Examination of Witnesses (Questions 180
- 199)
MONDAY 27 NOVEMBER 2000
MR MICHAEL
GRANT, MR
MARTIN MCGANN
AND MR
TERENCE JENNER
180. Do we not already bear all the risk, are
we not piling money into a system that is clearly failing? We
have inherited a fragmented system, we are throwing money into
a fragmented system. Do you think it would be a good idea if we
had a greater share?
(Mr McGann) It would be a good idea if we can reach
a situation where we can utilise the public sector funds to lever
in more private sector money for railways, that would be a good
idea.
181. Do you agree if there was greater equity
from the public sector that Railtrack would be able to borrow
more from the city?
(Mr McGann) I do not think that is necessarily the
case.
182. That was Gerald Corbett's view. In terms
of speed, my understanding is that the record for a steam engine
in Britain is 126 miles per hour, that was the Mallard in 1938,
we are still doing 125 on Intercity trains, and the French are
doing 320 mile an hour trains. What is your strategic vision for
the growth in the average speed of British trains moving towards
the French level?
(Mr Grant) From a strategic point of view we would
want to look at 140 miles an hour, which is the proposition on
the West Coast Mainline.
183. You mentioned looking at the structure,
you have been looking at these working groups, are you ruling
out the idea of having some sort of inventive private/public partnership
along the lines as I was saying, about equity and borrowing, because
of the fears of a hiatus?
(Mr Grant) That is not our mandate at the moment.
If the working groups conclude that something needs to be done
about structure, we will address it at the time.
184. I talked about speed and fares. In terms
of volume the French use double-decker trains, is there any prospect
of us having extra capacity? I know there is the physical problem
of rails. When are we going to be able to have double-decker trains
in Britain?
(Mr Grant) There is an economic analysis there. I
believe that South-West trains have publicised they are looking
at double-decker trains.
185. Does anybody have any idea when we might
expect double-decker trains?
(Mr Grant) If South-West trains were successful in
their franchise replacement I guess you would be looking at a
five to ten year period.
186. In terms of the situation on overcrowding,
would you agree that the problem of overcrowding in simple terms
is there are more people wanting to go on trains and the growth
in trains is due to congestion on the roads and one million people
in jobs is far ahead of the supply side? As a Strategic Rail Authority,
will you ensure that comes into balance in the next few years?
When will it come into balance?
(Mr Grant) As you will see in the report, the major
element the report identifies is an increase in infrastructure
and for that infrastructure we are talking about a five to ten
year time frame.
187. Finally, in terms of customer complaints
and consumer confidence, you will be aware that various operations,
like Macdonald's, whoever it is, have leaflets and they say to
their customers "please fill in this leaflet, tell us what
you think". Do you think it is a good idea for train operating
companies to have leaflets in their stations so that passengers
can fill them in as they are sitting in queues and can give their
suggestions so you get a true idea of the dissatisfaction that
the public feels about the rail system in Britain?
(Mr Grant) I will certainly take that comment on board.
The major element of our approach has been through the National
Passenger Survey where you can get a more accurate picture than
from the trains, but clearly some of that may be a good thing
to do.
Chairman
188. Before we lose sight of the question, can
the Treasury tell us what the holding in Railtrack is by the Government?
(Mr Grant) It is one million shares but I do not believe
it is held through the Strategic Rail Authority.
(Mr Dennis) The Strategic Rail Authority has not been
formally vested yet.
189. Presumably that is the intention. Mr Williams
asks have you lost them?
(Mr Glicksman) Can we give you a note on that[1],
Chairman?
Chairman: That would be helpful, yes. Let me
know if they are on a GNER train going forward.
Mr Davidson
190. Do I take it from what you have been saying
that it is your view that the present franchises are too soft
and they allow people to get away with lax behaviour?
(Mr Grant) I can certainly say the franchises going
forward will have more stringent requirements.
191. That was not what I asked you. I asked
you whether or not you believe that the present ones are too soft?
(Mr Grant) For the amount of investment that we are
putting into the railways going forward we will demand more from
the franchises than is in place at the moment.
192. Shall I ask you again then. Do you believe
that the existing franchises are too soft?
(Mr Grant) In some cases they have been easy to achieve,
in other cases they have not.
193. Thank you. If I assume that some of the
existing franchises are to be sold in order to simply get the
whole rail privatisation rolling and the Government will be able
to settle for what they can get, is that a reasonable view?
(Mr Grant) I believe, talking to a number of people,
that the early franchises were let on more generous terms than
the later ones in terms of the programme that took place of privatisation.
Mr Davidson: I was really interested in your
point about the correlation between early privatisation and the
level of profitability. In order to sustain that it would be helpful
if we could have some evidence of how you came to that conclusion.
Chairman: Can we have a note on it[2]?
Mr Davidson
194. That would be helpful. Can I go back to
the point you made at the very beginning, I think in response
to the Chairman, I just want to get this absolutely clear. Are
you saying that under the regime that you are starting to renegotiate
that it could be 20 years before 15 out of 16 trains run on time?
(Mr Grant) That could be the case.
195. Do you regard that as acceptable? Do you
think that we should regard it as acceptable?
(Mr Grant) There is a question about the level of
investment you believe is necessary to achieve 15 out of 16 trains.
Of the two franchises that have been let so far, one is planning
to achieve it by 2004 and the other one by 2010. What we have
said is we want it to be achieved earlier than 20 year, so I am
saying we would expect it to be achieved within the life of the
franchise but the evidence to date is that we will get it earlier
on some and later on others.
196. Are you on performance related pay at all?
(Mr Grant) No.
197. Are any of the staff in your organisation
on performance related pay?
(Mr Grant) Some are. The organisation contains people
under British Railways Board contracts, people under OPRAF contracts,
some under Department contracts and, in future, Office of the
Rail Regulator contracts.
198. Is there anybody in your organisation who
loses money if trains are late?
(Mr Grant) Not directly, no.
199. I wonder if I could just ask you a point
relating to page five, paragraph 12. I just want to be clear about
this point about the trains. It says "The Authority would
consider adjustments to fares to encourage passengers to avoid
the high peak." You indicated at one point during your answers
that it would not be your intention to price people off the railways,
do I take it that there will be off-peak reductions or is it more
subtle than that?
(Mr Grant) What we were looking at was whether people
would be prepared to travel in the shoulders just outside the
peak. There has been some evidence of that on the c2c franchise.
That was the idea behind that.
1 Note by Witness: I can confirm that the Government
holds just over one million shares in Railtrack through the Department
of the Environment, Transport and the Regions. They are the residual
amount of the shareholding that the Secretary of State retained
to pay bonus shares to those who bought at flotation and elected
the "bonus share" option if they held the shares for
three years. Claims for bonus shares are still being received. Back
2
Note: See Evidence, Appendix 1, page 24 (PAC 2000-2001/52). Back
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