Supplementary memorandum by the Department
for Transport, Local Government and the Regions (PRF 35C)
PASSENGER RAIL FRANCHISING AND THE FUTURE
OF RAILWAY INFRASTRUCTURE INQUIRY
I refer to the letter of 21 November, in which
the Committee requested a copy of the Department's notes of the
meeting between the Secretary of State and Railtrack's Chairman,
Mr John Robinson, which took place on 25 July 2001.
The minutes of the meeting are attached, together
with a supplementary note which explains that the Department has
decided, exceptionally, given the Secretary of State's wish to
be helpful to the Committee, to make the notes available.
The Department is releasing the minutes more
generally at the same time as making it available to the Committee.
The following record was originally classified
(RestrictedPolicy) and not disclosable under the Code of
Practice on Access to Government Information. Given the Secretary
of State's discussion with the Select Committee, and without prejudice
to its position under the Code, the Department has decided exceptionally
to make it available to the Committee, as it requested by 27 November,
and is at the same time releasing the minute and this supplementary
Mr Robinson spoke frankly and explicitly in
confidence at the meeting. The record took this into account and
its circulation was strictly limited accordingly. Against this
background, the note of the meeting was circulated by the Secretary
of State's Private Office on 30 July. As with all minutes produced
by the Secretary of State's Private Office, it was not intended
to be a verbatim record but to provide a concise note of the main
points of the discussion and of the points requiring further action.
Paragraph 6 of the note recorded that John Robinson
said that he was working on a number of proposals relating to
the company's short term and longer term finances which it would
be helpful to discuss with the Government. The Secretary of State
suggested that Mr Rowlands, the Director General in the Department
responsible for railways, to whom the meeting note was addressed,
should discuss the proposals with Railtrack's advisers, CSFB.
This was a highly abbreviated account of what
took place. Mr Robinson said that he considered the contents of
this part of the discussion to be highly sensitive and would rather
a record was not made of his comments. Given Mr Robinson's concerns,
the Secretary of State agreed that this part of the meeting would
not be minuted and that his private secretary would cease taking
notes. These instructions were followed. (Another part of the
discussion, on a Board-level change at Railtrack involving the
departure of Mr Jonson Cox, was similarly recorded only in general
terms, again at Mr Robinson's specific request).
Based on the recollection of all those present
on the Government side, the Secretary of State provided details
of that part of the meeting which was not minuted in his Statement
to the House of Commons on 15 October at column 954 and in his
appearance before the Select Committee on 14 November (Questions
844-850 refer). The key points were that:
Railtrack's financial situation was
more serious than John Robinson had previously thought.
Mr Robinson spoke about needing a
soft letter of comfort from the Government before being able to
access existing banking facilities.
It was agreed that there should be
discussions between officials and Railtrack's advisers.
If Railtrack were unable to access
their existing banking facilities through a soft letter of comfort
from the Government or receive extra financial assistance from
Government, it was clear that on 8 November, when Railtrack was
due to give its interim results, it would be unable to make a
going concern statement.
1. You were present on 25 July when the
Secretary of State and John Spellar met with John Robinson, Chairman
of Railtrack. Richard Mottram, Dan Corry and I were also present.
2. John Robinson said the Railtrack AGM
had passed off as well as could be expected. He had had a positive
meeting with the Safety on Trains Action Group and hoped a more
constructive relationship could be maintained in future.
3. John Robinson said he was continuing
to review Railtrack's management and finances. It would take another
year to return to pre-Hatfield performance levels and probably
three years to get performance to a level the company could be
proud of. Turning things round was not a question of more investment,
but rather running the company properly.
4. John Robinson outlined a number of steps
he was taking to address Railtrack's current problems:
He was trying to build a better working
relationship with the Rail Regulator.
He had appointed CSFB as advisors
on the company's finance and structure.
He was taking personal control of
the West Coast Main Line upgrade.
He would be making a number of changes
at board level.
5. In all of this his aim was to focus on
the key things Railtrack needed to do to run a safe, reliable
railway, in particular cataloguing and managing the company's
assets properly and having a robust maintenance programme.
6. John Robinson said he was working on
a number of proposals relating to the company's short term and
longer term finances which it would be helpful to discuss with
Government. The Secretary of State suggested that you should discuss
these proposals with CSFB.
7. John Robinson said that, while in the
short term relations with the Regulator were improving, the current
regulatory framework placed great burdens on Railtrack. He favoured
a regulatory regime focused on two or three key areas (eg safety,
punctuality and reliability), which would be a more realistic
environment for the company's operations.
8. John Robinson said Alastair Morton's
recent comments about Railtrack's ability to raise money in the
markets had been unhelpful. The Secretary of State said he would
be stressing to the Rail Delivery Group the need for all players
in the industry to show discipline in their public comments.
9. The Secretary of State expressed concern
at the high number of temporary speed restrictions on the network.
John Robinson said this was not just a Railtrack problemit
was contractors who imposed the speed restrictions. You noted
that the industry's risk aversion was in part due to ongoing speculation
about managers being prosecuted over Hatfield.
10. John Robinson said he was not attracted
to more radical models or reorganisationsuch as giving
TOCs control over track and signalling. This would lead to two
more years of disruption. The Secretary of State stressed that
there were many people who expected to see tangible results in
return for the large public resources being put into rail; if
the position did not improve quickly it was inevitable there would
be calls for alternative structural arrangements to be considered.
30 July 2001