Delivering a Sustainable Railway: A 30-year Strategy for the Railways? (HC 219-iv) Transport Committee 5 Mar 2008

Q498 Mr. Eric Martlew (Carlisle): Obviously, there are various criticisms, at various levels, of management. How do you think the board of Network Rail behaved?

Mr Bolt: One of the reasons we concluded that a penalty was an appropriate part of the package was to send a very clear signal to Network Rail's board as well as to the senior management that these were issues which go to the reputation and the capability of Network Rail and that they were very much issues for the board to take seriously and to ensure they were addressed.

Q499 Mr. Eric Martlew (Carlisle): Do you believe this particular board has the capacity to do this, and what is your view of the Chairman's action over the Christmas time?

Mr Bolt: Clearly, we do not have a role in appointing the board, nor should we. I would expect the non-executive directors, playing the role which is proper for non-executive directors, to be asking questions about the governance of Network Rail and issues of that sort.

Q500 Mr. Eric Martlew (Carlisle): I am not quite clear. Are you of the belief that this present board can actually make the improvements which are necessary?

Mr Bolt: We believe that if Network Rail takes the issues we have identified in this report seriously, it is capable of making the improvements needed to improve its practice on planning and management of projects, yes.

Mr. Eric Martlew (Carlisle): Thank you for that. Could I now go on to the West Coast Main Line programme?

Q501 Chairman: I am going to hold you there for a minute and I will come back to you on that, because we are all going to be after the West Coast Main Line. I think really the point Mr Martlew is concerned about is the governance arrangements generally. Are they going to actually function well for an organisation of this size and importance?

Mr Bolt: Network Rail clearly has an unusual governance structure in the sense that it does not have shareholders, it has members, but it operates within the framework both of the combined code and within licence conditions, for example, setting the criteria which the management incentive plan should meet and requiring at least two non-executive members to have railway experience. We have said as part of our general review of Network Rail's licence conditions that we will be consulting more broadly during the course of this year on whether those licence requirements are adequate or whether we should look at reviewing those requirements. To emphasise the point, it is not for us, nor should it be, to take decisions on the structure -

Q502 Chairman: Mr Bolt, we are not asking you to recruit, but we are saying that if part of your responsibility is to look at the way this thing works, then inevitably that must include the composition of the board and the responses of the board and the non-executive members, and a lot of people believe that this organisation is run by a group which is totally toothless and therefore cannot instigate the sorts of disciplines you ask for in your report.

Mr Bolt: If there are issues about the governance of Network Rail which are relevant to our licence conditions, then of course we will look at those. The key issue for us, as Network Rail's regulator, is to make sure that the company (that is the board and the senior management, not distinguishing between them) address the weaknesses which were identified in this report and put them right.

+++

Q536 Mr. Eric Martlew (Carlisle): On the modernisation of the West Coast Main Line and looking towards the future, the "de-scoping" (which I think is the term you used) means they are doing less work, does it not? Now, we have a timetable - and we have all suffered trying to get it right, or not getting it right - which is due to come in at the end of this year. If you keep on de-scoping, that means you are going to have more massive disruption of the West Coast Main Line between now and December, or somebody has got to take a decision that the programme will not be completed by December of this year and give us another date. What is your view on whether this can be completed by then?

Mr Emery: We have asked Network Rail to come forward with a coherent plan by the end of this month. Our discussions with Network Rail and discussions with Mr Coucher indicate that he is well on the way towards coming forward with a plan which provides for additional time during already booked weekend possessions, some three or four days extra work, and they are working with the train operators and the freight operators to find a way in which they can get to December 2008 in a robust way. It is quite important. The train operators want it, Network Rail wants it, the Department wants it. There is a huge stream of passenger benefits which come out of getting the new timetable running.

Q537 Mr. Eric Martlew (Carlisle): If that happens, there is going to be more disruption this year, and if you accept that plan and it does not work will you accept some of the responsibility for it?

Mr Emery: Certainly. In a sense we are, as a regulator, looking at these things and if a plan comes to us and we broadly endorse that plan and accept that plan as the plan and have no change to the regulatory output, then of course as part and parcel of the whole railway network our reputation will suffer. But the responsibility, of course, on delivery of this rests with the infrastructure manager, Network Rail, to do the job properly.

Q538 Mr. Eric Martlew (Carlisle): Just finally, would it not be better to give some leeway on this one and postpone that timetable for perhaps six months?

Mr Emery: I think you just have to look at the implications of that. Mr Coucher tells me that if that happens, that will have a knock-on effect on a whole series of work elsewhere and it will have a knock-on effect on the loss of revenues elsewhere, and those things. So this is not a simple delay, it has an effect, and I think that is the point. There is quite a lot of commitment across the whole rail industry to get the West Coast modernisation programme delivered in December.

+++

Q610 Mr. Eric Martlew (Carlisle): Just on that point, if you look at what we had before we had the shareholders' group structure in Railtrack. You would not think that was a success, would you? Is Network Rail better than Railtrack?

Mr Foxall: In my personal opinion, I think Network Rail have achieved a great deal. There are considerable faults and there are considerable reservations, but you have to look at it on a balance sheet basis and I think they have achieved a great deal, and that must not be lost. But that does not mean that they cannot do much, much better. The issue we were talking about earlier must not be repeated.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

The full transcript may be read here.

On behalf of Eric Martlew, 3 Chatsworth Square Carlisle Cumbria CA1 1HB