Examination of Witnesses (Question Number
WEDNESDAY 17 OCTOBER 2001
80. My last question, for all these financial
things you go cap in hand to the Treasury in January; is that
(Mr Linnard) There is a Spending Review which will
conclude next July.
81. Mr Linnard, we have heard that bit. I want
to let you escape, but there are some very important things we
need to know. What changes do you expect in the way that the railways
are regulated? Is the Rail Regulator's Office going to be merged
with the SRA?
(Mr Linnard) What Ministers have saidand I
think I had better stick to the wording of thiswhat the
Secretary of State said when he announced Railtrack's move into
administration was that "there were plans to legislate when
Parliamentary time allows to rationalise the present regulatory
structure to provide stronger strategic direction while reducing
the burdens of day-to-day interference in the industry and a self-defeating
system of penalties and compensation".
82. What does that mean then, Mr Linnard?
(Mr Linnard) It means that if Railtrack emerges from
administration into a company limited by guarantee, there would
probably be a need to look again at the respective roles of the
Strategic Rail Authority.
83. So, in other words, it is not your intention
that the Rail Regulator's Office would continue in the way it
does, you would be looking at a different role, you would be looking
at a different relationship?
(Mr Linnard) A different relationship but still some
form of independent economic regulation.
84. You would junk the existing series of penalties
but look for an alternative method. Is that what you are saying?
(Mr Linnard) Economic regulation principally
85. Economic regulation in my book is fines.
(Mr Linnard) It is track access charges and possibly
also penalties, but primarily track access charges, setting the
income that Railtrack in its new form will receive from train
operators and others.
86. But the Regulator does not just deal with
Railtrack, does he; he makes assessment on all sorts of very important
aspects of railway work and he has specific means of making the
companies respond. Is it your intention that he should retain
those powers? Is it your intention that he should in future be
part of the SRA? If so, how will he operate?
(Mr Linnard) What Ministers have saidand I
cannot stray too far from what has been announced already to Parliamentis
that given the assumption of a company limited by guarantee, there
would be a case and a need for legislation therefore to rationalise
the functions of the SRA and the Rail Regulator because the Office
of the Rail Regulator was set up with a view
87. I think we get the message.
(Mr Linnard) To regulating a private company
distributing profits to shareholders.
88. That is something that the House of Commons
will ultimately have to address. Can I ask you something which
is probably very simple, but I am not very clever; why do we have
to have a Railway Strategy Division as well as the Strategic Rail
(Mr Linnard) We have not got a Railway Strategy Division,
we have got a Railway Sponsorship Division.
89. You are sponsored? We are not allowed to
be sponsored in the House of Commons.
(Mr Linnard) All non-departmental public bodies, which
is what the Strategic Rail Authority is, have sponsor departments
and sponsor divisions within the Department which look after pay
90. So how is that different from the relationship
you had with the previous organisation? Are you marginalising
(Mr Linnard) No, we are not.
91. Are you restricting its ability to plan
(Mr Linnard) We do not think we are. Indeed, we are
very keen that it publishes strategic plans.
92. Are you giving it more instructions than
you gave it before and more rigid rules? Is that why you were
misunderstood in your original answers?
(Mr Linnard) I do not think we are. We are issuing
directions and guidance but the SRA has always operated under
objectives, instructions and guidance from Ministers and so did
its immediate predecessor, the Office of Passenger Rail Franchising.
93. Mr Linnard, we have had within the Department
a section dealing with railways, however that was described. We
now have a new section which is a sponsoring section, not a strategic
section, so it is not thinking strategically, it is just sponsoring
the SRA. I am not clear exactly what the difference is. That is
probably because I am not very bright!
(Mr Linnard) The best way to answer that is to say
at the moment the Railways Directorate in the Department has about
60 people in it. That compares with a much greater number of people
in the Strategic Rail Authority or the Office of the Regulator.
It is a very small part of the Department and, even if we wanted
to, we are not resourced or equipped to second-guess the SRA or
anybody else on operational decisions.
94. So who takes the decisions within the Number
10 unit? Was this situation forced by Number 10 or a decision
that came up in the Department?
(Mr Linnard) What decision?
95. Was the decision to put Railtrack into administration
a decision by the unit in Number Ten?
(Mr Linnard) That was a decision taken by the Secretary
of State for Transport.
Chairman: You have been very patient, Mr Linnard,
and you Mr Coulshed. I hope you have enjoyed seeing us because
we may want to talk to you again.