Examination of Witnesses (Questions 600
WEDNESDAY 22 NOVEMBER 2000
600. We just want to clear up how it is that
you had a Chief Executive who presumably put the written evidence
to the Board, unless it was done entirely off the cuff, as you
say, that presumably the Board knew about the written evidence,
after all this is the House of Commons and, you know, it is going
to be published, and you were the Finance Officer at the time,
so presumably he also consulted you.
(Mr Marshall) Yes, absolutely.
601. Because, after all, I do not think Mr Corbett,
brilliant though he may have been in the matter of all sorts of
finances, was automatically going to do it all off the top of
his head, so I assume he asked you, as the Finance Officer
(Mr Marshall) We did an analysis.
602. That is right; so it was your analysis,
as the Finance Officer, you helped prepare the evidence, the evidence
is then submitted to this Committee, and then, by the time you
come to see us again, there seems to be this sort of underlying
assumption that, "Yes, we looked at that, but it was only
one of many options and we rejected it." What we want to
know is, it looks as though this decision was taken in July, it
was signalled to the Committee, it was suggested if not to the
Government then certainly to the SRA, and then when we question
you about it in November we are told, "Well, of course, we've
changed our minds since then." There is no disgrace in having
changed one's mind, but it is unwise to suggest that, somehow
or other, the Committee are making it up?
(Mr Marshall) If I can be clear though, it really
was not a question of changing our minds, although, as you say,
there is nothing wrong with that. The reality is that it was very
briefly considered because there was no appetite in Government
for that position to be taken at that time.
603. Now we are getting to it, really. What
you are saying, Mr Marshall, is that the Board thought this was
the best option, you put that in your written evidence to us,
it was then submitted to Government and the Government said "No"?
(Mr Marshall) The Government were not interested in
it; but it was not, clearly, the best option, there are pluses
and minuses about it, but at the time it was an attractive one.
Miss McIntosh: May I remind the Committee of
my declaration of interest.
Chairman: Yes, we will accept your declaration.
604. Thank you. May I congratulate you, Chief
Executive, on your new appointment.
(Mr Marshall) Thank you.
Miss McIntosh: We took evidence from Mr Knapp
last week that said that, and I quote: "My suggestion that
ourselves and other European countries have separated the operation
of the track from the provision of services on it was not unique,
it had been copied in a number of other European countries."
And he is on record as saying that this is one of the mistaken
policies of the European Commission, that they are trying to propagate
this, and perhaps even trying to join the Conservative Party soon.
One of the most successful countries was one of the first countries
to do this, and I have got some research here from the House of
Commons Library that says Sweden was the first country in Europe
to separate the management of infrastructure on operations in
1988, and in evidence that the Swedish Railways gave to the
Chairman: To the previous Committee?
Miss McIntosh: No, not this Committee.
Chairman: We have a whole report on this; if
you wish, I can detain you for the next seven hours.
Miss McIntosh: This was to the European Communities
Committee, Sub-Committee B; but the results of the restructuring
of the Swedish railway system is evident, that they actually have
that, in spite of stiff competition, they have increased the railway
transport share of total goods transported from 34 per cent in
1993 to 54 per cent. What do you think they are doing right that
perhaps we could
605. Well, Mr Marshall, I do not know whether
you know how the Swedish system is . . .
(Mr Marshall) No.
Chairman: No; well, frankly, I am very happy
to have your views on the Swedish companies, but you are not actually
running it, and, you will forgive me, but
Miss McIntosh: Can I phrase the question differently?
Chairman: Please, yes, and rather more briefly,
because, in fact, of course, it was denationalised a completely
different way. This Committee took detailed evidence, which is
available in the Select Committee Report, with a Conservative
Party Chairman, who is turning in his grave at what is happening
at the present time; but that is entirely beside the point. Would
you like to ask your question again, Miss McIntosh.
606. Do you, at Railtrack, believe there is
anything inherently wrong with the separation of Railtrack and
the provision, the way that we have done it in this country, from
the provision of services on it?
(Mr Marshall) No.
607. And do you agree with Mr Brown, from ATOC,
who said that what the industry needs at the moment is a period
(Mr Marshall) Relative stability, certainly; that
does not mean there should be no change, but we have the structure
we have, we need to improve it, rather than radically shake it
all up again.
608. Thank you. Is there any truth in the rumour
that Railtrack is considering pulling back its maintenance service
in-house, and leaving the contractual relationships that were
(Mr Marshall) We have made no secret of the fact that,
following the accident at Hatfield and all the learning from the
inquiry that has followed, we are going to have a hard look at
our maintenance and renewal contractual arrangements. We would
not want to prejudge those at this stage, because actually there
is a considerable period of analysis that has got to follow. We
need to explore all of the options, from one end of the spectrum,
which would be, as you say, potentially, to take everything back
in-house, I think, personally, at this stage, that is very unlikely,
through to broadly the structure we have, but making sure that
our processes and the arrangements we have never allow something
like that to happen again. I believe probably the solution is
somewhere in-between, and that we will look at areas such as inspection
and maybe feel the need to take direct control of that.
609. What trained engineering staff have you
got who would be capable, since you have only got the same number
of engineers involved now that you had before, and you certainly
did not have enough to monitor carefully either the work of the
contractors or the general safety level, how would you evaluate
whether it would be a good alternative to bring back maintenance
in-house or not?
(Mr Marshall) In the short term, Madam Chair, clearly
we will allocate some resource on a project basis, and we can
do that, to really look at the issue and do a detailed analysis.
610. What timescale are you looking at, for
that type of study?
(Mr Marshall) The work starts now, and in the new
structure that we announced earlier onit was yesterday,
it feels like a long time agothat we announced yesterday,
we have got a particular, very large job, whose entire purpose
will be to look at the entire maintenance arrangements we have.
Once we have resourced that up, and that is a high priority, we
will do the analytical work. Looking forward, partly to Madam
Chair's question, though, we will have and we will resource up
and finance a great deal more engineering resource in the company,
so that whatever the solution is we can go for it.
611. "Resource up" is a phrase meaning
that you will employ more engineers?
(Mr Marshall) We will employ more engineers.
612. How many?
(Mr Marshall) Too early to say, Sir, but we will employ
whatever we think we need.
613. Mr Middleton, you are an engineer, do you
want to make a guess; how many people, since you do not have the
resources to do this at the moment, how many extra people would
you require, and what kind of budget? Presumably, since you are
dealing with an ex-Finance Director, if you are going to do an
exercise of this size, you will have to produce a budget which
incorporates not only numbers but finance?
(Mr Middleton) Yes, I will have to do that. The way
the industry is structured currently, the responsibility for the
engineering of the network sits in the contractors, that were
formed from within British Rail infrastructure services. Madam
Chair will recall that structure at the time of privatisation.
614. Only too well.
(Mr Middleton) So the bulk of the engineering resource
that was in BR went into those companies at that time. What we
will be looking at, very urgently, this is not something that
is going to take a long time, is where the split in the engineering
resource should actually be; and if we decide that more inspection,
or the inspection, and engineering decision-making should be made
within Railtrack, rather than within the contractors,
615. You have the legal responsibility, of course,
(Mr Middleton) Yes, we do. I am explaining the structure
and what we are going to do about it. If we decide that the engineering
decision-making is not being carried out appropriately within
that contractual framework then we will make arrangements to move
that decision-making inside Railtrack. The resources, therefore,
will come in part from Railtrack, in part from the contracting
industry and in part from growing our own resources by recruiting
separately more engineers. In answer to your direct question of
how many more engineers that will be, it is too early to answer
that question, but it is certainly not a small number, it would
be certainly in the hundreds.
616. Yes, Mr Middleton, so if you are going
to rebuild confidence in the industry, this is not something that
can be an academic exercise over a number of months.
(Mr Middleton) It will not be.
617. Also, because of the evidence that was
given earlier, about the continuing numbers of months that you
are still talking about before the entire regime gets back to
any kind of normality, there is going to be considerable pressure
on your organisation if it appears that you are not instantly
taking action in relation to safety and maintenance and the improvement
of the existing services?
(Mr Middleton) Yes, you are absolutely right, and
we have already brought in additional resource by going to the
consulting industry, we have brought in additional resource from
American consulting engineers, to strengthen our own resources,
because that is the quickest way of getting additional engineers
into the company, working on these very difficult issues. We also
have to face the fact that a lot of our engineering resource right
now is out fixing the problem we have got on the network.
618. And they have been since the accident.
(Mr Middleton) And that is the absolute number one
priority. Further changes to the structure must follow that recovery
plan, we must get that recovery plan done first, and by the time
that recovery plan is completed I will have completed my review
of the structure and I will have made recommendations to the Board
as to how we should organise going forward.
619. So that is mid January or probably February,
from the kind of timetable we have been given?
(Mr Middleton) Yes. It does not mean we are not doing
anything in the meantime, because we have got resources in place.