Examination of Witnesses (Questions 620
WEDNESDAY 7 NOVEMBER 2001
620. How can your credibility be re-instated?
(Mr Grant) Hopefully by producing the strategic plan,
by getting the buy-in from the industry and producing a blueprint
to go forward with.
621. Whose fault was it that it was not produced
(Mr Grant) Clearly it is the SRA's fault. At the time
everything seemed very difficult, even in writing this strategic
plan it has been very difficult to find some solid ground to stand
622. Everything seemed very difficult. Did you
think it was a simple industry when you came into it?
(Mr Grant) I did not really realise how complicated
it was. I have a railway background and was trained as a railway
engineer but that was before privatisation.
623. What discussions have you held with Virgin
about the West Coast Main Line organisation?
(Mr Grant) We received two documents via the Department
about two weeks ago; the documents were dated 8 and 12 October.
There is no agreement on that document. It is a document which
has been signed by Virgin and Railtrack but pre-administration.
We were asked by the Department to look at it. We had been expecting
to look at the West Coast Main Line. Where we are at the moment
is that we have asked a number of questions of Virgin. We have
also asked a number of questions of the administrator. Our primary
focus is to make sure that phase one is delivered as quickly as
possible, that is the 125-mile-per-hour running and reduction
in journey times. Phase two looks more problematic and we are
doing the analysis for that. It is too early to say where we shall
end up on phase two but at the end of the day we recognise that
the West Coast Main Line is a mixed use railway. We need to optimise
that use and that is the analysis we are doing at the moment.
There is no agreement whatsoever in any proposals put forward
from Virgin and Railtrack. Even the status of the document is
not absolutely certain as to whether it is an agreement between
Virgin and Railtrack.
624. Do you feel any concern that apparently
there is no agreement about something which should have been delivered
(Mr Grant) We have always been concerned about the
West Coast Main Line. What we are trying to do now is to focus
on what needs to be done, first of all for phase one and then
to focus on phase two.
625. What will guide your decision on both phase
one and phase two? Who would be making the judgement about whether
phase two was important?
(Mr Grant) We shall be making recommendations to the
Secretary of State but ultimately if you assume that there is
a limited amount of money and if phase two is considerably more
than anyone is expecting, then a judgement has to be made as to
whether that is the best way to spend public money. Today there
are only two pockets left with Railtrack in administration: one
is Virgin and the other is the Government.
626. Do you think it is right that Virgin should
receive compensation because Railtrack have not delivered as promised?
(Mr Grant) I could not really judge that but within
the analysis we shall obviously make those sorts of recommendations
when we have seen all the facts. We were not party to the facts
before about two weeks ago.
627. What principles will be guiding that analysis?
(Mr Grant) In terms of whether they are entitled to
compensation or not?
(Mr Grant) The contract; the contract they have and
now the one the administrator is interfacing with Virgin and the
Government standing behind the administrator. At the end of the
day, what we are looking for from the West Coast Main Line is
the optimum use for passenger and freight; that is Intercity and
commuter as well.
629. In your evidence in paragraph 4 you say
that where major infrastructure improvements are necessary you
consider that long-term franchise replacement is not the only
delivery mechanism. Do you think such long-term improvements are
required on the West Coast Main Line? What are you going to do
to bring them forward?
(Mr Grant) It is absolutely essential for the West
Coast and East Coast Main Line that these improvements take place
because they are the main arterial routes. They are absolutely
crucial to delivering the ten-year plan. They need to be upgraded,
we need further capacity and we shall be doing all we can to expedite
it as quickly as possible.
630. What do you think the relationship should
be between the Strategic Rail Authority and government?
(Mr Grant) I see our role as advising Ministers on
railway issues and keeping officials up to speed.
631. You talked about meeting the goals of the
ten-year plan, but you are also talking about your strategic review
coming out. It would be helpful to understand the relationship
between those two as we go through the discussion.
(Mr Grant) The strategic plan's focus is on delivery
of the 50 per cent passenger growth and the 80 per cent freight
growth and dealing with overcrowding. Those are the objectives
which have been set in the instructions and guidance and that
is the core of the ten-year plan and how we are going to try to
632. Were you not surprised that neither your
previous Chairman nor the SRA were involved in the decision to
put Railtrack into administration?
(Mr Grant) Yes, we were surprised.
(Mr Grant) Maybe disappointed at the time; I am not
so sure now. Certainly disappointed at the time.
634. You would have expected it to be part of
your strategic responsibilities.
(Mr Grant) We have quite a bit of experience of restructuring
635. You have just said in answer to Mrs Ellman's
question that the East Coast Main Line and the West Coast Main
Line are absolutely core to the future of Britain's railways.
Are you absolutely convinced that the new Chairman of the SRA
is going to be entirely impartial in deciding who the franchisee
should be of those two routes?
(Mr Grant) I certainly hope he will be and that is
probably a question you should ask him. As accounting officer,
I have responsibilities which are separate from the Chairman's
and we shall be looking for value for money on East and West Coast
and every other project we do.
636. I would have hoped to put those questions
to the new Chairman but I am told we do not have time in this
inquiry to do so. In the new structure the Government envisages,
what do you imagine the role of the Rail Regulator would be and
what do you believe the new relationship between yourself and
the new Rail Regulator should be?
(Mr Grant) We found regulation quite difficult in
some aspects in so far as knowing where the money is spent. There
has been a number of issues where the Regulator decided that Railtrack
are entitled to more money, which meant less money for enhancements.
There is no doubt in my mind that there needs to be an independent
body as an arbitrator or as a regulator going forward because
there will be disputes and if we are to attract private capital
they will look to that person or that body to make sure there
is fair play.
637. The Committee will have the opportunity
to question your Chairman but he is not being appointed until
December I think.
(Mr Grant) I believe it is 1 December.
638. In the light of the Government's new approach
to franchising which we have witnessed recently how many long
and short-term franchises have you recommended there should be?
(Mr Grant) May I take a step backwards and talk about
what we have been asked to do by the Secretary of State through
his statement in July? He asked us to look short term at how we
could improve passenger performance, investment services, improve
rolling stock and improve passenger facilities. We then took those
issues away and we looked at the franchise replacement programme
and we broke it down into six categories. Some of this may be
commercially sensitive so I shall give you a general answer on
the six categories as we have looked at them and give you an idea
of how many there are in each category. There are those whose
future has already been determined and they include Chiltern,
South Central, a total of five. There are those which in the mapping
process we have got onto a cost/plus basis and they need to be
dealt with quickly. Then there are those franchises which we believe
could wait until expiry. We need to phase these things in terms
639. Expiry including the extra two years or
expiry at their existing contractual date?
(Mr Grant) Expiry at the existing date. Then there
are those franchises, probably one or two, where they are possibly
going to run into difficulties as the subsidy profile declines.
Then there are those franchises where there is a potential to
extend for two years, East Coast Main Line, Connex South East
and First Great Western, but again they have to come forward with
proposals if that is what they want to do. The remaining ones
are long-term franchises which are Gatwick, C2C, West Coast and
Cross Country. It is not short-term franchises. It is a case of
horses for courses. Some will be extensions and there will still
be long-term franchises.