Examination of Witnesses (Questions 353-359)
MR BILL
EMERY, MR
MICHAEL BESWICK,
MR BRIAN
KOGAN, MR
MARTIN STANLEY,
MR JOHN
BANFIELD
19 JULY 2006
Q352 Chairman: Good afternoon to you,
I am sorry to have kept you waiting. May I ask you first of all
to identify yourselves for the record, starting with the only
lady?
AND MS
CATHERINE ABBOTT
Ms Abbott: I am Catherine Abbott,
I work at the Competition Commission.
Q353 Chairman: Gosh, you are a brave
lady!
Mr Banfield: John Banfield; I
also work for the Competition Commission.
Mr Stanley: Martin Stanley, the
Chief Executive of the Competition Commission.
Mr Emery: Bill Emery, the Chief
Executive of the Office of Rail Regulation.
Mr Beswick: Michael Beswick from
the Office of Rail Regulation.
Mr Kogan: Brian Kogan from the
Office of Rail Regulation.
Q354 Chairman: Thank you. I am sure
you know the rules. Speak up and if you agree with one another
please do not say so at inordinate length, and if you disagree
please seek to catch the Chairman's eye. Can we begin with the
Office of Rail Regulation? You are working to become more involved
in the franchising process in order to ensure that bidders are
well informed about the network capacity. What do you want to
add to that process above and beyond what Network Rail can bring
to the table?
Mr Emery: As you are aware, our
role in the franchising process is pretty minor. We do have a
significant role in agreeing the access requirements to the rails
and the stations and depots, and in a sense one of the issues
around franchises is at what stage in the franchising process
do the access arrangements get confirmed so that the franchise
operators and potential bidders are aware of the position on access.
So one of the areas where we do see that there is some scope for
improvement is in the way we work with the Department on better
information to franchise bidders. I think there are other areas
where in our experience of talking to franchisees—because
part of our role is to monitor the performance of the franchisees
and network Rail—we meet each franchise company every six
months to discuss issues on performance and issues come out there.
We do see some scope—and I picked up some of the evidence
earlier—that slightly more flexibility on the specification
would help the franchise companies respond to markets as well,
and we think that that could be facilitated. We are ourselves
going to be consulting in a few weeks' time on improving the incentives
for the whole railway industry as part of the 2008 periodic review,
and one of those is to try and align the incentives between the
franchise operators, and Network Rail, and if we get that right
we do think that the industry should be able to deliver more for
less and do it quicker than under the current arrangements.
Q355 Chairman: So are you suggesting
that not enough is being done to encourage new entrants into the
franchising market?
Mr Emery: I am not certain we
are saying that there is not enough being encouraged. We have
a longstanding policy on open access, and you have had discussions
earlier from Hull Trains and Grand Central. At the present time
the costs of franchising are such that the number of players are
reducing. We have some worrying signs from some of the existing
owners who find the whole process is becoming more difficult and
they wonder whether they really want to bid. So in a sense there
are issues which need to be looked at by the Department in how
they are running the actual process. But my colleague, Michael
Beswick, who has been around this industry for a long period of
time and much closer to that may well be able to help.
Q356 Chairman: Come on, Mr Beswick!
Mr Beswick: I think the other
point I would make is that we think that the franchisees can bring
quite a lot in terms of innovation and customer and local focus
to the railway.
Q357 Chairman: Would you like to
give us a short rundown of one or two really innovative methods?
Mr Beswick: I think, for instance,
Laing Rail taking the Chiltern franchise by the scruff of the
neck and coming up with a scheme to improve it in terms of extra
services and in terms of extra infrastructure and project managing
that through in partnership with Network Rail is a classic piece
of innovation. We have seen many more innovative ideas—
Q358 Chairman: Just a minute, I am
not quite clear. Are you saying that they took hold of a failing
company and turned it into an efficient company and that is innovative?
No, you are not saying that?
Mr Beswick: I think what they
did was built on what was quite a successful piece of railway
already and moved it a long way ahead and I think that is a good
example—
Q359 Chairman: So it is management
and it is the ability for a company to do what it was paid to
do.
Mr Beswick: I think the key thing
there was that they had quite a lot of flexibility to do that
and they did not have a very tight specification.
Chairman: I am trying to sort out what
is innovative about running a good railway. I am missing something,
obviously. Mr Scott.
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