Examination of Witnesses (Questions 1
- 19)
MONDAY 27 NOVEMBER 2000
MR MICHAEL
GRANT, MR
MARTIN MCGANN
AND MR
TERENCE JENNER
Chairman
1. This afternoon we are discussing the Comptroller
& Auditor General's Report on the Shadow Strategic Rail Authority:
Action to Improve Passenger Rail Services. We have in front of
us Mike Grant. Perhaps you would like to introduce your colleagues,
Mr Grant?
(Mr Grant) Good afternoon, thank you.
On my right is Mr Terence Jenner, Corporate Services Director
of the Shadow Strategic Rail Authority, and our senior legal adviser.
On my left is Mr Martin McGann, our Finance Director and Principal
Finance Officer.
2. Thank you. Our procedure relates very closely
to the report. I will try to give you some indication before each
question which bit of the report I am talking about so you can
refer to that. I am going to start with paragraph 2.7 which reports
that you have set an aspirational target of 15 out of 16 trains
being on time. I suppose at the moment that might sound rather
humorous. What are you doing to achieve this target and when do
you expect it to be met?
(Mr Grant) Perhaps a few words on the aspirations
because 15 out of 16 trains is an aspiration that the SRA has
for over some time period and it will vary from franchisee to
franchisee. Just to put it in a bit of context, 15 out of 16 trains
arriving on time is well within the bounds of normal railway operation
for the Netherlands, for Spain, for Switzerland and for France.
The 15 out of 16 is something that is achievable. What are we
trying to do to achieve that 15 out of 16 trains and when are
we trying to achieve it by? The principal method of trying to
achieve the 15 out of 16 trains, which is an aspiration, is through
franchise replacement. The two franchises that have been awarded
so far—heads of terms, that is, not franchise agreements—for
Chiltern and GoVia both have those within the life of the franchise
to be achieved.
3. Thank you very much. Do you have any estimates
for the rest of them? That is two out of how many?
(Mr Grant) Two out of 25. They will come forward as
we negotiate each franchise and we would be aiming to have those
15 out of 16 trains within the life of the franchise.
4. Of all franchises?
(Mr Grant) Of all franchises.
5. And they are how long typically?
(Mr Grant) We are talking about up to 20 years.
6. That is quite a long time, is it not?
(Mr Grant) It is quite a long time but the achievement
of that 15 out of 16 is dependent probably mainly on improvements
in infrastructure and major infrastructure takes a considerable
amount of time to put in place.
7. So you are saying that it could take 20 years
before we get 15 out of 16 trains on time?
(Mr Grant) In some cases it may well be.
8. I see. I am sure others will come back on
that. My next question relates to figure eight which actually
ties in rather well with this. It shows a large variation in the
reliability and punctuality of different train companies. If the
poorer companies could achieve the standards of the best this
would produce a dramatic improvement over the whole network. What
are you doing to bring about such an improvement?
(Mr Grant) On the punctuality and reliability, it
is important to look at the causes of the punctuality problems.
The main problems of punctuality and reliability are contained
in one of the charts further on, which are mainly down, to if
you like, causes of delay in figure 13 which shows that the operator
causes about 50 per cent, Railtrack causes about 35 per cent and
external causes about 15 per cent. On the operator causes, in
the franchise replacement we are looking for resilience in the
train operations, so they need to provide adequate trains, adequate
train crew. As far as Railtrack are concerned, a lot of this comes
back to infrastructure, so the major infrastructure developments
will help that punctuality and reliability.
9. How are you going to ensure that will happen?
We had the Office of the Rail Regulator in before the summer and
one of the number of things that came up was the ineffectiveness
of the enforcement of the penalties structure that we currently
have. How are you going to make sure that they actually do what
you want them to do?
(Mr Grant) The Committee will be aware from the report
that the penalty regime we have suggested for new franchises should
be doubled. Punctuality should be brought within the terms of
enforcement, which it is not at the moment. New franchises should
include provisions for performance benchmarking which will be
raised through the life of the franchise. Again, it comes back
to franchise replacement as far as the train operator is concerned.
10. Let us pick up on that doubling. Paragraph
2.10 explains how your consultants, London Economics and AEA Technology,
found a "mainly insignificant" relationship between
the punctuality and reliability incentives and better performance.
Do you think that doubling will alter that?
(Mr Grant) We believe it will. Obviously I was not
around at the time when this was set up but what I have gleaned
from my colleagues is that when these regimes were put in place
they actually measured the value to passengers in lost time, not
the consequence of how much it would cost to put it right. We
believe that doubling it will make a difference, but in some cases
because the cost of putting it absolutely right may be billions,
it is between the two, ie the existing does not work as well as
it should and if you had a very penal rate then it would not work
either.
11. We have had, particularly in the last few
weeks, complaints from more than one rail company head, Mr Corbett
perhaps being the most obvious, about the safety implications
of the incentive structure in the industry. Will this not make
it worse?
(Mr Grant) If I can answer that question in two time
frames. Considering the amount of money, public and private money,
that is in the Government's ten year plan it seems almost impossible
that you would not expect to have a safe, reliable, punctual railway.
Clearly that is the plan for ourselves and the ten year plan,
to provide that railway. In the shorter term, it is hard to deny
that under the current circumstances because there is concern
about safety, punctuality and performance, that is not good enough.
12. So you are saying in the short-term it is
not possible to deliver punctuality safely?
(Mr Grant) What I am saying in this current period,
as we stand today, is you can see the effects of safety and performance,
but in the long-term—
13. I can see the effects of the current management
of the railway, whether that is safety I am not sure.
(Mr Grant) At the moment there is a safety concern
and the performance is affected because it is not operating properly.
14. I will let others come back on that, it
will be an issue I am sure you will have to answer more questions
on. Let me move on to paragraphs nine and ten which show that
the number of passengers on the railway is growing rapidly and
that this is resulting in increased overcrowding on trains. What
are you doing to bring about investment in new rolling stock to
relieve this overcrowding?
(Mr Grant) Sorry, could I just check the reference?
15. Paragraphs nine and ten of the C&AG's
Report. The issue is the question of overcrowding and getting
more rolling stock on the tracks. How are you going to do that?
(Mr Grant) The SRA sponsored two action groups, one
short-term action group and the other a long-term action group,
specifically to try to deal with the rolling stock position which
at the moment is unsatisfactory. Maybe I could just mention some
of the causes to start off with. First of all, on the Railtrack
side, whether they are providing adequate information so rolling
stock companies and manufacturers can get the rolling stock on
board and, then, of course, the question of whether the rolling
stock can actually perform once it is in service. The short-term
action group did have some success in getting the LTS, c2c trains
and South West Trains into service in the spring, but subsequently
they had to be withdrawn because of the poor manufacturing performance.
In the longer term we are sponsoring a number of actions whereby
the manufacturers and Railtrack share more information to try
to make the acceptance that much smoother. In addition, one of
the working groups that has been set up by Sir Alastair Morton,
as requested by the Deputy Prime Minister, is looking at vehicle
acceptance and how that can be improved.
16. You are doing that on their behalf, are
you? I see. I expect others will come back on that. It strikes
me as something which should be fairly straight forward for the
operating companies to get right, but however. The Government
announced earlier this year a large increase in public spending
on the railways, the total grant to Railtrack from you, in effect,
totalling £4.7 billion over the course of five years. What
do you expect to get from that investment?
(Mr Grant) Clearly we have been looking at the ten
year period and the ten year plan. We have been looking to the
major enhancements that will come forward, ideally the safer,
the bigger, the better railway. We will be producing a Strategic
Plan in the New Year which will contain a number of projects and
the direction in which we think is the appropriate way to go.
17. We are not seeing you in the New Year. You
have got £4.7 billion, how are you expecting it to be spent
and how will you make sure that it is spent?
(Mr Grant) I will let Mr McGann go through the details
on the financing side.
18. By all means.
(Mr McGann) I think the £4.7 billion you are
referring to is the capital grant, part of which is in respect
of the renewal of the West Coast Main Line and part of which is
in respect of the renewal to cover a degree of under maintenance
previously on signalling and telecoms. It is a combination of
those two.
19. And how will you police that? Anybody can
answer.
(Mr Jenner) It is very much for the Regulator to police
it as it is sustaining the basic existing railway. It is part
of his jurisdiction to ensure that the money is spent appropriately
and what is produced is an efficient network as a result.
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