Examination of Witness (Questions 140-159)|
WEDNESDAY 10 APRIL 2002
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
(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 betweenand 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.
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
(Mr Byers) How much public money for the 10 Year Plan
(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
(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.
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
(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
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?
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.