TUESDAY 1 MAY 2001

SIR ALASTAIR MORTON AND MR MIKE GRANT

  40. I think that is one way it could be described.
  (Sir Alastair Morton) We have pointed out to them, something that they needed no telling, that they risk disappointment and people staying away. We pointed out that we were pleased they halved their fares to get people back on to the line. We have expressed opinions, because we are not responsible for their profits, or the behaviour of various companies.

  41. When will the name of the successful bidder for these franchises be announced?
  (Sir Alastair Morton) What happened after the announcement on April 1st of the new arrangements of Railtrack about the projects to enhance, in this case, on the East Coast Main Line, was that we put out certain questions to the two contenders saying, "Things have somewhat changed or may be thought to have changed, you have to have a chance here to express any affect that may have on your bid". We asked for those to come back on April 17th, they did. We now have their answers, we are evaluating them and we should be making our recommendations to ministers within a very short period from now and then they will have them in front of them for answer.

  42. We were advised that the announcement would be made last summer?
  (Sir Alastair Morton) So were we.

  43. What was the delay?
  (Sir Alastair Morton) Ask the Minister. We are saying that we put our recommendation of a preferred bidder to the Minister on 8th December last year and any answers about what has happened since then until April 1st have to come from him.

  44. What led to the dispute between the people involved with the East Coast Main Line?
  (Sir Alastair Morton) The dispute!

  45. There was some statement made in February.
  (Sir Alastair Morton) Railtrack suddenly surprised us with a statement that the costs of the East Coast Main Line had rocketed. We reacted to this by saying to ministers, "Do not send us any letter accepting our recommendation, or otherwise, until we have got to the bottom of this". We got to the bottom of it by sitting down with Railtrack and going through it carefully and we were able to explain it to ourselves and to ministers. We said to the ministers, "That is okay now, we do not think it changes the situation, we are waiting for your reply as before".

  46. The statement by Railtrack, that the costs have increased by nearly one hundred per cent in some instances was misleading, was it?
  (Sir Alastair Morton) It depended entirely on what you included in making that statement, including things like project contingencies. On a like with like basis, as we said a little later, it increased by 20 per cent.

  47. You just responded to Mr Olner saying, "We are short of capacity, but the reason why we are short of capacity is because of the delay in nominating the successful bidder. It does not just apply to passenger rail it applies to freight and all of the other services on the East Coast. I consider that further delays will not help the situation in winning back passengers on to rail".
  (Sir Alastair Morton) I agree with you.

  48. You say we will be hearing something within the next 14 days.
  (Sir Alastair Morton) We will submit our recommendations within the next pretty few days, I am not naming a precise number. It will be up to them after that when we hear from them.

  49. That does not help us, the next few days could be 30 days, it could be 60 days, it could be 14 days.
  (Sir Alastair Morton) It would be a great deal less than a month. The question is will it be more than a week, will it be more than a fortnight.

  50. Can we settle on 21 then? Can we have a target date?
  (Sir Alastair Morton) Inside 21, I am happy, yes. Let us be clear, that is our recommendation to ministers, that is not their answer to us. Our recommendation to ministers goes in confidence to ministers, it is they that release it to the public by putting it back to us.
  (Mr Grant) Can I add one thing, the project has been progressing. The identification of a preferred bidder is absolutely necessary, we have not slowed down the development of the project or the upgrade. That has been progressive.

  51. Is that not part of the strategy?
  (Mr Grant) We do need a preferred bidder, however so far the project has progressed, it has not stopped because of the lack of—

  52. Mr Grant, this is part of our difficulty, if people do not know what the strategy is how can you then decide who is going to be the preferred bidder?
  (Mr Grant) The criteria for the preferred bidder is well documented on the many things that we—

  53. You misunderstand me, I am not saying if you publish a series of criteria which may bear strong resemblance to criteria published before you can get people to respond, I am asking you something different, the Strategic Rail Authority is supposed to be setting the overall pattern for the development. That is the first thing it says in the piece of paper that you yourself submitted to the Committee, that your function is not only to promote but also to encourage. All I am saying to you is, how can you set your franchises if so far there is no published strategy for where you want the railway to be?
  (Sir Alastair Morton) If you are saying that so far there is no statement of which yards of railway at which point on the East Coast Main Line I would disagree with you. What we need is a statement that we are seeking. This is in the public domain and has been made a number of times, including in the Ten Year Plan, that we are anxious to increase the carrying capacity for both passenger and freight of the East Coast Main Line and that we plan to do so, or we plan to support the plans to do so, shall we say. Our strategy is to support plans that remove bottlenecks, that improve speeds, and all this has been published. In other words, the strategy for the East Coast Main Line at the strategic level is pretty clear. What is not yet clear is exactly what investment project, into which section of rail, as it were, and which junctions will go ahead and in what order until we have a resolution of who is going to be the main users of the line, there are several, namely the winner of this franchise and they are able to sit down with Railtrack and with us. Then, if I may say it again, Railtrack has just folded out of the scene as the prime mover in that process. Until October last year, or November, there was not any doubt in Railtrack's mind that they would be the developer of the East Coast Main Line upgrade in its four phases, of which phase one is in Leeds. They then suddenly said, "We cannot handle this".

  54. Because it came as a complete shock to them when they looked at the figures and they looked at the assessment, they came back to you and said: "We have all of this wrong, we are terribly sorry, Guv, we are going to take our bat and ball home". Is that what you are talking about?
  (Sir Alastair Morton) They said that to the Regulator.

  55. You do not see any illogicality in the lack of overall strategy and the kind of discussions you are having with individuals about particular bits of the system?
  (Sir Alastair Morton) There is a perfectly good connection but there are two contenders and there are two more versions of the further stages of the planned upgrade. We are discussing them with a view to assessing which offers more value for money, that is our primary responsibility, to get value for money for the taxpayer's pound.

  56. Can I remind the Committee of my interest in Railtrack, First Group and Eurotunnel. Sir Alastair, welcome to the Committee, what is the status of the Strategic Agenda published by the SRA on 1st March this year?
  (Sir Alastair Morton) It is an agenda, it is a list of things requiring further action. The product of further action will be a plan to be published in November. The process of working to that agenda will, no doubt, produce actions by others as well. It is a work document.

  57. I gather that in there one of the priorities is to provide a framework for delivery of the rail content of the Ten Year Plan and it also says that rail Regulator will have a duty to facilitate the SRA's strategy. Would I be going too far to say that the Regulator is uncertain?
  (Sir Alastair Morton) I think in the Regulator's opinion you would be going a lot too far. He recites a list, I cannot quite remember, he either has 13 or 17 statutory duties laid on him, of which he regards that as one, no doubt an important one, and we regard it as important. I agree with him, it is not the only one.

  58. I also see that one of your priorities is to remove bottlenecks to increase capacity. I also have an interest in the East Coast Main Line, is it correct that one of the main blocks on capacity between Edinburgh and London is actually the part between Newcastle and Edinburgh, is that correct? That is one of the main bottlenecks, particularly to freight, although to passenger traffic as well.
  (Sir Alastair Morton) It is one of them, certainly.
  (Mr Grant) The East Coast Main Line has a number of projects, Welwyn is another one. There are a number of bottlenecks up there which could be tackled at different phases through the East Coast Main Line operator.

  59. Could I briefly ask about your policy on new stations, and who the recipients of the new stations will be. Could you just confirm to us that, perhaps, existing stations might be benefiting us more before new stations would be considered?
  (Sir Alastair Morton) Obviously the development towards the strategic plan is going to include a statement of our strategy for station investment. Once again one has been caught amidships in the last six months by the fact that Railtrack has effectively withdrawn from that activity-one of the things it had to do under the terms of privatisation-where they previously said, "Wonderful, this is a commercial scheme, we can do it", they are now saying, "We will not touch it unless we get a hand-out". Railtrack's posture has changed a great deal, which has to affect everything we do. What we propose to do is come out with a statement of who we look to to do what in general terms about which categories of station. We have not come up with that yet. That is a new train of thought for us post-Railtrack. On the second point, existing stations before new stations, I would like to put to you a comment, if I may, because I think it illuminates the subject. There are a number of commuter town-centre stations who no longer wish to have more vehicles coming in to join trains at their station at rush hour in the morning and out in rush hour in the evening because these people tend not to shop or contribute to the commercial life of the commuter town. Watford is a rather good example, it is positioned to be the best hub for railways and point of contact with roads in South-East England. They tell us they do not want to have more rail passengers coming in to park at their station. The logical thing to do is a parkway station outside Watford. As of today I would not be able to tell you where that might be in terms of siting it. It seems to me the logic will be indistinguishable in places like Woking and Swanley in Kent. The logical thing is going to be for parkway stations outside them, adjoining major highways in order to get commuters into the main conurbations, Birmingham, London, Leeds, whichever, without disturbing local commuter towns.