Examination of Witness (Question Number
WEDNESDAY 17 OCTOBER 2001
140. It is written into the legislation and,
of course if anything goes wrong you will have that responsibility.
(Sir Alastair Morton) We are the operator of trains
of last resort; I had not contemplated being operator of the network
of last resort.
141. Who should be responsible for the state
of the railways in future?
(Sir Alastair Morton) For the physical condition?
142. The running of the service from the public
point of view. Should anybody be in charge of the state of the
(Sir Alastair Morton) There should continue to be
franchises or contracts specifying performance requirements and
offering incentives and penalties, which will continue to be issued
by the SRA, or its successor, to the train operators, which I
think should be fewer and stronger, as I have often said before.
That is that part. If the party who is paying the piper is calling
the performance requirements, and indeed the structure is SRA
for the infrastructure as well, which is what I am suggesting,
the successor to the SRA would be responsible for getting value
for money for a very large quantity of government money which
is reduced from its maximum size by the amount of private money
that is brought in, or by generating a successful operation. As
these train operators become more successful they earn larger
profits, unless it is all going away in reducing subsidies, which
it has done in the past.
143. You may have heard Mr Linnard confirm to
us that Railtrack's costings for the West Coast Mainline scheme
were chaotic, non-existent and wrong and they had not been very
forthcoming. Was the SRA aware of that?
(Sir Alastair Morton) No that is not the SRA's job
until now; that is the Regulator's job. He put his Consulting
Engineers into Railtrack in 1999-2000 and they came up with this
figure of £5.8 billion which was in currency until just about
a week or two ago. That is the Regulator's job. What I am saying
is that it would become the SRA's job. If we have to pay the non-private
sector part of that then my successor should be in there knowing
what those costs are and are likely to be.
144. What should the relationship be between
the Strategic Rail Authority and the Sponsorship Department? We
are told it is called the Rail Sponsorship Division.
(Sir Alastair Morton) A good deal more distant than
it is, I venture to say. If you examine Mr Linnard's organisational
chart, he is the Director of Railways. You will find any proactive
activity currently in the SRA, probablyalthough not necessarilyhas
a division of Mr Linnard's Directorate watching over it. If you
read the draft instructions and guidance issued in July for the
SRA, which have not yet been published as final, you will see
that almost every breath we draw has to be cleared with Ministers,
which actually means with Mr Linnard. This is not a useful relationship.
I think the Government has to remember that in times past in this
country there have been authorities. Think of the Atomic Energy
Authority for one, told to go away and build a nuclear power programme.
I do not believe that civil servants were party to every decision
along the way. Government is there to give policy directions and
to recruit and ensure the existence of a competent agency. They
are certainly entitled to say "we don't think they are getting
the job done", but then they should put somebody else in
to go away and do the job. You cannot have two doing the job of
one, it is pointless.
145. Should there be any individual organisation
ultimately responsible for the state of the nation's rail system?
Should there be any such thing?
(Sir Alastair Morton) I accept I am covering a lot
of boxes and names and activities in such a short time. I am sorry
if I am causing confusion. I think I am saying in the Mark II
SRA the second black hole that needed to be addressed was the
Regulator, the ORR, and the SRA and also safety regulation. I
think the Mark II SRA should be both the franchisor and the economicif
that is the right term, I am not quite sure about that termregulator
of price, performance and access and of standards, which is part
of access; and should be the promoter, I think is the best word,
of the infrastructure development that the network so badly needs.
If all that were to come to pass, then I think you would be looking
at the SRA Mark II under my successor.
146. Listening very careful to what you said,
the word "delay" crops up time and time again. The delays
in trains are matched by a delay in clear-cut decision making
for the railways as a whole, and we look in the same forlorn way
that passengers stand on a platform except without the amusing
messages on the tannoy. What I am going to ask you about is specific
delays which were under your remit at one point in time. Some
transport authorities approached youI am thinking specifically
of Merseyside Passenger Transport Authoritywith a view
to delegating some of the franchise activity, to delegate the
franchise itself to get a more locally constructed product that
would satisfy the people of Merseyside more than the current service.
I understand that you gave a fair wind to that and considered
it thoughtfully and recommended it, but since doing so nothing
has happened in terms of information back to Mersey Travel or
information coming out of a government department. Have details
like that passed into some decision limbo or are they on somebody's
desk awaiting determination?
(Sir Alastair Morton) They did pass into a limbo.
We did give a fair wind to the proposition that the Transport
Authority of Merseyside should become the franchisor of what actually
is the equivalent of London Underground, a hermetically sealed
separate network off the national network. We were saying "get
it off the national network" and "yes, indeed, it is
your local system, you should have it and supply it and provide
for it and say what you want from it". That was passed to
Lord Macdonald. I think the limbo did end because I think he did
say he did not want to do it and I think there were reasons given
and I would have thought they were given to Mark Dowd, the Chairman,
but I was not in that conversation.
Dr Pugh: I will follow this up privately.
147. Vertical integration; do you think it has
got any part to play in the future?
(Sir Alastair Morton) I am very concerned that we
restructureand this is of fundamental importancethe
railway structure we have, that we do it in one agreed programme
of doing itit will not all happen on one day - with the
maximum amount of consensus around it and we do it with great
firmness and definition. The reason I say all that is that if
we muddle along doing bits of it at a time and getting into arguments,
I believe the patient will die and the ability to run a network
will collapse. Therefore, unless you can explain to me how to
get there from here, who should be the board and management and
owner of a vertically integrated national network in the private
sector, I am against doing it. What I am favour in ofand
I did not get to this part of what I was saying about future organisationis
that there be regional Railtracks, regional Newtracks. I would
suggest there could be six (and I could defend that statement
at length with diagrams on a board) and one of those should be
Scotland, and Scotland would be the place to pilot the idea of
vertical integration because it is a manageable bite, one TOC,
except for a few services in from the south, and just one Railtrack
region. They can co-operate.
148. A return to the old British Rail?
(Sir Alastair Morton) If it works perfectly, others
will have confidence in it, private capital might be very interested
149. How long would the pilot have to run?
(Sir Alastair Morton) Until it either collapsed or
Chairman: You will remember British Rail re-organised
at considerable expense and great pain and was known as OFQ, organisation
for quality I think it meant, but that was not what they had in
150. I can understand the argument for a pilot
but what you are saying is you have a restructuring and everything
else and you have a pilot with ScotRail and then, if that succeeded,
after a certain length of time, you would start restructuring?
(Sir Alastair Morton) I did not say that. I said you
would have created an example and others might follow. If you
take this successor to Railtrack and put its regions into separate
subsidiaries, you canand I think you shouldsell
shares in those to TOCs. The TOC boundaries, which are pretty
close, should as far as possible be made to fit within but not
necessarily the same as Railtrack's regions. There are a lot more
than six TOCs. You would start to get a commonality of interest
between certain TOCs in this area and this region. The question
of TOCs having shares, but minority shares I imagine, in the Railtrack
zone region might be taken forward. That figure might go to 100
per cent in Scotland. It could follow upwards in other areas where
they had sufficient confidence in each other to sell their theory
to private sector financiers, for example. In other words, I see
what I would call a corporate finance process evolving that can
do a lot to pull the parties together across the wheel rail interface
rather than having some legislative big bang, which is not an
idea I fancy.
151. Short-term extensions to franchises; a
(Sir Alastair Morton) I do not see the point. I would
not call it a disaster. I do not think it gets us further forward.
There was a paper that Mike Grant and his team pulled together
to the Secretary of State at the end of August which set out TOC
by TOC, all 25 of them, whether they could be extended or not
and for what reason. It was a complete analysis and I think an
152. At the end of August?
(Sir Alastair Morton) So far there has been no reply
so I am not sure what happens next.
153. When would you have expected it to be reasonable
to have had a reply? By now?
(Sir Alastair Morton) The instructions and guidance
issued to me when I took over (that is the previous lot to the
shadow SRA) said that Ministers would reply within three weeks
so long as they had been kept informed during the development
of those ideas.
154. Were they kept informed during the development
of these ideas?
(Sir Alastair Morton) Absolutely: constant meetings
with officials. The SRA knows what it is doing. It may not be
the best in the world at the job but at least it knows what the
job consists of. It explained very carefully the evolution of
this memorandum and presumed when it arrived at the other end
officials would be in a position to explain it immediately to
the Secretary of State who would then have three weeks, under
the three weeks rule, to tell us whether he wanted to go down
that road or not.
155. How often did he manage to reply within
the three weeks?
(Sir Alastair Morton) I cannot be absolute but I have
difficulty remembering a single case.
156. The PTE Group really feel that you are
too dominated as a Strategic Rail Authority by the South East
and London and not conscious enough of the regional problems?
(Sir Alastair Morton) I think you should go back and
ask them about their last meeting en masse with
me. I travelled to Birmingham and I wound them up, saying, "You
chaps are going to have to fight your corner otherwise that lot
down there in the Department and the Treasury are going to see
you do not get enough money to do what you want to do." Is
that favouring the South East? I do not think it is.
Chairman: Some of us might suspect that you
are quite good at winding people up, I do not know why. Could
I say to you that this Committee will be the poorer for losing
your evidence as the head of the SRA. Doubtless we shall think
of some very good reason to haul you in in some other capacity.
Can I before you go thank you for being always very interesting
and entertaining. You have given us all sorts of ideas which we
have found worth investigating and we are very grateful to you.