Examination of Witness (Questions 920
WEDNESDAY 14 NOVEMBER 2001
920. The ten year plan was desperately needed.
How much time has now been lost as a result of these problems
(Mr Byers) I do not believe that we have lost any
time as a result of the decisions that were taken in relation
to Railtrack. I believe that the ten year plan and the objectives
within it can still be met. We are now probably, as far as rail
is concerned, in almost a stronger position to meet the commitments
we made in the ten year plan than we were before railway administration.
921. How soon do you expect Railtrack to come
out of receivership?
(Mr Byers) That will obviously be a matter for the
administrator and I would not want to think that the administrator
feels under any pressure to come out of administration by a particular
date. I think he knows and has said before this Committee that
he would like administration to be as short as possible but clearly
he has his own legal obligations and he must discharge those to
his own satisfaction. It would not be helpful to put a deadline
or a timetable as far as the administrator was concerned.
922. Not even a hope?
(Mr Byers) As soon as possible, but that is not very
923. You say that the ten year plan is not going
to be jeopardised. Can you guarantee to us that all the improvements
on safety, the slam doors, the fail safe systems on the signalling,
none of that is going to be delayed as a result of this?
(Mr Byers) The commitments that have already been
made will not be affected by Railtrack going into administration.
924. One of the problems is no one is quite
clear what each person is doing. Could you clarify that? As I
understand it, the problem with the east coast main line refranchising
was that you were trying to compare bananas with eggs. The two
bids were not really comparable. That appears to have been the
fault of the Strategic Rail Authority. Are you going to try and
make sure that the Strategic Rail Authority makes bids comparable
(Mr Byers) Comparing bananas with eggs sounds a pretty
fruitless exercise. Mr Bennett highlights an important point which
is that what we need to do with any franchiseand the east
coast main line is a very good example of thisis to have
a core of outputs that we expect to be the minimum that a new
franchise owner would deliver on. Then one can compare like with
925. Is it your job to do that or is it the
Strategic Rail Authority's job to do it?
(Mr Byers) I think it is for the Secretary of State
giving guidance on a new franchising regime and we are consulting
on that at the present time. If time is available, it would be
very useful to have the recommendations from the Committee to
inform our decisions at the end of this process. It is my responsibility
to give guidance on the franchising process. What we are trying
to do is to have a core of outputs against which bids can be judged.
What we should not try and do is to constrain new ideas and innovation.
I would not want to stop that happening. It might be that you
have almost additional proposals coming from a bidder saying,
"For an extra sum of money, we would be able to provide this."
926. We have been there; we have done that.
I hope you will think very carefully. What has happened since
you have come in is that, first of all, there has been an announcement
of a standstill on the franchises so that some which were expected
to be awarded were not awarded. Various operators have said this
will affect the way that they go for rolling stock. Whether that
is accurate or not we can judge but that is what they have said.
It is obvious the SRA itself is in considerable disarray. They
have not yet published their report and there has been this complete
chaos with Railtrack. What we need to know from you is: is the
successor to Railtrack going to be in the same shape as its predecessor?
Is it going to have the same assets? Is it going to be able to
take decisions? Are you going to go for the same sort of structure
or are you going to try and find something different? If you are
going to find something different, are you going to accept that
Railtrack was incapable of bringing enough engineering expertise
within its own board in order to assess what was happening with
its contractors? Are you going to push forward these changes?
If not, are we going to have three more years of chaos while somebody
makes up their mind what we should be doing? Please consult but
give us a few answers and we will give you a straightforward plan.
(Mr Byers) What I have sought to do in the time that
I have been Secretary of State is to identify the steps that will
need to be taken to create a structure within which we can see
genuine improvements in the railway network. My own judgment is
that we needed to look at the whole franchising regime.
927. Fine. You have told us that in considerable
(Mr Byers) I have not reached conclusions yet. I will
reach conclusions and that will be informed by some of the recommendations
which have come from this Committee over the period. As far as
the successor to Railtrack is concerned, we have laid down guidelines
which should apply. It will be for the administrator to make recommendations
to me, but it will not be a body which will be controlled by the
government. As far as the Strategic Rail Authority is concerned,
I think it is right that I give it directions and guidance but
keep an arm's length relationship with it. Most importantly -
and I think this is crucial - is that the strategic plan which
they are now about to produce at long last will be an agenda on
which the industry can move forward. Part of that will be the
way in which they are going to approach the whole principle of
how franchises are to operate. This is why I was trying to make
the point that although understandably people are concentrating
on Railtrack there are a lot of other parts of the jigsaw that
we have to get absolutely right.
928. What about the regulator because you have
the regulator regulating on the one hand and you have the Treasury
regulating on the other.
(Mr Byers) There does need to be a form of independent,
economic regulation. What form that takes is something we need
to consider in the light of the new structure that might well
929. How long are all these considerations going
(Mr Byers) We do not have too long.
930. We have not got any time at all. We are
working on borrowed time now.
(Mr Byers) I have only been in this place a matter
931. Believe me, none of this is having a go
at you. There are some of us who say that if these decisions had
been taken in 1997, if there had been a Transport Bill then, we
would not be talking in these terms, but the reality is that the
railway industry is not clear about its franchises; it is not
clear about its rolling stock; it is not clear about Railtrack
and it is not clear about where the commitment for its new investment
is going to come from. We have the SRA apparently having a collective
nervous breakdown and ATOC is not far behind it. We need some
answers but we need them fast. What timetable are we talking about?
(Mr Byers) I agree with your call for urgency. It
was one of the things that struck me when I was first appointed,
that time was not on my side.
932. That is the truest statement you have made.
(Mr Byers) We have to take decisions. Some of them
will be tough. Some of them will be controversial and will be
disagreed with, but the only way we will get a railway system
which is fit for the 21st century is if those tough and difficult
decisions are taken. They will be taken and sooner rather than
later. I would hope thatI am not sure when I am next giving
evidence before the Committee on railway mattersby the
time I next come before you in a few months we will have resolved
these outstanding questions, but it will be a matter of a handful
of months rather than six or nine months.
933. In your Department's response to our March
report, published in October, on the issue of company limited
by guarantee, it says in paragraph 47 that the government believes
thisthat is, to make the railway industry work in a safer
and better mannercan best be achieved by transferring Railtrack's
network responsibilities to a private sector company limited by
guarantee; not a preference; not a suggestion, but one might conclude
almost a decision. I am wondering how consistent that is with
what you have said about considering the options. Could you clarify
that? This is not a decision that has been taken, I assume; it
is government's preference as things stand to date.
(Mr Byers) What was very important was that we had
in place a vehicle, if I can use that word, which would be able
to take over the responsibility of running the network. That is
what we have done through a company limited by guarantee. It is
not a decision. I think it would have been foolhardy and a mistake
to have ruled out any other proposals that might come forward.
There may be other interesting proposals that are made and I think
they should be given due and proper consideration. That is really
what we are doing at the moment. We are working up the details
of the company limited by guarantee but we will also give proper
consideration - indeed, I welcome expressions of interest. Let
us see what other ideas there are around but the key test has
to be whether, at the end, we can have a new licence operator
that can overcome the difficulties that we have experienced as
far as Railtrack is concerned.
934. May there not be a conflict between the
need for urgency that is consistent with getting the new system
correct, the administrator's proposed timetable and your considering
what other options may be put on the table for your consideration
in terms of what may succeed Railtrack?
(Mr Byers) We have to recognise that the administrator
has a particular set of legal duties and responsibilities. As
I think I said earlier, I do not want in any way to put him under
pressure in terms of laying down a timetable. During this period,
he will need to consider the proposition that we have put forward
for a company limited by guarantee; he will need to consider the
proposition which might come forward from other interested parties.
I think you noted an interest being expressed by WestLB. He will
need to give detailed considerations to those particular proposals
but, given that there is this period of administration anyway
when obviously he and his teams are looking at the assets, looking
at the value which is in Railtrack plc which is a part of Railtrack
which is in administration, there is this time when we are not
losing anything because Railtrack is in administration.
Chairman: Secretary of State, you have been
very tolerant and you have been giving us evidence for a long
time. I think all the Committee are grateful to you for that.
Speaking entirely personally, were it to be the case that we finished
up, at the end of all our deliberations, with a company run by
Deutsche Bundesbahn, some of us might think that was mildly ironic.
I simply leave you with this thought. As you have been kind enough
to say that you hope to have the answers by the next time you
come before the Committee, I am delighted to hear that and I will
just remind you that that is on 16 January. Thank you very much