Examination of Witnesses (Questions 100
- 119)
MONDAY 27 NOVEMBER 2000
MR MICHAEL
GRANT, MR
MARTIN MCGANN
AND MR
TERENCE JENNER
100. You will be brief because I do not want
to take too much time.
(Mr Jenner) The performance target will be 93.75 over
the life of the franchise rather than the current BR historic
figure. The incentive rates, performance penalties or bonuses
will be doubled from what they are at the moment. There will be
an enforcement regime on punctuality. At the moment they can be
breached and possibly lose their franchise on total cancellations
or cancellations, but now a similar enforcement regime will apply
to the trains running on time or not. There will be customer satisfaction
targets that they will have to meet: cleanliness of trains, cleanliness
of toilets and that kind of thing. If they fail to meet them then
up to half a million pounds per half year they may have to spend
in putting those matters right.
101. What happens if they achieve the targets
quite easily during the franchise, will you be able to amend them
to make them more difficult?
(Mr Jenner) What we have built in for a long-term
franchise up to 20 years is a series of review points. The purpose
of the review is to ratchet up the performance on customer satisfaction
targets, so it is a gradually rising trend throughout the whole
of the franchise period.
102. So you are saying that the franchise will
be flexible?
(Mr Jenner) Our intention is that it certainly should
not finish where it starts off from.
103. What can be done to get improvements in
performance incentives for those companies whose franchises have
not yet come to an end?
(Mr Grant) That is obviously a difficult issue. Other
than encouragement, we have a contract with them that—
104. Can you threaten them with not getting
the new franchises?
(Mr Grant) They have a contract and we have to honour
that contract. If they breach the contract or they are in contravention
of it then, of course, there are powers to take that franchise
away, but as long as they operate within the terms and conditions
of that contract there is not much that we can do.
105. I have stated, I do not know whether you
admitted it, that some of these franchises were so lax and so
easy to achieve that on the performance that we have seen in the
past, although they have achieved the actual franchise, they have
not been performing and giving a first class service. Why should
they be considered again for a new franchise?
(Mr Grant) They are performing within the contract.
Clearly we will be looking for them in new franchises to meet
the aspirations and the targets that we are setting, but we cannot
really do that much with existing contracts.
106. On page 33, paragraph 2.22, half way down
the page, it says: "The Authority stated that it will expect
train operators to `build in sufficient resilience to their plans
to deal with problems that are reasonably foreseeable, such as
staff shortages'. It will also seek to build in review points
every five to seven years to assess the franchisee's performance."
I am interested in how that is going to work.
(Mr Grant) On figure two of the document—
107. Which page is that?
(Mr Grant) Page 13. It just outlines the main components
of a franchise agreement. That includes a passenger service requirement,
a train plan, the incentive and penalty regimes, regulation of
fares and other aspects of passenger service. We are analysing
in a great deal of detail the proposals put forward to us and
that will include the resilience point, which is not just the
train plan, the drivers available to it, but it is also about
infrastructure and making sure that the operator's infrastructure
can provide for a bigger and better railway. As we go forward,
what I have done in terms of the organisation is to put the emphasis
of our organisation on delivering. I know we are not a delivery
organisation in terms of actually providing the trains, but we
will be focusing very much on the Railtrack and train operating
company interface which is what the passenger receives. We will
have much more focus on the delivery, we will be looking in a
great deal more detail at the train plans and making sure there
is resilience. Some of the punctuality and reliability issues
are down to not enough drivers.
108. Could the franchise be terminated if, for
example, it was clear that the holder was badly under-performing?
(Mr Grant) Over a period of time there would be tests
in there and it could be terminated.
109. Figure 11, page 30, and also 2.18, which
is basically talking about figure 11. I must admit, considering
the state of the railways at the present time, I was very sceptical
that this was actually a very sincere plan, particularly when
I noticed that Railtrack had a major input into it. It seems to
me that there are lots of plans around but not a great deal of
action taking place. I notice that you have just come from Railtrack,
have you not?
(Mr Grant) I was at Railtrack for five months.
110. Did you not like it?
(Mr Grant) I got offered a better job.
111. Just in time.
(Mr Grant) Ah—
112. Tell us about this plan because, frankly,
if you read the ten points in it, some of them are jokes really,
are they not, if you consider what has happened in the last two
years? For example, target track maintenance work on reducing
delays, work together on better timetable planning, you go on,
target the 50 worst delay hotspots. This is 1998 but not a lot
seems to have been done.
(Mr Grant) As far as the ten point plan is concerned—
113. What has been achieved?
(Mr Grant) Certainly the Punctuality Task Force was
achieved, 800 drivers was achieved. They did identify the 50 worst
delay hotspots.
114. They found them. They did not do a great
deal about them, did they?
(Mr Grant) I think what you will find is in the most
recent delays in punctuality and reliability, Railtrack have been
pretty flat in their percentage of problems. You will see that
in figure 12, the Railtrack delay, 43 per cent, is flat. I think
you have also to take into account that there has been an increase
in the number of trains running every day which will lead to obvious
difficulties and extra strain on the infrastructure. In the most
recent—
115. I am not really convinced, to be honest.
I am not convinced at all. It seems to me there seem to be lots
of plans around and lots of targets but at the end of the day
we have got a railway system now which is worse than it was three
years ago. I am now catching the aeroplane and the aeroplane is
three hours quicker coming from the North East of England. Frankly
it is deplorable. You can have all the plans in the world but
if they are not achieving anything, it just seems a great shame.
If we move on and look at paragraph 3.13 on page 42, this paragraph
seems to sum up privatisation really. There are companies who
are doing their best. GNER, for example, I have no complaints
against them, they are doing a good job and they are making their
profit and that is fair enough. But there are others, are there
not, that have under-performed, under-achieved, they could not
give a monkey's cuss about the customer, all they are interested
in is making a profit for the shareholder? Why has your organisation
just stood by and let it happen, because it has happened? Nobody
is happy with the railways.
(Mr Grant) When you say let it happen, I think it
is fair to say, and the report recognises this, that OPRAF as
an organisation did what it could within the contractual limits.
116. You had companies who were prepared to
be fined, who would rather take off rolling stock and be fined
because it is still more advantageous for them to make profits
for their shareholders and provide a worse service. They were
actually prepared to do that. That cannot be a very compassionate
sort of service they are offering. All they are keen on doing
is making a huge profit for the shareholders. I was at a meeting
on Friday night, and I will not say where, and one question one
person asked at the meeting was "what about the shareholders
in all this?" What about the shareholders? I could not give
a monkey's cuss about the shareholders, it is the passengers who
are travelling who are not getting the service. That seems to
me to be the attitude of a lot of these companies. It is your
job to do something about it.
(Mr Grant) We are doing something about it in the
new franchise agreements. As I said to you earlier, unless they
are in breach of the contract there is not much we can do about
it. In terms of profitability going forward, under the new franchise
agreements if they are making super profits then we will claw
some of those profits back.
117. It has been mentioned that railways are
being used now 24 per cent more than they were before which means
that if that is the case these train companies must be making
huge profits. Do the present franchises allow those profits to
be shared or are they just taken by the rail companies? Presumably
if they are not, is there the possibility that in the future,
as we saw with the utilities being given away and the windfall
tax being brought in at a later date, is there the chance of this
happening in the railways?
(Mr Grant) Under the current franchise arrangements
there is not a profit share. Clearly it is a mixed picture across
the railways because it is not all of the companies that are making
profits, some of them are in difficulties. As far as windfall
tax, and I look to Mr Jenner, I believe there was a windfall tax
based on Railtrack a year or two ago.
(Mr Jenner) Yes.
118. I am talking about the companies themselves.
(Mr Grant) There is not any proposal to have any windfall
tax other than, as I say, under the new franchise agreements there
will be an opportunity to claw back profits.
Mr Steinberg: Thank you.
Mr Love
119. Good afternoon, Mr Grant. This Report shows
that commuter services in Greater London are not only the most
expensive in the country but they are also the most overcrowded
and, indeed, have an appalling record on punctuality and reliability.
Are London passengers getting a raw deal?
(Mr Grant) I cannot dispute that the facts that you
just said, that according to the information contained in the
Report they are getting more per mile.
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