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

Examination of Witness (Questions 140-159)



Mrs Ellman

  140. How do you think you should relate to the Strategic Rail Authority? Should it be a different relationship to that held by your predecessors?
  (Mr Byers) I have to say I am not aware of the nature of the relationship between my predecessors and the Strategic Rail Authority. What I do know is that I think we have a very good leader of the Strategic Rail Authority in Richard Bowker. I think he commands the confidence of the industry: I think he has set the Strategic Rail Authority in a new direction: it is giving genuine leadership to the industry: and certainly I think there is a very positive relationship now. I am also aware of that placing a challenge for myself as Secretary of State and also for the Department because what it means is we have to be confident enough to give Richard Bowker and the Strategic Rail Authority the freedom to get on with the job. It is not my responsibility or my Department's responsibility to be micro managing the Strategic Rail Authority and, if that means that we have to give up some of the levers we have at the moment and some of the restrictions which stand in the way of positive development, we have to be prepared to do that but I think it will lead to a far better and more constructive relationship with the Strategic Rail Authority. That is certainly what I want to see and when we publish the new guidance and directions I hope people will be able to see that we are giving effect to that.

  141. Would you ever direct the Strategic Rail Authority to include projects that it left out of the 10 Year Plan because you thought they were important?
  (Mr Byers) I do not think that would fit into micro managing the work of the Strategic Rail Authority, and I think there would obviously need to be a discussion.


  142. It is macro managing?
  (Mr Byers) Absolutely, because it would be, and if there is a major project which is not in the 10 Year Plan which this Committee felt strongly about and which Parliamentary colleagues felt strongly about, I would be failing in my responsibilities as Secretary of State and, as you know, Chairman, I would never want to do that, and you would be the first to criticise me if I were to do that.

  143. I know how pleased you are when I criticise you.
  (Mr Byers) Well, that would make me pleased every day, Chairman! But there is an important point here which is that there is a distinction between—and I will not call them "macro" but those major issues where the Secretary of State will have a responsibility and micro managing the role of the Strategic Rail Authority, and I think there has been a criticism in the past where the Department and maybe Secretaries of State have tried to manage the work of the Strategic Rail Authority. That is certainly not my approach and it will not be the approach of the future.

Mrs Ellman

  144. Have you got any macro-management projects in mind at the moment?
  (Mr Byers) I have a horrible feeling you have, Mrs Ellman, and you are about to let me know about them!

  145. Would you like to suggest any?
  (Mr Byers) I think those are probably discussions I should have with the chairman of the Strategic Rail Authority, but we are aware of a number of issues which are important and which perhaps did not get reflected in the strategic plan.


  146. Could you tell us exactly how much public money you expect will be available for the whole of the 10 Year Plan?
  (Mr Byers) How much public money for the 10 Year Plan for rail?

  147. Yes.
  (Mr Byers) £33.5 billion.

  148. And you still expect that sum of money?
  (Mr Byers) Yes.

  149. And you still expect the private sector to come up with matching finance to the extent you have written in?
  (Mr Byers) We do. For the sake of the record, we have made it clear that the total of £64.9 billion is made up of £33.5 billion from the public sector and £34.3 billion from the private sector, but we need to take from that £34.3 billion £3 billion of public sector funding, because that is public sector funding to lever in private finance, and there is a danger we will be accused of double-counting if we were to leave that there, and we do not want to be accused of that, so although we think there is £33.5 billion public and £34.3 billion private, we need to take off £3 billion to give us the total of £64.9.

  150. We will come back to you on that. By the way, we have not had your note, so I am sure you would like to ask the Department when they are going to give us the note.
  (Mr Byers) You should have had it, and I apologise.

  Chairman: We have not had anything in by today.

Miss McIntosh

  151. Secretary of State, do you stand by your rail freight targets as set out in the 10 Year Plan?
  (Mr Byers) Yes, indeed.

  152. What allowance have you made for the closure of the rail freight facility by Eurotunnel through the Channel Tunnel since approximately November last year?
  (Mr Byers) The target is an 80 per cent increase at the end of the 10 Year Plan, and there is no doubt that what has been happening with the Channel Tunnel has made it very difficult for freight to go through, and the French authorities have failed to secure the Channel Tunnel rail freight facility. There has been dialogue at the highest level from our Government to the French Government about the steps they need to take. We are told today that with effect from Monday 15 April SNCF hope to run an average of 72 trains a week through the Tunnel, so that is starting next Monday. The week ending 7 April, they managed to get 42 trains through, and that compares to the situation for the week ending 17 March when it had dropped to 21 trains a week. So they have begun to put in stronger security measures and we are beginning to see the benefits of that. As soon as we get a return to normal working as far as the Channel Tunnel is concerned, and we have not had that now for far too many months, that will make a real improvement. The reason why it is crucial that the Channel Tunnel operates normally as far as freight is concerned is that one of the key areas of growth for freight will be intercontinental across Europe, coming from way over towards Turkey and Eastern Europe across to the United Kingdom. That is a huge growth area as far as rail freight is concerned and that is where the Channel Tunnel does become very important.

  153. But you are not prepared to adjust your figures for the six month loss we have taken evidence on at this Committee?
  (Mr Byers) My own view is that we have time in which we can make that up.

  154. Can I share with you some evidence this Committee has received, which appears not to coincide with the evidence you are giving this afternoon. GNER told us that it was manufacturers and bankers who were reluctant to become involved in a deal on infrastructure investment where there was no certainty that the franchisee ordering the new rolling stock would be in place to take delivery, and that was why it was difficult for them to make this investment which had been agreed over the two year period. Equally, we heard from the Freight Transport Association that their members were only prepared to invest where they could see certainty and that they do feel, and I am paraphrasing, handicapped where there are insufficiently clear details on the financing of individual projects given. Would you like to comment on those two pieces of evidence which we have received?
  (Mr Byers) On the GNER point, section 54 is very clear, which is that the liability for financial institutions or banks will effectively be covered—


  155. I do not want to go back over that, Secretary of State, if you do not mind. Would you deal with the other point?
  (Mr Byers) It was a question which was put by Miss McIntosh.

  156. Yes, I understand that, but we have gone into that in some detail.
  (Mr Byers) I was not clear on the second point about what sort of projects were being referred to by the freight companies. Could I have an illustration?

Miss McIntosh

  157. The split. For example, more specific detail of how the division of the private sector contribution is expected to be made between train operators, rolling stock, leasing companies and infrastructure investment.
  (Mr Byers) I think it would depend on the details of each individual contract. You mentioned rolling stock, in terms of the recent GOVia-South Central rolling stock deal, there will be something like £600 million private sector finance, and in total since the turn of the year we have had about £1 billion of private sector finance. If you look at the Chiltern franchise, GNER and the GOVia rolling stock deal, we have had over £1 billion of private finance invested in the railways. So some people may say that, but we have very strong proof of the private sector being more than willing to be involved.

  158. Are you not disappointed, because you should have by this stage £3 billion if you are going to get annual amounts to reach your sum of £34.3 billion from the private sector? Are you not disappointed you have only got £1 billion to date from the private sector?
  (Mr Byers) No, because it would be odd if we were in a situation where it was done on an annual basis. If the Committee looks at when the bulk of the franchises will be awarded, it is 2003, 2004, and I think then we will see large sums of private finance coming into the rail industry. So I think it would be a mistake to try and look at it on an annual basis, saying we should get £3 billion every year to get to our total. That is not the way it will work in practice. The way it will work in practice is when the re-franchises take place, and that is when the private sector will make their investment.

  159. You do not see it as a warning signal that the Freight Transport Association have told us that their members are saying they want more financial certainty, more legal certainty in the contracts? You do not see that as saying this private investment may not come forward?
  (Mr Byers) Let us have details of individual projects which they are walking away from. All I am saying is, if there is uncertainty, we have taken steps to introduce certainty. If there are worries about the Channel Tunnel, we have taken steps with the French authorities to address that. No, I am confident we will see the private sector investment in freight and we will see our freight targets met at the end of the 10 year period.

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