Admiral Sir Michael Cecil Boyce, GCB, OBE, having been created Baron Boyce, of Pimlico in the City of Westminster, for lifeWas, in his robes, introduced between the Lord Sterling of Plaistow and the Lord Guthrie of Craigiebank.
Lord Davies of Oldham: My Lords, following the problems created by years of under-investment and a flawed privatisation, Britain's railway infrastructure is now under the new ownership and strengthened management of Network Rail. Working with the industry as a whole within the strategic direction of the Strategic Rail Authority, the company is concentrating on its core priorities of operating, maintaining and renewing the railway to demanding performance targetsfor the benefit of passengers and stakeholders, not shareholders.
Viscount Goschen: My Lords, I thank the noble Lord for that reply, although I could not work out whether he responded with a "yes" or a "no"; that is, whether or not he believes that Network Rail's performance is satisfactory. Perhaps he could tell the House.
Does the noble Lord agree with the view of his own rail regulator that the explosion of costs at Network Rail is a direct function of the fact that no longer is there any shareholder equity in the company? Further, do the Government now agree that the governance structure, which was forcefully argued for by the noble and learned Lord, Lord Falconer, when he was at the Dispatch Box, is in fact fatally flawed? As the rail regulator has himself pointed out, it is far more difficult to regulate a company with no shareholders.
Lord Davies of Oldham: My Lords, the answer to the first question put by the noble Viscount is that Network Rail has been fully in existence only since October of last year. It is, therefore, somewhat premature to ask how well it is doing set against such a limited perspective and against the Government's 10-year strategic plan for transport. Let me assure the
Lord Bradshaw: My Lords, does the Minister agree that the contractual structure that has been wished upon the railway system is fatally flawed in that one cannot force a contractor to deliver at the very highest levels of quality? What is Network Rail doing to ensure that we do not have a railway which is maintained in bits and pieces and whose quality does not give us the type of service that we want?
Lord Davies of Oldham: My Lords, I accept what the noble Lord says. It is necessary to have a coherent structure in the development of the railway system, and that is what Network Rail is charged with providing. The contracting system requires Network Rail to establish a sophisticated system of monitoring. As we all knowrecent events have emphasised the factthat monitoring needs to be carried out with the greatest care. I do not believe that anything in the structure of the signing and development of contracts militates against Network Rail being able to succeed in its overall objectives.
Lord Faulkner of Worcester: My Lords, does my noble friend agree that, while the railway system obviously still faces the most appalling difficulties, we can at least welcome the fact that the various elements in it are at last talking to each other in a constructive way, unlike the days of Railtrack when they were simply at each others' throats? Will he specifically welcome this morning's announcement by the Strategic Rail Authority of the route utilisation strategy for Midland Main Line? That demonstrates how the parties to the industry can work together for the benefit of all the people who work on it and use it.
Lord Davies of Oldham: My Lords, I appreciate very much what my noble friend indicated. In fact, there have already been some signal successes to which we can pay due regard and in which we can take pride. But we recognise that the problems of the past have been ones of coherence, particularly, as I mentioned earlier, in relation to the flawed privatisation. We now have a structure where, as my noble friend said, all the crucial players in the industry are talking and working together effectively.
Lord Davies of Oldham: My Lords, I believe that some noble Lords will also recollect the costs of the botched privatisation process. Frankly, although a not insubstantial sum, the amount of £70 million must be set against the colossal costs to the nation, particularly in terms of transporting passengers and goods, of an ineffective railway. It is still early days as we attempt to recover from many years of substantial under-investment. Surely the noble Viscount recognises that what was handed over to the incoming administration in 1997 was a railway replete with problems, which will not be solved overnight.
Lord Berkeley: My Lords, does my noble friend agree that one of Railtrack's problems was that, in its seven years of existence, it did not manage to create an asset register and thus did not know what it owned or the condition of what it owned? Does not that problem still face Network Rail? Therefore, does my noble friend welcome the fact that maintenance of the Swindon to Paddington section of the line has been taken in-house, together with knowledge of the assets, so that at least control is held over that? Whatever contractors do, if they are not managed correctly, nothing right will happen.
Lord Davies of Oldham: My Lords, characteristically, my noble friend, with his great knowledge of the railway system, has hit upon a crucially important point. The failed structure of Railtrack led to a situation where the organisation was unaware of its assets. Network Rail is making significant progress on that point. It is a crucial building block in running the railway system effectively.
Lord Davies of Oldham: My Lords, it is certainly the case that a considerable amount of the investment in Network Rail will repay only over a substantial period. I believe that the noble Lord will recognise that investment which is designed to produce the outcome of the main points of a 10-year strategy cannot be judged at present. But Network Rail is fully accountable to the Strategic Rail Authority and, therefore, the monitoring of its activities will be kept under the strictest review.
Lord Davies of Oldham: My Lords, my noble friend is right. Members of the public represent the most substantial group of shareholders in the railway. Particularly significant is their role as taxpayers, given the considerable amount of government money invested in this area. But my noble friend will recognise that Network Rail and the Strategic Rail Authority have structures of accountability and they will be held to account. He will also recognise that nothing will serve the general public and taxpayers worse than for us to tolerate a railway that is well below modern standards.
Lord Davies of Oldham: My Lords, we have consulted the Health and Safety Executive, the Rail Safety and Standards Board and Network Rail. None is aware of any recent amendments to standards or regulations that preclude the use of bi-directional signalling operations. However, I understand that the Railway Group Standard for the provision of lineside signals was changed in February 2002 when the installation of simplified bi-directional signalling was withdrawn for new signalling schemes.
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