Examination of witnesses (Question Numbers
TUESDAY 1 MAY
40. I think that is one way it could be described.
(Sir Alastair Morton) We have pointed out to them,
something that they needed no telling, that they risk disappointment
and people staying away. We pointed out that we were pleased they
halved their fares to get people back on to the line. We have
expressed opinions, because we are not responsible for their profits,
or the behaviour of various companies.
41. When will the name of the successful bidder
for these franchises be announced?
(Sir Alastair Morton) What happened after the announcement
on April 1st of the new arrangements of Railtrack about the projects
to enhance, in this case, on the East Coast Main Line, was that
we put out certain questions to the two contenders saying, "Things
have somewhat changed or may be thought to have changed, you have
to have a chance here to express any affect that may have on your
bid". We asked for those to come back on April 17th, they
did. We now have their answers, we are evaluating them and we
should be making our recommendations to ministers within a very
short period from now and then they will have them in front of
them for answer.
42. We were advised that the announcement would
be made last summer?
(Sir Alastair Morton) So were we.
43. What was the delay?
(Sir Alastair Morton) Ask the Minister. We are saying
that we put our recommendation of a preferred bidder to the Minister
on 8th December last year and any answers about what has happened
since then until April 1st have to come from him.
44. What led to the dispute between the people
involved with the East Coast Main Line?
(Sir Alastair Morton) The dispute!
45. There was some statement made in February.
(Sir Alastair Morton) Railtrack suddenly surprised
us with a statement that the costs of the East Coast Main Line
had rocketed. We reacted to this by saying to ministers, "Do
not send us any letter accepting our recommendation, or otherwise,
until we have got to the bottom of this". We got to the bottom
of it by sitting down with Railtrack and going through it carefully
and we were able to explain it to ourselves and to ministers.
We said to the ministers, "That is okay now, we do not think
it changes the situation, we are waiting for your reply as before".
46. The statement by Railtrack, that the costs
have increased by nearly one hundred per cent in some instances
was misleading, was it?
(Sir Alastair Morton) It depended entirely on what
you included in making that statement, including things like project
contingencies. On a like with like basis, as we said a little
later, it increased by 20 per cent.
47. You just responded to Mr Olner saying, "We
are short of capacity, but the reason why we are short of capacity
is because of the delay in nominating the successful bidder. It
does not just apply to passenger rail it applies to freight and
all of the other services on the East Coast. I consider that further
delays will not help the situation in winning back passengers
on to rail".
(Sir Alastair Morton) I agree with you.
48. You say we will be hearing something within
the next 14 days.
(Sir Alastair Morton) We will submit our recommendations
within the next pretty few days, I am not naming a precise number.
It will be up to them after that when we hear from them.
49. That does not help us, the next few days
could be 30 days, it could be 60 days, it could be 14 days.
(Sir Alastair Morton) It would be a great deal less
than a month. The question is will it be more than a week, will
it be more than a fortnight.
50. Can we settle on 21 then? Can we have a
(Sir Alastair Morton) Inside 21, I am happy, yes.
Let us be clear, that is our recommendation to ministers, that
is not their answer to us. Our recommendation to ministers goes
in confidence to ministers, it is they that release it to the
public by putting it back to us.
(Mr Grant) Can I add one thing, the project has been
progressing. The identification of a preferred bidder is absolutely
necessary, we have not slowed down the development of the project
or the upgrade. That has been progressive.
51. Is that not part of the strategy?
(Mr Grant) We do need a preferred bidder, however
so far the project has progressed, it has not stopped because
of the lack of
52. Mr Grant, this is part of our difficulty,
if people do not know what the strategy is how can you then decide
who is going to be the preferred bidder?
(Mr Grant) The criteria for the preferred bidder is
well documented on the many things that we
53. You misunderstand me, I am not saying if
you publish a series of criteria which may bear strong resemblance
to criteria published before you can get people to respond, I
am asking you something different, the Strategic Rail Authority
is supposed to be setting the overall pattern for the development.
That is the first thing it says in the piece of paper that you
yourself submitted to the Committee, that your function is not
only to promote but also to encourage. All I am saying to you
is, how can you set your franchises if so far there is no published
strategy for where you want the railway to be?
(Sir Alastair Morton) If you are saying that so far
there is no statement of which yards of railway at which point
on the East Coast Main Line I would disagree with you. What we
need is a statement that we are seeking. This is in the public
domain and has been made a number of times, including in the Ten
Year Plan, that we are anxious to increase the carrying capacity
for both passenger and freight of the East Coast Main Line and
that we plan to do so, or we plan to support the plans to do so,
shall we say. Our strategy is to support plans that remove bottlenecks,
that improve speeds, and all this has been published. In other
words, the strategy for the East Coast Main Line at the strategic
level is pretty clear. What is not yet clear is exactly what investment
project, into which section of rail, as it were, and which junctions
will go ahead and in what order until we have a resolution of
who is going to be the main users of the line, there are several,
namely the winner of this franchise and they are able to sit down
with Railtrack and with us. Then, if I may say it again, Railtrack
has just folded out of the scene as the prime mover in that process.
Until October last year, or November, there was not any doubt
in Railtrack's mind that they would be the developer of the East
Coast Main Line upgrade in its four phases, of which phase one
is in Leeds. They then suddenly said, "We cannot handle this".
54. Because it came as a complete shock to them
when they looked at the figures and they looked at the assessment,
they came back to you and said: "We have all of this wrong,
we are terribly sorry, Guv, we are going to take our bat and ball
home". Is that what you are talking about?
(Sir Alastair Morton) They said that to the Regulator.
55. You do not see any illogicality in the lack
of overall strategy and the kind of discussions you are having
with individuals about particular bits of the system?
(Sir Alastair Morton) There is a perfectly good connection
but there are two contenders and there are two more versions of
the further stages of the planned upgrade. We are discussing them
with a view to assessing which offers more value for money, that
is our primary responsibility, to get value for money for the
56. Can I remind the Committee of my interest
in Railtrack, First Group and Eurotunnel. Sir Alastair, welcome
to the Committee, what is the status of the Strategic Agenda published
by the SRA on 1st March this year?
(Sir Alastair Morton) It is an agenda, it is a list
of things requiring further action. The product of further action
will be a plan to be published in November. The process of working
to that agenda will, no doubt, produce actions by others as well.
It is a work document.
57. I gather that in there one of the priorities
is to provide a framework for delivery of the rail content of
the Ten Year Plan and it also says that rail Regulator will have
a duty to facilitate the SRA's strategy. Would I be going too
far to say that the Regulator is uncertain?
(Sir Alastair Morton) I think in the Regulator's opinion
you would be going a lot too far. He recites a list, I cannot
quite remember, he either has 13 or 17 statutory duties laid on
him, of which he regards that as one, no doubt an important one,
and we regard it as important. I agree with him, it is not the
58. I also see that one of your priorities is
to remove bottlenecks to increase capacity. I also have an interest
in the East Coast Main Line, is it correct that one of the main
blocks on capacity between Edinburgh and London is actually the
part between Newcastle and Edinburgh, is that correct? That is
one of the main bottlenecks, particularly to freight, although
to passenger traffic as well.
(Sir Alastair Morton) It is one of them, certainly.
(Mr Grant) The East Coast Main Line has a number of
projects, Welwyn is another one. There are a number of bottlenecks
up there which could be tackled at different phases through the
East Coast Main Line operator.
59. Could I briefly ask about your policy on
new stations, and who the recipients of the new stations will
be. Could you just confirm to us that, perhaps, existing stations
might be benefiting us more before new stations would be considered?
(Sir Alastair Morton) Obviously the development towards
the strategic plan is going to include a statement of our strategy
for station investment. Once again one has been caught amidships
in the last six months by the fact that Railtrack has effectively
withdrawn from that activity-one of the things it had to do under
the terms of privatisation-where they previously said, "Wonderful,
this is a commercial scheme, we can do it", they are now
saying, "We will not touch it unless we get a hand-out".
Railtrack's posture has changed a great deal, which has to affect
everything we do. What we propose to do is come out with a statement
of who we look to to do what in general terms about which categories
of station. We have not come up with that yet. That is a new train
of thought for us post-Railtrack. On the second point, existing
stations before new stations, I would like to put to you a comment,
if I may, because I think it illuminates the subject. There are
a number of commuter town-centre stations who no longer wish to
have more vehicles coming in to join trains at their station at
rush hour in the morning and out in rush hour in the evening because
these people tend not to shop or contribute to the commercial
life of the commuter town. Watford is a rather good example, it
is positioned to be the best hub for railways and point of contact
with roads in South-East England. They tell us they do not want
to have more rail passengers coming in to park at their station.
The logical thing to do is a parkway station outside Watford.
As of today I would not be able to tell you where that might be
in terms of siting it. It seems to me the logic will be indistinguishable
in places like Woking and Swanley in Kent. The logical thing is
going to be for parkway stations outside them, adjoining major
highways in order to get commuters into the main conurbations,
Birmingham, London, Leeds, whichever, without disturbing local