Examination of Witnesses (Questions 580
WEDNESDAY 22 NOVEMBER 2000
580. So what has changed then between 5 July
(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.
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'
(Mr Marshall) That is a difficult one.
584. Perhaps you could let us have that, through
(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
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
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.
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
(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
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 towe
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,
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.
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.