Examination of Witness (Questions 920
WEDNESDAY 6 DECEMBER 2000
MR T WINSOR
920. Would April 2001 be a satisfactory timescale
for Railtrack to complete the register?
(Mr Winsor) April 2001 will be the date on which Railtrack
and we will have established a common understanding and agreement
as to the current condition of the network. I still want the asset
register to be built up after that. The asset register is going
to be a very comprehensive thing and it will take time for Railtrack
to populate it with data of the appropriate quality. However,
I am reminded that Railtrack in May 1998 signed two contracts
with Virgin train operating companies, one West Coast Trains and
one Cross Country Trains, undertaking to provide those companies
with information in relation to their network which is not much
less extensive than the information I am now seeking to a standard
of completeness and accuracy in all respects. I am going to be
keeping the pressure on Railtrack: you can accept that from me.
921. Who will have access to this register?
How will you ensure that all organisations which have a genuine
reason for seeking access to the information about Railtrack's
assets will not be denied access?
(Mr Winsor) If we have a licence condition which requires
third party accessbut subject to rules which mean that
enthusiasts do not clutter the company up with unnecessary or
unmeritorious requeststhen Railtrack will be obliged to
meet all these requests, and if complaint is made to me that somebody
who is entitled to see things in the register has been denied,
then I can take appropriate enforcement action. There are other
ways in which people can get access to the appropriate data and
part of the consultation we have carried out involves the different
approach, involves contracts which we can compel Railtrack to
enter into, like the Virgin contracts, which will give the rolling
stock manufacturers, the train operators, whoever wants the information,
a direct contractual connection with Railtrack so that if they
do not get the information they themselves can enforce the obligations
directly. Virgin found their two contracts, which are called vehicle
and route acceptance contracts because they are about the new
rolling stock, to be immensely valuable. The question I put to
Railtrackand I still have not had a satisfactory answeris
that if they can do that for Virgin why can they not do it for
everyone. I think they regard the Virgin contracts as an unfortunate
and uncomfortable precedent, but they do set a precedent.
Chairman: Lots of us may agree with them on
that but that is not the point at issue. There are other reasons.
922. Moving on to another of the measures intended
to improve Railtrack's accountability, are Railtrack cooperating
with your plan to introduce reporters? Will these reporters be
introduced in April as previously stated?
(Mr Winsor) Yes, they are. They are being a lot more
positive about the reporters and I expect that the reporters will
be up and running for 1 April 2001.
923. How closely will those reporters be able
to examine the work of the infrastructure maintenance contractors
and the means by which they are supervised by Railtrack?
(Mr Winsor) They will have very extensive powers.
They will have full access to Railtrack's people, books, records,
assets and premises. They will have the right to take copies,
carry out inspections, measurements and tests on Railtrack's assets
or in relation to Railtrack's assets, including taking equipment
and persons onto the premises in order to carry out these tests
and they can take electronically stored information. It is quite
a significant facility.
924. Does that include the maintenance contractors?
(Mr Winsor) They can have full access to the people
who are working on or in relation to Railtrack's assets. So Railtrack
must procure that; if the information is held by the maintenance
contractors then the reporters have access to them as well.
925. Do you have some kind of general idea of
a specification that you would be asking for for these people?
The skills mix.
(Mr Winsor) It will be horses for courses.
926. But they are going to be new horses for
courses. What kind of skills mix are you looking for?
(Mr Winsor) They will be predominantly engineers,
927. I am not quite clear what your role is
as Regulator because in the course of your remarks you described
your activities as going round looking at the rails and doing
things like that. Or are you really there to monitor the financial
systems and structures of Railtrack to see that a large amount
of public money injected into that company is being properly used?
What is your role?
(Mr Winsor) It is a bit of both. Railtrack's accountability
for its operations, its maintenance and renewal of the network
and its enhancement of the network, is an accountability which
it owes to the public interest under the authority of a licence
granted under the authority of the Railways Act 1993 and enforceable
by me. The licence deals with Railtrack's stewardship of the network
and it also deals with associated matters. My jurisdiction is
to monitor and enforce that licence, and to modify that licenceand
there are seven additional licence conditions which I am going
for. I also supervise the consumption of the capacity of railway
assets. That is to say when somebody wants to run additional trains,
it has a new access contract with Railtrack and I must approve
that access contract. If Railtrack demands unreasonable terms
or unreasonably refuses access, I can direct Railtrack to grant
access. I also enforce domestic competition law under the Competition
Act 1998 and a number of other things, a list perhaps too long
to go into.
928. You realise that the Government have stated
clearly that they expect the major part of Railtrack's funding
requirement to be met from capital markets. Do you think it makes
sense for a company which is neither fish nor fowl, neither a
proper private company nor yet a proper public service company,
to be able in these circumstances to fulfil that requirement,
given the fact that the vituperative criticism which is constantly
heaped on it, not least by you and us and the Department and the
media, has a great effect on its ability to raise funds? Is it
sensible, does it make sense that the Government should be expecting
to achieve one and at the same time be dishing out the other?
(Mr Winsor) I think Railtrack is a proper private
company. It is a company registered under the Companies Act 1985
whose shares are listed on the Stock Exchange. It is a company
carrying out an essential public service. Accordingly Parliament
has decided that this service will be provided only on conditions.
Railtrack's shareholders and their investors knew what those conditions
were when they bought the company; it was all explained in the
prospectus. Railtrack is in the same position as a regulated private
monopoly, accountable to the public interest through an independent
economic regulator as well as health and safety and the other
matters I mentioned, just like a water company, electricity, gas
and telecommunications. British Telecom is regulated by Oftel,
yet they are able to raise significant amounts of money. Railtrack
is able to raise significant amounts of money and I am confident
will demonstrate that. I wonder about your remark about vituperative
criticism. It seems to me that the criticism they have had is
certainly not motivated by malice, it is motivated by concern
for the protection of the public interest. The company may complain
about the criticism, but it has brought it on itself. It may be
of interest to the Committee to know that for every form of enforcement
action or other pressure I have placed on Railtrack, in fact the
reaction of the stock market is to put the price up.
929. Do you agree you catch more flies with
honey than vinegar? I believe it is true that the safety record
of Railtrack is very, very good, that the number of serious accidents,
sad as they are, have been extremely few and far between since
Railtrack took over, that compared with almost any other type
of transport its safety record would come out near the top. For
that reason, do you think it ought to get more carrots than the
stick we are giving it? How can we complain about the management
and running of this service if we are judging it by a false set
(Mr Winsor) I do not think we are judging it by a
false set of criteria. The public rightly expects rail transport
to be the safest form of land transport around. There has been
a very significant degree of politicisation of railways, stoked
up by the media. It is a matter of regret to the railway industry
that that has been so. If Railtrack's performance had been far
better, then it would have been getting plaudits rather than brickbats.
The safety record of Railtrack, the Southall, Ladbroke Grove and
Hatfield accidents aside, has been good, but those were very serious
accidents and the causes of the Ladbroke Grove accident are not
yet established; Lord Cullen's inquiry will report shortly. Railtrack
has admitted responsibility for Hatfield because it was a broken
rail. It is unfortunate that there is such an intensity of pressure
on the company from the media, but I believe that is virtually
inescapable as things stand. The company's best policy is to improve
930. Are you aware that the Rail Users' Council
Chairman, Sir Stephen Francis, has stated that the cracking which
caused the Hatfield accident is probably a unique event and that
the rails which have been examined, many hundreds of miles of
them, have shown no other examples of this. You talk about these
phenomena being known in other parts of the world, but surely
the significance is how common or uncommon they are. Do you think
we have a responsibility, you, us, the rest of us, to try to put
a clear picture and a true picture of what is going on in the
railways? It is easy to sit here and rubbish them, as we do regularly,
but should we not take these factors into consideration? Or do
you dispute what the Rail Users' Council say about the safety
of the railway lines?
(Mr Winsor) I dispute what their Chairman says in
relation to the incidence of gauge corner cracking. I think he
is reliant perhaps on the former Chief Executive of Railtrack
who said there was no other rail in the condition of Hatfield.
Tracks have been discovered in very poor condition since Hatfield
and that is a matter of concern. These are isolated incidents
and Railtrack is taking early and urgent action to tackle them.
In my opinion it is not the case that Railtrack has faced undue
criticism or public pressure from my organisation or the Strategic
Rail Authority or the other regulatory authorities since the Hatfield
accident. What we are trying to do is to enable the company to
raise itself from its knees, get on with the national recovery
plan, improve its asset knowledge and therefore restore the confidence
of the public in the operation of the national railway network.
A beaten and humbled Railtrack is not in anyone's interests.
931. Is it in anyone's interests for us to create
such a hoo-ha that people like Mr Corbett are driven out of office
and relatively inexperienced new people come in all of the time?
That is actually what happens when you have one of these crashes.
We look for a scapegoat rather than accepting that there is risk
in all forms of travel.
(Mr Winsor) The circumstances of Mr Corbett's departure
from Railtrack are not publicly known. It is my beliefI
was not therethat the board of Railtrack decided that it
would be best if Mr Corbett were to leave the company. That is
the way that public companies operate, that the management of
the company should be determined by the company and not by outsiders.
I think that is what happened.
932. I have no shares or other kind of fiscal
interest or pecuniary interest. Will you give rail the credit
for being the safest form of land travel, safer than cars, safer
than buses, safer than lorries? I do not know what you can compare
it with in terms of safety but I think it is significant and important
that we in organisations, groups, meetings like this, do not continue
to give the public the impression that what they are being offered
in the railways is not safe. After all the amount of use of railways
has gone up phenomenally. The task they took on in meeting that
demand has been phenomenal and I do not know whether you think
they should not be given any credit for the way the railways have
been developing under privatisation, but I do.
(Mr Winsor) It is in the nature of railways that they
are safer than other forms of land transport. The accidents aside,
the railways' safety record is an extremely good one and it is
very, very important that the public understand that. I believe
that they do understand it because it is the truth.
933. You put a lot of emphasis in your review
on performance. Are you sure you have this right? Certainly the
train operators are suggesting that you are more interested in
pushing for performance to be spot on rather than necessarily
encouraging extra services on the line.
(Mr Winsor) I am encouraging both.
934. Which is more important, to have six trains
an hour with a few late or two trains an hour always spot on for
(Mr Winsor) We must have the mix of performance and
density of traffic which is the most appropriate for the needs
of the travelling public. The services must be established so
as to meet the needs of their users. If we only had two trains
an hour, then the trains would be significantly overcrowded or
people would be driven away to the roads. In determining whether
or not there should be six trains an hour or two trains an hour,
I must take into account a number of factors, including the economics
of the proposition.
935. But the Strategic Rail Authority also has
a view. Are you happy that there is no conflict between yourself
and the Strategic Rail Authority?
(Mr Winsor) Our jurisdictions are quite different.
936. The Strategic Rail Authority would very
firmly be wanting to increase the frequency of services on a lot
(Mr Winsor) Yes.
937. You are very keen on performance. Do you
not think there is a conflict between the two?
(Mr Winsor) No, I do not. The performance of the increased
density of traffic can be protected through the good management
of the network. We are trying through the enhancement framework
and the additional funding for the railway to increase significantly
the capacity of the railway so that we can get improvements in
performance and improvements in the volume of traffic, both freight
and passenger, which is carried.
938. Railtrack has been regenerating some of
its stationsyou might say tarting them up. Do you think
that was good value for money or was an awful lot of money spent
on the project management rather than actually doing anything
on the stations?
(Mr Winsor) Railtrack did spent a lot of money on
stations. They have not done so particularly efficiently and we
have corrected this in the periodic review by defining much more
closely what they have to do for the money. They have not, for
example, completed the station regeneration programme which they
were financed to do in the first control period, 1995-2001. They
will have to complete that programme, but they will not be paid
any additional money for doing so because they have already been
paid it. We are not going to pay them twice.
939. How do you force them to do it then?
(Mr Winsor) Because condition 7 of their network licence
requires them to enhance and develop the network in accordance
with the reasonable requirements of their customers. If their
customers have paid for these outputs, then they have to be delivered.
940. You referred earlier to the land register
which they have and your concern about perhaps vetoing some developments
on that land. In a constituency like mine there are many brownfield
sites which are basically old railway sidings. There have been
great difficulties in getting some of that back into productive
use. Obviously the Government is keen to see brownfield sites
developed. Are you confident that you are not going to be yet
another veto which simply makes a morass of bureaucracy and neither
really protects the land nor encourages development?
(Mr Winsor) Yes, I am completely confident that we
are not going to get in the way of proper development. If there
is no reasonable prospect for railway use of these sites then
Railtrack will be free to dispose of those sites for whatever
redevelopment value they can get for them and indeed under the
property allowance scheme, which is established as part of the
periodic review, part of those profits from that redevelopment
will come back to the taxpayer. I would not wish to be misunderstood.
The licence condition in relation to restraining Railtrack's freedom
to dispose of its assets is not going to be a veto on every disposal,
far from it. It is going to be a veto used sparingly when Railtrack
is trying to dispose of something which ought not to be disposed
of. If it is disposing of something which really does not have
a reasonable prospect for railway use, then not only are they
free to do so and I will not get in the way, but they will be
encouraged to do so, because they will make more money out of
941. Are you aware of something like Central
Railways' proposals for the freight line from Liverpool through
Manchester and Sheffield?
(Mr Winsor) Yes.
942. That involves quite a lot of old railway
lines possibly being brought back in. Will you be protecting Central
Railways' wayleaves, or their proposed wayleaves?
(Mr Winsor) This licence condition will only apply
to Railtrack. If Central Railways wish to acquire land from Railtrack
in order to build the new line, then because it is for railway
purposes my licence condition is not going to get in the way.
Railway purposes are widely defined. It does not mean to say it
is only Railtrack's railway purposes, it is anybody's railway
943. You are in the process of renegotiating
on freight but we heard some pretty sad stories about the state
of freight as a result of present difficulties. Is there anything
you can say to us about what you are going to do to make it more
viable for freight?
(Mr Winsor) We are looking very carefully at the economics
of the rail freight market which are very different from the passenger
market. There is no public subsidy for freight other than through
the freight grants system which is now to be administered by the
Strategic Rail Authority. We believe that freight charging should
be more transparent, that there should be greater certainty and
confidence, that when freight operators want to know what it is
going to cost to run an additional train or do a new freight flow
they will know in advance and with a much greater certainty and
stability what it will cost to run the freight. It is also important
that Railtrack, one way or another, is paid the full costs of
operating the network in the interests of freight. It is a mixed
traffic railway. We are discussing with the Strategic Rail Authority
how Railtrack should be paid for freight traffic, whether it should
be entirely through freight charges which the freight operating
company is paying or some form of Government support. It could
be a direct payment from the Strategic Rail Authority or it could
be that the charges to passenger operators will be increased and
therefore the SRA will pay more through higher subsidies to passenger
operators, effectively cross-subsidising freight from the passenger
business. This is a choice for the Government and we are in close
consultation with them.
944. How are you going to apply penalties for
what has happened over the last month? On the basis of the timetable
which was published originally or on the basis of the revised
(Mr Winsor) I do not apply the penalties. I have not
taken enforcement action against Railtrack and only if I do can
I apply financial penalties. I am not yet persuaded that is the
right thing to do. What we want to do is get Railtrack to get
on with the recovery plan. My senior staff are over with Railtrack
right now and after leaving this Committee I am going to Railtrack
House for a meeting with the Chief Executive in order to get the
latest and fullest version of the national rail recovery plan
to examine with our experts. The financial penalties which Railtrack
are taking as a result of the post-Hatfield chaos are a function
of the liquidated damages regimes under the track access contracts.
Railtrack have an automatic obligation to pay this money to the
train operators, either on the basis of the emergency timetable
or on the pre-Hatfield timetable and the train operators have
said to a number of people, including the press, that the amount
of money Railtrack is offering them is not enough. There is a
potential for a contractual but not a regulatory dispute to arise,
but I believe that everybody concerned is most interested in the
recovery of normal operation first and sorting out the money later.
945. You are always an extremely interesting
witness for us and you give us a lot to think about, though the
reality is that in your last encounter with Railtrack you actually
gave them more money than your original intention. Do you just
talk tough and actually act soft?
(Mr Winsor) No, but nor do I penalise them inappropriately.
My job is to make sure that they are entitled to earn and given
the opportunity to earn a sufficient amount of money in order
to operate, maintain and renew the network for the next five years.
There was a difference between my July conclusions, my draft conclusions,
and my October final conclusions. That was mainly because we recognised
additional evidence which Railtrack provided to us of constraints
in the supply market. Railtrack is facing an enormous growth agenda.
The prices which Railtrack will have to pay for the carrying out
of this mainly construction agenda are going to be a lot tighter,
a lot higher as a result of the increased activity, not only in
the rail marketand there will be more because of the growth
programmebut also in road building and in other spheres
of activity. Therefore we decided that it was appropriate to allow
Railtrack additional funds in order to cope with that. It does
not help anyone to handicap Railtrack in carrying out the growth.
946. Nobody has suggested that should happen,
but the reality is that you have told us Railtrack have not done
what they were supposed to do in the first place. You have told
us that you have a series of economic restrictions which you can
impose on them and you told us that you can claw the money back.
Are you really convinced that those are sufficient sanctions to
use against a company which is not performing properly in the
sense that it is protecting the interests of the public?
(Mr Winsor) I am satisfied that the powers available
to me in conjunction with the Strategic Rail Authority and their
jurisdiction are sufficient to ensure the proper protection of
the public interest, to make sure the money is spent wisely and
well on the right things and at the right times.
Chairman: On that note I not only wish you a
jolly evening with Railtrack but may I say that we shall continue
to take a great interest not only in Railtrack's doing but also
yours. Thank you for coming.