WEDNESDAY 16 JANUARY 2002
Mr Andrew F Bennett, in the Chair
Examination of Witnesses
RT HON STEPHEN BYERS, a Member of the House, Secretary of State, and SIR RICHARD MOTTRAM KCB, Permanent Secretary, Department for Transport, Local Government and the Regions, examined.
Chairman: I will just ask Members to declare their interests.
Mrs Dunwoody: Rail, Transport and Maritime Trade Union.
Mr Betts: Transport and General Workers' Union.
Mr Donohoe: Transport and General Workers' Union.
Mrs Ellman: Transport and General Workers' Union and Adviser to the Local Government Association.
Miss McIntosh: GNER Car Parks and member of the RAC Breakdown Services. Small shares in BA and, BAA and EuroTunnel Rail, Track and Services. I would also like to register a farm in the north of England.
Chris Grayling: I am a small-scale private landlord.
(Mr Byers) I am Stephen Byers, the Secretary of State for Transport, Local Government and the Regions.
(Sir Richard Mottram) I am Richard Mottram, the Permanent Secretary of the same Department.
(Mr Byers) Just get on with it, I think.
(Mr Byers) I think the reason why the Prime Minister took that decision after the last Election was to allow the Department to focus, I think, to a greater extent on what he believed would be one of the key delivery areas for the second term of this Labour Government which was transport, and I think he has been proved to be correct by that analysis, but, most importantly I think, in doing that, in putting environment into a new Department and making links with food, agriculture and rural affairs, it was very important that we did not lose the close relationship and the importance that environment clearly has on the areas which the new Department has responsibility for, whether transport, local government and the regions, planning and so on. I would like to think that we have been able to develop a very good and constructive working relationship with the new Department, but I think the main reason was to ensure that we could focus more readily particularly on transport, because that is a key priority, and a big decision needed to be taken early on in this Parliament, but also on areas like planning, urban regeneration, renewal, housing, the regions and so on, so it allows us a greater focus on those issues, I think.
(Mr Byers) Well, he said on the Frost programme on Sunday, actually repeating something I think the Deputy Prime Minister said over Christmas and New Year, that early in the first Labour Government in 1997 a gamble was taken in relation to Railtrack, specifically in relation to Railtrack, whether action should have been taken with regard to Railtrack or whether more money should be given in the hope that Railtrack would begin to deliver as a licensed operator, and I think that was the context in which he said that the gamble was taken with regard to the position relative to Railtrack. Just to clarify the position, I hope the implication of what I said by way of the background to the decision was not an implication that not enough had been done in the first Parliament, but it was an indication, I think, that a greater focus was going to be needed on transport in this Parliament, bearing in mind that if we look back to the very clear statements made in 1997, the priorities identified by the Government then were, first of all, to stabilise public finances and then, secondly, as we began to do that and as the economy began to grow and we got more money which we could then devote to public services, the two priorities were education and health. That was made very clear in 1997 and in many respects those were the priorities as far as the people were concerned as well and now that we have made improvements in education and health, we have still got those as priorities, but we have also got the need to drive forward on crime and on transport as well, so those are now the four key delivery areas as far as the second term is concerned.
(Mr Byers) It does not give me concerns because in all of this I think there is a political priority and you can develop good working relationships and make sure that people know what they are doing, why they are doing it and the direction in which they wish to pursue policy. I agree with the thrust of the point you are making in that the regions of England are almost a sort of ignored powerhouse and we have got to do a lot more to make sure that they can deliver more effectively than they are at the moment. A great concern to me, as a North East Member of Parliament, is that the disparities within the regions of England are not narrowing, but they are actually growing and one of the big challenges, I think, for a Government elected to govern for all our people is to make sure that all of the regions of England can benefit from the economic prosperity that we are seeing in a few regions of England and sustainable development is going to be a key part of that. In terms of where policy lies, there is joint policy work going on between the Deputy Prime Minister and myself in terms of a White Paper that we will be publishing on the whole question of English regions, including elected regional assemblies and there is work we are doing with my old Department of Trade and Industry in relation to regional development agencies and so on, so it is good working relationships that are going to be important if we are going to deliver the sort of improvements that we want to see and deliver on sustainable development of the regions.
(Mr Byers) Well, Sir Richard may want to say something about the official-level working relationship because there is a concordat between the two Departments which does not just cover politicians, but also covers officials as well and I think it is very positive. I meet Margaret Beckett on a regular basis. We meet every week in Cabinet, but we also meet informally over a drink or we meet more formally just to make sure that we all know what we are doing and at Minister of State level, there are meetings in the diary on a regular basis.
(Mr Byers) I can give you the details, but I meet Margaret Beckett every week at Cabinet and every so often when we feel there is a need to discuss a matter.
(Sir Richard Mottram) On the official side, the concordat was an exchange between me and the Permanent Secretary of DEFRA, Department of the Environment, Food and Rural Affairs, and it was agreed in an exchange of letters. That laid down that for all the key policy areas where the two Departments have an interest, which are things like obviously fundamentally the relationship between the environment and transport or the relationship between our planning responsibilities and their rural affairs interests, our policies towards towns and cities and how they relate to their interests, et cetera, there would be joint working, so there are a number of official committees which after the changes that were introduced, we have gone on involving them in the way we do the work and they involve us in the way they do their work and I think these arrangements are working reasonably well. I see Brian Bender himself two or three times a week, so if there are issues of difficulty about these things, then we could discuss it.
(Sir Richard Mottram) We do not, no, but the reason why we had this concordat obviously was because after the machinery of government changes, we were very determined that we would not lose the benefits that we had from environment being part of a department with transport, so that is what we wanted to do and that is what they wanted to do. The environmental protection staff are actually still in the same building. They intermingle all the time with people from my Department and all those personal relationships are obviously still there.
(Sir Richard Mottram) Well, I think a concordat is just a formal way of saying, "Yes, we will go on being friends".
(Sir Richard Mottram) No, it did not have a wax seal. It was just an exchange of letters. It was not a treaty and it was not deposited. The treaty will come next!
(Mr Byers) If it will help the Committee, my notes say that the quarterly meetings are formally held between Michael Meacher and John Spellar and with Lord Falconer as well.
(Sir Richard Mottram) Well, for a mixture of reasons, I think. Some of the Department's programmes are ring-fenced, in the jargon, which means that we agree sums of money and we cannot vary the sums of money allocated to those particular purposes.
(Sir Richard Mottram) Because that is the nature of the regime we have agreed with the Treasury, so, for example, we would have ring-fenced provision for certain European programmes which we cannot vary. We have ring-fenced provision for some high-priority programmes where the money was given to us as part of a three-year deal in the last Spending Review and we agreed with the Treasury when they gave us the money that we could not vary that provision without their permission, so that is one set of reasons. Another set of reasons is very deliberately we have agreed with some of the people whom we fund, like, for example, the regional development agencies, it was agreed at Permanent Secretary level and then at Ministerial level that they would have a three-year budget and they could absolutely be confident that they could use their budget over three years with full end-year flexibility and they have chosen to manage their budgets in that way and then, thirdly, there are obviously issues about our forecasting and whether we have ----
(Sir Richard Mottram) Like we have got it wrong, yes, absolutely.
(Sir Richard Mottram) I would not say it was bad management. Well, let me say, forecasting is a part of good management. We underspent our capital budget by around, I think, 5.5 per cent taken as a whole last year. That is a number that is larger than I would like. In the system we have you will never eliminate underspending because we are actually required not to overspend and, therefore, there is always going to be a propensity built in, I think, to underspend, but do I think 5.5 per cent is a good number? No, I do not. I think it should have been lower.
(Mr Byers) The important thing is that the Department has a very big capital programme.
(Mr Byers) It is, which is about £350 million underspend, so it is a large sum of money which could be used. I am in a rather interesting position here because it was when I was Chief Secretary at the Treasury that we formally introduced a system of end-year flexibility because we had a situation where people would rush to spend their budgets before the end of the financial year, would not achieve value for money and no one really benefited from it. So I introduced the concept of end-of-year flexibility which allows you to roll over budgets into the following financial year. Now, there is a danger in that because it can allow people to relax and so you get bigger underspends because people will say, "Well, okay, we can use end-of-year flexibility and we will use it in subsequent years". Now, there is a danger there because it then has a knock-on effect and you find you are not spending the money within your three-year spending round, so what we have done in the last few months is really to have a priority of looking at better forecasting, but also making sure that we have flexibility, so with those budgets which are not ring-fenced, we can make sure that we can re-allocate funds so that there is a spend in this financial year which does achieve the value for money that we want to obtain, so it is something we are taking seriously. At the moment I think we are projecting an underspend of about £180 million where obviously we are going to take steps to try and reduce that down even further.
(Sir Richard Mottram) Could I just add one very brief point to that, which is that certainly when I came into the Department having come from the Ministry of Defence, I was very struck by the way in which although these reforms were being introduced then and obviously are very important for using money much more cost-effectively, the Department still had a mentality which was essentially a mentality of annual expenditure. This, for reasons we could go into if the Committee wanted, was something that we had to get away from, so to that extent I was encouraging people to think about three-year plans, to think about the thing over three years, "We will exploit the end-of-year flexibility", and if you encourage them to do that, you risk then that they will have to go flat on their forecasting, so now they have to change down their ----
(Sir Richard Mottram) Well, you do not overspend because what you do is you are allowed to add the end-of-year flexibility with permission until the next year.
(Sir Richard Mottram) You could build up a very big number, yes, that is right, and with the permission of Parliament, you can add that to your budget and that is taken into account in public expenditure planning.
(Sir Richard Mottram) No, you cannot do that. It is a three-year plan, but you can only add to your subsequent year budgets what you have underspent in the first year and then if you underspend in the second year, you can add it again, but it requires the approval of the Treasury and the approval of Parliament, and obviously we want to minimise that while making sure we do not have end-year surges in expenditure which are wasting money, as the Secretary of State said.
(Sir Richard Mottram) I think you will always tend to have an underspend at the margin, yes.
(Sir Richard Mottram) Yes.
(Sir Richard Mottram) What would I aim for as an underspend?
(Mr Byers) A penny.
(Sir Richard Mottram) I would have said 2 per cent, but the Secretary of State tells me the answer is a penny.
(Sir Richard Mottram) His leaked letter did not say that at all.
(Mr Byers) The thing in the Department is that we have many agencies which deliver on the capital programme and I think the Committee have had details of the profile of where the underspends take place and if they have not, they should see that.
(Sir Richard Mottram) They have.
(Mr Byers) It is important because some of those agencies historically are inclined to underspend considerably and it was a gentle reminder, the letter, in fact that there is a responsibility on all of us to make sure that we achieved value for money, but also that we met the forecast that had been made and that was the purpose of the letter that I sent round in the autumn of last year.
(Sir Richard Mottram) If we did overspend, depending on the scale of it, I would have to appear before Parliament through the Public Accounts Committee to explain why we had overspent.
(Sir Richard Mottram) Well, I said some of it was an issue about ring-fencing, yes.
(Mr Byers) I think the important point is that it is not money which is lost to transport; it is money that we can use through end-of-year flexibility and make sure that we get a real return for the money that we are investing. It is the easiest thing in the world to spend money unwisely and there is a danger that we just get fixed on how much money is spent. The real question we have got to be asking ourselves is: what are the benefits we are getting for that investment? I would much rather look very carefully at what our priorities are and what we are trying to achieve and deliver on those rather than just sort of willy-nilly go into a sort of spending spree. Now, there are issues to do sometimes with major road-building programmes where there is slippage for reasons I think the Committee will understand and that can very often have a significant knock-on effect because of the scale of the spend of some of those projects.
(Mr Byers) Not at all, no. The purpose of having a plan that was announced on Monday is so that people can see that we are looking at this in a strategic way. Now, it may be the case that ten or 15 years ago that was not the case because of lack of investment and people did not actually have a mechanism in place. What we have been very disciplined about is to say that for the first time we are going to see sustained investment in transport over the next ten years and let's make sure we get a real return for the spend that we are going to make, and £180 million is going to go into transport over that ten-year period, so let's do it in a strategic way and that is exactly what we are doing. It is very disciplined, it is very tight, it is very focussed and the travelling public will benefit as a result.
(Mr Byers) I think the notion that you can start today is an interesting one. If we took a decision today to fund some of those projects, I would be surprised if you would see actual spend appearing in the budgeting until the next financial year and you must be aware of that, let's be honest about that. We are in the middle of January, a commitment made today would almost certainly have a financial implication in the next financial year and that is the nature of the scale of the projects that we are dealing with. We announced £11/2 billion of local transport schemes just before Christmas.
(Mr Byers) Because what we are doing is making sure that for that local transport plan, the biggest investment ever in local transport plans, that all of them are priorities and achieve value for money. It is easy to put in an extra £200,000, but are you achieving value for money for that? Our decision was that £11/2 billion for the projects which are put forward would deliver real improvements and would meet our priorities. It allows us to spend £200,000 elsewhere for other priorities. The important thing is to make sure that we get the underspend down and we do it in a way which achieves value for money and we will do that and I think the Committee will see because of the steps that I have introduced as Secretary of State that the underspend will be lower this year and it will be lower next year because that is important because we have got an allocation, we have a pressing need and it is something that we have got to meet and we will.
(Sir Richard Mottram) Could I just illustrate one of the issues which is that one of the significant underspends, and I think this was in the material we sent to the Committee, one of the significant transport underspends was we had forecast that we would spend £42 million on the Channel Tunnel Rail Link and the outturn was £23.4 million. This was partly about forecasting and it was also partly about the basis on which it was being funded and getting additional money from other sources. The programme itself was basically running to time. If we took that money out and spent it somewhere else, what we would then find is that we did not have the money to complete the Channel Tunnel Railway project which is why a number of these big transport projects are organised on the basis that we have ring-fenced provision with the Treasury which we account for a particular project and if we do not spend the money in 2000/01, we put it into the budget of 2001/02 if it is needed there and we ensure that we fund the project, so it would not make sense to take that money and re-allocate it to local transport plans unless and until we were confident that we did not need it for that project. So that is what we are trying to do; we are trying to plan on a three-year basis and actually in the case of transport we are now planning on a ten-year basis as well and we reconcile these numbers to make sure we try and deliver what we are committed to delivering. That is the important consideration.
(Sir Richard Mottram) Yes, I would, but another example would be that we made provision for trans-European networks, which is a European programme, where the problem we have there is that in order to be allowed to spend the money, we actually have to get the agreement of Europe to co-fund some of our projects and we have not been as successful as we would have liked to have been on that.
(Sir Richard Mottram) No. We have more than a concordat.
(Mr Byers) I think the objectives are right. They are balanced and they look broadly at what the Department is seeking to achieve. Within government there are agreements that are struck and I think they reflect the Government's priorities. I think we have a very good, positive relationship with the Treasury and it is one which will continue and I think our objectives are correct and they have not in any way been imposed upon us.
(Mr Byers) Well, Lord Birt is a member of the Forward Strategy Unit which is Number 10 and he is not involved with anything to do with the ten-year plan.
(Mr Byers) He is involved in looking at things that might arise in 15 or 20 years' time.
(Mr Byers) That means to me as Secretary of State I hope I am going to be in the job for a long time, but not when I am drawing my old age pension, but I am pretty relaxed about the work that Lord Birt is involved in.
(Sir Richard Mottram) How many civil servants do I have?
(Sir Richard Mottram) Well, in the Department about 3,500.
(Sir Richard Mottram) Many of them are, yes.
(Mr Byers) I think we will see with interest the recommendations that Lord Birt brings forward. My priorities are delivering improvements between now and probably when the next Election is held and delivering a ten-year plan.
(Mr Byers) It keeps him occupied.
(Mr Byers) Well, certainly my Department is not funding that.
(Mr Byers) Well, it is a matter for the Prime Minister's Department at Number 10.
(Mr Byers) It was a Prime Ministerial appointment and we made that clear. I do not appoint members of the Prime Minister's Forward Strategy Unit. I do think, and it is something successive Prime Ministers have done and we are quite clear about this, that they do bring in people from outside to look at long-term planning. Actually if you think about some of the difficult issues we are dealing with today, it might have been helpful had Margaret Thatcher, when she was Prime Minister, begun to think about the problems that would be facing the transport system ----
(Mr Byers) She created it.
(Mr Byers) Well, I think we should see it in the way in which Lord Birt will be making recommendations in addition to the work that is going on in the Department. We have a good working relationship with Lord Birt and the work he has done so far. I am quite relaxed about what he is doing.
(Mr Byers) You are inviting me to begin a very interesting debate about spending. The important thing, I think, is that we do see spending being allocated or finance being allocated on the basis of need. Certainly within England, what I have commissioned for the first time, I think, is a major piece of research to identify where each region is getting its funding from in terms of public expenditure. That work has not been done before, but for the first time we have now commissioned that to take place, so we will be able to see within each region of England where the money is going and who is funding it and then we can look between regions to see if there is an unfair allocation. I think that work then has to be done and that will then feed into the wider considerations within the United Kingdom about how we fund within the United Kingdom and not just for the regions.
(Mr Byers) Well, I have influence in terms of we are just beginning the Spending Review for 2002 and we will be, as part of our submission to the Treasury, making the case very strongly of the need to have an active regional policy and that will entail funding to assist the regions of England and that funding will take a variety of forms. It can be support for the RDAs in terms of economic regeneration, and although we no longer sponsor the RDAs, we can still be advocates on their behalf and what is very clear to me is that if we are to see long-term sustained development in the regions, we do that where the economic performance of productivity within those regions improves. I do believe firmly that with an active regional policy we can achieve that. We also need to look at how infrastructure is developed so that we can support particular regions there and we can see how skills and training are allocated within regions.
(Mr Byers) Absolutely, and it is a responsibility that I take very seriously. The power I have, the influence I have is to be the advocate for the English regions at the Cabinet table and in our discussions with the Treasury, and that is what we do. That is the role that we play and when the Spending Review comes out later this year, people will be able to judge how successful we have been on behalf of the regions.
(Mr Byers) Well, it is a matter for the Government and the Chancellor will be responsible for the Spending Review 2002, which we have begun. I will discuss with him the priority that needs to be attached to the regions as well as to transport and other areas for which I have responsibility, and ultimately it will be a Government decision that will be made. The Chancellor will obviously make recommendations.
(Mr Byers) In terms of the amount of money that will be received, it will be a Government decision.
(Sir Richard Mottram) Can I just offer an illustration on this in relation, for example, to the regional development agencies. From next year onwards we are going to have a single pot for the money which they spend which was a programme which was worked on by the old DETR when we sponsored those agencies, but much of the money that those agencies spend is actually money which comes off our votes and we have direct influence over what they are going to spend that on and the way we are going to work the capital pot, the single pot, is that they have to provide their corporate plans which are considered by all the key spending departments, so we and the Secretary of State will influence how they spend their money, what they spend it on, et cetera, even though we no longer sponsor those agencies, and those decisions will therefore be taken by the key Ministers with those regional spending responsibilities, the Secretary of State, the Secretary of State for Trade and Industry and so on. They are collective decisions which are taken about our strategy for the regions.
(Mr Byers) Comparisons will be drawn and rightly so because we are a united kingdom.
(Mr Byers) And explain why those differences exist, yes.
(Mr Byers) Well, we now have responsibility for electoral matters and there is a commitment to reduce the number of Scottish constituencies by the time of the next Election and we are working on that timetable.
(Sir Richard Mottram) Well, what has happened on that is that we were working on a revision, in particular I think it is Guidance Note 6, from memory.
(Sir Richard Mottram) Well, we have had such guidance and we were committed to revise it.
(Sir Richard Mottram) Yes, and we have been proceeding on the basis that we are going to revise it. The position we are currently in is as follows. Inside the Department we were preparing revised guidance in relation in particular to Guidance Note 6. In parallel, we were working on the Planning Green Paper and one of the things which came out of the Planning Green Paper, on which we are now obviously consulting, was the feeling that some of our guidance notes are too detailed, so what we have decided to do is to go away and think a bit more about Planning Guidance 6 in relation to the main Minerals Planning Guidance, which is number 1, if you are still with me, but in the meantime the bit that is really out of date is the national and regional guidelines for aggregate supplies, how much we need and where we might get it from, and we are proposing to take that out and to deal with that separately and to consult on that in the spring of 2002, so the real reason why we are now going a bit slow on the guidance itself is that we want to streamline it as part of our approach to planning guidance following the Planning Guidance Green Paper.
(Sir Richard Mottram) Certainly not.
(Sir Richard Mottram) I will set myself that target, Chairman.
(Mr Byers) It can, but it depends which parts of the country you are looking at. In some parts of the country, there is a greater belief that the development of clusters is more important than the economic regeneration of that ----
(Mr Byers) Well, there is some evidence, but evidence goes both ways. I remember when I was at the Department of Trade and Industry, there was some evidence there which we commissioned which showed that planning was standing in the way of the development of clusters and I think people will be aware of that fact, so there is evidence in both directions.
(Mr Byers) Of the work in the DTI, yes, of course.
(Mr Byers) Is that specifically in relation to clusters?
(Mr Byers) Well, as I say, there is other evidence which will conflict with that and I am firmly of the view that in some parts of the country the planning process has stood in the way of the development of business clusters.
(Mr Byers) Well, we are consulting at the moment, as you will be aware. We have produced a consultation paper just before Christmas and we will not make any decisions until the consultation process is complete.
(Mr Byers) That certainly would be a major infrastructure development, yes.
(Mr Byers) That is an interesting definition of progress.
(Mr Byers) No. My approach to planning is this, which I think is probably worth putting in this context: I happen to believe that planning and the use of land is one of the key levers that we have got both for social renewal and economic regeneration. One of the great achievements of Attlee's 1945 Labour Government was actually to put in place a proper system of planning which was used to achieve those objectives. Since then, the planning system has moved away from achieving those objectives and what I want to do is to use it once again as a key lever for economic regeneration and social renewal. Now, to do that, you need to build a consensus around what you are trying to achieve. A planning system will not work if people feel they are being excluded from the outcome and you have to get people to buy into it. Now, I happen to believe, partly from my own constituents' experience and partly from what happens elsewhere in the country, that local people, if there is a big planning application, they do not feel they have got a role to play because you get barristers coming from London, QCs paid enormous expense and local people just feel intimidated by the whole process. They do not feel they are involved and that has got to change. Now, the Planning Green Paper is about actually involving local people right at the very beginning with their own local development plans about what they want to see in their own area.
(Mr Byers) Yes, well, that is wrong.
(Mr Byers) Yes.
(Mr Byers) Well, I would not be happy with that, I have to say. I think if it is an issue of policy principle, then one can argue why the political process needs to have a desired outcome, but if it is something else, I think we should be far more relaxed about the approach. We have free votes on a number of issues traditionally in the House ----
(Mr Byers) Well, it would not, you see. That is a misunderstanding the proposals contained in the Green Paper because what we are saying about the parliamentary process is that it would not be involved in the details which would still be decided locally, but Parliament would be involved in deciding the principles behind the major infrastructure developments.
(Mr Byers) Well, my own view is to make a distinction between the policy where I do believe there is merit in having a disciplined approach as opposed to the detail of a particular planning application where obviously that is for local determination anyway and it is not a matter that Members of Parliament in this House would get involved in.
(Mr Byers) I want to get to the 60 per cent first. We are at 57 and this target has got to be met. It is not easy. When I saw the target, I thought, "Well, we are at 57 per cent already. Is 60 per cent a bit easy?" There are reasons why it is actually quite difficult, but we have now introduced some fiscal measures which will make brownfield development a lot more attractive financially, so I am confident that we will achieve the 60 per cent within the timescale that we have set ourselves. What I am prepared to do is to say that when we get to the 60 per cent, let's up the target and let's try and get there before the timetable that has been set. As I say, I am confident we will achieve it, but I would rather get there first than set a new target before we have got to the one that is there already.
(Mr Byers) They have been and we have got some very useful figures, which I do not know whether the Committee have got, which break it down by region. We have set targets by region and most of the regions actually have done very well, and Yorkshire Forward, as an example, has done very, very well in terms of the work that they have been able to do, so there are some very good examples, particularly in former coalfield communities and that is important both in terms of making the communities more pleasant places, but also in assisting economic regeneration in those areas that need that support very valuably.
(Mr Byers) This is a key area for the Department and I think the Government actually. Housing is one of those policy areas where I do not think enough attention has been paid for 15 or 20 years. The one policy, the right-to-buy for council tenants, if you look back over the last 20 years has probably been the only new policy which has been developed in housing. Now, we are facing real issues in London and the South East with too much demand, if you can put it that way, and then we have the low demand problems, I have to say not just in the Lancashire mill towns, but there will be low-demand areas in Sheffield, I am sure, there are low-demand areas in Newcastle and there are low-demand areas in many parts of the country coming about for a variety of reasons. A great danger is that in those areas, there is this desperate downward cycle where local authority housing we can rescue because invest and we can have a far more focussed approach, but it is the privately-rented and privately-owned sector where we have the real problems where what happens is that there is low demand, prices fall, landlords move in, buy up the properties and then put in people in receipt of housing benefit and they do not really care about the condition of the properties.
(Mr Byers) Well, it is important that you recognise that I understand the problem actually because sometimes it may be the case that people do not understand the problem. We understand it and we will do something about it in terms of the Spending Review for 2002. It is no secret to say that one of the main submissions that the Department will be making will be to get additional funding to address these particular concerns and the market renewal aspect is, I think, one of the interesting parts of the proposal that we will be putting forward.
(Mr Byers) That may be an option, but I do think that making that decision in Whitehall would be the worst possible approach. It has got to be far better if local people come up with proposals maybe for demolition, maybe for renewal, for renovation. What I think would be terrible is if we had a blueprint here in London where we would say that for Lancashire this is what is going to happen. I think we should give people a range of options and it could be demolition and new build so that they can respond to different sizes of families and so on, but it has got to be bottom-up, otherwise it simply will not work. We have been here before in housing policy where people determined it from the centre and it has not been successful.
(Mr Byers) I do not want to be in a position where we deny people the right to buy because of our failure to see new housing stock in London or elsewhere in the country, so the challenge, I think, is not to deny opportunities to people to own their own home, but the challenge is actually to see new stock being built or old stock being renovated and brought forward into use or remodelling. You will know from your own constituency that we cannot accommodate very often within the social sector large families and there are huge differences between families and we have to be far more responsive to the new demands which are being made upon us. Now, within the plan that we are developing which we will discuss with the Treasury as part of the Spending Review, we have got to have this flexible approach which will mean more housing stock being provided.
(Mr Byers) Yes, it is across the board.
(Mr Byers) It is a commitment that will be met irrespective of any decisions which are taken by tenants.
(Mr Byers) We are using different mechanisms to improve the stock in those sectors. One of the things we are looking at, at the moment, is whether we can use the Housing Benefit system to force - to be honest - landlords to improve the quality of the stock. My view is this: the private landlord is receiving, directly from the Government, Housing Benefit. It does not go through the tenant in many cases; they get it directly from the local authority on behalf of the Government. They get a Housing Benefit cheque. In some authorities it is tens of thousands of pounds a week that a private landlord is getting. In my own constituency one landlord gets tens of thousands of pounds a month from the local authority by way of rent. I think we should be expecting the landlord to provide decent accommodation for the money that we are giving him by way of Housing Benefit, and we are not at the moment. I think that is a lever that we can use, and should be using, to drive up standards in the privately rented sector.
(Mr Byers) I think it is an area that, obviously, we need to keep under review. I think we need to tread very carefully. I do not want to say something this morning which may lead people to believe that somehow the Government is going to alter its policy, because there are no plans to do so at the moment.
(Mr Byers) I think the reports that came out before Christmas are very informative in terms of looking at the situation, whether in Burnley, Oldham or Bradford, because they all vary in terms of what was at the heart of the problems. You are right, I think, to point out that there was a common thread through all of them, which was simply different communities growing up alongside each other but with no relationship with each other. I think the way round this is through civic leadership. What has happened in those parts of the country where you have had strong civic leadership, where people have been prepared to give a lead politically - and it can often be a difficult lead and you can be criticised for it - we have not seen the sort of difficulties that we saw in those three towns and cities. I said this when we published the Local Government White Paper; we need to have a renaissance of civic leadership and community leadership. Perhaps one of the mistakes that successive Governments have made, really, since 1980 is to take powers away from local government. So there has not been that sort of leadership there that one might have expected in previous years.
(Mr Byers) That is where you need that civic leadership. What I do know is that we cannot do it from the centre. An imposed solution would not work. You need, in a sensitive area like this, civic leadership which seeks to build consensus, to take people with them and to introduce those sorts of policies.
(Mr Byers) Engaging with governors and relevant bodies and getting them to see that there are changes that might be necessary may well help.
(Mr Byers) We are monitoring the new governance procedures as it develops, and there is a unit ----
(Mr Byers) There is a unit in the department that is doing precisely that.
(Mr Byers) I think we need to look at it in terms of the traditional way of doing things, because that is a comparator, to see if it is being successful. I think we judge success by whether or not service delivery is being improved, whether local people feel that there is more openness, that there is a greater buy-in to what the local authority is doing.
(Mr Byers) That is why we need to compare it with the more traditional approach, and see what benefits ----
(Mr Byers) I think if I say one of the ways in which you can define success is by openness, and it turns out it is not as open, then it will be successful.
(Mr Byers) Most Members of this Committee know my views on this particular issue.
(Mr Byers) If it can be achieved.
(Sir Richard Mottram) No, no, Chairman, I was just thinking about something else. I would record that I was nodding at that point.
(Mr Byers) I may be wrong, but I am not convinced that people turn out to vote because there is a cabinet system or there is not a cabinet system. What motivates them is actually the quality of service and knowing what the local council is doing. There are a variety of ways in which you can do that. Some of the best local councils, under the old system, would have high turnouts because they would be open, they would be clear with people on what they were trying to do, there would be political conflict and people would turn out and vote. That used to happen under the old system, but not everywhere - probably in far too few areas. So I think it is worth trying a new approach to see what benefits that can bring.
(Mr Byers) I think that is the sensible measure to look at, yes.
(Mr Byers) We will need to see. What I have said is that the Standard Spending Assessment will go because it bears no relationship to need within a particular local authority area or to a level of service which is actually being provided. What I would like to see is a reformed system of distribution which responds far more closely to the demands being made on local authorities within their own area and, also, the level of service which they are providing.
(Mr Byers) I would not comment on that because I have got a constituency interest, but what I can say is within London there will be a redistribution because there are some parts of London where demand has increased dramatically and where there is a great need compared to other parts of London.
(Mr Byers) South Shields is better. It is south of the river, so I can probably comment on that.
(Mr Byers) It is an unfair system and it is the system which we all know was introduced for the most cynical, party political reasons. The SSA is motivated by party politics.
(Mr Byers) To save Westminster and Wandsworth. If you talk to the former Secretary of State for the Environment, now Lord Baker, I think he concedes the fact and is now quite open about it. This is not a London-against-the-rest-of-the-country thing, because there will be parts of London that will benefit from a system which is more closely based on need and the level of service which is required.
(Mr Byers) That is why it is wrong to say it is London against the rest of the country. The issue is that there will be parts of London that will benefit by a fairer system, there will be other parts of the country that will benefit as well; there will be some parts of London that will lose and there will be other parts of the country that will lose as well, but that is the nature of any big change. This will be a big change in the way in which we allocate funding.
(Mr Byers) I think there will need to be transitional arrangements with the sort of big change that we are looking at. I have said, when I gave the Local Government Settlement, that I would like to find the mechanism to involve, clearly, Members of the House and local government itself about the changes that we want to introduce, because they will be contentious. A problem shared is a problem halved.
(Mr Byers) We are doing the work now in the department and I would like to think that, perhaps, after the local elections in May we have something that we can go out with.
(Mr Byers) Absolutely.
(Mr Byers) We will, and I think one of the important issues that we will need to look at is, really, particularly for small district councils, where this is a real, pressing issue, that there is a cost by just having a local council. This affects small districts in particular, and it may be that we say that for every council there will be a sum of money that you get automatically, as the cost of running the council. Small, rural district councils, in particular, will benefit from that particular approach. That is one of the ideas that we are looking at at the moment.
(Mr Byers) I always get in trouble when I talk about the Euro, so Sir Richard will answer.
(Sir Richard Mottram) The Electoral Commission will tell us.
(Sir Richard Mottram) My understanding is that they will determine it, yes.
(Mr Byers) They are given guidance, I think, in the legislation. There is some provision which gives them -
(Sir Richard Mottram) I have not got this in my notes but I can give you more detail. It is not determined by the Government.
(Sir Richard Mottram) No. The way it is framed is not.
(Sir Richard Mottram) That is not a question for me.
(Mr Byers) We will need to double-check but I think we hand it over to the Electoral Commission.
(Sir Richard Mottram) We will.
(Sir Richard Mottram) Is this the number of parliamentary seats?
(Sir Richard Mottram) I am afraid I do not know, Chairman.
(Sir Richard Mottram) Yes.
(Sir Richard Mottram) We have an agency, the Vehicle Certification Agency, who are in close touch all the time with car manufacturers about how they are implementing both voluntary and compulsory European standards. So it would be through them.
(Sir Richard Mottram) I do not know the answer to that off the top of my head. I can give it to you.
(Sir Richard Mottram) We have not discontinued it.
(Sir Richard Mottram) What we had on cycling was a long-term target, which I think is by 2012 (speaking from memory, but I will check), to quadruple it. That target superceded another target which was - and I cannot do this one from memory - to increase it by some certain number, either by this year or last year, and we certainly have not met that target.
(Sir Richard Mottram) We have not done away with it ----
(Sir Richard Mottram) Absolutely not. That target we are thinking about. We do not have further milestones on that target. We certainly have a focus on how we are going to deliver that target, which as the Committee, I think, has discussed on previous occasions, is going to be very difficult. We still have that target and it is a target we are committed to.
(Sir Richard Mottram) I have a horrible feeling I have done this before, Chairman, and got into terrible trouble! What happened was that in the 2000 Comprehensive Spending Review the Government was introducing many more targets, and the idea, essentially, was that you got money in return for commitments to outputs. This was all done in a bit of a hurry, I think, and produced far too many targets - many of which were process-based. If you look at the targets in our annual report, for instance, a lot of them in the 2000 Spending Review are process-based. I am sorry, that was the 1998 Spending Review. In the 2000 Spending Review it was recognised we needed a smaller number of better focussed - what are called Smart - targets, and the number was reduced. In this Spending Review I would expect the number might be reduced again, but the department has about 80 targets that I am responsible for.
(Sir Richard Mottram) The cycling target is a Smart target, yes.
(Mr Byers) I think there is a better way of approaching it, which is not to have a target to reduce the number of motorised journeys but to have a target to include other forms of transport and give people a genuine choice. I think that would be a far better way of approaching it.
(Sir Richard Mottram) We have targets both for congestion and pollution, and so, as the Secretary of State says, we are actually focussing on the impact of transport of all kinds rather than just one mode.
(Mr Byers) I do, actually. It is more of a challenge to us because there are ways in which you can force people off the road, if you adopt certain policies, but I think that would be the wrong approach. I think the far better approach - but more difficult for government - is to see a real change, a real improvement, in the standard of public provision - whether it is rail or bus.
(Mr Byers) The figures that I know, which are quite significant, are in relation to school children walking to school. You will be aware that it is the short school run which involves great use of the car, which we have been looking at. The latest figures that I have seen show, for the first time, that we have seen an increase in the number of children walking to school, because there has been real attempts to try to develop safe routes - cycling routes as well as walking - and so on.
(Mr Byers) No, there is a fall in the numbers of people driving as well. There would appear to be a correlation between the two.
(Mr Byers) That too much is going into walking?
(Sir Richard Mottram) I do not know the answer to the first point you made about our model. I can go away and look at what assumptions our model makes about walking. I am afraid I do not know the answer to that. On your second point, the key here, I think, is that the Government is investing very much more heavily in Local Transport Plans. If I think about, certainly, the areas I have seen in the country where I live, if you look at the way in which councils are now spending the additional money they have been given for Local Transport Plans, a significant part of that is actually about making our streets more pedestrian-friendly. I always forget the statistics, but the proportion of car journeys, for instance, that are less than a mile is a big number, and what we want to do is encourage people not to use cars for those purposes but to walk. If you create a better environment for them to do that, then that seems to us to be the right way of doing it. So there is both local transport money - and that is a matter for local authorities to decide to spend some of that - and there is all the advice and guidance that we and others have put out about improving the local environment. In the next spending review we are also looking at public spaces generally, and that, too, may impact upon people's propensity to walk around rather than to use transport.
(Sir Richard Mottram) I do not, actually. We have 11, roughly speaking, civil servants who are working on a combination of walking and cycling. They deploy themselves flexibly. This is not how they get to work, this is how they ----
(Sir Richard Mottram) A very small number because it is about 11 out of 3,400 or 3,500. If we thought that there was some compelling need to put additional resource into that area, I can assure the Committee that we could do that. We are not in a position where we do not have the administrative resources.
(Sir Richard Mottram) I can add to people in the area probably a lot easier than I can meet the cycling target, Chairman. I know the Committee are, quite rightly, concerned about this, and I have talked to the people who are in charge of this area and I have asked them whether, if we gave them more resource, we would produce some dramatic effect. Their judgment - and this is, after all, a free hit for them, a Permanent Secretary does not often ask people "Would you like more people?" - was that this was not an issue about administrative resources inside the department. If you think about the problem, it is a problem which is mainly about local government resources, about professional expertise, etc. We are looking at those areas as well, it is not a question of whether we have 11 civil servants. If I could magic the problem, if I could double cycling by putting 22 on the problem I would put 22 civil servants on the problem.
(Sir Richard Mottram) Can I send you an answer to that?
(Mr Byers) I think they are trying to achieve two separate things. The Public Service Agreement is an agreement between ourselves and the Treasury - so it is an internal government agreement, if you like - the Local Transport Plans are an agreement arrived at in detail because of submissions made in detail by the local authority to achieve particular objectives in that local community. That is what we are funding. So the Public Service Agreements are a broad outline (and we have just been discussing some of them) without going into detail about how, in process terms, it is going to be achieved. Local Transport Plans are actually the opposite; they are very detailed and that is why we need more monitoring opportunities.
(Mr Byers) On fuel tax, you have got to get to a situation where you have a level of tax which is acceptable to the travelling public. What we saw 18 months ago was people saying that the level of taxation had got high enough, and they expressed that very clearly.
(Mr Byers) As you know, Mrs Dunwoody, there was not an immediate response from the Treasury.
Chairman: Just a delayed one.
(Mr Byers) I am sure they read the report before the ten days, Mrs Dunwoody. The important thing, in any democracy, is that governments will listen to the views being expressed by individuals. It was looked at as part of the Budget process, and the Chancellor made announcements in the Pre-Budget Report and, I think, since then we have now got a level that people broadly find far more acceptable.
(Mr Byers) The Chancellor is responsible for taxation matters.
(Mr Byers) My own view is that on matters like this, matters of taxation should be decided by the UK Chancellor in his Budget Report to the House of Commons.
(Mr Byers) It is the nature of the European Union. I think there are great dangers with the argument that harmonisation of taxes will make a single market. The way in which we can achieve a single market is if markets are actually opened up. If the French opened up their electricity market then we might have a single market in electricity in Europe. That is how we get a single market, not by harmonisation of taxes.
(Mr Byers) But the important thing is that tomatoes can be traded freely in every country in Europe, so you have a genuine single market.
(Mr Byers) What I am saying is there will be issues to be determined by national governments about levels of taxation, but the challenge for the European Union is to have a genuine access to markets throughout Europe.
(Mr Byers) No, although we did say something about that particular aspect at the time. The consultation finishes at the end of this month and we hope to have something by the end of March. On the specific point, the issue is unlicensed cars, and we calculate there are probably about a million unlicensed cars in the United Kingdom.
(Mr Byers) I am sorry, uninsured.
(Mr Byers) Anyway, it is far too many. A million is a pretty extensive sum. I need to check on whether we think there may be a million unlicensed, actually. That may be the figure. Let me check on unlicensed or uninsured. The point is we have to get to a situation where, if you like, the owner takes fiscal responsibility for the car. At the moment, there is a situation - and we are improving the situation at the DVLA to be able to do this - to make sure that there is a process of monitoring, so we have registration on a rolling basis, so there is a far greater control and knowledge over who actually has ownership of a particular vehicle.
(Mr Byers) It is an area where a lot of work is going on involving ourselves and others.
(Mr Byers) It is an enforcement matter, so the Home Office, in terms of enforcing the legislation, is clearly in the lead and we need to make sure that the police authorities treat it as a priority. The reason why it has come forward as a big issue is because the value of cars as scrap has just disappeared.
(Sir Richard Mottram) Yes. The answer to that is that they would do. Obviously there are resource issues and we have to put more money into it, but it is not unfeasible for them to do it.
(Sir Richard Mottram) On resources, if you look at the way in which provision is made for DVLA and you look at the number of civil servants in DVLA, you can see that it fluctuates quite markedly ----
(Sir Richard Mottram) I am answering your question. --- in relation to demand. So the answer is if the Government wishes abandoned cars policy to be tightened up - and quite clearly that is what the consultation document says - then DVLA has the capacity to do that, but it will cost more money and it will need more people to be employed. That is an issue which will need to be addressed in the next spending review, is the answer. It is not a question that they say "We cannot do it". Incidentally, Chairman, could I just say that our number is at least one million unlicensed vehicles, and many of them we think are also uninsured and many of the drivers do not have licences.
(Sir Richard Mottram) That is an option that has been looked at, yes.
(Mr Byers) I am not sure it is going to help enormously on abandoned cars.
(Sir Richard Mottram) It potentially makes it worse.
(Sir Richard Mottram) It makes it worse ----
(Mr Byers) It does not help!
(Sir Richard Mottram) It makes it worse if we do not have a policy! We are thinking about abandoned cars. Our abandoned cars policy is being thought about in the context that we know the End-of-Life Directive is coming.
(Mr Byers) I think you are right to say that this is a crucial area of public transport for very many people. I accept the criticism that perhaps we have not paid enough attention to it. That has got to change. What is interesting is that there is a considerable amount of additional funding going into buses and we are not seeing a return for it. I think we need to look very carefully at the structures that are in place and the levers that we have got to deliver a quality improvement as far as bus services are concerned. If that means we have to move to more of a contracting situation where we know what we are getting, we know what we are buying and we know the level of service, and we then pay for that, then that is something we have got to be prepared to do.
(Mr Byers) We will give it very careful consideration.
(Mr Byers) I am not sure, offhand.
(Mr Byers) About eight per cent.
(Sir Richard Mottram) It is much bigger for buses. I do not know the figure.
(Sir Richard Mottram) Of course.
(Sir Richard Mottram) Not in London. Obviously, London is the biggest bus market but there is a big difference between passengers and ridership - if there is such a word - in London and in some other parts of the country. The obvious case is the north-east where numbers are falling off as car ownership rises. In London ridership is rising and is widely spread across the community.
(Sir Richard Mottram) We are, yes. It is not our direct responsibility. Obviously there is a big problem over costs in relation to buses, which I think is driving this issue.
(Mr Byers) We are doing a lot of detailed work with NATS in the light of the downturn since September 11. There were problems there before September 11.
(Mr Byers) We will want our own advice. We do not just take any figures that someone produces for us.
(Sir Richard Mottram) They have given us a range of figures, on different assumptions, and we are talking to them about that range.
(Sir Richard Mottram) That is correct, yes.
(Sir Richard Mottram) What we have been discussing with them is the range of outcomes where, as in all these cases, there is a so-called "best case", which will definitely mean forecasts which are lower than those which were envisaged pre-September 11, and then there is a case which is even worse than that. The argument is about that range. It is not really an argument because it is a perfectly amicable discussion, but there is an issue about the fact that none of us know how many people are going to be travelling in five years. Therefore, we need to have an approach to solving this problem which recognises that uncertainty.
(Mr Byers) I will come to that, but the Scottish centre has been deferred, and the reason why we agreed to the deferral, with great reluctance, was actually to sort out the situation and to do the work first, and then to take the decisions that will be necessary, and that ties in with the point about the financial circumstances.
(Mr Byers) Yes, but you know as well as I do that you should not believe what you read in the newspapers.
(Mr Byers) I think you make a very important point, Chairman.
(Mr Byers) There will be some people who would like the Government to take on the risk because they have a financial interest in getting us into that position.
(Mr Byers) My answer is that Members of the Committee will know the arguments that were deployed at the time of NATS and those arguments apply equally today as they did then.
(Sir Richard Mottram) Of course, the Government is a minority shareholder in that company. That was the basis on which this was done.
(Sir Richard Mottram) Therefore, it is perfectly proper for that company to come to all of its shareholders, including the Government, and to discuss with them its situation.
(Mr Byers) All we have agreed to is a deferral. We have not agreed to a deferral for a particular time. The reason why we agreed to a deferral was to allow us to sort out the situation that we are facing at the moment.
(Mr Byers) I will repeat what I said earlier. All that we have agreed so far is a deferral to the Scottish centre being constructed. No more than that. There is a wide set of discussions going on about the financial situation of NATS in the light of the downturn, particularly since September 11, and it is part of those discussions, but no conclusions have yet been arrived at and when we reach an outcome to those discussions it will need to reflect the commitments that have been given during the passage of the legislation.
(Mr Byers) We will need to reach an agreement with the airline group and with other shareholders in NATS as soon as we can. I am not going to give away some of my negotiating strength by putting down a timetable in front of the Select Committee today.
(Mr Byers) I announced to Parliament the agreement that we had, the details of which are contained in the decision letter.
(Mr Byers) I think we keep under review the way in which we manage the motorways.
(Mr Byers) We will know in a few weeks' time. The final bids came in on 4 January, they are now being clarified and evaluated, the London Transport Board will meet round about the second week in February to make an in-principle decision on whether value-for-money is achieved. I think when I last came before the Select Committee they had not agreed this but they have now agreed with me that they should publish very quickly after that board meeting the details and also the advice that they have received, and there should then be consultation, primarily with the Mayor and Transport for London but it will be a wider consultation as well, because these will be made publicly so people can see the comparator between what the PPP offers and, also, what the public sector comparison would offer as well. I would also make available the Ernst & Young report which is being made available to me - an independent report. I know this is a big issue which has caused a lot of debate, and there was an alternative means of funding identified by the Mayor which is through a bond issue. I think it would not have been a right consultation, or an effective consultation, if all that we had been comparing with the PPP had been the traditional form of public service comparator. So what I have done, and this will be made public as well, is make sure there will also be a comparison on value-for-money terms between the PPP and the bond issue as outlined by the Mayor and the Commissioner. So people will have a range of options around which they can consider. Then there will be a consultation period and then, probably round about the middle of March, a final decision will need to be taken on whether the value-of-money of the PPP has been achieved. It will be very open and it will be an opportunity for people to engage in the debate. I have ensured that there will not just be a comparison between the PPP and the public sector comparator, they will also be able to look between the PPP and the value-for-money of a bond issue.
(Mr Byers) It will be about three weeks.
(Mr Byers) We will announce what Plan B is at the time of the final process.
(Mr Byers) No.
(Mr Byers) No.
(Mr Byers) Yes.
(Mr Byers) No, I think the important thing on the partnership project is that we get real value-for-money. I was not prepared to say that it should go ahead immediately because I was not convinced it was actually going to achieve real value-for-money. My approach to the whole of the London Underground modernisation has been very pragmatic; I am not coming at this from a dogmatic position; I want to deliver what is going to be best for passengers in London. If that means that we do not go ahead with the property partnership but we actually hand that over to the Mayor without making a decision - if that is the best thing to do on value-for-money terms - that is what I will do. It is the same with the three PPP contracts. If they do not achieve value-for-money we will not go ahead with them.
(Mr Byers) I will take the decision on value-for-money on behalf of the Government, but it will be my decision.
(Mr Byers) The Treasury has been involved in how the public sector comparator has been compiled, as one would expect.
(Mr Byers) It is the first or second week in February, but the London Transport Board will no doubt let the Committee know exactly what date it is. I have got a provisional date, but it would probably be wrong.
(Sir Richard Mottram) I will send you a letter that includes the date.
Chairman: Thank you very much.
(Mr Byers) It is an interesting rumour, and rumours are even more interesting if they are scurrilous. I have never known a rumour that was not scurrilous. I can rule it out. No decisions have been taken on what Plan B might be or the terms under which Plan B would operate.
(Mr Byers) The dates are correct because they have been disclosed in parliamentary replies before Christmas, so, yes, those dates are correct. The ONS is an independent body and it will obviously take its time in reaching any decisions on classification.
(Mr Byers) Just to say that the £162 million was not legally due to be paid on October 1; the April agreement was to use best endeavours, and it was a clear condition of that that it would not count against public spending. Why the ONS classifies one thing against public spending and other things as not is, really, an issue for the ONS. They are an independent body, they are not influenced by politicians and they make these decisions. And we have to abide by them.
(Sir Richard Mottram) If I can just add one small thing. It was not a question about the money it was: could we have a vehicle which was 50 per cent private sector, 50 per cent government and how would such a vehicle be classified. That was the question that ONS were being asked, and the conclusion they came to was it could not be off the Government's balance sheet and off all private sector balance sheets as well.
(Sir Richard Mottram) No, because when we were involved in negotiating the April agreement (and that was, obviously, before the Secretary of State took office) the April agreement was negotiated with Railtrack and they were quite comfortable that what we were doing was we were going to use our best endeavours to create this vehicle. We set out to use our best endeavours to create that vehicle. The correspondence that I had with Sir Alastair Morton was designed to ensure - on my part, anyway - if there was a subsequent inquiry by Parliament, in particular by the Public Accounts Committee, I was giving an assurance that no one would argue that the SRA had been at fault in the way in which they had gone about the technical issue of seeing if Renewco could be established on this basis. That is what that correspondence was about. Railtrack were perfectly happy at the beginning of April on the basis on which we proposed to proceed in relation to Renewco. I was personally involved in the discussions with them.
(Sir Richard Mottram) No. I am not saying that, no.
(Sir Richard Mottram) I do not think that is the description of what happened. What happened was - I am not an expert on these vehicles - we agreed with Railtrack that we would give them more money, and what we were then discussing was could a vehicle be created which would enable Railtrack to add to its cashflow, over and above that money, through such a financing vehicle. These things are very, very complicated. At the beginning of April everyone was using their best endeavours and throughout the process everyone was using their best endeavours but they are, however, very complicated, otherwise it would not have taken that many months for that to be done. Everyone behaved in good faith.
(Mr Byers) Those matters are matters not for the Secretary of State but for the House of Commons and the House of Lords. The Rail Regulator is independent and his functions and responsibilities can only be changed by both Houses.
(Mr Byers) We are confident that adequate funding can be found within the 10 Year Plan. It is also just worth stressing to the Committee, as we said at the time the 10 Year Plan was published, the 10 Year Plan is a flexible framework and during the period of the 10 Year Plan there will be three Spending Reviews. Those Spending Reviews will need to identify the priorities of the government at those particular times.
(Mr Byers) The Administrator is still doing his work, it would be premature because that work has not been completed.
(Mr Byers) There are a number of avenues that the Administrator is giving consideration to. He has not decided who will take Railtrack out of administration, who will be the successive body and there are one or two options about how that might be achieved. It will really be for the Administrator under one of those options to make recommendations to me under the Railways Act. As I say, the Administrator is still doing his work.
(Mr Byers) To say I pushed it into administration is a judgmental view. What happened was I petitioned the High Court and the High Court decided on 7 October that Railtrack was insolvent. Indeed the High Court judge, Lightham J. made it very clear he would grant the order immediately because of the evidence that was put to him.
(Mr Byers) That is a question for Railtrack. Railtrack did attend court and they had counsel present and they did not object to the petition and did not raise a word against it. I know some people have drawn attention to the fact that Railtrack made a profit in the last six monthly report, but to announce a profit in no way reflects on whether or not a company is solvent or insolvent, because one has to look in relation to the profit that has been made over the six month period with the debt which has been incurred over a lengthier period. The directors of Railtrack will, as they have to do under legislation, have to make a statement of affairs. That statement of affairs will need to disclose the level of the debt that Railtrack have to service. I think when people see the level of debt, coupled with our projections of a £700 million deficit by December of last area, rising to £1.7 billion by the end of March this year, they will understand why the High Court judge, Lightman J., took the decision which he did.
(Mr Byers) That is still work the Administrator is doing. When he has completed his work all of that information will be made public and people will be able to see them.
(Mr Byers) The Committee and the public would not see the whole picture. It is far better if people can see the whole picture. It is far better to publish by the Administrator at the end of the exercise rather than to take a weekly snapshot of what is a changing picture. As the work goes on the Administrator is discovering more about the true position of Railtrack, about its major projects, like the West Coast mainline, and so on. Let us get the whole picture at the end of the exercise, it is far better than to get odd little briefings from certain people we see in the press, and so on. Let us get the Administrator to make his report and then we can all see the situation.
(Mr Byers) It would be true to say the Administrator is discovering things like, for example, on the West Coast Mainline, which people did not expect. Let us see what the Administrator comes up when he has completed his work.
(Mr Byers) He has legal obligations he has to meet. The important thing is that we use this period of administration to do two things really, one is to make sure that the successor to Railtrack does not have the baggage which has been left behind by Railtrack and begins with a clean sheet so it can get on with the job. Secondly, that we use this period to make sure that there is good management to run Railtrack Plc. For understandable reasons the Chief Executive who was there, Steve Marshall, wanted to argue the case for the shareholders. It is a very good example of the difficulty that Railtrack always had between trying to serve two masters, the shareholders and the travelling public. In the end, of course, their legal obligations by statute are to the shareholders and not to the travelling public. They were concentrating on arguing the case for the shareholders and were not concentrating on reliability and punctuality within the network. We have new people in, John Armit as Acting Chief Executive and Jim Cornell, engineers and railway men, and they are now committed, really focussed, on improving the way in which the licence is operating. That is important because, obviously, we do not want to see the situation worsen during this period of administration.
(Mr Byers) That is a matter for the Administrator, it would be improper for me to put pressure on the Administrator when he has his legal obligations.
(Mr Byers) He shares my objectives that the sooner it can be done the better. The sooner it can be done the greater the value there will be in Railtrack.
(Mr Byers) I hope and I am confident it will be done this year.
(Mr Byers) No contingency plan in what way?
(Mr Byers) In evidence I have given to this Committee before there were basically two options that were being looked at, one was to provide more money to Railtrack and, secondly, if we did not provide more money to Railtrack what would be the consequence of that. The consequence was that Railtrack would go into administration. Under the Railways Act there has to be an administrator appointed and there will then need to be a successor to Railtrack. I think the Committee, and the honourable member in particular, would have had a lot to say if on the Monday, after the administration had been granted on the Sunday, there had been a blueprint that somehow we had imposed it on the industry. That would have been improper.
(Mr Byers) I think the strategic plan makes it very clear that access for people with disabilities is a very important thing to deliver on, not just for the individuals but for the industry itself. I am pleased that there is an assurance and a commitment in the strategic plan that a person in a wheelchair will no longer have to travel in the guard's van by the end of 2004. I have to say I would like to see it brought forward, I said this to the House on Monday, sooner. As far as I understand it, there are no difficulties in terms of delivering on the disability and discrimination commitment.
(Mr Byers) I think we need to be aware in one of situations that you have mentioned that although heads of agreement have been arrived at there are still very detailed negotiations going on. What we might be seeing here, certainly for understandable commercial reasons, are people putting forward a particular situation because they want to secure the best deal they can for themselves. We should be cautious about people with an understandable commercial interest because they are involved, as we speak, in very detailed commercial negotiations with the SRA about the details of those franchise agreements.
(Mr Byers) I was not referring to debt. I said that there will be a deficit of 1.7 billion by March this year.
(Mr Byers) That is separate from the debt of Railtrack.
(Mr Byers) You are right to say that a number of the train operating companies have difficulties with the franchises, and the Committee will need to look back at when the franchise were awarded and the circumstances of them being awarded. I think the industry will benefit from having a smaller number of train operating companies.
(Mr Byers) No, as we go through the franchise process we will see, this is said clearly in the strategic plan, there will be a reduction in the number of franchise holders. That will be good because it will reduce the fragmentation, which has been a real problem in the industry. It will also mean that out of main termini in London we may have just one franchise operating and that will improve efficiency dramatically as far as those stations are concerned.
(Mr Byers) The private sector is still keen to be involved in the franchising process.
(Mr Byers) We have a very good example today where the GNER franchise has been announced this morning. The Committee will find out that represents about £100m in private investment in a two year extension alone, money which has been committed today by the private sector. Not just allegedly, hard headed business people today are putting in £100 million on a two year extension to one franchise.
(Mr Byers) Sheffield clearly is the place to be, that is why all of these trains need to be running there. I think the important thing about the Strategic Rail Authority now under new leadership is it needs to give a lead, that has really been lacking.
(Mr Byers) The Committee have said this as well. I am reflecting the good advice of the Committee.
(Mr Byers) The Strategic Rail Authority has lacked leadership. The Strategic Rail Authority operating effectively would actually be able to overcome that sort of duplication process, and using the franchise process is a way you can do that. I have been disappointed that the franchise process has not been used in the past as a key way of driving up improvements as far as passengers are concerned. That has to change for the future.
(Mr Byers) The 10 Year Plan, and this was said by the Deputy Prime Minister when it was published, so it is not just me saying it today, is a flexible framework. It would be barmy to set in concrete a 10 Year Plan for transport, because there will be changes during the course of the 10 years which we are going to have to respond to. That is why it is a framework within which we operate. We will review it and revise it in the light of new demands and pressures being made. We will have three Spending Reviews that will be conducted during the lifetime 10 Year Plan and that can build in, perhaps, new money, if we can get it, and make a case to the Treasury. That is what we need to be doing. It is a flexible framework. There are things that can be added to the 10 Year Plan if there is a demand there for it.
(Mr Byers) There is a clear commitment for its introduction. Can I let the Committee know the precise cost of it.
(Mr Byers) There has been some discussion about this. We have said that the franchise process is basically horses for courses. It may well be as far as Merseyside is concerned that having the PTE involved and responsible for it would be the best way forward for that particular franchise.
(Mr Byers) Two things have to happen. You are right to point out that the SRA has to be in a position of strength in its negotiations for the new franchise holder. The government needs to give the SRA our backing to achieve that. Secondly, we do need a new approach to franchise, this is a point raised in the House the other day, which will allow the SRA to take into account previous performance by franchise holders in deciding whether or not they are an appropriate holder of the franchise. Their record should be used, for some it will be of benefit, because they have worked well, and for others it will be a real disadvantage. They should recognise that it is how they perform with franchises they already have which will be used in judging whether they are appropriate people for franchises in the future. That is a very powerful message when we are, perhaps, thinking of reducing the number of franchise holders.
(Mr Byers) My reply is going to be that a bus is not a train. I know that will be written in the newspapers tomorrow, "Secretary of State, Great Revelation". It was a point raised by the honourable member for the Vale of York in the House on Monday. If you get a route like Thirsk up to Newcastle - and I know because I have done that route before when I have lost money at Thirsk races - you can travel reasonably quickly by train, but the idea of having a bus!
(Mr Byers) It is a serious point, a bus is not a train.
(Mr Byers) I believe that lessons have been learned by what has happened over the last few years. You are right to point out that the quality and the technical ability, and so on, of rolling-stock has been poorly lacking. I am afraid it is a consequence of decisions that were taken 10 years ago, when many good manufacturers went out of business because of the orders on stock in privatisation.
(Mr Byers) My mother has never called any radio station. I am afraid once again it is a question of, do not believe all you read in the newspapers. She is 78 years old and she should be left alone by the press actually.
(Mr Byers) I can say that my mother has a lot to say to me.
Mrs Dunwoody: Quite right.
(Mr Byers) I think it is important that companies that have failed on performance - for example, replacing Thirsk to Newcastle by a bus - is something that should be taken into account when it comes to refranchising. Industrial relations is an issue that will be taken into account, not in a negative way. The important message in all of this is that we want both sides to talk and to negotiate a settlement. The message to railway workers is that it is not in their long term interest to have disputes on railways, because people will find alternatives, and they risk putting their jobs on the line as a result. It is in their interest to get a solution as well.
(Mr Byers) I have made the position very clear as far as the government is concerned in relation to that. The important thing is that those individual railway workers through their unions and the management get together and talk and try and arrive at a solution.
(Mr Byers) It is clear that at the moment there is a great concentration, and rightly so, on issues to do with the railways. Railways are used by 2.5 million people per day and the quality of service is not good enough and we have to improve it and we have a responsibility with the industry to do precisely that. There are big decisions about to be taken on London Underground. I was very clear when I was appointed in June that I would have to take these difficult decisions in relation to the railways and London Underground and to do it quickly. I have done that and people have criticised some of the decisions. I am clear that to muddle through and to tinker round at the edges would have been the worst thing to have done. Decisions are going to be taken and we are going to get on with it. I hope that by doing that we can stabilise the position in relation to transport and then those other big areas for which we have responsibility, which I am still very closely involved with, the local government White Paper we had before Christmas, the planning Green Paper, a new initiative on housing, the whole regional agenda, all of those issues, all very important, are being worked on at the moment and they will be worked on over the period ahead. The media does not focus on them as much but the work is going on and we are making a real difference as far as they are concerned.
(Mr Byers) That might be an outcome, that is true. One of the reasons why we have enormous pressure on our transport system is we have one million more people in work than we had in April 1997, that is one million more people needing to get to their place of work each day and that has put enormous pressure on our transport system.
(Mr Byers) The important thing is they have a job.
Chairman: On that note, thank you very much indeed.