Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence

Examination of Witness (Questions 260 - 279)




  260. "Short time"?
  (Mr Winsor) By the end of this month. The fact is that Railtrack has spent more than was assumed by my predecessor in 1995 when he set the structure and level of charges at the time. I must make an assessment as to how much money they have spent more and whether that money was efficiently spent—because you can spend money inefficiently, that is very clear—and whether or not they spent it on the right things and therefore how much additional money to allow them to recover in the future access charges in relation to the amount they have already spent. I shall be fair and I can assure you that I am scrutinising these matters and I am not merely taking the figures that Railtrack produce just because they happen to be Railtrack's figures.

Miss McIntosh

  261. May I ask a general principle rather than a matter of detail which I am sure you would not be able to help us with today for reasons you have given? May I ask whether you believe it is important to alter the current track access charging system better to align the incentives on Railtrack and the train operating companies?
  (Mr Winsor) Yes.

  262. To what extent would you alter it? How would you alter it?
  (Mr Winsor) I shall be announcing shortly the extent to which I shall alter it, but I do believe very strongly, in spite of some of the rather ill-informed remarks by members of the press and others, in incentive regulation rather than enforcement regulation. However, whilst I believe in carrots, I am not going to throw away the stick. I believe it is important to align much more closely the incentives which Railtrack has to invest in the network and to improve performance in the interests of passengers and freight customers and therefore of the train operators. My conclusions at the end of July will say how and to what extent.

Mr Donohoe

  263. How many companies do you think will be operating trains in 10 years' time?
  (Mr Winsor) I do not have a clue and it is not a decision for me; that is a decision for Sir Alastair Morton and Mike Grant of the Strategic Rail Authority because it is they, not I, who decide who gets a franchise. They will also be making decisions as to how much public money will go into growing the capacity of the railway. If there is more capacity, there may be more traffic and there may be more opportunities. It will be a number less than the present number. I am afraid I cannot be any more specific than that. Ten years is a long time as well. The franchise replacement programme, which is already under way, is a remarkable process in terms of the rigour of the obligations which the Franchising Director is going to be demanding from the new companies. They are not going to get soft contracts like they got last time, I confidently expect.

  264. You were here earlier and you heard the evidence of what Sir Alastair said and some of the questioning there was in connection with the numbers we were going to be faced with, not so much in terms of the operating companies but the ownership of these operating companies and as to whether or not there is a potential there for good practice if there is a reducing number of companies. I was under the impression that was your responsibility or that you could in fact control that as an element.
  (Mr Winsor) I cannot dictate how many owners there will be, but I can affect how many owners there will be because under the licences which the companies hold, there is what is called a change of control provision. The same sort of rules apply in the franchise agreements, so there is control in both the Franchising Director's hands and mine. If there is a change of control proposed, where two companies may be getting together, which we regard as objectionable on public interest grounds, then we can block it. What we cannot do is arrange forced marriages. We can keep parties apart but we cannot drive them together.


  265. That is a fairly excessive power, is it not really? That is going to be the end of the line, when you get two companies whom you believe really present some kind of public interest danger. They would have to be a long way down the line before you were asked to rule on that.
  (Mr Winsor) No, I doubt that, if I may say so. I do not regard any of the powers I have as excessive, but the judgement really needs to be as to how they are used. I should like to correct something Mr Corbett said at the last hearing in a minute. Is it something which would only come in at the last minute? Technically the way it is drafted, the answer is yes, we can object once the change of control has already taken place. In fact the change of control power is drafted in exactly the same way as the North Sea operating licences have been since 1964 and the practice in that industry and the practice in the railway industry is that when parties want to get together they come to the regulatory authorities first saying, "If we did this, would you object?". We can give them guidance and prior clearance and that is how it works.

Mr Donohoe

  266. What, say, of the fact that one company can control the West Coast and the East Coast after the present round of franchising is complete? Would you have anything to say about that, as to whether or not it is healthy or unhealthy?
  (Mr Winsor) Yes. The Franchising Director decides who gets the franchise, so he does not have to rely on a change of control power.

  267. But if you were being told as part of the consultation process that there must be, that it was possible you were going to end up with one company running down both sides of the country, you could have a view which would say no, you are not, you are not having that.
  (Mr Winsor) Yes, I could stop it.

  268. Why is it taking so long to restore the quality of the track on the network to the 1994 levels?
  (Mr Winsor) You might ask. It is taking a long time because network maintenance and renewal practices do take a long time. If it is a substantial amount of work, replacing significant amounts of rail and so on, these can only take place in what are called possessions, when the railway is closed for maintenance work. There are two long possessions in the year, Christmas and Easter, and there are others of shorter duration. The possessions have to be booked a lot of months in advance in order to get the time to make the changes. Operationally there is a lot of planning involved, but you may ask why the network is in a poorer state now than it was in 1994 and what are Railtrack doing to get it back. Railtrack has agreed with my predecessor, and I am monitoring it very carefully, a thing called the Track Quality Improvement Programme to get the track back up to 1994 standards by certain target dates, one of which is 1 April 2001. They are getting close to it but they are not there yet. I regard it as very regrettable that Railtrack allowed the quality of the network to deteriorate in the first place. I believe that if they had spent wisely and well and in a timely manner then these problems would not have occurred. My predecessor took the view that he should take action in relation to this matter in 1998 and the track quality improvement programme was established in 1999 a few months before I took over. We are on Railtrack's case.

  269. Have your consultants reviewed Railtrack's claim about the impact of additional traffic on track quality?
  (Mr Winsor) Yes.

  270. What is that?
  (Mr Winsor) I shall be announcing my conclusions as part of the periodic review. I apologise for being a little cagey. We do need to make assessments about the sufficiency of Railtrack's spending and how much has to be done and I have to announce that at the end of July.

Mr Bennett

  271. But there are one or two bits of track which have not had any extra trains on them and yet the rails seem to keep breaking. Is that not right?
  (Mr Winsor) Rail breaks take place for a variety of reasons. I can go into the technical reasons; but probably not.

  Chairman: I would rather you did not.

Mr Donohoe

  272. Who determines the quality of the rail track?
  (Mr Winsor) Railtrack is under a general obligation to maintain and develop the network in accordance with best practice. Best practice is a matter determined by me, resulting from my consultants' and my internal experts' advice.

  273. So the specifications, right down to the type of metal, would be coming from your office, would they?
  (Mr Winsor) They can be.

  274. Are they?
  (Mr Winsor) The specifications are coming out to a certain level of detail. I am not able to tell you, because that really is a very technical matter, just what level of detail, but not to the finest scintilla of detail.


  275. The trouble is that when those of us who have the misfortune to travel on trains are told there is a fishplate broken at Euston and we must now get off at Watford Junction, we have to learn to take what you might call a detailed interest in the state of the rail. What you are being asked, since you have identified this gap, this lack of urgency in Railtrack, since you have already told us you intend to make comment on that, what we are asking you is at what point somebody comes along to you and says yes, but the real state of the track is this and the reason is that and the technical reasons are this and to get it changed you have to do that? Forgive me, it is not normally part of a lawyer's training to know about fishplates.
  (Mr Winsor) Although this lawyer knows more about fishplates than most lawyers.

  Chairman: I am glad to hear it. I was told that railwaymen were astounded to think they still existed. Perhaps you have the advantage of all of us.

  Mr Donohoe: From the experience of the continent the levels of specification which are going into the rails there are far higher than they are in this country. It would seem to me very sensible that if you have the powers then you can make the specifications under British standards or whatever to improve upon that. It is no use, is it, that investment going in and it might be billions, it might be for whatever?

  Chairman: You have already told us that. You want to know that they do not spend their money badly.

Mr Donohoe

  276. Why do you not specify to a level which is going to mean that the rails which are made today do not break for the next 20 years?
  (Mr Winsor) I am going to give Railtrack very much clearer specifications.

  277. Excellent. That is what I want to hear.
  (Mr Winsor) I have announced additional controls on Railtrack and the establishment of what we call Reporters. They are used in the water industry and they are going to be used in the railway industry. These guys are going to go around the network. They will be paid for by Railtrack, engaged by Railtrack, appointed only on my say-so and they will be reporting directly to me with a legal duty of care to me. They will be all over Railtrack, with what intensity I decide. They will provide me with reports monthly, annually, in whatever degree of specification I choose. They will have access to every aspect of Railtrack's organisation, books, records, electronic data, the track itself, its contractors and so on.


  278. Where are they going to be placed, within your organisation or within Railtrack?
  (Mr Winsor) There will be an independent firm of consultants and they will be around the network with orange jackets.

  Chairman: With respect, the world is full of orange jackets.

Mr Bennett

  279. When do they start?
  (Mr Winsor) I need to get the network licence amended before I can get them appointed. I need Railtrack's agreement to that as part of the periodic review settlement. I expect Railtrack will give that agreement. If they will not give that agreement, then I shall refer the matter to the Competition Commission.

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