Q11 Chairman: Of course.
Dr Mitchell: The press statement says: "Commenting on today's article in The Guardian rail firms ask Hoon for state help. An ATOC spokesman said, 'The story in today's Guardian is not an accurate reflection of the discussion which actually took place at the meeting between train operators and the Secretary of State yesterday. Train operators explained that they are weathering the current economic climate and, as with all other responsible businesses, are actively monitoring how events unfold. The specific ideas reported were not raised with the Department but train companies underlined both their commitment to deliver quality services to passengers and their willingness to contribute actively to the economic recovery of the UK."
Mr Curry: Chairman, a point of order. As a financial journalist could I just point out that if we are given information in camera the interpretation outside will be that all or any of the companies might be in difficulty and I think that will have a much more damaging effect than being specific because even for those that may not be in difficulty the speculation may well be that they are.
Q12 Chairman: You have heard what my colleague said. Of course I will allow you to give us evidence in private, but you might contemplate what Mr Curry has said and you might want to use this opportunity in public session to give some reassurance to the public.
Dr Mitchell: What I may say at the moment is a small number of companies are showing red and I am prepared to divulge the number in private at the end.
Q13 Chairman: Let us ask you, looking at paragraph 11 on page six, what would happen if there was a failure. The taxpayer, it tells us, shares demand risk with the train operators. Presumably the taxpayer is, therefore, exposed in the event of a failure?
Dr Mitchell: Yes, indeed. In two ways they would be exposed. First of all, most franchises now have a revenue share arrangement whereby the Government take some of the downside risk in return for some of the upside reward. Obviously if a train company is not trading successfully then the Government starts having to bear some of that pain. The second thing is, depending on the time of the market, if a train franchise has to be re-let then we may get an adverse price compared with the time that the franchise was let.
Chairman: A subject of interest to me is GNER, for those who have constituencies in the East Midlands-
Mr Curry: Ex-GNER.
Q14 Chairman: Exactly, precisely what I was going to ask about. Of course, GNER was at risk of failure. If we look at figure 17 on page 26, the history of GNER, I can say as a passenger-maybe my colleague, Mr Curry, may disagree with me-I have not noticed any fantastic improvement in the service that I am receiving. I see that they have promised you-National Express-an additional £100 million premium. Is that secure? Are you going to get it?
Dr Mitchell: The train companies have said that they are intending to deliver the franchise premiums and the franchise agreements they have with us. The re-let of the GNER franchise, the East Coast franchise, was, as you say, let at an increased premium. That, I think, reflected the state of the market at the time but, as I said in my previous answer, if one was to let a franchise like that now-
Q15 Chairman: It is very much at risk now. Given the passenger experience is much the same, what are we achieving? For instance, it says here: "Among the extra services will be new London-Lincoln ... " line. That is not a very exciting prospect because it is going to go via Nottingham.
Dr Mitchell: There are a number of additional promises made within the franchise agreement, one of which is an enhanced service to various destinations in the north from the second timetable iteration which is due at the end of this year. There are a number of other franchise commitments which National Express have made which I would be happy to elaborate on if you wish.
Q16 Chairman: You can send me a note about them,1 I do not want to weary my colleagues with more questions about GNER.
Dr Mitchell: I will be happy to.
Q17 Chairman: I think you will find that various of my colleagues will have interests around the country so you will have to do your best to answer them in some detail or give us a note.
Dr Mitchell: Of course, I will be happy to do so.
Q18 Chairman: Let us go on asking a couple more questions before I finish on the impact on the taxpayer. If we look at paragraph eight, the impact on the taxpayer, we see that: "These savings help to fund the Department's proposed investment in passenger services". How will you ensure that any reduction in subsidy you do receive is, indeed, ploughed back into investment in passenger service?
Dr Mitchell: There is no direct link between the funding that has been promised for railways over the next control period, which is 2009.
Q19 Chairman: It says here: "These savings help to fund the Department's proposed investment in passenger service". What we want to know is that any money or saving is going to be ploughed back to passengers. That is a fair question, is it not?
Dr Mitchell: Yes, it is.
Q20 Chairman: Are you prepared to give me any kind of positive answer?
Dr Mitchell: Yes. The answer is a straight yes.
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