Examination of Witnesses (Questions 326
- 339)
WEDNESDAY 15 NOVEMBER 2000
MR JAMES
KNAPP AND
MR STEPHEN
YANDELL
Chairman
326. Good afternoon to you, may I begin by making
a personal declaration. I am an individual member of Mr Knapp's
Union, I would like that recorded. I have been proud to be for
many years. May I say what a pleasure it is to see you here this
afternoon, Mr Knapp. Can I ask you to introduce yourself and your
colleague?
(Mr Knapp) I am the General Secretary
of the Rail, Maritime and Transport Union. Steve Yandell works
in our Policy Unit at the Union headquarters.
327. Thank you very much. Did you want to make
a few opening remarks?
(Mr Knapp) Except to say that I have spent a lot of
time at home in recent weeks and I have been looking on in horror
at the Hatfield tragedy and the aftermath, and the damage that
has been done to the industry, the loss of freight traffic and
passenger traffic. I just wanted to mention that because these
happenings have, unfortunately, come along since we submitted
our evidence. Apart from that, I think the time would be best
spent talking to the members of the Committee.
328. Thank you. Could I ask you, first, do you
see any conflict between a safe railway and one that is punctual
and reliable?
(Mr Knapp) There is a clear conflict within the present
structure of the industry. The first thing you have to bear in
mind is that we have a large number of companies operating in
a fragmented situation. They are all driven by a need to look
after the bottom line in the balance sheet and to give the shareholders
a return. I notice that Railtrack raised a dividend this week
to shareholders. I think it has to be understood that the answer
to the question has to be counted against the framework and the
structure of the industry at the moment, because repairs to the
track means disruption to services. There can be a temptation
not to do that, to get around it in other ways, like repairs to
trains. Some of that came out in the Southall Inquiry. Within
the current structure there is, without a doubt, a conflict.
329. Need there be?
(Mr Knapp) No, because we need to change the structure.
I did not come this afternoon to talk about how you could tinker
around the edges with the present structure. The time has arrived
for a radical approach towards changing. I think as a very minimum
you need to have an integrated core involving Railtrack and the
infrastructure work force to start to get rid of these pressures
and potential conflicts. I believe that the state should have
a stake in that integrated core in respect of the capital investment
that has been promised from the Government. The answer to your
question is there need not be but I do not see it getting any
better under the present structure.
Mr Donaldson
330. Mr Knapp, you are very welcome. I want
to talk a little bit about the West Coast Main Line. Do you think
that the Government should provide direct capital support for
the West Coast Main Line modernisation project?
(Mr Knapp) I think the answer to that is that if it
is going to get done there is no choice. The Government have already
had to bail out the Channel Tunnel Rail Link. If this job is going
to be finished—and it needs to be done, it is years and
years overdue—I do not think there is any alternative but
to make a contribution from the Government. The thing that concerns
me about that is that there is nothing in it for the taxpayer.
It is not even like London Underground where it will get handed
back after 30 years. If you put £4 billion of Government
money into Railtrack it is all gone. If you take the last big
modernisation under British Rail, which was the East Coast Main
Line, all of these modernisations bring about increased revenue,
that is a proven fact down the years. There is a feedback there
to the industry, but there is nothing coming back to the Government
or the taxpayer in that kind of way. I do not think there is any
choice here, otherwise the whole thing is going to collapse, that
is the important thing about the whole structure that we are operating
in. Railtrack can just not deliver the amount of capital investment
that is needed for a project of that size.
331. What do you think the Government should
do to obtain a better deal for the taxpayer from the upgrading
of the West Coast Main Line?
(Mr Knapp) I have always argued—I hope I have
been a prophet before my time—I do not see why the Government
should not take a stake in Railtrack in return for the capital
investment that is being deployed here. I do not know a lot about
the City and private business but I do not think anybody would
put money into a business if they did not get something back,
whether it is a seat on the board or shares. We cannot just go
on and on putting public money in on this scale. I believe as
a first step that could be done. The Government, ie the taxpayer,
could have an equity stake in Railtrack thereby exercising some
direct influence over what is going on. I think that would be
a step towards the integrated core I was talking about earlier.
332. You talked about the danger of the whole
thing collapsing, do you have a concern about safety on the West
Coast Main Line?
(Mr Knapp) There is general concern about safety,
you know, which tragically have come out at Ladbroke Grove and
Hatfield in the past 12 months. There is lot of pressure, as I
said earlier, to avoid penalties, to avoid delays. There are companies
arguing with each other about who is to blame for the delays.
There are general problems about the pressure on safety standards.
The West Coast Main Line is no more unsafe than anywhere else
but it needs to be modernised, because the longer it goes on more
of these kind of dangers will threaten. The only way you can avoid
disaster is to reduce speed, which is what was not done in respect
of Hatfield.
333. You seem to imply in what you are saying
that the pressure of deadlines and penalties, and so on is leading
to inadequacies in terms of safety. Am I interpreting what you
are saying accurately—I do not mean specifically to the
West Coast Main Line—generally what you are saying is because
there are deadlines and penalties, and so on, mistakes are being
made?
(Mr Knapp) There is a temptation to avoid those penalties
and to cut down the liability towards those penalties. There are
a whole number of other things as well. The work force face pressures
now that they did not have to face before. They all work for different
companies and they are under pressure to keep their own company
on the right side of the line, if that is the right way to put
it. Is Railtrack to blame for the delay? Is it the train operating
company to blame for the delay? They have to speak to their own
company controller before they talk to the Railtrack controller,
who are actually the ones that have to control the network. These
are things that happen now that never, ever happened before, those
kind of pressures and that kind of eventuality.
334. Are you saying that the result of that
is human error as a result of pressures or are you saying that
it is something more than that, that there are shortcuts being
taken with regard to safety which could result in something serious?
(Mr Knapp) It could result in human error, yes, if
you are under pressure. But, of course the inquiry into the Southall
accident revealed quite clearly the link between the desire to
cut corners, if you like. As to the fact that the automatic warning
system was not working in the Great Western train, if you read
some of the background to that, there was a great debate going
on between the companies about the cost of it and the cost of
bringing it up to scratch. It had been there as a fire extreme
for about five years, but allowed to dilapidate, and there are
similar features coming out of the inquiry report in relation
to train maintenance, where things were not being done up to the
standard that you would have expected. So there have actually
been manifestations of that in some of the tragedies we have had
in the last couple or three years.
335. Finally, therefore, you would like to see
changes to the regime that, I suppose, address these issues of
penalties and deadlines and so on, and give safety a greater priority
when it comes to that kind of situation?
(Mr Knapp) Well, safety should always be a number
one priority. Nothing but nothing should ever come ahead of that.
I doubt if you will achieve it by tinkering, for the want of a
better word, with the present regime. I think the time has come
for a more courageous approach to be taken to that problem, and
that means fundamental change in the structure of the industry
as it is now, to get rid of the fragmentation, to get rid of the
pressures. The time is opportune, and I will be very interested
to hear what Lord Cullen has to say on that very question when
his inquiry report is published next year. But there has to be
change.
Mr Stevenson
336. Railtrack's Chief Executive, Gerald Corbett,
consistently told this Committee that the suggestion that profits
are put before safety is erroneous. Do you believe him?
(Mr Knapp) No, I do not. I think he changes his mind
in the aftermath of disaster. In fact, I think if you search through
his public comments you will find he said something like that.
337. In your evidence to us—we have had
the main and the supplementary one—you say, "It is
the view of RMT that public ownership of the network (inaudible)
high levels of investment", and so on, and you have elaborated
on that today, except you say the state should take a stake. Now
my question is: What do you mean by "public ownership",
and does that mean "taking a stake"? Do you see the
distinction?
(Mr Knapp) I think it is in a way, but it is a step
removed from taking the whole industry into public ownership.
What I am talking about initially is a stake in Railtrack, because
there is a lot of capital expenditure going in there from the
Government, and to create that integrated core of the infrastructure
owner and the infrastructure work force. So my union's position
has always been public ownership, since 1921 or something, but
I am stepping back from that and we are trying to be realistic
about the current situation that we are in.
338. Are you aware—a leading question,
perhaps—that the Government is intending to put £4
billion in direct grants into Railtrack over the next five years
in the West Coast mainline, and was proposing that £14.7
billion of public money is put into the railways and the track
over the next 10 years? Are you also aware that the total gross
figure for the sale of the whole rail network when it was privatised
was £4.638 billion? So it will appear that the Government
is planning to put something like three times more in grants into
the railway system out of the public purse than the whole railway
system was sold for. Are you also aware that by July 2000 the
total value of Railtrack on the stock market was £5.2 billion?
So the Government are also proposing to put two and a half times
more in grants over 10 years than Railtrack is valued at today.
What is your reaction to that and how should the public interest
be protected in those circumstances?
(Mr Knapp) I find it inconceivable that in a situation
like that there is not going to be any public stake. All that
money is just going to be delivered. Where does it go? How does
it get managed? How does it get spent? There is no direct public
influence, there is no return for the tax payer on that level
of investment. Of course the £4 billion you are talking about,
as I understand it, comes out of the £14.7 billion which
was the public end of the investment schedule for the next 10
years with something like £34.3 billion coming from the private
sector. We have to move now, as I say. If we do not move now and
make radical change, we are going to get more of the same.
339. My last question, if I might, is about
maintenance. Our recent evidence from Mr Corbett concentrated
to some degree on the relationship between Railtrack and it maintenance
contractors, and there are some Members of the Committee that
were concerned about that, if not all. A report in the Financial
Times of 11 November suggests that "Railtrack is considering
taking maintenance of the railway network, which employs 19,000
workers, back in house." Do you believe that Railtrack are
serious about that?
(Mr Knapp) As I said a couple of minutes ago, I think
Gerald Corbett has had a couple of flashes of light on the road
to Damascus. I think his change of attitude—and profit is
scheduled as one of his themes, and this is the second one—is
where he is beginning to realise that a lot of these relationships
are confrontational. You can talk to managing directors of these
infrastructure companies, it is a totally confrontational situation,
batting away at each other about what the cost of any given contract
is going to be. In fact, these companies are subjected to what
I think is a bizarre situation of having to re-tender for the
work every five years. One managing director told me the other
week in recent times 75 per cent of senior management time is
spent on trying to secure the contract, as opposed to devoting
time to what is going on out on the track. That keeps bringing
me back to my central point that we have to change all that. Maybe
by the comment attributed to yourself hopefully it is a sign that
you are beginning to think that way as well.
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