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

Memorandum by the Chairman of the Strategic Rail Authority (PRF 42)


  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 too—but 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 year.

  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 me—unlike 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 specified areas?

        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 achieved—and 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 enhancement?

        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 wish.

    —  transform the SRA's leadership of the industry, management of franchises and award of new contracts for services?

        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 on:

    —  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 rail—the 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; and

    —  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" strategy—East London Line, Crossrail, Thameslink 2000, Hackney-Southwest, etc—avoiding 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 money—subject 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

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