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JOHN HUMPHRYS: Good afternoon. Is it
too late for the government to save the railways? I'll be talking to the
Transport Secretary Stephen Byers. And we'll be looking at the tough decisions
the government's going to have to take if it's to prevent an energy crisis
in this country. That's after the news read by Darren Jordan.
HUMPHRYS: Thanks Darren. There's
usually ONE minister in any government at any one time who the other ministers
look at and say "thank God I'm not doing that job!" Well, Stephen Byers
is that minister at the moment and his problem - as the whole world knows
- is how to rescue the railways from what many people say is an inevitable
decline. They're in a mess and the voters may well punish the government
for it at the next election. Indeed, Mr Byers has invited them to do just
that if he doesn't improve things by then. Can he? He's here in the studio
with me and I'll be talking to him after this report from Paul Wilenius.
PAUL WILENIUS: Labour promised a new golden
age for rail. But five years on, we're still waiting. John Prescott took
a gamble on Railtrack, and lost. Now everybody's looking to Stephen Byers
to get on with the job and get the trains moving.
SIR ALASTAIR MORTON: Saying that we're going to
make the railways feel better by just operating them with more zest and
enthusiasm in the next few years and a lick of paint and a bit of expenditure
there, is not going to achieve any more than John Prescott's exhortations
achieved frankly, they need investment.
GEORGE COX: The question is the delivery,
at the moment so much in terms of our national infrastructure is not being
put right and people haven't got confidence that the government knows how
to implement the things it wants to do.
WILENIUS: Tony Blair has a new
top priority. To put Britain's crumbling rail system back on the tracks.
This is putting enormous pressure on Transport Secretary Stephen Byers
, to find a replacement for Railtrack , but also to decide the fate of
plans to partly privatise London Underground. But government policy is
facing the same blight that has dogged trains in recent years - delays,
Paul Gentleman, co-founder of the Better Rail Action Group, knows a lot
about delays. He's an advertising executive, and has been travelling from
Swindon to London every day on the train for eight years, at a cost of
more than five-thousand pounds a year. Following disasters like Hatfield,
many rail users are increasingly fed up with the state of the rail network.
And now he says his protest group is gaining momentum, and the backing
of a new breed of middle class militants.
PAUL GENTLEMAN: We are approaching journey times
now which are longer than they were in Victorian times - why is that? The
passengers want to know. And that's the frustration behind the passengers.
That's why our group's really come about. The March 1st boycott has been
brought about because enough is enough now. We've put up with this for
long enough. What we want is the general commuter rail travelling public
to boycott the rail network for a day, we've got eighty-five per cent public
support with that and I think it will be bigger than the fuel tax protest.
PAUL WILENIUS: But patching up the crumbling
rail system isn't enough. Last week the Strategic Rail Authority unveiled
a ten-year year plan to pump thirty-three-point-five billion pounds of
public money into the aging system, with a similar amount coming from the
private sector. Many industry experts say it's not enough.
MORTON: The government is now accepting
to a degree it was denying last Spring that the railway situation is dire
and that there's a lot to be done and Stephen Byers talks of tough decisions,
well the really tough decision to be taken is to accept that a lot of money
has to be invested, not just spent annually on maintenance but invested
in improvement and development of the railways if we are to have a network
that is safer, bigger and better, which is what we're all asking for.
WILENIUS: Many in the City and
business believe the government's current plans to help rail passengers
are fatally flawed, because they rely on private investment. They say that
won't be possible without a big increase in the income the industry gets
either from fares or government subsidy. It'll be even harder winning back
the trust of the private sector after killing off Railtrack.
MORTON: Frankly the private sector
doesn't finance uncertainty except in return for a significant payment,
it charges for risk, and if the risk at any point becomes too large or
too uncertain, it simply says, hold on I don't think we will do this until
things become clearer. I think that we're in that situation right now,
the private sector is simply saying what is the future structure we're
being asked to fund, until we know a lot more about it and its sources
of income we can't do it.
COX: Now before I put my
money in I'm now looking for some reassurance. So there will be a risk
premium on this and I don't think it's just with Railtrack I think this
now applies to any government project that you want the private sector
to be involved in.
WILENIUS: And in the short term
the government's critics say that their action over Railtrack is making
the situation even worse, not better.
THERESA MAY MP: Things are not improving since
Stephen Byers put Railtrack into administration, in fact they're getting
worse. Passengers have seen something like an overall forty-five per cent
increase in train delays since Railtrack was put into administration and
of course there are an awful lot of demoralised staff in Railtrack because
over ninety per cent of employees held shares, they've seen the value of
those shares wiped, wiped out by what Stephen Byers did, for some of them
they were their life savings, and they're feeling pretty sore about the
action that the government took.
WILENIUS: Guiding Railtrack out
of administration and back into some new form will be Stephen Byers greatest
test. Easing it into a 'not for profit' company, seems the preferred route.
But many Labour MPs feel that the right direction is to go for renationalisation.
JANE GRIFFITHS MP: 'Not for profit' for Railtrack
wouldn't really be my personal preference, what would be my personal preference,
and it could include 'not for profit' for Railtrack, is to say we must
have public control of all our transport infrastructure. We must have
sticks to beat train companies with and the successor to Railtrack and
whoever else is involved but we must have ways not just to shout at transport
operators but to be in partnership in a way where they have to listen.
WILENIUS: Some industry experts
are also worried that unless it has a government guarantee a 'not for profit'
company would not have the financial clout to get the railways back up
to full speed.
MORTON: If the government is willing
to guarantee the debts of the new Railtrack, whatever it is, then there's
no problem - that's a triple-A credit and it can raise plenty of money
but that's actually a new nationalised entity, why not say so. If however
the company is not going to have a, enjoy a government guarantee for its
debts then it's got to earn enough profit to accumulate enough reserve
quickly enough and certainly enough, and that's the important point, certainly
enough to convince lenders that they will get their interest and they will
get their repayment. They're not in the charity business.
WILENIUS: But no matter which route
the government chooses, one thing's certain, there'll be more delays. It
may take almost two years to get the new company up and running.
MAY: When the plug was
pulled on Railtrack the government said it would only be in administration
for three to six months. We're well over three months down the line now
and there's no sign of it being brought out of administration. I fear that
it's going to be in administration 'til the end of this year - indeed there
some commentators who say it could be well into two-thousand-and-three
before the company comes out of administration.
WILENIUS: Richard Branson's Virgin
Trains is investing hundreds of millions of pounds in new trains and rolling
stock. But it is only one of twenty-five train operating companies. Some
business leaders believe it's this fragmentation of the railways, not the
question of ownership that's the real problem.
COX: One of the problems
with the whole rail scene is not privatisation but the way it was done,
overly fragmented. You've got the track separated from the operating companies,
the maintenance separated from the track, the sub-contractors for maintenance
separated from maintenance. You're spending all your time negotiating with
other parties involved, your profit concerns is concerned with those negotiations
not with serving the customer. So the whole thing needs a much greater
degree of integration and a much simpler structure than we're going for
at present, and I don't see at present any plans to change that.
WILENIUS: And it's that fragmentation
of the railways which many people blame for the rash of strikes now facing
rail travellers all over the country. There'll be more this week, as guards
and station staff fight for pay rises to catch up with train drivers. And
there's a growing threat of even more misery to come, as union leaders
are forecasting walkouts in the coming weeks and months.
BOB CROW: So there's a real reality
out there that more action could take place directly as a result of the
fragmentation of the industry because different people being paid different
pay and conditions leads to resentment, leads to jealousy and it leads
to pressure being put on our trade union to make sure that we get the same
for all members who do the same job. I think there's a real possibility
this will continue spiralling and, could spiral out of control unless some
action is taken very quickly.
WILENIUS: Stephen Byers has taken
pride in his action over Railtrack, as many Labour MPs see it as rolling
back a key part of the Thatcherite legacy of privatisation. But many people
are waiting to see if he will go further, and kill off the long awaited
plan to partly privatise the London tube.
GAVIN STRANG MP: I personally hope that the PPP
as it's called for London Underground will not go ahead, I do believe that
the arrangements are too complex. I hope that Stephen Byers, and he's
indicated this as a real possibility, will in fact abandon the whole, the
WILENIUS: London's tube system
is straining at the seams. The government wants to bring in a new partnership
to feed a potential thirteen billion pounds of public and private investment
into the rundown system. But the scheme is still delayed and now Stephen
Byers is waiting for a report early next month on whether it's value for
money. But there are many who feel it would be a disaster if the plan
went ahead as it is.
KEN LIVINGSTONE MP: Looked at objectively no-one
in their right mind would go ahead given the contract's got a rate of return
of thirty-five per cent and it replicates exactly the same problems that
we saw at Hatfield, with the loss of life we saw at Hatfield, by separating
the running of the trains from the maintenance of the track. Everybody
already who has looked at this has already come to the conclusion, every
independent expert and assessment has been this is not value for money,
that the scheme should be dropped. The only organisations that have ever
said the PPP's a good idea are those employed by the government to say
WILENIUS: There's a lot at stake
for the government, as Stephen Byers wrestles with the future of Britain's
railways. He's already admitted that Labour will be judged at the next
election on improvements in rail services. But many political figures believe
that unless things start getting better soon, that judgement may not be
to their liking.
The views of angry commuters are
being taken seriously by the Transport Secretary. Last Wednesday Paul Gentlemen
arrived at Westminster for a meeting where he presented his group's proposals
to improve rail services to Stephen Byers.
WILENIUS: How did it go?
GENTLEMAN: It was very constructive. He
listened intently to what we've got to say, and he's gonna take into consideration
the ten-point plan that we've put to him.
WILENIUS: And what happens with
the protest planned for March 1st?
GENTLEMAN: We've stated that we wish to
call the protest off, but only if our ten-point plan is met. That hasn't
been met yet, so the protest goes ahead.
GRIFFITHS: I think it's got to
be at least be seen for there to be progress by the time of the next election,
we've got to see better railways, we've got to see more investment, and
it doesn't just have to be put in, people have to know that it's there
and feel the difference when they make their journeys otherwise we'll be
STRANG: If in fact we fail to make
progress in the transport field and in particular, if we fail to begin
to show real benefits in the rail system then the electorate can easily
turn on us.
WILENIUS: So further delays to
planned improvements for the railways and London tube could be politically
dangerous, as rail passengers are also voters and Tony Blair knows how
important they could be.
LIVINGSTONE: There will be no visible improvement
on the Underground at the time of the next mayoral election if the PPP
is imposed. And there most probably won't be any at the time of the next
general election and there'll be huge political consequences for the government
if people are still travelling in the present conditions when they all
come up for election in, in three or four years. I think if PPP goes ahead
you could see perhaps ten or a dozen Labour MPs lose their seats in London.
WILENIUS: So the political stakes
are high. The government is under growing pressure from the travelling
public to show it has the vision and the ability to find a route out of
MORTON: Stephen Byers has said
enough of vision, let's get on with the job. There's a problem, this government
like many governments before it, doesn't think long term, railways are
a long term problem, hospitals probably are as well but railways certainly
COX: I think Stephen Byers
has got a problem of restoring confidence and credibility, I don't know
of anyone who's saying at present well at least Stephen Byers has got it
WILENIUS: For many weary rail passengers
the government's plans are too little, too late. So Stephen Byers will
have his work cut out to find the right course quickly, if the railways
are ever going to have a new golden age.
HUMPHRYS: Paul Wilenius reporting
JOHN HUMPHRYS: Stephen Byers, you told
us we'd have that new Golden Age, or at least we would see real improvements
at the previous election. Now, you're telling us we'll see it in time for
the next election. We're entitled to be deeply cynical about that, aren't
we, or at least deeply sceptical.
STEPHEN BYERS MP: Well I think people looking at
the state of the railways today will rightly say, look come on, get on
with the job, they're not good enough. And I've said I've been very clear
about this, we don't have the railway system which is fit for the Twenty
First Century and I've been taking the decisions actually, which have put
in place the building blocks to create a transport system and in particular
a railway system that will be radically different and an improved system
than the one we've got now.
HUMPHRYS: But even if they work,
it will take a very long time, that's the point I'm making.
BYERS: I agree with that. I mean
there are no...
HUMPHRYS: ....beyond the next election.
BYERS: There are no quick fixes.
I think we..well, there will be improvements by the time of the next election,
otherwise I will be in certain difficulties as Secretary of State for Transport.
HUMPHRYS: ..that's for sure, we'll
look at that in a bit more detail. But let's just look at what has happened
in the past. You've accepted your responsibility, you said so quite clearly,
but you've only been in the job five minutes. So, therefore, it follows
that other people in the government, were, should, accept their responsibility,
BYERS: And they do, and...
HUMPHRYS: Do they? I haven't actually
heard John Prescott saying "I hold my hand up.."
BYERS: Well, I don't know what
you were doing over New Year, but even where I was, I knew that John...
HUMPHRYS: I wasn't working...
BYERS: ...that John Prescott had
said that we took a gamble on keeping Railtrack going in 1997 and it was
a gamble which we accepted failed.
HUMPHRYS: Well I did hear that
interview and he was actually..regarded as being amazingly complacent.
BYERS: No, I don't think so. I
think he was saying, look, we've gambled on Railtrack, that was a mistake,
we're now taking the decisions which need to be taken to actually create
a railway system which is going to be one which delivers an improved quality
of service. And also in the first two years of the first Labour government,
1997-99, we did stick to those Conservative spending plans, so the additional
money that we are now seeing going into railways was not available for
those first two years. We needed to do that John because the public finances
were in such a mess that we needed to stabilise, to get national debt down
and now we've got more money which we can spend on essential services.
HUMPHRYS: But that apart, sticking
with Railtrack and all the rest of it, we should have interpreted what
Mr Prescott told us then as an apology should we, that was...
BYERS: He was explaining the circumstances
around decisions that were taken during that first term in office.
HUMPHRYS: But it was a mistake,
I mean he was saying...
BYERS: And he was very, very clear
about it, it was a gamble and it didn't work.
HUMPHRYS: You will have spent less,
I take your point about the state of the finances in the first two years
and how you wanted to.. you were committed to sticking to the previous
government's spending levels. But you will have spent less over the last
five years than the Tories did in their last five years, an extraordinary
thing really, given that you recognise the state the railways were in.
BYERS: Less money coming from the
public sector, we've seen quite a big investment from the private sector
into railways. The first term was about education and health, those were
the priorities on which we were elected in 1997 and as a result of the
investment that's now going in and we've had over the last few years, I
think people are beginning to see improvements as far as education is concerned
and improvements as far as the Health Service is concerned. We now need
to do the same for transport.
HUMPHRYS: So what we saw was a
period of benign neglect.
BYERS: I think we saw a period
where we were trying to reflect the priorities that the people had in 1997...
HUMPHRYS: ..and the effect of that
was benign neglect of the railways.
BYERS: Well no because what we
managed to do, what we were doing was putting into place the framework
for a new structure and that's the Strategic Rail Authority...
HUMPHRYS: ...it took an awful long
time to do that..
BYERS: ...it took a number of years
but we had to get legislation through Parliament.
HUMPHRYS: ...you didn't start the
legislation until years in...
BYERS: ..we had to get legislation
through Parliament. As I say the first priorities were education and health,
we had to get legislation in those areas through quickly, which is what
we did. We were criticised in some quarters at the time for doing that
but it was part of the modernisation and reform agenda. What we are now
doing with railways is part of that modernisation and reform agenda.
HUMPHRYS: Which I'll come to right
now but just to be clear about this. You've explained why we had this period
when the railways did not improve, should we see that as an apology. Are
you saying, on behalf of the government, you know, I'm sorry, we maybe
should have approached it slightly differently, is that what you are saying?
BYERS: I think in the first term
we had priorities which the people had which were education and health
and those were the ones on which we began delivery and we are seeing improvements
now. What we are now doing in relation to transport is the same process,
we are putting into place new structures, the investment is coming in,
there's a big reform programme which will be difficult for some people,
but that's the only way in which we are going to see real improvements
as far as railways are concerned.
HUMPHRYS: So to finish that point,
Peter Hain was wrong when he said we started too late?
BYERS: No, I think we took the
right decision in those first two years to stabilise public finances...
HUMPHRYS: ..but then there's another
three years after that isn't there?
BYERS: Well, what I do know and
I was Chief Secretary in the Treasury when we were carrying through some
of the public finance changes, is that only by stabilising and getting
national debt down - remember under the last Tory government national debt
was increasing dramatically. We are spending more in repayments on the
national debt than we were on our school system. What we've been able to
do is to cut the national debt as a result we've now got more money which
we can spend on a sustained long term basis in essential services.
HUMPHRYS: Right, we'll come to
that. I will take it that that was not an apology unless you wish to correct
me and we'll move on to the future which is your strategic plan of course
that was unveiled a few days ago and went up like a lead balloon. People
did not like it, huge criticism of it, the FT, the Financial Times, said
it should be read as a work of fiction. You are relying on that plan to
rescue the railways in effect. In truth, it is a list of, to quote you
in another context, "vague aspirations" isn't it.
BYERS: No, I think it's actually
very precise and I can see you've got a copy here on the table John.
HUMPHRYS: I do, riveting reading..
BYERS: It is, and if you turn to
the back you will see that each franchise area there are very specific
commitments which have been outlined and time tabled as well.
HUMPHRYS: All right, well let's
look at..forget the individual franchise at the moment. Let's look at the
total amount that's going to go into the railways, a total of sixty-seven
billion pounds over ten years. Now, that's what you told us, it wasn't
new money of course, it was money that had already been allocated, but...
BYERS: ..and we were very clear
about that John.
HUMPHRYS: Oh, indeed. But what
you were less clear about and we read it again, it happens to be the Financial
Times that has taken a very close interest in all of this yesterday, was
that seven and a half billion pounds of that money was actually being double
counted. So we've got to subtract that and it comes out at sixty billion.
BYERS: That's wrong actually...
HUMPHRYS: ..our old friend double
BYERS: I read the FT report as
well and I was as alarmed as you are clearly, John, about this, because
I was insistent that we must be absolutely precise about how we present
the figures. Lessons have been learned here, I can assure you of that...
HUMPHRYS: ..so there is an apology
there for having done a bit of double counting in the past...
BYERS: ..no I'm saying lessons
have been learnt....
HUMPHRYS: ...going to get one apology....
BYERS: ...I can see that's what
you are after in the course of this interview, perhaps there may be one
a bit later on I don't know. But, on the serious point, the allegation
made is that there's seven and a half billion which was counted against
public spending and the same seven and a half billion was counted against
private investment - that's simply not the case, that isn't so.
HUMPHRYS: So what was the case
BYERS: I think the Financial Times
will have to answer for their own article..
HUMPHRYS: But where did that seven
and a half billion pounds that was counted...where did that go?
BYERS: Well it is seven and half
billion in the element of public spending, the thirty-three and half billion,
but it is not then counted again in the private sector investment. The
Financial Times will have to explain the basis of their stories and it
is inaccurate to say that seven and a half billion is counted twice and
that's the truth of this issue.
HUMPHRYS: Let's look at the sixty-seven
billion pounds figure then. You are not going to get that sixty-seven billion
pounds in truth are you because so much of it assumes...it assumes the
private sector is going to put in a huge amount of money, thirty-four billion
pounds and you simply cannot sit here this Sunday morning and say I can
guarantee to you, that we'll get that thirty-four billion pounds, you can't
do that can you.
BYERS: What I can say and we saw
it again in the introduction film, is the allegation that the private sector
is walking away from investing in railways because of my decision in relation
HUMPHRYS: ...assumption that they
will I think is perhaps a better word...
BYERS: ...no, because what I think
is important to recognise is that the City knows there is a clear difference
between the failed privatisation that was Railtrack, you know a company
quoted on the stock market and the sort of public private partnerships
that we want to have in relation to the railway system. The two are quite
different and people and investors in the City can make that distinction
and all of the signs are that they want to be involved in the projects...
HUMPHRYS: ...are they?
BYERS: ...which are outlined in
the strategic plan...
HUMPHRYS: ...are they? Well, I'm
not so sure about that. I read the man from Standard and Poor's and as
you know Standard and Poor's are the sort of gold standard in determining
what credit companies are like and all the rest of it and being very sniffy
about it, just yesterday, in a piece that I read, and he was saying in
effect that there must be absolutely no political interference, that the
independent regulator must have full jurisdiction as used to be the case
and if that is not so, then the City will have no confidence in it at all.
BYERS: I think they want to see
the successor company to Railtrack and to get away from the uncertainty
which we have at the moment because the administrator has to go through
his legal obligations. But that's a quite different issue John I think
from the question about whether or not the City will invest in public/private
partnerships and what we saw just on Wednesday of last week, when the GNER
were awarded an extension, two year extension to their existing contract
on the east coast mainline, a hundred-million pounds of private sector
investment in improvements as far as that was concerned. So the private
sector will be involved, because they recognise that there are opportunities
for them in the process that we've put together.
HUMPHRYS: Well but that isn't the
message that was coming across from the people we spoke to in that film,
no matter, whether you're talking about Sir Alastair Morton or George Cox
or whoever, or indeed the man from Standard and Poor's. They're saying
look, we've got a number of problems with this, one of them is that it's
not going to make any money, the other is that if it doesn't make any money
we can't absolutely be certain that the government would bale us out, if
they did bale us out then that would be fine, but you can't offer any guarantees
on either of those bases, can you, ........you won't guarantee their debts
otherwise it would be nationalisation and so on.
BYERS: We're moving away from the
situation where the government would be regarded as sort of guarantor of
last resort to the private sector. The private sector can be involved in
public sector provision provided it adds value and to be quite blunt, it's
a means to an end. We involve the private sector when they can improve
the quality of public services which are being delivered, that's the basis
on which we operate.
HUMPHRYS: And the private sector
says to you, fine, now there is a risk involved here, clearly, there is,
in their view, especially bearing in mind what happened to Railtrack under
your tutelage, there is a very very real risk indeed. Now, either you increase
the income that we are liable to get, but of course if you were to do that,
you would have to push up fares, are you prepared to do that?
BYERS: Well you're assuming that
the model that replaces Railtrack is going to be the same as Railtrack.
HUMPHRYS: We have to assume something
because we don't know what it's going to be.
BYERS: Well, you don't, but in
due course, and basically, I mean people say, why is it taking so long?
This administration, you know, three, six months, is it going to take longer?
HUMPHRYS: ...and it is isn't it?
It's going to take at least a year, it could even be two years I've heard.
BYERS: I think it's unlikely that
it'll be taking, people talk about two years, eighteen months. Those people
have got a vested interest to say so because...
HUMPHRYS: ...well tell me how it'll
BYERS: ...either they're disgruntled
shareholders who want the government to pay compensation, or they're the
political opposition who will make these points. It's going to be for the
administrator to decide, he has legal obligations...
HUMPHRYS: ...you talk to him, I
mean you've a pretty clear idea.
BYERS: Well what I want to do is
to make sure that coming out of administration will be a successor body
to Railtrack which will be focused on putting the passengers first and
won't have the baggage which Railtrack had. Now, that will take time, but
we're unravelling here what was an enormously complicated failed privatisation.
Now I make no apologies for doing that, you know, Railtrack came to me
in the Summer, wanting more money, we looked at the situation, we took
a decision that no more public money would be provided to Railtrack, they've
got billions over the years and have failed to deliver and as a result
of that they were put into administration by the High Court. Now I have
choice really, you could tinker around at the edges and muddle through,
which sometimes people do, or take some of...
HUMPHRYS: ...your predecessors
BYERS: ...no I'm not saying that.
But you could take some hard decisions for which you'll get political flack,
as I've done over the last few months, but it's those decisions which are
crucial if we are actually going to improve the railway system in our country.
And it would have been easy just to sort of take the soft option, say well
here's more money, no reform, we'll just muddle through. But that's unacceptable,
because there's an issue here that does need to be tackled, it's not just
in railways actually, it's across the whole area of public services, we're
putting money in, we've got to have reform as well.
HUMPHRYS: The trouble is, as a
result of what you've done, you have created massive uncertainty, you wouldn't
argue with that. I mean you acknowledge that there is uncertainty because
we don't know what will come out of it.
BYERS: I accept that.
HUMPHRYS: Yes. And one of the points
that Iain Duncan Smith made in an interview this morning, is that because
you have done that and because the City now regards you with deep suspicion,
we are not going to sort this out unless you go, you personally go.
BYERS: Well Iain Duncan Smith would
say that, wouldn't he, that's no great surprise, but I'm here and I'm going
to try and deliver on this agenda. But on the point about risk and the
private sector approach to putting in investment, the private sector do
see a real distinction between the risk that was associated with a publicly
quoted company like Railtrack and the risk that's linked into the public/private
partnerships that we want to use to implement the strategic plan.
HUMPHRYS: But only if you are able
to say to them we are removing the normal commercial risk. I mean what
you've not been able to do and nobody's been able to do it, is rewrite
BYERS: ...yes, these are con...
BYERS: ...and these are contracts
which are entered into between the government and the private sector.
HUMPHRYS: ...but the fact, looking
at it very very simply indeed, a company, a bank, or an investor of any
sort says, I will put money into that if I can get a decent rate of return.
BYERS: Absolutely. And it's contractually
assured. I mean this...
HUMPHRYS: Ah. Well now, contractually
assured but the lender of last resort, or the guarantor of last resort
of course is the government in this particular case.
BYERS: ...but it's the same, it's
the same in all of these PFI...
HUMPHRYS: ...but you're not prepared
to say we will guarantee any losses that you might make as a result of
it, you just told me you can't do that...
BYERS: ...no well that's one of
the attractions for the government and public/private partnership is that
commercial risk transfers over, but if provided that, provided they deliver
on the contract, they get the benefits of the terms of that agreement,
and that is quite different, where there's a contractual relationship between
the government and the private sector, which is how public/private partnerships
are based compared to the whole question of the private sector buying shares
in a company like Railtrack. The two are quite separate.
HUMPHRYS: Except that the company,
the investor still has to make that profit and the point that Sir Alastair
Morton made there was that if you can't have the situation where the government's
going to be the guarantor of the, going to guarantee the potential debts,
then you've got to increase income. Now are you prepared to say, because
this'll worry passengers of course, because the only way to increase the
income would be to push up the fares or the rate charge, or freight charge
or whatever it is...
BYERS: ...or increase the subsidy...
HUMPHRYS: ...or increase the subsidy.
Well you've already told me you're not going to do that, at least I understood
you say that, correct me if I'm wrong?
BYERS: No, you're right.
HUMPHRYS: I'm right. So there's
no more government money coming in, therefore the only other way of increasing
income is to push up the fares, now there are understandings at the moment,
are you prepared to say, we will not push up the fares in order to provide
a better rate of return for potential investors.
BYERS: That's not the basis on
which the strategic plan is based. There are two quite...I'll try and explain
this, there are two quite separate issues here. There's the company which
runs the lines if you like, which is Railtrack Plc at the moment...
HUMPHRYS: ...and then you have
the train operating...
BYERS: ...the licence operators
and then we've got train operating companies and freight. I think Sir Alastair
Morton's comments were in relation to the licence operator, Railtrack Plc.
There are separate issues there about how they're funded to make sure the
tracks and the signalling are maintained properly and effectively. Now
that will be done through grants from government and also from what's called
the 'track access charges' and they have two streams of income if you like.
What we're saying now is that the successor to Railtrack should be focused
purely on renewals, operations and maintenance. The big infrastructure
contracts like the west coast mainline, will not be the responsibility
of the new successor body, they will be special purpose vehicles, new financial
arrangements, which will be contractually underpinned and the government
will make a contribution as part of those contractual obligations.
HUMPHRYS: Alright, well
let, it is a complicated area of course, but let's assume, and I insist
that many people believe this is a wrong assumption, but let's assume that
you do get all of that money that you talk about in the strategic plan.
It's still not going to be enough is it?
BYERS: Well it is a hugely
increased amount from what we've had in recent years.
HUMPHRYS: It's a lot of
money, nobody disputes that, but it's not gong to be enough, is it?
BYERS: Well I think it
will be to deliver a real improvement to the quality of the railway system
that we're seeing. We're talking about billions of pounds a year going
into railways, money which has not been there in the past, I mean the railways,
like many of our crucial public services have suffered from generations
of chronic under-investment, we're changing that now, we're changing it
in health, in education, the fight against crime, we're changing it for
railways and transport as well. And as we invest that money, we've got
to make sure that we get the reforms in place as well. What I don't want
to see is more money going into railways under the old system and not seeing
the improvements that the travelling public want to see, so we've got to
invest in reform and insist on results, that's not just in relation to
railways, but actually if you look across the whole of public services,
but the big challenge is, put the money in and insist on reform as well.
HUMPHRYS: But is you look
at what Brian Staples, the Chief Executive Officer, the guy who runs AMEY,
that big, big contract company that does all the contracting, and he says,
I quote, "I'd be surprised if it" the sum that's in the strategic plan,
"I'd be surprised if it came anywhere near what needs to be spent". Well
there's a man who knows exactly how the railway works, because he's involved
in it all the time, his company.
BYERS: And probably a man
who'd like a little bit more money coming into his company as a contractor,
HUMPHRYS: Indeed, but then
there's nothing in it to upset you is there?
BYERS: ..but there may
be a reason why he's there making the case for need for more money to be
spent on railways because he wants his company to get a bigger slice of
HUMPHRYS: ...but he's not
alone, is he?
BYERS: Well I think there
are issues about the funding or railways, but I do believe that the money
we've got in the ten-year plan, you know, tens of billions of pounds, provided
it's linked to the reform programme will make a real difference and raise
the quality of the railways in this country. I mean, passengers want some
very simple things, they want trains that are not cancelled, they want
them to arrive at their destination on time, they want them to be safe,
they want them to be clean and comfortable, and those are the priorities
and that's how we'll be judged on how we improve in all of those areas.
HUMPHRYS: Well let's just
try to sum up that bit then by saying, no more subsidy from the government,
over and above what the strategic plan tells us about, no more of that,
and as far as the train operating companies and all the rest of it are
concerned, no big increases in fares to raise more money for them.
BYERS: That's true. That's
not the basis of the strategic plan.
HUMPHRYS: That is good.
So passengers who saw their fares shooting up in order ultimately to pay
for it, would be entitled to say, the government cheated us, lied to us.
BYERS: Well, they'd be
entitled to say, this was not in the ten-year plan, because that's the
truth of the situation.
HUMPHRYS: And that ten-year
plan is now fixed. That is, that's there, that's solid, that's in concrete?
BYERS: The obligations
are there. I've said though I want it reviewed every year, because there's
no point in having a ten-year...
HUMPHRYS: ...so it's not
really a ten-year plan then?
BYERS: Well, it's a ten-year
plan as we sit here today, but it's got to be flexible John, because if
you set it...
HUMPHRYS: ...so there might
be a different ten-year plan this time next year?
BYERS: It'll be the same
ten-year plan, but we'll review in the light of...
HUMPHRYS: ...so it might
be different, but the same?
BYERS: Well, we'll explain.
We'll give a review, if you like, a year on. What we've been able to achieve,
and what we're going to do in the future. Because the importance of the
ten-year plan, if I can just say this, is that it breaks down very precisely,
and it's quite worrying for a politician, this degree of detail, what will
be achieved the end of this year, what will be achieved by the end of 2005,
very important, that may be the time of the next election, and what will
be achieved by 2010, very precise commitments being made in the ...
HUMPHRYS: And what about
fragmentation of the railways. Everybody agrees it's completely bonkers,
twenty-five different train operating companies alone, what ought it to
be? What would be a sensible pattern, sensible shape for the railways?
BYERS: Well I think you're
right to point out that we've inherited a system where we have this terrible
fragmentation, and as a result, it's almost a bit of a blame culture, and
one of the things that struck me when I came in...
HUMPHRYS: Surely not in
BYERS: I think, well not
just in politics but in the railway industry. The people were blaming one
another for the failings of the system but were not prepared to take responsibility
HUMPHRYS: So what do you
think it ought to be? We've got twenty-five for instance train operating
companies, two, three, four, one?
BYERS: Well what Richard
Bowker has said, who's the new Chairman of the Strategic Rail Authority,
there does need to be a reduction, in the number of franchise operators...
HUMPHRYS: ...big reduction?
BYERS: ...a significant
HUMPHRYS: And he could
see it ultimately theoretically going down to one, could you?
BYERS: I couldn't see that,
but I think there will be a reduction, significant from twenty-five, I
wouldn't like to put a precise figure on it. But what we need to have is
a new franchise map, where the winners of the franchises are pushed to
deliver real improvements and the franchise process is one of the key levers
that we have to drive up standards and we should use it. It hasn't been
used to that effect in the past, but the new franchising regime which has
just been announced as well, will have at it's heart, the need to improve
the quality of service, to upgrade the lines and to give a far better travelling
experience to rail passengers.
HUMPHRYS: Let's have a
look in the closing minutes of this discussion, at London Underground,
where you want again a public/private partnership. Many people say it's
completely crazy the way it's going to work, it'll just be another way
of the whole fiasco of Railtrack's going to be repeated, the railways going
to be repeated Underground. You seem over the last few weeks to have been
suggesting that it's possible you might have second thoughts about that,
but in truth it'd be far too embarrassing for you to have second thoughts
at this stage, wouldn't it? Anyway, you're about the embark on your great
sort of road show with Tony Blair, I gather?
BYERS: Well, no second
thoughts, but last June, once again, when I came in, I said there are three
things that have to be satisfied for the public/private partnership for
the Underground to go ahead...
HUMPHRYS: Value for money
BYERS: Value for money,
which is, we're just about to do the test. Safety must not be compromised,
so the Health and Safety Executive will determine whether the system is
safe, not a politician, not Ken Livingstone or myself, but the Health and
Safety Executive, and thirdly, that there will be no privatisation of London
Underground. So this is not a Railtrack for the tube, as some people have
said. London Underground will continue to be publicly owned. What will
happen is that they will enter into contracts with the private sector,
but it'll be the private sector working for London Underground, now the
only point in going ahead with it is if these three private contracts deliver
value for money, now if they don't deliver value for money, and we'll know
over the next few weeks, then the public/private partnership will not go
ahead, and that's not a U-turn John, that just reinforces the points I
made last June.
HUMPHRYS: Right, but if
they come back and say, well we're not absolutely convinced, I mean, it
doesn't even have to be a great ringing endorsement in other words, if
they say, 'if, er, a bit dodgy really, possibly' you'd say, alright, we
won't do it. I mean it's just as simple as that.
BYERS: No, what we're going
to do is, probably the second week in February, we will release all the
information, I'm getting independent review from Ernst and Young about
whether it will be value for money, and there'll be a three-week period
where everybody can look in detail at whether or not these secure value
for money and then a final decision will be taken, so that..
HUMPHRYS: ...that three
weeks gives you the chance to pull away from it?
BYERS: Well I think we're
just being very open and transparent, and I think it's a good move to actually
allow the public to look in detail at how public private partnerships work
in practice and that's precisely what we intend to do, because if they
don't achieve value for money, then they won't go ahead.
HUMPHRYS: Because at the
moment the handover's supposed to take place on, what April 1st is it?
BYERS: It's probably later
than that to be honest. April 1st was always a sort of early date.
HUMPHRYS: ...so when, when
BYERS: ...probably during
the Summer I would have thought...
HUMPHRYS: ...during the
HUMPHRYS: Summer's a long
time. Could slip into what September, October?
BYERS: Summer's not a very
long time in this country John.
HUMPHRYS: It does depend,
BYERS; Some time after
April and it would be foolish to try and say precisely when.
HUMPHRYS: But it may not
happen, you're really asking us to believe that it simply may not happen,
after all the great rows there have been, it may not happen.
BYERS: The important thing
I think is that if we don't go ahead with the PPP that we move quickly
to make sure the investment goes in. I mean, my sort of motive here, is
once again, with the London Underground, like the railways, and like other
public services, there have been generations of under investment. Now I
happen to believe that we have got a once in a generation opportunity here
to improve our public services, because the money is there for education,
for health, for transport, for railways, for the tube. What we've got to
do is to use this opportunity to invest that money but make the reforms
that are necessary. Some people will oppose that, but it has to be done
if we're going to have world class public services which is what our people
HUMPHRYS: Stephen Byers,
thanks very much indeed.
HUMPHRYS: Tony Blair is about to get
a report from one of his special units about the energy crisis in this
country. What crisis? Well, there isn't one at the moment, but we're
heading in that direction apparently unless the right decisions are taken
soon and the big problem is global warming. There's enormous pressure
on all countries to cut pollution. In OUR case we've been relatively successful
so far, but the amount of electricity generated at nuclear power stations
is about to start dropping sharply and the new power is going to have to
come from somewhere. That means either more nuclear power stations - hugely
controversial - or trying to get more power from so-called renewable sources:
especially wind. Terry Dignan looks at the tough choices now facing the
TERRY DIGNAN: The modern city never sleeps.
It consumes energy relentlessly. But at what cost? The burning of fossil
fuels - gas, coal and oil - creates greenhouse gases. These are changing
our planet's climate. For the worse.
We're using energy as
if there's no tomorrow. Which means we're in danger of passing on to future
generations an environment irretrievably damaged by global warming. We
could switch on the lights using more nuclear power, but many Labour MPs
would object. Or we could use so-called renewable sources of energy, wind
in particular. But then the government would have to be brave and ask us
to pay higher electricity prices.
DIETER HELM: This government has a massive
majority, it is politically extremely powerful and it is a once in a generation
opportunity to tell people the truth, confront them with the facts of the
pollution that are caused to provide their energy resources and tell them
that it's going to get more expensive.
DIGNAN: At the Energy Savings Trust,
Energy Minister, Brian Wilson hears ideas for reducing fossil fuel use.
We face becoming dependent on imported gas, while emissions of pollutants
like CO 2, Carbon Dioxide, will go on rising. The Prime Minister's Performance
and Innovation Unit has been asked to come up with a solution.
BRIAN WILSON MP: It's a very challenging circle
to square. If we go on, if we did nothing, if we didn't have this review,
if we didn't take any interventionist actions out of this review then we
would have this very high dependence on gas, our nuclear industry would
fade away and that has an impact on emissions and also we wouldn't make
progress on renewables which in the past we haven't done well on at all.
JOAN RUDDOCK MP: It's a matter of investment, it's
a matter of political will and I think also dispensing with some of the
vested interests. The calculations are quite clear we could, even by 2025
produce half our energy from renewable sources. I think if the government
puts its mind to it, that could be achieved.
DIGNAN: On the Suffolk coast there's
home-grown energy without global warming. But Sizewell A nuclear power
station belongs to a dying industry. The nuclear reactor underneath me
here will shut down for the last time in 2006. Most of our nuclear power
stations will close over the next twenty-five years and there are no plans
to replace them. Yet ministers are now refusing to rule out a long term
future for nuclear power. Unlike coal and gas, nuclear power does not emit
greenhouse gases like CO 2.
ROBIN JEFFREY: Nuclear power today provides
round about twenty five per cent, a quarter of the UK's electricity. It's
very important, that's a lot of electricity, that's one out of ever four
light bulbs. So it's a very important aspect of making electricity in the
UK and it's got some very special advantages because it's electricity without
putting green house gasses, global warming gasses up in to the environment.
DIGNAN: But there is a big drawback
to nuclear power. It produces radioactive waste. If the protective clothing
of these men becomes contaminated, the material can be disposed of or treated
safely. But waste from nuclear fuel is much more of a problem and the cost
of storing it prohibitive. Which is why the energy review is expected to
play down nuclear's contribution to our future needs.
RUDDOCK: We've got ten thousand
tons of highly toxic nuclear waste at the moment that nobody can actually
dispose of. We are planning to get up to five hundred thousand tons from
the existing nuclear capacity and it's going to cost us something like
eighty five billion pounds to deal with this problem.
DIGNAN: An era is drawing to a
close. But ministers fear becoming too reliant on fossil burning fuels.
So they might extend the lives of some nuclear power stations. Despite
pressure from environmentalists, they won't rule out a long term future
for nuclear power.
WILSON: I don't think you can
do that. I think it has to be kept, the option has to be kept open certainly
for the foreseeable future. I don't think there's any great rush to build
new nuclear power stations but on the other hand, I think it would be crazy
at this juncture to say nuclear is a...has got no contribution to make.
Because the challenge then of meeting our environmental obligations and
at the same time losing the nuclear component would become that that much
DIGNAN: Many believe this is where
we should get our energy from - the wind. So-called renewable energy like
wind doesn't give off greenhouse gases or create dangerous waste. But this
Norfolk wind farm only produces enough energy to heat fourteen hundred
homes. If we're to see a massive expansion in renewable energy, it's argued
both the public and the Government will have to do more than simply pay
lip service to the idea.
The wind is free and the
maintenance requires just the occasional visit from an engineer. Yet less
than three per cent of our energy comes from renewables. Ministers hope
it will be ten per cent by 2010. The Performance and Innovation Unit is
likely to suggest doubling that figure by 2020. Yet wind farms have taken
off slowly. They suffer from rules which penalise energy companies financially
for any interruption in supply.
NICK GOODALL: The new electricity trading
arrangements under which all electricity is traded are disadvantageous
to renewables and it's a perversity that on one hand we have a laudable
government objective of introducing an initial ten per cent of electricity
from renewables and yet the single most likely technology, wind, which
by it's nature is, is intermittent because sometimes it's windy and sometimes
it's not, is actively punished by the rules of the new trading system.
DIGNAN: The Government's answer
is the Renewables Obligation which will require the utility companies to
buy a tenth of their electricity from environmentally-friendly sources.
But ministers may be loathe to meet a figure of twenty per cent for fear
of driving up prices to the consumer.
WILSON: You have to keep a balance
here between what carries public acceptability and what government wants
to do and our obligations environmentally and towards our future energy,
energy policy. And if you've got these things too far out of sync then
it's going to create a backlash. It's going to create a backlash from domestic
consumers who don't want to see their bills going up disproportionately,
it's going to create a backlash from industry who do not want to be made
uncompetitive through the price of electricity.
HELM: In the end, it is a choice,
it doesn't add up to simply say: you could have low prices and you could
have a significant improvement in our global warming position. You can't
DIGNAN: And nor may it be possible
to substantially increase wind energy without changing planning laws. Some
regard wind farms as eyesores. So there are to be regional targets for
renewables. Yet tackling global warming may still be undermined by planning
WILSON: We can achieve the 2010
target but no one should make any mistake that it's challenging and the
whole planning issue is a major factor in whether or not we, we achieve
DIGNAN: Take to the sea - that's
one answer to the problem. This meteorologist and engineer from Enron Wind
in Germany, hope there's enough wind off the Essex coast to generate plenty
of energy. Yet ministers even sound a note of caution about this idea and
about renewable energy generally. To the disappointment of those who extol
the sea's obvious advantages.
GOODALL: There's an awful lot of
water out there and if the sea bed's good enough that's perfectly good
real estate for building wind farms. If you want to build a several hundred
mega watt wind farm, as we're beginning to see interest in now, there aren't
many places on-shore you can do that.
WILSON: Off shore wind can be a
huge contributor, but already there are some storm signs brewing there
of people with interests who will object to that. You can't really mention
one technology where there are not either objections to current projects
or the prospect of objections when you actually come forward with them.
DIGNAN: And it may be a struggle
linking offshore - and onshore - wind generators to the national grid.
Indeed, the way electricity is supplied is a problem for most renewables.
UNNAMED MAN: The grid connection is at
the back of Clacton on Sea, so we've got an overland route to the shoreline
and then undersea cables out to a transformer in this area.
DIGNAN: Renewable energy generators
will be scattered far and wide and they'll be on a much smaller scale than
conventional power plants.
HELM: We have an electricity
system which is designed primarily with big coal power stations in the
North and nuclear power stations on the periphery, away from populations,
in mind. Those big power stations output is then transported through our
electricity system to the customers predominantly in the South. Now that
system for big power stations is uniquely inappropriate for a world of
small-scale local embedded wind farms or bio-mass farms or whatever.
DIGNAN: The plan here is for thirty
generators. But first the visitors have to start monitoring the wind's
strength and direction using a weather mast. To encourage such investment
it's said the Performance and Innovation Unit's draft report proposes a
carbon tax on fossil fuels, making renewables comparatively cheaper and
providing revenue to adapt the grid. Ministers, though, fear voters' reaction.
WILSON: I'm always very wary of
these kind of cure all's that if only we did it this way everything would
be alright. Well we're doing it in one particular way which has to carry
public acceptance, has to carry public understanding.
HELM: Much as governments like
to please everybody and come up with solutions which everyone welcomes,
the fact is that if you want to reduce CO2 emissions in this country by
a substantial amount, it's going to cost an incredible amount of money,
it is not a free lunch.
DIGNAN: Just four or five of the
type of wind farm planned here could provide as much energy as Sizewell
A nuclear power station back up the coast. But doubts remain as to whether
there's the political will to switch to renewable energy. If there isn't
many fear it's hard to see how we can avoid doing further damage to our
RUDDOCK: We can meet our energy
needs by renewables and it seems to me that if the report comes out strongly
enough, and I hope it will, then the Government will have a message and
there will be many many Members of Parliament and indeed pressure groups
that will be saying to the government tackle this now, demonstrate the
political will and get on with the job.
WILSON: I think we should go full
steam ahead on renewables. We should and we are, we are putting weight
and commitment behind that on a scale which is in complete contrast to
everything that has gone before in, in this country. But the idea there's
a simple answer that you leap from or our present mix to one which is very
heavily dependent on renewables is, is not realistic.
DIGNAN: Our demand for energy is
insatiable. But the harm this causes our environment has left the Government
in a dilemma. There's no shortage of ideas for tackling the problem. But
they're expensive and politically risky. Which is why ministers appear
so fearful of endorsing them.
HUMPHRYS: Terry Dignan reporting there.
That's it for this week. Don't forget about our website. Until the same
time next week... good afternoon.