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Railway Interoperability
Chris Grayling: To ask the Secretary of State for Transport, Local Government and the Regions if he will make a statement on the (a) timetable for and (b) cost implications of meeting European regulations on railway interoperability. [8331]
Mr. Jamieson: Following consultation in May-July this year, we are revising the draft Regulations to implement directive 96/48/EC of 23 July 1996 on the interoperability of the trans-European high-speed rail system. We currently expect that the final regulations will be made and then come into force by early next year. The draft Regulatory Impact Assessment included in the consultation document indicated that the estimated cost to UK businesses was £45 million (net present value at 2000 prices) of which £15 million would be incurred in the next three years, plus some smaller-scale costs for conformity assessment. There are also potential benefits, which are difficult to quantify, in terms of the provision of more competitive rail services which would benefit freight customers and passengers and attract more traffic to rail, yielding environmental benefits.
Directive 2001/16/EC of 19 March 2001 on the interoperability of the trans-European Conventional rail system is required to be implemented by 20 April 2003. An assessment of the costs and benefits of the implementation of this directive is not yet available.
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Speed Signs
Chris Grayling: To ask the Secretary of State for Transport, Local Government and the Regions if he will make a statement about the rules which prevent repeater 30 mph signs from being used in 30 mph zones. [8340]
Mr. Jamieson: Repeater signs are prohibited on roads with the urban 30mph national speed limit (restricted roads). Here the presence of street lighting is used to indicate the limit. The prohibition is the result of case law which makes it difficult to gain convictions for speeding if some restricted roads and not others have repeater signs.
The DTLR is due to review speed limit signing early next year. This will look at the question of repeaters on restricted roads.
Detrunking
Miss McIntosh: To ask the Secretary of State for Transport, Local Government and the Regions what plans he has to allocate specific funds for North Yorkshire county council to detrunk the roads; and if he will make a statement. [8145]
Mr. Jamieson: The Highways Agency has been and is having regular liaison meetings with North Yorkshire county council, most recently on 11 October, to discuss detrunking. At present, negotiations are progressing well and my Department has offered to make over £1.1 million available to the council for maintenance of those trunk roads to be detrunked in the county. Orders are currently being drafted and the majority should be published before the end of the calendar year.
Local Government Funding
Mr. Prisk: To ask the Secretary of State for Transport, Local Government and the Regions if he will make a statement on the progress of his Department's review of local government funding. [8165]
Dr. Whitehead: Following last year's consultation on local government finance we have been working with local government and other stakeholders in developing proposals for reform. The Local Government White Paper is due to be published later this year and will include a daughter document detailing our financial proposals. We have already announced that changes following the review of the revenue grant distribution system will take effect in April 2003.
PFI Road Schemes
Matthew Taylor: To ask the Secretary of State for Transport, Local Government and the Regions, pursuant to his answer of 18 July 2001, Official Report, column 203W, on PFI road schemes, what the total points awarded is as a percentage of total that could be awarded; what percentage of projects had points awarded; and what the five main reasons were for awarding of points. [8174]
Mr. Jamieson: There is no limit to the number of penalty points that can be awarded on the Department's PFI trunk road projects. Penalty points are issued when it is appropriate to do so. Points have been awarded on 87.5 per cent. (7 of 8) of the projects. The five main reasons for the award of penalty points on the Department's DBFO contracts are: testing of construction
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materials, traffic management, public safety during construction, management of the construction process and road maintenance.
Night Flights
Mr. Todd: To ask the Secretary of State for Transport, Local Government and the Regions what assessment he has made of the adequacy of controls on night noise at UK airports. [8524]
Mr. Jamieson: Controls on aircraft noise at night may be imposed voluntarily by the airport operator, in consultation with those affected. They may be subject of informal agreement, for example, with the relevant airport consultative committee, or of enforceable obligations under section 106 of the Town and Country Planning Act 1990 or they may be the subject of planning conditions. At airports designated for the purposes of section 78 of the Civil Aviation Act 1982, controls may be set under that power: at present, only Heathrow, Gatwick and Stansted are so designated.
In the consultation paper, "Control of noise from civil aircraft", published last year, we also proposed that the Secretary of State be given a new power to require a noise amelioration scheme to be made and agreed with an appropriate local authority to address particular local issues. Responses to that consultation are being analysed and I hope to announce the outcome shortly.
Airport Security
Mr. Gareth R. Thomas: To ask the Secretary of State for Transport, Local Government and the Regions what funding his Department has made available for research into improving airport security in the last year; and what criteria are used to assess bids for such funding. [8139]
Mr. Jamieson: I refer my hon. Friend to my answer of 19 October 2001, Official Report, column 1366W.
Mobile Phones (Motorists)
Mr. Drew: To ask the Secretary of State for Transport, Local Government and the Regions if he will make a statement on motoring offences and the use of hand-held mobile phones. [8588]
Mr. Jamieson [holding answer 18 October 2001]: As the Highway Code makes clear, drivers should never use hand-held mobile phones while driving. Using a hands-free phone is also distracting and drivers should always find a safe place to stop when using any type of phone. Drivers who use phones irresponsibly may be prosecuted for failing to have proper control of their vehicle. This offence carries a maximum fine of £2,500. It can also be an offence for employers to require employees to use mobile phones while driving.
Drivers may also be prosecuted for careless or inconsiderate driving or even dangerous driving. The penalties for these offences include endorsement and possible disqualification from driving. We therefore share the view of the police that current legislation provides sufficient powers to prosecute drivers who use mobile phones or any other in-vehicle devices, or carry out other activities that may distract their attention from the
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road. However, as stated in the Road Safety Strategy "Tomorrow's roads—safer for everyone", the Government will keep under review the need for new legislation.
Railtrack
Mr. Hoban: To ask the Secretary of State for Transport, Local Government and the Regions what meetings he held to discuss alternatives to putting Railtrack plc into administration with (a) Railtrack and (b) financial institutions. [8185]
Mr. Jamieson [holding answer 18 October 2001]: My right hon. Friend had a number of meetings with advisers and others before taking his decision to petition for Railway administration.
Mr. Hoban: To ask the Secretary of State for Transport, Local Government and the Regions if he will place in the Library his assessment of the financial position of Railtrack plc which led to the application for an administration order under section 59 of the Railways Act 1993. [8193]
Mr. Jamieson [holding answer 18 October 2001]: Copies of the bundle of High court documents relating to the railway administration order of 7 October have been placed in the Libraries of both Houses.
Mr. Hendrick: To ask the Secretary of State for Transport, Local Government and the Regions if he will make a statement on the structure and funding of the company limited by guarantee which he will propose should take over Railtrack plc's role as network operator. [10123]
Mr. Byers: It is ultimately for the administrator to assess and make recommendations on proposals for how Railtrack's railway assets are transferred out of administration as a going concern. I will have to approve any such transfer under schedule 7 to the Railways Act 1993. As recent press coverage has made clear, there is every possibility that there may be more than one proposal before the administrator. The Government welcome this. At the same time however, it would be irresponsible of us to do nothing and leave it to others to work up a viable successor company to Railtrack plc. We are therefore developing what we would regard as an attractive successor vehicle. We will put a proposal to the administrator for a company limited by guarantee (CLG) to take over Railtrack plc's railway assets and its role as Network Operator.
A CLG would be a private sector company run on purely commercial lines but without shareholders and consequently without the need to pay dividends in return for equity funding. Profits from the company would be re-invested in the network. The CLG structure could do much to address the current problems of the industry and could be one way of facilitating increased vertical integration with the possibility of individual TOCs playing a greater role in the maintenance of specific areas of infrastructure, where this was advantageous and appropriate. Any such vertical integration would need to include measures to protect the interests of other infrastructure users.
We anticipate that the board of the CLG would comprise 12 to 15 executive and non-executive directors. The executive directors would include a CEO, and
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engineering, finance, safety and commercial directors. The non-executive directors could include a chairman, one director nominated by the SRA, one director appointed after consultation with both the TOCs and FOCs, and up to seven other independent non-executive directors. As is the case with all companies, the directors would owe their first duty to the CLG itself.
This would be a highly professional board, tightly focused on delivering a quality rail network fit for the 21st century, remunerated and incentivised accordingly, and with corporate governance structures comparable to that of a traditional plc. In its early years the company would clearly face a number of key challenges: maintaining very high standards of safety on the railway; retaining the confidence of customers, employees and contractors; diagnosing the cultural and structural problems of the company and planning the best way of overcoming them.
We are confident that incentive packages can be devised which would be comparable with those for similar roles elsewhere in the private sector and which would ensure that the CLG recruited and retained the very best people. Incentives would be based initially on safety, meeting financial and efficiency targets, and providing a quality service to customers.
Instead of shareholders, a CLG has members. The SRA would be the founder member of this CLG and we anticipate that the majority of the other members would come from the private sector. Individuals drawn from private sector companies with a direct stake in the railways, other interests including passenger groups and employees, and the SRA (or its successor) could all be possible members. Financial interests and construction companies could also be included.
Under this structure the members would have a governance role equivalent to that of shareholders but would have no additional powers. They would be well placed to ensure the high performance and full accountability of the board.
For funding purposes the CLG would have the same sources of revenue as Railtrack had: property income, track access charges and grant. Some 90 per cent. of the company's income would therefore be covered by stable long-term contracts. Revisions to these contracts, for example to reflect any changes to the regulatory regime, would be subject to independent regulation in respect of the fair price to be paid for the outputs Government wish to purchase.
The CLG would not need equity to raise debt finance. The company would have the existing debt from Railtrack transferred to it and would be able to borrow further from the debt markets to the extent necessary. The cost of this borrowing would depend on the company's credit rating and under the proposals we are currently developing we would expect the CLG to have a solid investment-grade (ie at least BBB) credit rating. We anticipate that in practice lenders would view the company as a very low credit risk and a sound basis for their investment.
The 'cushion' between the risk of poor financial performance and debt providers that equity would provide under the standard plc model would come from two main sources. First, we would expect to put in place an arrangement by which the company could access a
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standby, subordinated loan facility. This facility would be enshrined in a contract, providing explicit support in specified circumstances up to a predetermined limit. It would be capped. It would not amount to a Government guarantee of debt, but the repayment of this facility would be 'last in the queue' of creditors for repayment. The possible value of this facility would be determined once the administrator has a better understanding of Railtrack plc's true financial position.
Secondly, although the company would not be distributing profits in the form of dividends, it would earn a surplus over direct costs. This would be sufficient over time to build up a significant reserve. Together, the company's reserves and the explicit loan facility, would mean that the CLG would have access to sufficient funds to cover foreseeable circumstances.
Under the CLG structure revenues would go further than they would have done with Railtrack. The cost of capital would be lower, there would be no dividends and the company would be able to prioritise cashflows in favour of lenders. In addition the company would operate with much lower risks than Railtrack, concentrating on operating and maintaining the infrastructure as well as undertaking small-scale renewals. The CLG would not undertake major new projects with all their attendant risks of cost overrun. As we announced in April this year, we anticipate that projects such as these, like the east coast main line upgrade, will henceforward be undertaken by special purpose vehicles. These are likely to be bespoke joint venture companies financed by a combination of Government grant and private sector debt and equity.
A CLG company structure could be combined with a different, more streamlined, regulatory regime than the one under which the industry has had to labour to date and this would help to underpin its credit rating. As stated, transparent independent economic regulation would continue to be an element in the regulatory regime.
There may well be other viable options for the administrator to consider, and we will give any transfer scheme put to us full consideration. Nevertheless, we are confident that the CLG structure we are proposing, along with the associated regulatory changes, would:
- produce a focused, professional, private sector company committed to maintaining and improving the rail network;
- retain the ability to raise significant private sector investment in the railways at reasonable cost;
- rid the industry of the previous tensions between the need to generate short-term increases in share price and the long-term needs of the network;
- give those with a stake in our railway infrastructure an input into how that infrastructure is operated and maintained;
- allow us to deliver our 10-year plan commitment of some £30 billion of public expenditure on the railways but with much improved value for money;
- play its role in levering in the matching £34 billion of private sector investment identified in the 10-year plan;
- put an end, once and for all, to the divisions all too apparent in the industry when the network was under Railtrack's stewardship.
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Mr. Jamieson [holding answer 22 October 2001]: We will be working with Railtrack and London and Continental Railways Ltd. over the next few weeks to consider valuation issues.
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