Memorandum by the Chairman of the Strategic
Rail Authority (PRF 42)
PASSENGER RAIL FRANCHISING
This is a personal response from the Chairman
of the Strategic Rail Authority to the Sub-Committee's invitation
in late July to submit memoranda.
In the last week of June I announced that I
would "neither seek nor accept" continuation of my appointment
as Chairman of the Strategic Rail Authority after its expiry on
31 March 2002. My decision was consistent with a conversation
with the Deputy Prime Minister on 10 April and my letter to him
of 8 May.
When the new Secretary of State, Mr Byers, thereupon
suggested to me that my successor ought to take my place in time
to launch the SRA's Strategic Plan by the end of November, I agreed
that would be a good idea if achievable. No date or terms for
my departure having yet been discussed and no information having
come from the Department on progress towards appointing a successor,
I have today given the Secretary of State the three months' notice
of my departure required of my by my terms of appointment.
Accordingly, I expect to be still in post when
(and if) the Committee holds hearings in late October or November.
I have taken this step because the process of
selecting and seating an NDPB chairperson is usually slow and
more so when, as in this case, any invitee will need to negotiate
positive, viable and satisfactory terms of reference. I have advised
the Secretary of State not to "require my successor to accept
the unworkable Instructions and Guidance in the draft" (Draft
I&G for the SRA issued for consultation on 27 June). Life
moves on, and I wish to do so toobut not before I have
done what I can to maintain the capability and the momentum developed
under my leadership despite the differences between Ministers,
officials and me that began to develop in the latter part of last
Currently, at my behest, the Chief Executive
and Board of the SRA are submitting a memorandum composed by the
Executive team here in response to the Committee's invitation.
My very capable Chief Executive, Mike Grant, can be questioned
on that memorandum by the Committee without my presence being
necessary. This procedure is consistent with my decision, notified
to the Secretary of State on 24 July and ratified by the Board
of the SRA on 2 August, to assign supervision of the preparation
of the SRA's Strategic Plan to a non-executive colleague approved
by the Board. The Strategic Plan to be published by the SRA at
the end of November will not be written or directed by meunlike
the Strategic Agenda published last March. This is appropriate,
since it will comply with the unworkable requirement that it plans
to use only the resources currently available to the SRA. I told
the Committee last May those are inadequate for the SRA's purpose.
I have some brief comments to make under the
headings in the notice of this new inquiry, after which I will
expand very briefly on the principal features of a useful Strategic
Plan as I would see it. I am willing to appear before Mrs Dunwoody
and the Committee to discuss the situation in the rail industry.
The notice asked if the Government's new approach,
notably tightening the departmental grip on this NDPB established
by the Transport Act 2000 and turning away from my policy of refranchising
despite its positioning last year as the cornerstone of the rail
segment of the 10 Year Plan for Transport, would:
ensure rapid improvement in certain
My answer is No, those measures of
themselves will not. Ministerial exhortation and SRA disciplinary
action under the existing franchises has been achieving what can
be achievedand it is not enough. New franchises with substantially
enhanced performance and investment requirements are needed.
secure investment adequate in the
light of recent events?
My answer is No. I spelled out in June
1999 and consistently since, on occasions to the Sub-Committee,
that longer-term franchises are an essential prerequisite for
adequate investment. Also now essential is a commitment to a restructured
relationship between the SRA (for HMG) and Railtrack backed by
a revised and clear understanding about the availability, subject
to Value for Money, of adequate public sector funding to support
the development of a safer, better and bigger railway system.
Provide the Framework for Major infrastructure
My answer is Not unless a competent
SRA is authorised and resourced to engage vigorously in project
development and delivery partnerships. Since late summer 2000
that has been less and less likely and the new directions, guidance
and policy pronouncements more or less close the door on the Sub-Committee's
transform the SRA's leadership of
the industry, management of franchises and award of new contracts
My answer is No, in any sense of improvement.
Detailed bureaucratic day-to-day control does not meet those aspirations.
improve rail industrial relations?
My answer is to confess that I do not
see how they can improve those relations. Employees and trades
unions have long-term vested interests in the bargains to be struck
with employers. If the latter have only short-term interests,
some very bad agreements may be reached.
To move on to my personal view of a useful Strategic
Plan from the SRA, for the 15 months since the Government published
its 10 Year Plan I have been working my way towards a Plan based
refranchising TOCs to a modified
map containing fewer franchises (probably 18, maybe 16), all of
them medium- and long-term (at least seven, mostly 12-20 years);
revising and enlarging financial
support and project development for rail freight;
restructuring Railtrack's relationship
with the SRA and the public purse on one hand, and with train
operators on the other;
revising the regulatory structure
of the industry, particularly in respect to safety, pricing and
performance, to fit the particular circumstances of railthe
only regulated privatisation to be subsidised;
revisiting the 10 Year Plan's funding
and timing, seeking to ensure adequate and timely deployment of
funds from the public purse in a manner likely to revive private
sector interest in funding heavy investment in rail;
seeking to invest over time in capital
projects (say completions to be reached over the next five to
15 years), which requires the initiation now and development from
now of future projects proven to offer value for money to the
public purse and adequate returns to private capital when the
time comes (some years ahead) for major commitments to spend;
seeking to assure vigorous public/private
co-operation in the attraction and development of skilled personnel
for the investment and operational needs of Britain's railways
if they are first to fulfil their current duties and soon (some
years from now) achieve the higher standards desired.
As I see it that Plan would focus on duly prioritised,
value-for-money capital upgrades of (a) the major hubs; (b) the
major inter-city routes; (c) key freight routes; and (d) a careful
selection of other identified routes of particular value; as well
as rolling stock, stations, access and information. Proper but
not absurd safety provision would be a given throughout. I put
major hubs (most notably London, also but not only Birmingham,
Manchester and Leeds) first because so many of the network's problems
are rooted in getting into and through those hubs. "Through"
London means particular attention over more than a decade to what
I call an "RER" strategyEast London Line, Crossrail,
Thameslink 2000, Hackney-Southwest, etcavoiding the need
to build both new tube lines and main line termini.
It will be noted that I aspire to a Plan that
meets Britain's needs, rather than one restricted as directly
by Mr Byers to the inadequate resources available. Time to completion
should be the variable, not moneysubject always to value
for money, the public sector calculation of which needs modernising
with positive intent.
I am perfectly well aware frustration may be
expressed that during my two and a half years to date as Chairman
of the SRA I have not done more to detail and publicise any such
Plan. I invite critics to describe to me a Strategic Plan for
the SRA prepared after the 10 Year Plan and five year Regulatory
Review (both July 2000) but before Hatfield (October 2000)
which would have survived the collapse of Railtrack and the withdrawal
of government commitment to the principle of refranchising. The
long tussle between Government and SRA over franchising strategy
and cost was an added, severe complication, which has gravely
damaged our credibility.
I am at the Committee's disposal if it wishes
to ask for clarification of this memorandum.
Sir Alastair Morton
13 September 2001