Examination of Witnesses (Questions 700
WEDNESDAY 7 NOVEMBER 2001
700. How much does that come to?
(Mr Grant) The agreement so far between ourselves
and Railtrack is for £28 million of development work.
701. As part of the ten-year programme it is
suggested that there is going to be £34 billion of private
money. How confident are you at this stage that that is going
to be achieved?
(Mr Grant) At this stage it looks very difficult.
It comes back to the whole industry structure going forward. Regulation,
the structure of whatever comes out of administration, all of
that has to be conducive to private investment otherwise it will
not turn up.
702. The SRA is going to be the lead body, is
it not, in trying to key in private money? That is virtually why
you are in existence. How difficult, if achievable at all, do
you think it will be to get that flow of capital going?
(Mr Grant) Starting from where we are, it is going
to be difficult. For the right sort of investment and the right
environment, that private money will be available.
703. Why did you adopt a strategy for franchise
replacement which left you unable to select the best overall value
for money or operational solutions?
(Mr Grant) I am sorry, I do not understand the question.
704. The Department criticised you fairly strongly
in its evidence saying that you really did not know what you were
doing about the franchising.
(Mr Grant) We have looked at franchising very carefully
in light of the 50 per cent growth and the overcrowding. We have
analysed each franchise and its contribution to that 50 per cent
target. We have looked at it, we have been very thorough, worked
very hard with the Department to make sure they understood our
analysis of each franchise.
705. They said you were unable to combine elements
to form the best overall value for money or operational solutions
and could only accept or reject the offers made.
(Mr Grant) Take the East Coast as an example, the
Secretary of State wanted more certainty around the infrastructure
numbers and that is why he asked us to look at them again. Where
we are today is that we have made assumptions on each franchise,
explained those to the Department and the Treasury and the contribution
that would make to the 50 per cent growth.
706. Were you short of funds to do the basic
work to analyse the profits which were made?
(Mr Grant) No.
707. You had enough money to do it.
(Mr Grant) To do the analysis?
(Mr Grant) Yes.
709. May I press you again on the strategic
plan? As I understand it you did a survey of the passenger transport
needs in Birmingham and you half did one in Manchester. That is
part of the information which is going into the strategic plan.
You are now doing a consultation next year on various elements.
How robust do you think your strategic plan is?
(Mr Grant) The strategic plan makes a number of assumptions
that things will be working. It has been very difficult to find
a solid piece of ground, with administration and where regulation
is. We have put in place a number of tests which we believe have
to be put right if the ten-year plan is going to be achievable.
710. As I understand it in Birmingham you looked
just at what people wanted to be able to do and presumably that
is built into the plan. You did the analysis of how to do that
in Manchester, and then decided not to do it because it was too
expensive. For the rest of the country you know what services
exist but how do you know what people would like to be able to
do if the services were there?
(Mr Grant) In the strategic plan we have focused on
the 50 per cent growth in passengers and 80 per cent growth in
freight and the overcrowding issues. In places like Manchester
and Birmingham, consultation with the PTEs is absolutely crucial
about what the local needs are. On the Manchester side, particularly
through the Trans-Pennine Express and Northern franchises, we
are in that consultation process now.
711. You are on the consultation process now,
but you are about to publish the strategic plan. Presumably the
strategic plan and this consultation are disjointed.
(Mr Grant) We are going to have to produce a strategic
plan every year. Our instructions and guidance say that we have
to produce a strategic plan in November of this year and that
is what we shall do on the best information available to us at
the time. Clearly in three months', four months' time, as the
industry structure may hopefully get a bit clearer, then we shall
revisit the strategic plan and produce it again in November 2002.
712. This time round it is going to be very
much centred on solving London's problems rather than the rest
of the country.
(Mr Grant) It is going to look at the instructions
and guidance on those three things. It is also going to look at
the success of the rail passenger partnership schemes and how
we can improve and widen that. We have just put in place more
streamlined processes on trying to get these small enhancements
put forward. I believe within the regulatory review there was
something like £500 or £600 million for small schemes
around the network.
713. I trust you are not letting Railtrack do
(Mr Grant) I think the calculations are going to be
done by the Regulator.
(Mr Jenner) That is correct.
714. Can this go ahead while there is this uncertainty
of Railtrack being in receivership?
(Mr Grant) They have to go ahead otherwise we are
going to stand still and it is really for the administrator and
the Department to make sure they are funded.
715. Do you have any consultations with regional
development agencies or regional assemblies on the economic impacts
of what you are planning?
(Mr Grant) We do have a lot of contact with external
relations department, with all the RDAs.
716. What do you mean "with external relations
(Mr Grant) Our external relations department deals
and different executives are allocated to different RDAs.
717. Does that influence what you do?
(Mr Grant) Of course it does. It certainly influences
what we think and how that feeds in to the strategic plan.
718. Does it influence what you do?
(Mr Grant) Yes, it influences what we do, because
it will influence the strategic plan and the strategic plan will
be our blueprint and therefore that is what we shall aim to do.
It does have an influence.
719. What are the major changes you would like
to see now in the rail industry?
(Mr Grant) What I should like to see coming out of
administration is more transparency, where the money is going,
certainly the transparency of contracts and most of all a change
in attitude of the infrastructure operator to make sure enhancements