Examination of Witnesses (Questions 240
WEDNESDAY 12 JULY 2000
M GRANT AND
MR T JENNER
240. In spite of your talented seminars, you
have not persuaded Mr Corbett to. Was he not a finance director?
(Sir Alastair Morton) That is right. Let me say where
I agree with Mr Corbett again. He has a duty to his shareholders
241. We do hope so.
(Sir Alastair Morton)to seek a very good settlement
from the Regulator in what is now going on. It is Mr Corbett's
duty to fight for that favourable settlement any way he can.
242. We are not in any doubt about who is responsible
for what. What you are saying is that you think that because this
is an infinitely variable procedure, it could be used in a number
of different ways, he does not agree with you. Are we agreed on
(Sir Alastair Morton) No, I am saying that he is free
to choose interpretations of the idea which suit his current debate
with the Regulator. I am saying that he has employed those to
the full with considerable skill.
243. What I want to know from you is what efforts
you are making to give a very clear lead to the bidders in the
franchise process about what you want from the franchise replacement.
You will forgive me saying this and I say this in no pejorative
sense, but we have heard from you today an extremely flexible
and interpretative, indeed almost an impressionistic view of the
different ways in which the franchise process can run. What is
it which you are doing to make it quite clear to the bidders what
you want out of the franchise replacement?
(Sir Alastair Morton) We hope we have made it beyond
doubt clear that we want a bigger and a better railway service.
(Sir Alastair Morton) The customers.
245. Good; it is nice to hear that word.
(Sir Alastair Morton) This means that we want more
capacity on the network, which means investment in hardware. That
gets you into debates with Railtrack and everybody else. We want
investment in what we sometimes call the soft issues, which is
just a term for making the quality of service better: the whole
journey experience from the time the person seeks to consider
making a journey by rail to the time the person disengages from
the rail system into another transport system as may be necessary
at the other end, which in large part also requires investment
but in quite different things. At the end of the day you arrive
at what people call Morton's mantra, which is investment, investment,
investment. People need to put the money into the business; the
parties, in the plural.
246. Fine, but in what? When it comes down to
it I am offering you a deal which might give lower fares, better
running, more services and alongside me is Mr Donohoe who is going
to give you nice bright stations with lots of property advances
and perhaps not such good terms for the passenger. What are you
going to ask?
(Sir Alastair Morton) By that time we are going to
have gathered the views of the passengers, of the local marketplace,
the communities served, which means the local authorities, the
user groups and others. There has been a lot of consultation.
It is an ongoing process. We shall have an understanding that
what is passionately desired is that thing there. Obviously if
you ask a person at eight o'clock in the morning whether he would
like to have a train which got his nose out of his neighbour's
armpit, that might be top of his priorities. When you talk to
him after he has got home and had a drink in the evening, he might
say he would like one which gets him to work on time, which might
require a different investment.
247. They might not necessarily be so completely
different might they?
(Sir Alastair Morton) They might not be, but you will
have gathered these opinions, you will have a view of what is
wanted. We shall have our own view the more franchises we discuss
and review and OPRAF has been managing franchises, regulating
franchises, for some time now. We have quite a lot of experience
in how the desires, the complaints, the pluses and minuses have
developed, are likely to develop. You put those against a picture
of traffic and you come up and say what is actually possible and
what is capable of being paid for. If taxpayers' money is to be
used in larger quantities when there are fewer passengers who
want that, is this going to be good value for money? At the end
of the day it does come back down to that.
248. Yes, but who judges that? May I just ask
you something else? Are you confident that if the franchises for
the local services are left to the end of the process there is
going to be room for them within the system and are they going
to be treated in a fair way?
(Sir Alastair Morton) The local services.
249. Yes. If you are talking about the local
services in the conurbations, they are left to the end as far
as we can see. Is there going to be enough track capacity? Is
there going to be enough money to enable the enhancements to be
(Sir Alastair Morton) It is a fair comment. We have
South Central as one of our first. We have Chiltern. They both
have into-town and in-town services. We are engaged with South
West likewise and Central, which is the local service for Birmingham.
They are all up on the block already. Thameslink has been put
forward. We are already busy with the local in-town services of
big conurbations. The one which has not begun yet is the local
services in what we will call the Northern franchise where there
are services into smaller towns in the PTE areas, because we are
consulting the PTEs pretty exhaustively.
250. When will that be finished?
(Mr Grant) Next year.
251. Next year is quite long. Beginning or the
end of the year?
(Mr Grant) We are discussing with the PTEs at the
moment and that consultation will drive when we actually start
the process. The process overall, as it is happening at the moment,
to heads of terms is taking in the region of about six months,
but the consultation with PTEs is an important aspect and we shall
not be cutting that short. There will be quite a bit of discussion
with the Northern franchise because there are five PTEs in that
252. Did Railtrack miss the opportunity in their
rail management statement to state a long-term vision for rail
(Sir Alastair Morton) In our view they
may reasonably feel they took a stab at it but it was a rather
incomplete stab at it. It is reasonable in future that we should
bring out our views in the autumn as we plan to do and that we
should take the lead, if that is what the principal funder is
after. Then they, Railtrack, will prioritise within our programme
to produce it. In other words, they could reasonably say they
would like to have more guidance from the SRA strategic plan in
the preparation of their own NMS.
253. Is it going to be necessary to alter the
current track access charging system to incentivise Railtrack
and the train operating companies?
(Sir Alastair Morton) Ministers have said that they
think there should be incentives. We believe that incentives can
work well. Incentives come in two kinds: they come as carrots
as well as sticks. At the end of the day it is part of the Regulator's
brief to work out exactly what they should be. We can say yes,
we think it is a good idea, to the Regulator. We can engage in
debate if he wishes on some useful ideas; we are there to talk
to, as it were.
Chairman: Thank you very much, Sir Alastair;
you have been very tolerant. Thank you for coming. Doubtless we
shall talk to you again and we look forward to your impressionistic
view of what is happening. Thank you very much.