Examination of Witnesses (Questions 20-39)
17 NOVEMBER 2004
RT HON
ALISTAIR DARLING
MP AND MR
DAVID ROWLANDS
Q20 Chairman: It is all right saying,
"You are doing all right without the cash lads, you are on
your own" if you do not very aggressively yourself address
those problems of congestion.
Mr Darling: I think one of the
prime concerns of the freight industry during the rail review
was that they would get guaranteed access and guaranteed over
a sufficiently long period to be able to sell their services to
the market. As a result of the Rail Review, we have done that.
We have changed from the existing system which almost assumed
that freight trains would be used on every line in the country
even though, for example, there is no way that there is going
to be regular movements of coal trucks between Inverness and Kyle
of Lochalsh, so why pretend that there are going to be. If you
take the main network, what we have done is reach agreement with
them as to those areas they need to have paths on, those freight
routes, if you like, up and down the west coast. The West Coast
mainline upgrade has increased the amount of the number of paths
available for freight, so we are helping there.
Q21 Miss McIntosh: Could I look at paths
on the East Coast mainline with which you and I are most familiar.
The last two weeks have seen an unfortunate derailment, in which
happily no one was hurt, involving a freight vehicle; it also
saw a freight train break down. On both days, two Fridays in succession,
there were severe delays. Are you still looking at possibly developing,
if you like, a third route to Scotland in parallel with the East
Coast route? Is that still in your Department's thinking?
Mr Darling: Basically, there are
two ways into Scotland by rail, from the east and the west. I
do not think it would be a practical proposition to attempt a
third crossing in the middle or anything like that.
Q22 Mr Donohoe: There are mountains there.
Mr Darling: As Mr Donohoe is pointing
out, there are mountains and, as I think you know, Miss McIntosh,
or at least your ancestors knew, one of the great things about
Scotland is that we are well protected but sometimes that can
work against us.
Q23 Chairman: It does not seem to stop
you coming south, I notice!
Mr Darling: We do like to come
down and make sure that everything is all right down here as well.
Q24 Miss McIntosh: What is your information
about EWS continuing through the Channel Tunnel?
Mr Darling: I think undoubtedly
they want to continue trading. It is not for me to talk about
their business but I think that is in the public knowledge because
they have said so, they want to develop their business between
the continent and ourselves.
Q25 Mrs Ellman: This Committee recommended
setting up a single rail agency to bring track and train closer
together and you have not accepted that. How are your proposals
going to help more accountability as far as the public/passengers
are concerned?
Mr Darling: What I wanted to do
was to streamline the structure that presently runs the railways
and I wanted to get rid of those organisations where I did not
think there was anything added to it or where I thought it duplicated
things. Do not misunderstand me, the SRA and Richard Bowker in
particular did sterling work in sorting out some of the problems
they took over and I will kneel to no one in my admiration of
the work that he did. However, the view that I came to is that
I thought it would be better to have one organisation responsible
for the network operation, which would be Network Rail. I wanted
to keep the train operating companies as the main interface with
passengers because I think they can grow and develop business,
but obviously behind that someone has to take the ultimate decisions
on timetabling and day-to-day operations which Network Rail will
do and that structure is set out in the Railway White Paper. So,
you have the Government and the Department setting the strategic
direction of the railways because, after all, it is the Government
of the day that pays for this and decides whether there should
be more railway or less railway, you have Network Rail responsible
for day-to-day operations and you have the train operating companies
working alongside that, the main interface with the customers.
Alongside all that, we are rationalising the number of train operating
companies because I think there are too many and one of the many
reasons for delays in the network is because of a conflict of
interest, congestion if you like, in parts of the network which
we need to sort out. What I think we have now is a far more streamlined
organisation and I think it is one that will work. I did go to
some length to try and consult with as many people as possible.
Obviously some things we took on board and some things we did
not. One of the things we did take on board that you recommended
was in relation to safety where you recommended that should come
to the ORR which we are doing.
Q26 Mrs Ellman: The retiring chief executive
of Virgin, Chris Green, has said that he believes there will need
to be a bringing together of these two under public ownership;
do you disagree with him?
Mr Darling: He did not say that
to me and I have had many conversations with him.
Q27 Chairman: He only said it after he
retired!
Mr Darling: Well, it is amazing
what can happen when you retire. As I said right up front, I do
think that partnership in this industry could work. Partnership
between the public and private sector and the railways works all
over the world. It will only work if you get the organisation
and the relationships right. What was very wrong about the
privatisation model was that it got these relationships wrong
and you can see the result of that. I think what we have here
is a relationship that can work, it brings additional money into
the railways and, if you look at a number of franchises in this
country, in terms of the services they offer, the customer service
if you like, and their flair and imagination, it is better than
what was before. There are some franchises that are not so good
and we need to sort them out but I think there are many things
that have been improved.
Q28 Mrs Ellman: Can you confirm that
the Department for Transport will take over the functions of the
Strategic Rail Authority?
Mr Darling: It has not taken all
of them but it has taken the strategic direction on some things
like the route utilisation studies and so on. That is going to
Network Rail and some of the operational stuff will go to Network
Rail. The Department is being reorganised. Within a very short
period, within the next two to three weeks, we will be telling
our staff in the Department and the staff in the SRA of the new
arrangements. If you forgive me, I do not want to set it out here
because I think we have an obligation to tell our staff first
what it is going to look like but I can tell you that it will
look very different to what there is today because the Department's
role is going to be different to what it is today and it will
recognise the fact that it is taking on responsibility that it
has not had before but I firmly believe that, when you strip it
all away, only the Government can set the strategic direction
of the railways. Successive governments of various colours have
actually tried to get rid of that responsibility but they find
it always comes back to them, so I am making a virtue of what
we need to decide. Ministers and civil servants cannot do the
day-to-day operations, that is a matter for railway people.
Q29 Mrs Ellman: Will your announcement
be consistent with the contents of the White Paper?
Mr Darling: Yes.
Q30 Mrs Ellman: You say that the Government
must be responsible for strategy. How do you see the future of
the railways? Is it about progress or is it about managing decline?
Mr Darling: I think there was
a period, indeed up to privatisation, where there was a general
belief that railways were—"managed" is putting
it too highly—in decline. I think railways have a good future.
We would not be spending the money we are spending on the railways
if we did not. If you look at transport generally, there is no
way that we would be able to enable people to move around this
country without a good railway system, so the railways will need
to carry more people and we will need to carry on investing in
them. If we do not do that, we will get more and more pressure
on the roads and, as well as there being no transport policy at
all, you would have disastrous consequences not just on the economy
but on the environment. I see the railways carrying more people
and, if we can get all these things right, I think railways have
a good future.
Q31 Mrs Ellman: You are reducing the
number of the franchises. What is your thinking on that and where
do you see that leading?
Mr Darling: Ultimately, what I
would like to do is to align the Network Rail operating regions
with a franchise because I think that will get rid of a number
of the operational difficulties that we have at the moment. There
is one good example of where this works well. South West Trains:
basically it is only they who operate on one particular regional
network of Network Rail. There is a joint operation centre which
I opened in January of this year which, as I was saying, has led
to significant improvements in performance because people are
working together. That is a good example and it works well there
because really the only other people who get onto those lines
are some freight trains, there are no other train operating companies
operating there. If you take, for example, an area where there
has been a number of difficulties in the West Midlands, one of
the franchises that we are going to take away is Central Trains.
That franchise was formed really because, when they broke it up
in the 1990s, they were left with all these lines and they called
them Central. If you actually look at where it goes to, Peterborough,
Leeds and across to North Wales, it is hardly a coherent railway
line. What we want to do is to reallocate those services amongst
other people like Silverlink, Virgin Cross Country and so on to
get a more coherent railway system. What we are trying to do is
to get something that is coherent and manageable and, if you do
that, you will get better reliability and a better service. I
have reduced from 25 down to 19 and there will, I think, be a
further reduction to about 15 or 16 franchises and I think we
need to work through some of the difficulties, challenges and
so on before we can get to that stage.
Q32 Mrs Ellman: Do you see the working
together that you have referred to as leading to some form of vertical
integration and single point of accountability?
Mr Darling: I suppose it is virtual
vertical integration. Formal vertical integration means that you
have a company working and that is the area. The difficulty with
that is that I mentioned South West Trains and that is a good
example of a fairly discrete service. If you take Virgin Cross
Country, I would not want a situation where the train leaving
Penzance had to negotiate across six frontiers as it went through
other people's areas. That is why we ruled out what people commonly
understand as vertical integration, the formalised vertical
integration. What I am very clear about is, if you want the railway
to work, then, in one control room for each area you need to have
people sitting down so that, if there is an accident or if there
is a delay, you could take the decision to sort it out in the
same room the way they used to do in the olden days and it actually
works. There are some things from the old days that do work very
well.
Q33 Mrs Ellman: Would you rule out extending
the close working between the franchise holder and the track—
Mr Darling: No, I would not. I
think they will work closer together. Indeed, the whole structure
that we have set up requires Network Rail and the train operating
companies to work closely together, and I think they can do that.
Part of our problem in the past was they did not always have aligned
interests. It is very difficult to get anyone to work together
if one is pointing one way and one is pointing the other. I do
see them working closely together, and I think what we have got
here will work, which is why I puzzle at Chris Green because I
do remember him telling me he thought it was a jolly good idea.
Retirement does odd things to you, I suppose.
Q34 Mrs Ellman: Did you discuss this
policy with passenger representatives?
Mr Darling: We discussed it with
the Rail Passengers' Council, which of course has made its own—and
you may want to come on to this—
Q35 Chairman: We may want to, so we will
not need to spend a lot of time on that now.
Mr Darling: In which case, yes,
we did, but I will come on to what they suggested separately.
Q36 Mr Stringer: Have you received a
positive response from local authorities to the consultation on
guidance for bus quality contracts?
Mr Darling: Mixed, I should think,
is probably the best way to describe it. Some people welcome it,
and those people who come from the school of thought that they
would like to see going back to regulation or near to regulation
or to make quality contracts the thing you would do if things
do not work out—in other words not part of an overall transport
strategy—they would have liked us to have gone further.
Generally speaking, especially when the White Paper was published,
there was a welcome. As you know, there is a whole spectrum of
views on this.
Q37 Mr Stringer: Have the local authorities
made any particular comment that Section 124 of the 2000 Act is
to remain the part of the Act that, as I understand it, you have
to pass the threshold, which is the only practical alternative—
Mr Darling: I have not had across
my desk any letters written to me saying that, but I think undoubtedly—because
I know from talking to people—that some local authorities
may have made those representations. Whether they are so specific
as to cover that particular section I do not know and I would
need to check for you. What I say to you, Mr Stringer, is I am
well aware of the fact that there are councils and individuals
who would, in simple terms, like to make it much easier to implement
quality contracts, and there are others that take a different
view. I have said time and time again, it depends where you are
in the country. Bus services are generally working well and people
will work with that. Where there has been problems they are saying
"No, we would like to change it".
Q38 Mr Stringer: How is the introduction
of quality contracts going to be tied into local transport funds?
Mr Darling: In the White Paper,
what we said was that where there was an overall coherent plan
for reducing congestion that might involve heavy rail, light rail,
bus, maybe congestion charging—a whole range of measures—we
recognise that it would be very difficult to do so if one element
of it, like buses, for example, were uncontrolled and they could
not be made part of a coherent plan. Under those circumstances
what we have said is we would then make it easier to allow a PTE
to have a greater control over bus services. So, for example,
we could feed things into a railhead or something like that. What
we are not agreeing to is a situation where, just because agreements
have not been reached or the present system is not working, the
default will be a quality contract; it is quite specifically an
offer to PTEs and to larger groups of councils to say "If
you come up with a coherent transport solution we are prepared
to make it easier for you to deal with the problems that you might
otherwise have on buses." That is the thinking behind it.
Of course, the money in the transport investment fund which we
have been building up gradually, we have put aside to help finance
a larger scheme of that nature.
Q39 Mr Stringer: Does that not still
leave the power in the hands of the private bus companies because
you still have to get over their practicality thresholds? They
can, for a very short period of time, flood the area with buses,
which might be what the authority was saying they want, and then
withdraw them, so that you cannot enforce a quality contract.
Is that not a problem?
Mr Darling: I do not think it
will be a problem because the powers we envisage giving to local
authorities are designed to make sure that that problem does not
arise. I make no bones about what I am trying to get at here.
If you go back to the question of congestion, as you know, it
tends to be conurbation based. What I am trying to do is to get
an overall, coherent approach to that and as part of a package
I am prepared to give councils the powers they need, provided
they are prepared to look at some—sometimes difficult—decisions
to go with it.
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