Examination of Witnesses (Questions 160
- 179)
MONDAY 27 NOVEMBER 2000
MR MICHAEL
GRANT, MR
MARTIN MCGANN
AND MR
TERENCE JENNER
160. I understand from Figure 23 that, in fact,
Greater London fares per mile are something like 60 per cent higher
than the next fare down. If you compare that with Merseyside it
is almost four times the fare per mile. Do you think London commuters
are being ripped-off as well as increasingly having to stand?
Do you think that can be justified? What can be done to squeeze
the differentials? I note that in Figure 22 everybody else reduced
their fares, but in London they went up again. What do you think
about that?
(Mr Grant) The fares are right as far as London are
concerned. They are significantly higher. If you were to change
this it would take some considerable time. It is a reflection
of where the privatisation started from.
161. Coming back to Mr Williams point, if you
are saying there are massive differentials on a regional basis
to what people have to pay to go to work on the train, you are
saying this is a structural problem. In terms of cross-subsidies
between areas, do you think this is a function of the fragmented
mess of privatisation we have inherited? Why is it that your working
groups have no remit to consider that? Evidently, there is no
formula in which you can begin to reduce these massive differentials,
or is there? How are you going to reduce these unfair differentials?
(Mr Grant) The fares themselves are also geared to
London Transport, so they have to go in some correlation with
them.
162. They are geared to what?
(Mr Grant) They are geared to London Transport fares.
You could not adjust the rail fares without adjusting London Transport
fares as well.
163. The bus costs.
(Mr Grant) The tube as well.
164. I think that Londoners paying 60 per cent
more than the South East and four times the amount of Merseyside
is a rip-off and you as the Strategic Rail Authority should be
doing something to get those fares down. The only formula I have
seen is RPI-1. We have the most expensive railway fares in Europe,
what are you going to do about it in the Strategic Authority?
(Mr Grant) We are not changing the fares policy that
is in place at the moment. We are encouraging train operating
companies to encourage people to travel on the shoulders. If you
were to do what you have suggested I am not sure we could cope
with the capacity, we certainly could not cope at the moment.
If we had a major reduction in fares then there would be a massive
increase in the use of the trains, which is what we are aiming
for, but whether we can cope with the capacity issue—
165. The strategy is to limit the number of
people using the train by keeping the price up, which is presumably
a profit maximising strategy anyway.
(Mr Grant) We are certainly not trying to keep the
price up. In real terms the price has gone down. It is not our
policy to price off passengers from the railway.
166. The strategy, from the Government's point
of view, is to get more people on the train and for you to ensure
that in the ten year plan there are more trains running and the
price goes down?
(Mr Grant) That is what RPI-1 wants.
167. RPI-1 is pathetic overall, given that we
have the most expensive trains in Britain. On a regional and variation
basis there are 60 per cent more in London than in the South East.
That is not going to reduce the average price or the relative
price. There is nothing in your plans to suggest that commuters
in London will get a fairer deal within the foreseeable future,
is there?
(Mr Grant) The London position is going to take some
considerable time to put more capacity onto the railways.
168. Within the ten year time frame how much
more capacity do you imagine will be put on?
(Mr Grant) The ten year plan is looking for an average
of 50 per cent increase in passengers and 80 per cent increase
in freight.
169. What do you think is going to happen to
fares?
(Mr Grant) The current fare policy is RPI-1.
170. Do you think that is enough? It seems to
be hopeless to me in terms of 60 per cent up. You are happy with
RPI-1.
(Mr Grant) That is the current policy.
171. Right. You would not answer the question,
fair enough. Can I ask you something about the depth and breadth
of Railtrack's management. Do you have complete confidence in
Railtrack's management? I know you were there for five months
and, indeed, Gerald Corbett was there for three years and Mr Marshall
has been there for one year. Do you have complete confidence in
Railtrack's management to deliver?
(Mr Grant) If I can take the Railtrack question in
three time periods. In the long-term we have to have confidence
in the Railtrack management to deliver the ten year plan. They
are in position at the moment and there is a new management team
in place. We have had one or two discussions with them. We are
working with Railtrack and we look forward to working with them
to deliver the upgrade, but I cannot give you any reassurance
at the moment because we have had little time to discuss it with
them.
172. Kevin Keegan walked away from the England
football role, he resigned and he was given no money, and Gerald
Corbett walked away and received a six figure sum, and then went
to India to lose some weight, do you think that is fair?
(Mr Grant) That is a matter for the Railtrack Board.
173. Given that the resolution of the England
problem was to bring in a Swede and, indeed, in the Underground
we brought in an American, do you think it is a good idea to bring
in a Japanese or a French operator to Railtrack to bring some
real experience to bear?
(Mr Grant) That is a matter for the Board. I hope
that Railtrack would look across the world to see best practice
and adopt it.
174. Rather than just TV rentals and wine merchants!
Yes, okay. Moving on to driver training. I understand that driver
training is now something like six months. It used to be two years'
long in the old nationalised days—if I am allowed to say
that—do you think driver training is up to scratch?
(Mr Grant) We are not an organisation that has the
expertise to comment on that.
175. You are confident it is up to scratch?
(Mr Grant) I am confident the HSE are making sure
it is up to scratch.
176. The ten year plan envisages something like
an extra £26 billion of public money and £54 billion
of private money will be spent. How many shares does the Strategic
Rail Authority currently have in Railtrack?
(Mr Grant) None, to my knowledge.
177. It has one million to my knowledge.
(Mr Grant) The Strategic Rail Authority does not have
any shares, the Government may have shares.
178. My understanding is the Government holds
one million shares in Railtrack through the Strategic Rail Authority.
Do you think if you had more shares in Railtrack it would give
you greater control over the rail system, as well as repatriating
some of the profits and running railways back to the taxpayer?
(Mr Grant) That is not a proposition that we are addressing
at the moment.
179. What do you think, or do you have a view?
(Mr Grant) Is it not the case, Mr McGann, that if
in exchange for increasing subsidy the Strategic Rail Authority
was allowed to have more shares, it would enable Railtrack to
borrow more in the city and we would get more bangs for our buck
in terms of public subsidy, as well as getting a share of the
profits, of course?
(Mr McGann) If the Government owned shares in Railtrack
it would have to bear the risk that that entails.
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