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JOHN HUMPHRYS: The railways are still not
back to normal. Some say it'll be a very long time before they are. And
yet railway companies are pushing up the cost of a ticket. This past week
Virgin announced a whacking ten per cent increase for some journeys. How
can they get away with it? Should they be allowed to get away with it?
The Transport Minister is Lord MacDonald.
Passengers understandably
are furious Lord MacDonald, should they be allowed to get away with it?
LORD MACDONALD: Well at the moment there's nothing
that we can do about that particular rise which I think is very regrettable
because it's not the kind of message you want to be sending out when you
are getting passengers back on the railway. All I can say is if you look
over the last four years, in fact the train fares have gone up at the same
rate as inflation. We have got a formula that says for a lot of the fares
there has to be inflation minus one per cent. But they are freeing companies
like Virgin to change their fares on some schedules and that's what Virgin
have been doing here.
HUMPHRYS: And it sends completely
the wrong signal doesn't it. I mean you've asked them to explain themselves
to the Strategic Rail Authority but in reality that's a bit of an empty
gesture, because as you say there's nothing you can do.
MACDONALD: Well it's really for the passengers
to look at it and say well can we get to Manchester more quickly by air
or by coach. In the end...
HUMPHRYS: ..or by car...
MACDONALD: ..or by car, is there an alternative
service we can take. They are in a marketplace, as I say it's doesn't help
my strategy that they should behave like that but there's nothing that
we can do to a sovereign company like Virgin to inhibit them on this particular
area. Although we do pay them considerable subsidies every year on Virgin
and they have also had money back from the Strategic Rail.. a bit from
the Strategic Rail Authority but a lot of money back from Railtrack in
terms of compensation. But they still say they're losing tens of millions
and that's the reason for the increase.
HUMPHRYS: You say it doesn't help
your strategy. The fact is it blows a huge hole in the side of it doesn't
it, because you want people to use their cars less and to use the trains
more.
MACDONALD: We do but this is only one particular
line. These are the Inter-City lines that are suffering most. If you look
at the overall figures you'll find that in fact we have got over ninety
per cent of trains running normally now and over eighty per cent of those
running punctually.
HUMPHRYS: Can I come to that in
just a moment because you've mentioned the question of money - who gets
what money and in a sense passengers are losing twice here aren't they.
Their trains are delayed so they lose in that sense, then what happens
is that the TOC - the Train Operating Companies - have to be bailed out.
Now there are three ways in which they can be bailed out. One is you push
the fares up as has just been happening, two you cut back on investment
which you don't want to see happen of course, and three more money goes
from the taxpayer. You have already given them, we have already given them
one-point five billion pounds and that is the only option isn't it, ultimately,
is to give them more money out of the public purse if we want to see things
improve.?
MACDONALD: No, I don't believe that's the
case John. I think that what we've got to do is make sure we get value
for money for what the public invests in the railway and the public has
to invest in the railway to keep the fares down. I think that's inevitable,
in fact our subsidy..
HUMPHRYS: Invest more is what I
am saying..
MACDONALD: We are investing more of course...
HUMPHRYS: More still is what I
am saying..
MACDONALD: We may have to invest more still
because we are planning to invest sixty billion private and public across
the next ten years in improving the railways, but if we want a bigger better
railway then we will have to have public investment but we want to see
private investment alongside that.
HUMPHRYS: Yeah, but the problem
with that private investment is that's fine and half of that sixty billion
is supposed to be private isn't it. But the trouble is that's tied into
increasing use of the railways, in other words tied in increase in income.
If we start seeing people using the railways less as we surely will if
prices go up like this, then that isn't going to happen.
MACDONALD: But remember this is a very
selective Virgin increase, across the railways as a whole, as many people
now are using the railways as this time last year, so there hasn't been
that Hatfield effect...
HUMPHRYS: ..it's dropped from what
it was...
MACDONALD: It's dropped a little bit than
what it would have been but in fact the figures do stand up, there are
as many people as were travelling this time last year. There's over ninety
per cent of the trains are now running normally, there's about eighty per
cent of those running punctually and it was about eighty-six per cent before
Hatfield. So it's not an entirely bleak picture.
HUMPHRYS: Not entirely bleak but
pretty bleak because those figures are predicated on a continuing increase,
not a leveling off, a continuing increase and you seem to be acknowledging
that you may have to give them more money than it is planned from the public
purse.
MACDONALD: We plan to put in about sixty
billion out of the hundred and eighty billion in the ten year transport
plan. There will be...a few billion more will go to rail as against other
modes like road. So yes it will be a little bit more there but we believe
that we will get better value for money than you would have got in the
past because we have got tougher regulation here and we believe better
leadership through this new Strategic Rail Authority that we've set up.
HUMPHRYS: Let's look at this question
of re-nationalising the railways. To which of course, the government says
absolutely no way. But why not use all this investment that we're talking
about, if you're going to give one and a half billion pounds is the figure
I've just mentioned, to Railtrack. Why not use that to buy a stake in Railtrack,
rather than just say look, here's the money, now you invest it as you think
fit, or as we think fit maybe. But nonetheless, why not say we will have
a stake in it because what the Select Committee who looked into this whole
question of re-nationalising said, it is unacceptable that the taxpayer
should be compelled to bale out a private monopoly company that has acted
so incompetently without taking any stake in the company in return. Had
a point, didn't it? bail
MACDONALD: Well, emotionally and politically,
you've got to have some sympathy with that. It looks, on the face of it,
like a solution. But I think in closer inspection you discover that it
takes too long, it costs too much, there would be years of upheaval. There
would be an investment freeze across the railways and what we're looking
for is the doubling of investment in the railways really against recent
times and that would be delayed for many, many years and we don't believe
it's the right course to take. What we need is more investment and better
management and better regulation. That way, we'll drive the growth of
we believe of about fifty per cent more passengers across the next ten
years.
HUMPHRYS: But it's possible that
you're going to meet an awful lot of voter resistance here, isn't it.
If you keep piling taxpayers' money into a system and the company that
is running that system is making a pig's ear of it and it's tax and its
shareholders ultimately benefit from that money, people will say, what's
going on here? Why should my hard earned taxpayers' money go to help out
these people?
MACDONALD: Well, you can see that the deal
that we did with Railtrack this week, in fact reduced their share price
because the shareholders realised that in under our deal they wouldn't
get any extra dividends, the money would have to be invested in making
sure that that railway ran properly because we've got a Regulator who's
looking at it very closely. We still want to expand the railway but we
are not prepared to let Railtrack be an inhibition on that, so we've said
to Railtrack, you can still invest but it'll be alongside the Strategic
Rail Authority and other groupings who will help us expand the railway
as in fact Bechtel and others have helped us build this new Channel Tunnel
rail link. We'll be doing the same in many other areas of the rail network.
HUMPHRYS: Their ability to invest
of course is directly effected by the reduction in their share price.
If a company is worth a fraction of what it once was then it has less to
invest and it can attract less investment.
MACDONALD: Well, if a company is badly
managed, then its shareholders will be punished and that's what's happened
this week. The shareholders then decide that the board representing their
interests will have to take action make sure the company...
HUMPHRYS: ...so British Rail, British
Rail, I'm going back a bit aren't I, Railtrack is badly managed, there's
no doubt in your mind about that?
MACDONALD: Railtrack admits it's been badly
managed...
HUMPHRYS: So why then, it returns
to the question of taking a stake in it doesn't it. Yes in the short term
there would be some complications, as you say, but in the long run, if
we had this badly managed company and we keep pumping money into it, it's
chucking good money after bad, isn't it?
MACDONALD: Well Railtrack will be appointing
a Public Interest Director, who will keep an eye, we believe, on it.
HUMPHRYS: One man?
MACDONALD: Well, it'll be somebody in the
board and well positioned inside the board to be the eyes and the ears
for the public interest...
HUMPHRYS: ...only one vote...
MACDONALD: I don't think it'll come to
a vote, I don't think it's about that. Railtrack isn't I accept a normal
PLC, a normal public company because it's got a vital national asset and
also it receives public subsidy. We have therefore come up with a statement
of principles that covers operations with Railtrack and we believe that
that's the best way forward, more management, better investment. We believe
it'll be an expanded railway and a better run railway in future.
HUMPHRYS: Right, better run railway.
When is it going to be back to normal? You keep using this figure of
ninety per cent but in December you said that at the end of June, that's
last December you said at the end of January, things, January, not June,
everything would be fine, in January, you said it would be over by Easter,
all these problems, what's the latest forecast? You're in danger of losing
your credibility aren't you?
MACDONALD: Well, we said that by the end
of January largely back to normal. What we've got now is about ninety-two
per cent, these are the figures that I got just a day or two ago, ninety-two
per cent of all trains running - but around the country and in the commuter
areas it's about a hundred per cent. In terms of punctuality, as I say
the latest figures I have show about eighty-two per cent on punctuality,
as against eighty-six per cent pre Hatfield.
HUMPHRYS: ...well...
MACDONALD: And punctuality's defined in
a various, you know, in a number of various ways, but it's trains that
are within five minutes...
HUMPHRYS: ...and in some cases
they cook the books in effect, because the timetable's been rewritten so
often, nobody knows what punctual means any longer. I mean if I give you
an example of the West Anglia Great Northern, it won't be back to its pre
Hatfield state until, that's cross-country of course I'm talking about
now, until next year.
MACDONALD: We've got about two or three
of the lines where we have problems, west of Exeter for instance, London
to Norwich, London to Milton Keynes and of course we've got a lot of work
going on on the West Coast Main Line as well because that's the biggest
engineering project of its kind in Europe, about six billion pounds of
work being done there. So that's the other paradox here, that we're investing
at last to try and upgrade the British railways which have been starved
of investment for decades, but there's a cost there in disruption. When
we talk about the speed restrictions we have post Hatfield, but at any
normal time on the railroad there's about two-hundred speed restrictions
on and unfortunately, that will continue as we rebuild the railway, but
we believe...
HUMPHRYS: ...exactly...
MACDONALD: ...but we believe through that
rebuilding we will get to a railway which runs much better...
HUMPHRYS: ...when...
MACDONALD: ...we've said that we're very
largely back to normal by Easter, by May, the Regulator has, the Regulator...
HUMPHRYS: ...that is not the experience
of the passengers, it really isn't...
MACDONALD: It depends as I say as how you
interpret these figures and you're obviously understandably querulous John,
but what I'm told by the companies and I don't believe that they would
be misleading me, is that we are largely back to normal with over ninety
per cent of these trains running and for instance, in the commuter areas
around London, closer to a hundred per cent.
HUMPHRYS: Maybe you should get
out on the trains more and talk to the companies less...
MACDONALD: Well, I do. I was on them just
yesterday and fortunately they both ran on time.
HUMPHRYS: Well, I talk to a lot
of people who use them and they say, they're rubbish, not to put too fine
a point on it.
MACDONALD: Yes, I can understand the frustration.
I share the frustration of the passengers but I assure you we are investing
to make it better.
HUMPHRYS: Lord MacDonald, thank
you very much indeed.
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