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

Examination of Witnesses (Questions 580 - 599)



  580. So what has changed then between 5 July and today?
  (Mr Marshall) I am, myself, not Mr Corbett; obviously I am here to give you my personal perspective on this.

  Chairman: We had noticed, Mr Marshall.

Mr Stevenson

  581. We had noticed.
  (Mr Marshall) I am sufficiently plumper. But, no, that is my personal view. There are a whole variety of ways that public funding can be levered into the industry and into Railtrack, that is one of them, there are plenty of others, and all of them can work quite effectively. Our partnerships, that we are talking about with the Strategic Rail Authority, with the train operators, can be indeed a very effective way of levering public equity.

  582. In these uncertain times, we are looking, I hope, from the public interest point of view, to try to get some glimmer of certainty from your good selves, and in July that avenue was told to this Committee as being the very best way, in fact it was not just the best way. Further questions of Mr Corbett, to the effect: "Is it a fact that Railtrack proposed to the SRA that they should invest in preference shares in Railtrack as being the most efficient way to lever . . ." That is a fact. In other words, it was not just a statement. Railtrack went further and said to the SRA, "Please do so, because this is the best way." Now this is not marginal stuff, this is pretty serious. What has changed between then and now that you have got these enormous doubts about this?
  (Mr Marshall) We need to put the statement in context, if I may. Clearly, there have been, as we have gone through, this year, a periodic review process, a huge number of discussions about possible ways of funding the railway. There was a discussion, and, by the sound of it, it was July, I do not recall, about that possibility; there have been numerous discussions, dozens, about a whole range of other possibilities. My own view is that the likely financing is going to be a whole cocktail of different things, I do not think it is a one-hit answer. I think it is going to be, clearly, the periodic review is the starting-point, there will be Railtrack raising a great deal of debt on its own balance sheet, and we may come on to that in another aspect in a minute, and clearly the Strategic Rail Authority, with its railway fund, is going to be looking to lever funding into the industry, in whatever ways it deems it wishes to do so.

  583. I have two quick questions, if Mrs Dunwoody will allow me. First of all, could you give the Committee any idea of what percentage of your revenue, as a company, comes from the public purse now, and what your assessment is in five years' time?
  (Mr Marshall) That is a difficult one.

  584. Perhaps you could let us have that, through the Chair?
  (Mr Marshall) We shall provide that, yes.

  585. Very lastly, when did your company decide, not announce, decide, to increase the dividend to the shareholders?
  (Mr Marshall) We decided at the Board meeting immediately prior to the approval of our interim results, which were announced on 13 November.


  586. Were you the Finance Officer when Mr Corbett made the previous announcement, that you have just been questioned about, 5 July?
  (Mr Marshall) Yes, I was.

  587. Did he take your advice?
  (Mr Marshall) Yes, we certainly worked very closely together.

  588. And you have now changed your advice. Now you have become the Chief Executive, the view of the Board is completely different, because of the subsequent reviews; is that what you are telling us?
  (Mr Marshall) No, it is not as clear as that. At the end of the day, the Chief Executive of the company, with the support of the Board, takes the final decision. There were a range of options. That option was pursued at one time, but, to be frank with you, it is being made a much bigger issue than it was, it was explored amongst a whole range of others, and it was not contemplated by both parties seriously for any length of time.

  589. No, but presumably it was based on your advice, as Finance Officer?
  (Mr Marshall) We were working up directly a whole range of options, and that was one of them, at a point in time, alongside others; it was not an exclusive recommendation, "This is the thing we feel we must do." It really was not like that.

  590. So it was Mr Corbett who kind of homed in on that?
  (Mr Marshall) Yes; for whatever reason, in the session back in July, he homed in on it, but it was not a major thrust of what Railtrack was worrying about for any period of time.

Mr O'Brien

  591. On this point, when you and your colleagues appear here, are you coming with the authorisation of the Board or as individuals? Because, Sir Philip, if the Chief Executive is making a statement here we assume it is on behalf of the Board, and therefore there is no saying that, "Well, we didn't agree with that." I think that either we accept what is said here, on behalf of the Board, or they are speaking as individuals: which is it?
  (Sir Philip Beck) The situation is clearly that, if we want specific issues raised with the Board and confirmed by the Board, that of course can be arranged, but when we come here we come, really, essentially, as individuals to answer your questions, because we cannot, as it were, anticipate the questions you will bring to us.


  592. Just a minute, Sir Philip, wait a minute; you are saying that you come here not as a representative of the Board and of your company but as an individual?
  (Sir Philip Beck) No, I am sorry, I have misled you.

  593. That does happen from time to time.
  (Sir Philip Beck) We do come here as representatives of the Board, and I would be very surprised if, on any issues of broad policy, anything we said was ever different from the Board's view.

  594. Well, I should think the Board would be surprised, too, yes.
  (Sir Philip Beck) I think they would. But when it comes to the response to sort of individual and fairly detailed points then, clearly, that is an issue which we have to—we wish to respond to your Committee on those detailed points and not to say to you we have to go back to the Board to get confirmation.

  Mr O'Brien: I was talking about the funding, the financing.

  Chairman: We are also talking about evidence that was given to us in writing, Sir Philip.

  Mr Stevenson: It is written evidence.


  595. It is not that we are trying to trick you. We just have this sort of naive idea that when somebody puts in written evidence from a particular Board of a company we actually think that must be the company's policy. I am sorry if we got that wrong. We are not asking you something that we are making up, this was written evidence?
  (Mr Marshall) Madam Chair, one more comment on this. There is no problem with the proposal that Mr Corbett was talking about, as I have said to you, it is actually a positive option and it could have been something that could be made to work; but the fact is there are a whole range of other, very viable options that can substitute for it, and that is the point I have been at pains to emphasise. A whole raft of things have been looked at, over many months, as to how to lever in financing to Railtrack; that was one of them, it is a perfectly viable one. So I do not think the Committee was misled in any way as to whether it was a good idea at the time.

  596. Mr Middleton, do you want to comment?
  (Mr Middleton) Sorry, Madam Chair, I think Mr Stevenson was quoting from the oral evidence, not a written submission.

Mr Stevenson

  597. No, I must get this clear. I have the documentation, I can promise you, and I have the record here, and I am referring to written evidence that was submitted, and I can produce that evidence. It was not just an off-the-cuff remark, I do not want to interrupt again, but we have got to get this clear, if I might, here is the memorandum, and it is here: "We have proposed that the SRA invest in preference shares in Railtrack." It is in the memorandum, it was not an off-the-cuff remark. And, I must say, I take objection to this `off-the-cuff' stuff, it is not off the cuff, because we try to do a bit of homework, and it is there in the written evidence. And any suggestion that this was a sort of off-the-cuff thing that Mr Corbett just dropped on the table is completely erroneous, Mr Marshall?
  (Mr Marshall) I am not suggesting that.

  598. Somebody has?
  (Mr Marshall) If I could come back on this, Madam Chair, one re-run at it. It was an option on the table at that time, and indeed, quite appropriately,—

  Mr Stevenson: No, I am sorry, it is the best option, Mr Corbett said, it is not `an' option, it is the best option, in the written evidence, and in the evidence he gave to the Committee, not an option, Mr Marshall, the best option.


  599. I do not think we are trying to trip you up, Mr Marshall.
  (Mr Marshall) No, no, I am not feeling tripped up, I am trying to help.

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