JOHN HUMPHRYS: So Lord MacDonald, he's right isn't he. They are used as a whipping boy, everybody kicks them, including, especially perhaps one might say your good selves, the government, but we need them. LORD MACDONALD: We need them, that's certainly true and we need the train operating companies and I think they and Railtrack are the victim of two decades of neglect in terms of under-investment and also of a chaotic privatisation programme that broke the industry into a hundred parts and left us with defective mechanisms and what we've done by setting up a Strategic Rail Authority is said....we've said, 'let's try and work in partnership from now on and get these relationships right so that Gerald can actually have an incentive for expanding the railways and that George and his train operating companies can help fund that expansion. If we were all pointing in the same direction with the right kind of formula at work with Sir Alastair Morton and his shrewd business experience driving it, then we'll get somewhere quickly but as Gerald says we've put on twenty-five per cent more trains, a thousand more trains every day, they're also looking at an industry that a lot a people in the rest of the UK business would be very happy about because it's going up fifty per cent in terms of its customers over the next ten years. HUMPHRYS: Well yes, good, fine, excellent, everybody will say and talk of partnership is splendid but why, in that case, if Gerald is doing such a good job...why are you kicking poor old Railtrack to death all the time? We have John Prescott in this very studio just a couple of weeks ago saying - 'I'm not wild about Railtrack. I don't know who is.' MACDONALD: Well what we've got is a rail regulator who is an independent economic regulator and he is a beady-eyed chap who is going over the various relationships that Railtrack have with the rest of the industry...... HUMPHRYS: What's that got to do with what I just asked you? MACDONALD: Well because Gerald has been having quite a hard time from the regulator...... HUMPHRYS: From you people as well, not just from the regulator - that's his job. MACDONALD: The independent regulator has been going through and I'm sure the public would be very pleased to see that he's vigilant on their behalf, they just want to try and make sure they're getting value for money. HUMPHRYS: I wasn't asking you about the regulator, I was asking you about John Prescott and you. I mean are you wild about Railtrack? MACDONALD: I've worked closely with Gerald and I'm very appreciative of the efforts they've made. HUMPHRYS: So John Prescott got it wrong then? MACDONALD: We had a safety summit last Tuesday and Gerald and the rail companies had, within two months of Paddington, come forward with a pretty profound changes in the way that they might operate the railway and we were very pleased that about that. HUMPHRYS: So we'll hear a bit less of government dumping on Railtrack in future will we? John Prescott's going to sing a different tune if he comes back into the studio in another couple of weeks is he? MACDONALD: Well John Prescott has worked hard over the past two years to put together mechanisms that will allow us all to work together and that's why we've brought in a Transport Bill to try and make sure that we've got a Strategic Rail Authority that will give us the investment that's been so lacking in two decades of Tory....... HUMPHRYS: Well now the investment that they want, that Railtrack want, you heard Mr Corbett saying it a minute ago is forty-one billion pounds. MACDONALD: Well I heard him saying it might be in that region. I think I heard him saying earlier it might be thirty-four or thirty-five billion..... HUMPHRYS: Well let's go with what he said five minutes ago (both speaking at once) Forty-one billion pounds. MACDONALD: Your splendid track record.....he put it at thirty-four, thirty-five earlier in the week....... HUMPHRYS: ...... well with inflation you know....... MACDONALD: Sir Alastair said that his back of the envelope calculations might put it around there too. What we're looking at is a perspective of ten years. We're looking at Railtrack having to negotiate with the regulator and what its access charges will be. We're looking at a very thoroughgoing process of re-franchising the train operators will be engaged in which will be predicated on increased investment and new relationships between them and Railtrack. Were looking at what the SRA, the Strategic Rail Authority can invest. We're looking as John has said at the private sector too for investment and then there's government and certainly if we're going to cope with fifty per cent increase over the next ten years then government will play its part in that. HUMPHRYS: Right. Will government fill the gap? MACDONALD: Well what will be the gap? We'll certainly be.... HUMPHRYS: A lot. Many billions of pounds...... MACDONALD: Well we'll be there to help. We've got a very strong position with the economy. We're intent on modernising Britain. It's a historic role I think of Labour Parties to try and make up for the neglect in infrastructural investment and we'll do that again. HUMPHRYS: So whatever they need, they'll come to you in whenever it is, a year, two years' from now and we've all heard them say on that side of the table what they need. They'll have had the bit of money from private investors and as Mr Corbett said that's going to be difficult in this climate - they're out there in the Bay of Biscay being blown hither and thither and yon. They'll have had that money, they'll have had the extra bit of money from fares, the rest of it, as he said, has got to come you. Now if you're saying this morning, 'No problem Gerald. If you want those billions whatever those billions are we will fill your boots with it', then that's fine. Is that what you're saying? MACDONALD: No. What I'm saying is that we've put in place a very powerful broker in Sir Alastair Morton and the Strategic Rail Authority and he has been given the job under law with a new transport bill of devising a strategy that develops and expands the railways and we'll play our part in that. Now that's a long process and it's to do with franchises being renegotiated perhaps because...... HUMPHRYS: Ah - but it's not a long process if you heard our man representing the passengers. It is not a long process. This process has to start now, today, not next week, not next year, it has to start now and if they cannot squeeze..... Alastair Morton might be all of the things that you said he is but if he can't squeeze that investment out of the other places you are going to have to fill the gap - is that what you're saying? Let's be very clear about this. MACDONALD: Yes, let's be clear. The process has already started. The Strategic Rail Authority, even in its shadow form.. HUMPHRYS: ..I fully accept all that... MACDONALD: ...is in negotiation with three train operators, three down, twenty-two to go. We're beckoning them in, saying 'Come forward we want to do all of this quickly.. HUMPHRYS: ..accept all of that, but not even Mr Corbett believes all the money is coming from there.. MACDONALD: ...we can't under law force George's members to come up and renegotiate with us. We hope that we will make the process attractive enough that they will see that there's an advantage in coming forward for investment on a very large scale which helps their business, that allows them a new relationship with Gerald and Railtrack and that government again besides Sir Alastair being the broker that we'll be able to play our positive part in that too. HUMPHRYS: But the fact is you had not ear marked real new money to fill this gap that all of those on that side of the table need filling. MACDONALD: Well we this year will be spending one point three billion of public money.. HUMPHRYS: ..not near enough.. MACDONALD: And what we are saying is that as we see this process developing we'll be standing very close to that process and ensuring that we get the railways in the next ten years that the passengers deserve. HUMPHRYS: Well I'm not sure that answers the question again, because that isn't going to be enough. We've heard that isn't going to be enough. As it carries on, as we see the extra investment that is needed and we repeat, we are talking now about forty-one billion pounds, a vast amount of money. Is the government.. MACDONALD: ..over ten years. HUMPHRYS: Sure, absolutely.. MACDONALD: Four billion a year and we put in one point three billion a year.. HUMPHRYS: Alright, leaves a big gap doesn't it. MACDONALD: Well Gerald's explained how it can help. They can help fill that. HUMPHRYS: He's explained that it has to come from the government, that's what he has explained. MACDONALD: Yes, but what I'm saying is that you've got here a process and our investment has predicated and success and negotiations that the Strategic Rail Authority has with George's members and the rail operating companies that the regulator has with Gerald and that we all have with private investment that might come forward and it's also predicated in the growth of the railways itself. So it's a complicated process and you wouldn't say at the start of it, here is X billion. What I am saying is this year there's one point three billion in there, Gerald Corbett has said that Railtrack this year is investing two billion, that's twice as much as the historic average. HUMPHRYS: I understand that but let me give you something else that complicates this as well. And that is that we are now being told there's actually going to be more money to be spent on the roads. All of a sudden instead of waging war on the motorist you're the motorist friend because that's much more politically popular to be the motorist's friend than the motorist's enemy. So, it's going to go on the roads....... MACDONALD: Yes.... HUMPHRYS: ..... as well as on the railways, problems here? MACDONALD: ...... Yes HUMPHRYS: Problems here.....? MACDONALD: Well we've got an unprecedently strong economy and we have a chancellor who for the first time has dedicated money from certain revenue streams, from fuel duty for instance.. HUMPHRYS: ..not certain of that, because the escalator has gone and it may or may not be.. MACDONALD: If the six per cent went down to only one per cent that would still be over two hundred million a year, dedicated to transport. HUMPHRYS: That's not guaranteed. MACDONALD: Road congestion charging going forward perhaps.. HUMPHRYS: ..five years' time.. MACDONALD: Five years time, a billion pounds a year minimum.. HUMPHRYS: But five years' time, this man is telling us that it's got to be done next week. MACDONALD: No but you are asking about road schemes and what I am saying if you look at road schemes it takes sadly in this country thirteen years to build a road from end to end but we are saying that the ones that we have already got in prospect, pull them forward to this year, we are going through that process with two or three different sets of road schemes, we are looking at the bottle necks in the roads as well and saying how can we break those bottle necks. How can we invest more in transport across the board, how can we make up for the severe neglect that we have, not just in the railways but also in our road system over the past years. HUMPHRYS: It's a different sort of tune now isn't it and that's because you're running scared in the Department of Transport. We had what John Prescott cheerily calls the 'teeny boppers' at Number Ten. We've had them briefing against you all over the place saying you're selling out the motorist and dumping on John Prescott. That's what's causing this change of heart isn't it? MACDONALD: Not at all, I've been in this role four months and worked very closely with Downing Street and with the Treasury and had nothing but co-operation from them. What we have here is a very strong economy which will allow us to do what is our historic task, which is to modernise the fabric of Britain. We want of course to advance our agenda of social justice and fairness but we want to invest in enterprise and it's very important that we have a good transport system. HUMPHRYS: You've got to get people.. you keep telling us, John Prescott has said that he will have failed if he doesn't get us out of our cars to a greater extent, if the number of journeys that we make by car does not fall, he's going to fail within five years. Why don't you say to him quietly, because you are probably an old mate of his by now, why don't you say: 'John, why don't you get rid one of those Jaguars, just for a start, it will send a signal.' MACDONALD: Look, the guy has a nine year old Jaguar that sits in Hull, his other.. HUMPHRYS: ..he's got two Jaguars. It's the message it sends.. MACDONALD: ..his other car is a government car. He's the Deputy Prime Minister, you get sent around, as John well knows, you get sent around London with red boxes scurrying to and fro the House of Commons, well fine, take your Jaguar off the Deputy Prime Minister and give him a Rover if it makes you happy. I'm sure John Prescott would have no concerns about that. But on that other quote, again, he didn't say quietly, I didn't say quietly to him, he said loudly to me, that so called quote about getting people out of their cars in five years or I would have failed, that is not what he said. HUMPHRYS: Well he actually said it to me and... anyway we won't argue about that. A lot of those problems, a lot of these problems are facing you because the DETR, the Department for the Environment and Transport and the Regions is absolutely massive. Each single bit of it has got huge problems and we've got poor old John Prescott running the whole lot. Now, it is unmanageable isn't it, that's got to change hasn't it? MACDONALD: No, I think that's a bit of a red herring. I think clearly the problems of the Environment are closely related in many areas with our transport and I don't see that there is anything mutually exclusive in running the two together. People run much bigger businesses than we have in our department so I think that it's a big department but he's a big man and we'll win through. HUMPHRYS: And he's hanging on.