
have been the government's view is that provided a project meets
some of the aims, objectives and needs identified in the programme
and agreed by the European Commission it may be supported. Objective
1 funding is being sought for tram schemes in Merseyside and South
Yorkshire, under the current English Objective 1 programmes. These
are likely to support the provision of infrastructure rather than
mobile assets. In response to 15(b), have Objective 1 funds been
used previously in this way? The Merseyside Objective 1 programme
during 1994 to 1999 used the structural funds towards the cost
of infrastructure projects related to transport communication
and they involved the provision of bus, rail station facilities,
bus lanes and the infrastructure in airports and docks, they have
not involved provision of mobile assets.
274. I think you cleared up the question that
we wanted to ask you.
(Ms Phillips) We are terribly sorry about
275. Have we cleared it up, you said that they
did not in the past, do you think it is possible under this Objective
(Mr White) If it is featured in the agreed programme
and agreed with the European Commission, I apologise I am not
familiar with the Welsh Objective 1 programme, if it is agreed
that mobile assets such as bus and trams can be supported then
that is a possibility. It is not ineligible. I should, perhaps,
add that the Commission have certainly instigated a move away
from infrastructure projects to more business support measures.
276. We will be talking to the Commission, it
is really a question for them from what you say.
(Mr White) Yes.
Chairman: Unless there is anything else? Thank
you very much for your patience and your answers.
5 See page 61. Back
See note on page 60 for complete answer to question. Back