Examination of Witnesses (Question Numbers
1-19)
DEPARTMENT OF
TRANSPORT, NETWORK
RAIL, OFFICE
OF RAIL
REGULATION AND
ASSOCIATION OF
TRAIN OPERATING
COMPANIES
4 JUNE 2008
Q1 Chairman: Good afternoon. Welcome
to the Committee of Public Accounts where today we are considering
the Comptroller and Auditor General's Report into Reducing
Passenger Rail Delays by Better Management of Incidents. We
welcome Dr Mike Mitchell who is the Director General of Rail and
National Networks in the Department for Transport; Iain Coucher
who is the Chief Executive of Network Rail; Bill Emery who is
Chief Executive of the Office of Rail Regulation and David Franks
who is the Managing Director for National Express Rail and a Board
Member of the Association of Train Operating Companies. Mr Mitchell,
before I ask any questions of Mr Coucher, it strikes me that Network
Rail is a bit of an enigma; there is a bit of a fiction that it
is a private company but in fact 50% of its funding comes from
the public sector, from us the tax payer. That is £3.4 billion
a year. Mr Coucher is not an accounting officer so how do we actually
exercise control over him as a Committee of Public Accounts?
Dr Mitchell: Network Rail, as
you know, is an independent private sector company and the Government
cannot intervene in its operation and decision making.
Q2 Chairman: An independent private
sector company with half its funding coming from the tax payer,
to the tune of £3.4 billion.
Dr Mitchell: That is correct,
yes.
Q3 Chairman: You say that with a
straight face, do you?
Dr Mitchell: Network Rail is a
private company but you are correct in saying that most of its
funding comes from the Government.
Q4 Chairman: So how are we supposed
to exercise control over it as a Committee of Public Accounts
if Mr Coucher is not an accounting officer, although he is responsible
for £3.4 billion of public money?
Dr Mitchell: The Secretary of
State is responsible for the £3.4 billion of public money.
Our principal contractor is of course Network Rail and we are
able to influence Network Rail in that way, but only as a customer.
Q5 Chairman: You still have not answered
my question, but we will have to leave it there. Mr Coucher, you
are responsible for this body. Can I refer you to figures four
and five on page 12? I want to deal first with the rail delays
and what progress has been made. I want to ask you why it has
taken so long since the Hatfield disaster to reduce the number
of incidents and the length of delays to anywhere near pre-Hatfield
levels. If you look at figures four and five you can see it has
taken a long time to get back to square one, has it not?
Mr Coucher: We have been set a
target by the regulator as to what is achievable given the age
of the assets, the funding and the level of use on the network.
Q6 Chairman: I might ask Mr Emery
about the targets in a moment; I am not convinced that this target
is particularly challenging. Whether there is a target or not,
you are responsible for this body. How much are you paid to run
it, by the way?
Mr Coucher: I am paid, as a matter
of record, £585,000.
Q7 Chairman: Plus bonuses?
Mr Coucher: Yes.
Q8 Chairman: So what I want to know
on behalf of the long-suffering public is why it has taken so
long for you to reduce delays and the number of delays to pre-Hatfield
levels.
Mr Coucher: That is because we
are not measuring on a like for like basis. We are now running
considerably more trains and it means that every single incident
we get on the railway does impact a lot more trains. Today we
run about 22,000 trains a day and in Railtrack's time it was 18,000
trains a day. It is a much more congested railway and we have
consistently beaten all targets set for us by the regulator who
is there to determine what is achievable given the age of the
assets and the activity on the railways.
Q9 Chairman: If you are doing so
well why has the rate of improvement slowed in the last year?
If what you said was right and gradually the usage had gone up,
you would surely expect the improvement to continue, but in fact
the improvements have slowed in the last year; the lengths of
delays has dropped hardly at all, there has only been a marginal
drop in length of delays. You are responsible for this body, what
are you doing about it?
Mr Coucher: We have just completed
the following year 2007-08 and we have taken another million minutes
off that target so the out-turn was actually 9.8 million minutes
and we have continued that downward trend. There were specific
reasons in 2006-07, in particular one day in which we incurred
some 250,000 minutes.
Q10 Chairman: Why was that?
Mr Coucher: Because of extreme
weather in which we continued to run trains because we believed
that was the right thing to do for passengers, even though it
would cause Network Rail to miss its targets. We ran trains in
this country whilst Holland, Germany and France cancelled the
vast majority of theirs. We stand by that decision.
Q11 Chairman: So that is why the
improvements have slowed down in the last year, is it?
Mr Coucher: In the last year we
have taken a million minutes off the targets, so the final out-turn
which is the next block on the curve which you do not have there
is actually 9.8 million minutes and this year we are targeting
a further 900,000 minutes reduction to 8.9 million.
Q12 Chairman: Mr Emery, Mr Coucher
has mentioned this target and your target for delays in 2006/2007
was 10.6 million minutes which was actually less demanding than
Network Rail's own target. You are supposed to be the regulator;
why have you got a target which is less demanding than the person
you are regulating?
Dr Emery: In the determination
in 2003 the then Office of the Rail Regulator set the targets.
We expect Network Rail to meet those targets.
Q13 Chairman: I am sorry but you
have not answered the question I put to you. You are supposed
to be the regulator; you are not supposed to be a pushover. Why
are your performance targets not more demanding? Why are they
not challenging enough?
Dr Emery: In essence I think there
is a bit of hindsight here. The judgment was made by the regulator
in 2003; the trajectory on delayed minutes was set for a five
year period.
Q14 Chairman: The obvious question
then is why do you not review your targets more regularly then?
Dr Emery: We review our targets
and as we will be making our announcement for the period 2009
to 2014 tomorrow—our draft determination is tomorrow—we
will be setting Network Rail challenging targets for the next
period.
Q15 Chairman: Which will be more
challenging than what we have seen hitherto, will they?
Dr Emery: Certainly. The Government,
in its requirements for the railways from 2009 to 2014, has set
out expectations for increased punctuality, reductions in delays;
those are part and parcel of the package of measures that we will
be requiring from Network Rail as part of our draft determination
which we will announce tomorrow.
Q16 Chairman: Dr Mitchell, let us
look at the train operating companies. If we look at the targets
you set there at paragraphs 1.4 and 1.13 they caused 38% of delayed
minutes last year. Are their targets challenging enough?
Dr Mitchell: I believe they are,
yes.
Q17 Chairman: Why?
Dr Mitchell: The performance targets
have been tightened over the years and the train companies have,
in most cases, achieved them. However, in one particular case
they did not achieve them and, as you know from the Secretary
of State's announcement some three months ago, we took action
against that company.
Q18 Chairman: Train faults are the
main cause of delays, are they not?
Dr Mitchell: They are, yes.
Q19 Chairman: Are train operating
companies not operating trains? So if it is their fault why are
you setting a target which apparently is not very challenging?
Dr Mitchell: The targets for overall
performance are, I believe, challenging. You are correct in saying
that train faults are the most significant cause of delay. Having
said that, a large number of new trains have entered service over
the last few years and, as a result of that, the number of train
faults is declining.
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