TUESDAY 1 MAY 2001

SIR ALASTAIR MORTON AND MR MIKE GRANT

  100. We do not want to get too much into that.
  (Sir Alastair Morton) If I may answer the first one. I have already made it plain, and I have said it again today, that we consider, we recommend, we believe, we insist if you like in so far as we can, that the allocation of funds to the SRA under the Ten Year Plan must be rethought and reshaped to fit the new circumstances, because they do not fit.

  Chairman: That is the point Mr Stevenson wants to come back in on.

  101. In A Strategic Agenda, which you describe as a work document, you are pretty critical of Railtrack. "Many felt Railtrack could assume leadership of the industry; it did not." That is quite unequivocal. You are also critical of the fragmentation of the industry under privatisation. My question to you is the new situation that we are facing is where Railtrack will be responsible for what is termed its core business, that is looking after the current network in terms of maintenance and so on, but new developments will be the subject of different arrangements with different players, your authority playing a leading part in it.
  (Sir Alastair Morton) Correct.

  102. Is that not further fragmentation?
  (Sir Alastair Morton) Give me the alternative other than nationalisation?

  Mr Stevenson: I have not got time to do that but if you can spare me ten minutes outside I will try.

  Chairman: You can read what Mr Stevenson said this morning in Westminster Hall which is very instructive.

  103. My question is, is that not more fragmentation?
  (Sir Alastair Morton) I do not believe it is. I am a considerable believer, total believer, in the possibility of blending public and private finance. I was, if you recall, the previous Chancellor's first chairman setting up his Private Finance Panel for him. I believe we now have, whether we wanted it or not, and to an extent that we may not have wished, a requirement as well as opportunity that we work out blended financing structures to invest heavily in rail infrastructure and the rail system in general. I believe that the capital markets of the world contain far more money that could be made available to it if it was a credible series of propositions than we will ever find in the back pocket of the Treasury. Therefore I am wholeheartedly in favour of going the private capital route. We have to pick that up and go with it. I put that forward on 30 June 1999 for the first time, I repeated it at intervals in the latter part of 1999, I put it in formal advice to the Government, as I have made known, in February 2000 and I kept saying it through 2000. Railtrack, under Gerald Corbett, took a different view, which I have said before in public, that they should be given more money through the Regulator's review and they should be left to do it all because they were the right people to do it all. So there was a disagreement between Mr Corbett and me, not a personality clash or anything of these things, simply that he wanted it left to Railtrack and he did not want anybody else getting on to his network. That opposition to what I was saying collapsed at Hatfield, if I may say so. It took until this spring for the to-ing and fro-ing that followed between Mr Marshall and the Regulator over the funds that were or were not or should be available to Railtrack to work its way to a point where decisions could be taken and sums of money could be defined and new dispositions emerge, which included a number of conditions in return for easing Railtrack's financial burden on 2 April. Those conditions did, in fact, take up my recommendation and apply it on a scale and with a suddenness that I had not foreseen, I have to say.

  104. I am still seeking an answer to my question. If you have Railtrack as a private monopoly player and in future it is going to be responsible for its core business and someone else or some other organisations, including your own, will be responsible for the development of the railway network, I put it to you that by definition it is further fragmentation.
  (Sir Alastair Morton) It is involving further parties.

  105. Thank you. I put this to you with the greatest respect, and I say that because I do not want it to be misinterpreted, that I am getting the impression that this is not a strategy at all, it is reacting to situations.
  (Sir Alastair Morton) I have some sympathy with that having been in this Chair for two years. The point I have made on several occasions, including today, is that we have been held up in defining what can be invested where with what purpose in this network by repeated changes in circumstances. One of the problems that now exists, and I have just said this, is that the funding to us under the Ten Year Plan is not necessarily inadequate but is in the wrong shape and, actually, I would say is inadequate because of the changes we also spoke of, and therefore has to be rethought and I am confident that the Government proposes to do that after the election.

  106. Before Mrs Dunwoody drops on me, can I come to my last question which is about strategy and your document, A Strategic Agenda, which you describe as a work document. I also understand that you are going to listen to the players in the industry. You are going to listen to what they say and hopefully come out with your strategy some time in the autumn. That seems to be it. If you are going to listen to what the industry is going to say, and given the dramatic changes that have taken place in the last 12 months that we have discussed, how in heaven's name did you come to the conclusion that when all this new rail network is built it should be handed over free, gratis to Railtrack?
  (Sir Alastair Morton) I do not think I ever said that.

  107. It is in here.
  (Sir Alastair Morton) Where? Could you read it to me?

  Chairman: Would you like to give us the exact page?

  Mr Stevenson: Do you want to come back to that so I do not hold people up?

  Chairman: If you would like to look for that.

  Mr Stevenson: Yes, I would.

  108. I have one or two quick questions. Train protection: can you tell us anything useful about that?
  (Sir Alastair Morton) I am not sure there is anything to add to what is already in the public domain which is that TPWS is going ahead and that European train control is required to be added into the network, presumably at time of upgrades but with a final date set by Messrs Uff and Cullen.

  109. And you think those targets will be achieved?
  (Sir Alastair Morton) I did not say that. It is going ahead, I said.

  110. Do you think that the targets will be achieved?
  (Sir Alastair Morton) I think it will be a considerable achievement and a considerable extra expense compared with doing it up during upgrades, if those targets are achieved, because not all of the lines in question are due for upgrades by that date so it will have to be special projects. I also think that there is a considerable problem of resource, human resource, skilled resource, for the programme in question and the development of the train control system. Always remember, no matter what passengers' association has said what, there is not functioning in Europe today a system such as we will be installing on our faster lines. There are systems under development, there are systems in action, like our ATP, here and there, but there is not covering any network anywhere in Europe a complete system that is in normal operation. It is still under development. The human resource for it is very scant and the cost of doing it as a special project as opposed to during upgrades is quite a lot extra and, therefore, like the other thing, I am a bit sceptical.
  (Mr Grant) If I can just add something to that. There is an industry team being put together to look at the plan and they expect a report by March 2002 whether it is achievable or not.

  111. Channel Tunnel Rail Link: is that now all going to be running smoothly?
  (Sir Alastair Morton) It has not yet passed over to us. I am sorry to seem to duck the question. It is due to pass to us some time later this year, I think, is it not?
  (Mr Grant) Yes.
  (Sir Alastair Morton) There is a team working in the Department which will pass over to us with it, so our relationship in the future will be direct with London Continental and the parties to the project. I am told, contrary to press reports, that phase one is on time and on budget, but I am afraid I am not in a position to give you a certificate to that effect.

  112. You talked at the beginning about how pleased you were to have the West Midlands Strategy in place. When are you going to have a strategy in place for Greater Manchester?
  (Sir Alastair Morton) There is a study, as you know, that has been going on, like the West Midlands one, for about two years which I launched in Manchester and it is due to report in June. Depending on what it says the parties to it, which would certainly include Railtrack as network operator and us as principal financial motivator, shall we say, are likely to work together on it, but until I have seen it and know that we are going to agree on it it is difficult for me to say 1 July or anything like that.

  113. The difficulty is that in the modernisation of the West Coast Main Line some of the decisions on Greater Manchester have already been pre-empted.
  (Sir Alastair Morton) I am afraid that is correct in many parts of the country.

  114. Is it not essential that you get your strategy in place as quickly as possible?
  (Sir Alastair Morton) No. Whatever we do between January 1 2000 and January 1 2002 on the subject of Greater Manchester will have to accept the West Coast Main Line upgrade as a given. There is nothing anyone can say to change the fact that the West Coast Main Line upgrade is half way to two-thirds of the way through. In fact, as I am sure you are very interested in the Commonwealth Games, you need to be praying that it is damn nearly finished.

  115. I was going to ask you at the end of this session whether you are going to give a guarantee that the rail lines will be functioning well for the Commonwealth Games?
  (Sir Alastair Morton) There are two problems in that. One is the work programme to actually instal the upgrade in the Manchester area and the second is to make sure that what is newly commissioned works well, which is not the normal practice in British Rail history or in recent history on the network. No, I cannot give you that guarantee. It would not be appropriate for it to come from me anyway.

  116. It would be a pretty appalling advert for the rail system in this country if during a prestige event like that the railway was not functioning efficiently, would it not?
  (Sir Alastair Morton) I suspect that is probably correct but I cannot call to mind the date of go ahead and what was said then, so I will not comment, I am afraid.
  (Mr Grant) I visited Manchester South last week and it looks pretty tight. There is some float but it does look tight.

  Chairman: What does that mean?

  117. Does it mean that it will not work?
  (Mr Grant) From what I understood it means there is a gap of about two months between the end of work and the start of the Commonwealth Games. Obviously as things progress, at some point if the project slips backwards it slips into the time of the Commonwealth Games.

  118. What about the TransPennine proposals that you are looking at? Are those dependent on this strategy for Manchester?
  (Sir Alastair Morton) In part, in that if you are going to bring express trains through Manchester on their way from Leeds to Manchester Airport you had better not knock over anything on the way, as it were. The junctions and grade separations and whatever else, extra platforms needed by TransPennine Express, and also by the future Northern franchise, and what is needed for light rail development in Manchester, of which there is going to be quite a bit, and freight, these must all mesh together. If you like, the TransPennine Express, which is out to franchise renewal process at the moment, is the enabler of the process, or one of the two enablers because I think light rail could be described as another enabler that is having its own development now. Manchester is going to get a better rail borne public transport system out of the combined improvement of TransPennine Express, which are the high speed limited stop, or non-stop, InterCity trains east-west across the Pennines, the Northern franchise, which is many slower or more frequently stopping trains over Lancashire, North Cheshire and Yorkshire, light rail and the freight development that is very necessary across the Pennines too.

  119. But my constituents who go in on a daily basis from somewhere like Heaton Chapel or from Reddish North are not going to get a better service, are they, because their trains are going to get second or even third place to these InterCity trains?
  (Sir Alastair Morton) This is South Manchester, is it not?