Examination of witnesses (Question Numbers
TUESDAY 1 MAY
20. How is your relationship between the Strategic
Rail Authority and the Scottish Executive?
(Sir Alastair Morton) I am happy to listen to their
answer. Mike Grant has had the most recent meeting with them.
As far as I am aware they know they have to give us instructions
and guidance, and we are waiting for them, meanwhile the relationship
is perfectly open.
Chairman: Mr Grant, how do you get on with the
Mr Donohoe: It is a different, it is the Scottish
21. The Scottish Executive.
(Mr Grant) We have a very good working relationship.
We are constantly in touch with the Scottish Executive and I have
not been told there are any problems between us and the Scottish
22. Who is the lead in that relationship, you
(Mr Grant) It is a partnership, I am not avoiding
the question. We are going to do a study with them, we expect
to receive some instructions and guidance in the autumn. Clearly,
as far as lead is concerned it comes from them once they have
issued the instructions and guidance.
23. You are the Strategic Authority.
(Mr Grant) We are their agents and we will implement
24. If they make different decisions to the
ones that the British Government take that would affect your strategy,
is that what you are saying?
(Mr Grant) In relation to intra Scotland services
they have the final say.
Chairman: That is another one of the things
that is going to evolve.
25. Sir Alastair, do you think Virgin Trains
are justified in raising their fares by up to ten per cent in
view of the continuing disruption?
(Sir Alastair Morton) Let us get the fundamental of
the answer out first. They were free to do so.
26. Do you think they were justified?
(Sir Alastair Morton) There was no case under our
powers and under any legislation for us telling them they could
not do that. They had previously either held them down or reduced
them and they now increased them in a surprising jump back to
a trained line that others were already on. Nevertheless, it was
a big jump at a bad time and we said so. Mike Grant had the meeting
with Chris Green that discussed that.
27. Do you think you ought to be seeking additional
powers to limit price increases?
(Sir Alastair Morton) I would like guidance from Parliament
or from ministers in the first instance on why we should work
to transfer financial risk from the users of the railway and the
owners of the companies to the taxpayer, whereas presently it
resides with the owners of the companies and the users of the
28. Instead of sitting on the sidelines, do
you think, Sir Alastair, you ought to be compensating train operators
for some of the losses that have been incurred since Hatfield?
(Sir Alastair Morton) Again, you would like me not
only to take the risk off the travellers but also off the owners
by compensating for the damage they have suffered.
29. The public think that the Strategic Rail
Authority is the authorityyou mentioned the inverted cone
previouslyit is going to put it right, are you going to
be able to put it right?
(Sir Alastair Morton) The Strategic Rail Authority
is not the British Railways Board recreated and it is not the
Treasury. If the Treasury tell us, "We wish to compensate
everyone who has suffered from the aftermath of Hatfield, please
pay them out and send us the bill", we will act as the agent
for the Treasury in that, but until they do so we do not have
power to go down to the Barclays Bank and say, "Hand over
a lot of money because we want to give it to railway people, owners
of companies and users of trains". We may be called an authority
but we do not have unlimited funding.
30. It seems to me that you ought to be shouting
a little more. You mentioned before, in your response to the Virgin
Trains justifying ten per cent fare increases, it was only weeks
before that they slashed them to 50 per cent to encourage more
passengers back on to the rail and then a month later they were
putting their fares up ten per cent. Surely you ought to have
kicked up more of a fuss on that than you did?
(Sir Alastair Morton) They are the ones who will suffer
31. The passengers will.
(Sir Alastair Morton) The passengers will stay off
the trains if they want to.
32. It appears to me that you do not want to
take-up being the passengers' champion?
(Sir Alastair Morton) The only way I can tell people,
where I have no regulatory power, to keep their fares down and
reduce their revenues is by increasing the subsidy we pay them,
and that is behind your second question of why do we not ease
their pain from Hatfield.
33. Is that not rather convenient, you saying,
"We do not have the money for doing it and, anyway, we are
not there". We are laying down the strategy but we are not
telling them what to do. We are not giving them an overall indication
of where we want the industry to be. We are allowing these policies
to evolve. You do not interpret that your role is in any way pointing
out to the train operating companies the direct connection between
prices and rears on seats, you do not feel that is something which
you need to discuss.
(Sir Alastair Morton) We did point that out quite
strongly to Virgin.
(Mr Grant) I had a meeting with Virgin and we did
express our disappointment at the fact that they had raised their
34. I have to say that is not half the disappointment
the passengers on the station feel.
(Mr Grant) Most of the leisure fares were not raised.
The regulated fares were not raised, it was the unregulated fares
that were raised and Virgin were discounting a lot of fares, even
from 16th April to 19th May there were fares of £13 from
Manchester to London.
35. That was at a time when they were so disastrously
off their timetables that it required an effort and will, concentration
and desire to expand one's education by being prepared to read
for many hours to take the train in the first place.
(Sir Alastair Morton) Correct.
(Mr Grant) It is still running at a discount fare.
The regulated fares were not raised, it was the unregulated fares,
which is in the contract.
(Sir Alastair Morton) Unless you take the view that
first class passengers should be a protected species at the expense
of ordinary rate taxpayers; and you already know, I am sure, that
Railcard holders and Young Persons Railcard holders are entitled
to saver fares at any time; what is going on, and it is quite
aggressive, is the introduction of airline yield management to
railways. We lack capacity in our railways and until Parliament
and the Treasury passed legislation and provide funds,and the
time passes to get more capacity on to the line, there is going
to be an issue about what is the correct pricing and how to best
manage the yield from trains. We have privatised the industry,
we did not do it, Parliament did, and the people to whom it was
privatised signed up to pay certain bills and they signed up to
receive in return certain revenues. If they are able to manage
the yield so that a lot of people pay less and some people pay
more, but in general people are driven to planning their journey
earlier if they want to pay less, in general terms, that is the
privilege that Parliament gave them. We do not rewrite legislation
in the SRA.
36. Have you discussed with the operating companies
the suggestion that you make that they are driving towards an
air lines type of control of the yield and individual trains or
is that something that you interpret from the information you
(Sir Alastair Morton) We discussed it.
37. What is the view of the operating companies?
Is that their view, is that what they say they are doing?
(Sir Alastair Morton) They interpret it to different
38. Have you pointed out to them that it might
not be in the interest of the railway industry, as a whole, and
certainly not of the passengers.
(Sir Alastair Morton) They would point out
39. No, have you, Sir Alastair, as part of the
Strategic Authority pointed out to them that such a decision would
have an immediate impact on both passengers and the future of
the railway system?
(Sir Alastair Morton) We have pointed out that raising
charges when giving bad service is poor tactics in our opinion.