Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Question Number 80-96)



Andrew Bennett

  80. My last question, for all these financial things you go cap in hand to the Treasury in January; is that right?
  (Mr Linnard) There is a Spending Review which will conclude next July.


  81. Mr Linnard, we have heard that bit. I want to let you escape, but there are some very important things we need to know. What changes do you expect in the way that the railways are regulated? Is the Rail Regulator's Office going to be merged with the SRA?
  (Mr Linnard) What Ministers have said—and I think I had better stick to the wording of this—what the Secretary of State said when he announced Railtrack's move into administration was that "there were plans to legislate when Parliamentary time allows to rationalise the present regulatory structure to provide stronger strategic direction while reducing the burdens of day-to-day interference in the industry and a self-defeating system of penalties and compensation".

  82. What does that mean then, Mr Linnard?
  (Mr Linnard) It means that if Railtrack emerges from administration into a company limited by guarantee, there would probably be a need to look again at the respective roles of the Strategic Rail Authority.

  83. So, in other words, it is not your intention that the Rail Regulator's Office would continue in the way it does, you would be looking at a different role, you would be looking at a different relationship?
  (Mr Linnard) A different relationship but still some form of independent economic regulation.

  84. You would junk the existing series of penalties but look for an alternative method. Is that what you are saying?
  (Mr Linnard) Economic regulation principally—

  85. Economic regulation in my book is fines.
  (Mr Linnard) It is track access charges and possibly also penalties, but primarily track access charges, setting the income that Railtrack in its new form will receive from train operators and others.

  86. But the Regulator does not just deal with Railtrack, does he; he makes assessment on all sorts of very important aspects of railway work and he has specific means of making the companies respond. Is it your intention that he should retain those powers? Is it your intention that he should in future be part of the SRA? If so, how will he operate?
  (Mr Linnard) What Ministers have said—and I cannot stray too far from what has been announced already to Parliament—is that given the assumption of a company limited by guarantee, there would be a case and a need for legislation therefore to rationalise the functions of the SRA and the Rail Regulator because the Office of the Rail Regulator was set up with a view —

  87. I think we get the message.
  (Mr Linnard) — To regulating a private company distributing profits to shareholders.

  88. That is something that the House of Commons will ultimately have to address. Can I ask you something which is probably very simple, but I am not very clever; why do we have to have a Railway Strategy Division as well as the Strategic Rail Authority?
  (Mr Linnard) We have not got a Railway Strategy Division, we have got a Railway Sponsorship Division.

  89. You are sponsored? We are not allowed to be sponsored in the House of Commons.
  (Mr Linnard) All non-departmental public bodies, which is what the Strategic Rail Authority is, have sponsor departments and sponsor divisions within the Department which look after pay and rations.

  90. So how is that different from the relationship you had with the previous organisation? Are you marginalising the SRA?
  (Mr Linnard) No, we are not.

  91. Are you restricting its ability to plan strategically?
  (Mr Linnard) We do not think we are. Indeed, we are very keen that it publishes strategic plans.

  92. Are you giving it more instructions than you gave it before and more rigid rules? Is that why you were misunderstood in your original answers?
  (Mr Linnard) I do not think we are. We are issuing directions and guidance but the SRA has always operated under objectives, instructions and guidance from Ministers and so did its immediate predecessor, the Office of Passenger Rail Franchising.

  93. Mr Linnard, we have had within the Department a section dealing with railways, however that was described. We now have a new section which is a sponsoring section, not a strategic section, so it is not thinking strategically, it is just sponsoring the SRA. I am not clear exactly what the difference is. That is probably because I am not very bright!
  (Mr Linnard) The best way to answer that is to say at the moment the Railways Directorate in the Department has about 60 people in it. That compares with a much greater number of people in the Strategic Rail Authority or the Office of the Regulator. It is a very small part of the Department and, even if we wanted to, we are not resourced or equipped to second-guess the SRA or anybody else on operational decisions.

  94. So who takes the decisions within the Number 10 unit? Was this situation forced by Number 10 or a decision that came up in the Department?
  (Mr Linnard) What decision?

  95. Was the decision to put Railtrack into administration a decision by the unit in Number Ten?
  (Mr Linnard) That was a decision taken by the Secretary of State for Transport.

  Chairman: You have been very patient, Mr Linnard, and you Mr Coulshed. I hope you have enjoyed seeing us because we may want to talk to you again.

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