Q1 Chairman: Good afternoon. Welcome to the Committee of Public Accounts. First of all, I would like to welcome a couple of delegations joining us. We have a delegation from the Public Accounts Committee of Sierra Leone, you are very welcome. We send our best wishes to your chairman who is ill in hospital after arriving here; we hope he is better now. Also, we have officials from the Stormont Public Accounts Committee, Northern Ireland Office. If any Members are available I will be meeting our guests and friends after this Committee and we will discuss interesting points arising from it. Today our business is that we are considering the Comptroller and Auditor General's Report on Letting Rail Franchises 2005-2007. Welcome back to our Committee, Dr Mike Mitchell, who is the Department's Director General responsible for national networks. Perhaps, Dr Mitchell, you could introduce your colleagues, please.
Dr Mitchell: Yes. On my left is Mr David Payne, who is Acting Head of Finance for National Networks, and on my right is Mr Jack Paine, who is my Director of Procurement.
Q2 Chairman: Okay. Can I ask you, first of all, about your forecasts on passenger numbers. If you look at paragraph 10 on page six of the Report it reminds us that: "The reduction in subsidy is dependent on a continued strong increase in the number of passenger journeys". I just wonder whether you were not over-optimistic in thinking that you were going to have to pay less in subsidy because of a strong increase in passenger journeys when, of course, because of recession that might not happen?
Dr Mitchell: Yes, Chairman, that is clearly a concern that we have, but we do monitor the financial position and, of course, the passenger numbers of all the train companies closely. We are in very regular contact with all the franchisees on at least a monthly basis. Obviously the economic downturn is having an effect, but for the present revenues appear to be holding up reasonably well. In one or two cases we have been told by franchisees that their season ticket renewals in January, which is a very good indicator, a lead indicator, have been up. That gives us a bit of comfort, but I think you are right in saying that this is a matter we need to keep under very close review.
Q3 Chairman: Let us just explore that in some more detail, if we may, and look at paragraph 4.8, which you can find on page 25, Dr Mitchell. At the bottom of that paragraph it says: "The Department now produces 'traffic light' early warning reports on the financial position of each operator". So what are these traffic lights showing on the financial position of these operators? What is happening at the moment?
Dr Mitchell: This is a report that we maintain on a regular basis to give ourselves our view of where we think train companies may be going over the course of the next few months. We also monitor the condition of the holding groups, bearing in mind the experience we had with GNER some 18 months ago. We seek to validate these views with the train companies and with the holding groups, and we are in the process of doing that at the moment.
Q4 Chairman: You are just describing to me what I already know. What are these traffic lights showing at the moment?
Dr Mitchell: I have difficulty saying what the exact-
Q5 Chairman: How many lights are now at red?
Dr Mitchell: I would have difficulty answering that question, Chairman, because that is price sensitive information on behalf of all the train companies.
Q6 Chairman: I was not asking you which companies are showing at red. There is a lot of public money at stake here, Dr Mitchell, £3-4 billion worth of public money. I think that as a Committee of Public Accounts we are entitled to know in general terms what is going on. I am not asking you to specifically mention a particular company, which I agree with you might affect the share price, but I do ask you to reconsider your answer and see if you can give some sort of answer to the Committee, which monitors public spending, so that we can be assured that £3-4 billion worth of taxpayers' money is not in danger.
Dr Mitchell: I understand the question. I would emphasise that these are our views of the likely risks going forward on train companies.
Q7 Chairman: I know they are your views. How many lights are now at red?
Dr Mitchell: I repeat, I have great difficulty answering that.
Q8 Chairman: You are refusing to answer that question?
Dr Mitchell: May I consult with my colleague?
Chairman: You may.
Mr Curry: A non-answer to a question is more damaging to the rail companies than an answer.
Q9 Chairman: Do you know how many lights are red?
Dr Mitchell: Yes, I do. Chairman, I am very concerned about the effect that this is likely to have on share price, however I accept that you have a right to know this information. May I suggest that we have a session in private at the end of this session at which I will be pleased to give you that information?
Chairman: My colleague will just ask a question about something that has been in The Guardian today.
Mr Williams: The Guardian today is full of the woes of the franchisees and saying that they are asking for reconsideration of the franchise terms and that they want shorter trains, they want rewriting of financial terms in the financial agreement, they want extra state funding for a thousand staff across the railway network and there are a whole series of figures that they apparently have given to The Guardian. Why are you not aware of these and why can we not be told?
Q10 Chairman: Why can The Guardian be told and not this Committee?
Dr Mitchell: The straight answer to your question, Mr Williams, is that The Guardian report is inaccurate. I attended that meeting which The Guardian reported and none of these issues was raised with the Secretary of State. Perhaps it would help if I read an extract from an ATOC-that is the Association of Train Operating Companies-press release this afternoon in response to The Guardian article. May I read this?