BBC On The Record - Broadcast: 20.01.02

==================================================================================== NB. THIS TRANSCRIPT WAS TYPED FROM A TRANSCRIPTION UNIT RECORDING AND NOT COPIED FROM AN ORIGINAL SCRIPT; BECAUSE OF THE POSSIBILITY OF MIS-HEARING AND THE DIFFICULTY, IN SOME CASES, OF IDENTIFYING INDIVIDUAL SPEAKERS, THE BBC CANNOT VOUCH FOR ITS ACCURACY ==================================================================================== ON THE RECORD RECORDED FROM TRANSMISSION: BBC ONE DATE: 20.01.02 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. NEWS 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, delays, 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 whole approach. 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 so. 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 in trouble. 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 this crisis. 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 are. 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 in hand. 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 there. 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, yeah? 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: took an awful long time to do that.. BYERS: took a number of years but we had to get legislation through Parliament. HUMPHRYS: 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 counting... 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: there is an apology there for having done a bit of double counting in the past... BYERS: 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 then. Where... 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 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 to Railtrack... HUMPHRYS: ...assumption that they will I think is perhaps a better word... BYERS:, 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, 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? And we... 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 be then? 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: 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 for instance.. BYERS: 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 basic commercial... BYERS: ...yes, these are con... HUMPHRYS: ...capitalistic... 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: 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, so he.... 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 the cake... 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: 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: 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: 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 politics? 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 themselves. 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 reduction. 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: when, when might it... BYERS: ...probably during the Summer I would have thought... HUMPHRYS: ...during the Summer? BYERS: Mmm. 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, September, October? 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 want. 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 government. 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 greater. 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 have both. 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 objections. 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 it. 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 environment. 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. 27 FoLdEd
NB. This transcript was typed from a transcription unit recording and not copied from an original script. Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy.