Q131 Geraldine Smith: The problem I find since rail privatisation is everything seems so fragmented and even as a Member of Parliament I find it difficult to know, when people complain, just who to raise those complaints with, because people pass the buck and it is very difficult. You have different people dealing with stations, different people dealing with trains and things; do you not think it would be better if it was a lot simpler and is this not working out really expensive for the taxpayer in the long run?
Dr Mitchell: I do not think it is working out more expensively for the taxpayer. The 2005 Act of course simplified the structure considerably by taking the SRA out of it and reducing it basically to the Department for Transport, the Office of Rail Regulation and Network Rail. It is obviously more complex than under British Rail but the results are there for themselves; the train companies I believe have brought a lot in terms of innovation and in terms of improving capacity in a situation where up until the early 1990s we were managing decline.
Q132 Geraldine Smith: That very much depends on the train companies and you will find very mixed experiences if you travel on the trains a lot; sometimes it does not feel like there are those improvements but other times it does. Virgin Rail operate a pretty decent service, as I say very expensive in terms of business travel, but they operate some reasonably priced fares, so the long distance does not seem too bad. For commuter journeys and things, however, it is pretty hit and miss and if you travel in school holidays at times it can be a nightmare on those trains. I travelled with my elderly mother and, you know, when someone is old and is faced with being stood on platforms, crowded in like cattle, not being able to get on a train and when they eventually do get on there is nowhere to sit; someone like that is not going to use the train again in a hurry. You seem a bit complacent about these sorts of issues.
Dr Mitchell: No, not at all.
Q133 Geraldine Smith: You do not seem to think there are any real problems there; just as long as you can get enough people on the trains it really does not matter, they will just have to put up with it.
Dr Mitchell: We are certainly not complacent about it. As I have said, we have got the challenge since really the start of privatisation of a growing railway, and it has been a challenge to deal with that position. You are right, we have got patchy performance, not only between companies but within companies, and part of the challenge is to get that level of average performance up. We have improved punctuality, for example, but there are still outliers. You mentioned Virgin Trains; for reasons, mainly not of their making, their performance has been below what we would expect in recent weeks. In terms of the action we take on it, I have seen in the Report the reference to First Great Western where there was considerable disquiet about their performance at the start of last year and we took quite severe action on their part and I am happy to report that their performance is now among the best in the UK. It can be done and it is part of our job as effectively franchise managers to lift that general standard and to get the public the service they need.
Q134 Geraldine Smith: Would you say you pay enough regard to actual quality? I take on board what you say about punctuality and there have been improvements in train times, they do tend to run a lot better, but sometimes it is the experience while you are actually on that train and sometimes it can be extremely poor. What can you do; once the franchises are actually issued how can you keep a check on those companies and what sanctions can you have against them if they are running a poor service?
Dr Mitchell: The level of complaint that each train company is getting, the reasons for those complaints and the passenger satisfaction scores are discussed on a monthly basis so we do pressurise the companies to improve where we think they can do so. We have, as I said earlier, shied away from putting absolutely everything into the franchise agreement because the danger with that is the old problem of micro-management; if we put everything in then we have to monitor everything carefully and it would be a valid criticism then to say that we are micro-managing. There has to be a balance between putting everything in and putting the more important things in and then going for discussion with the train companies.
Q135 Geraldine Smith: Finally you were asked previously why not involve local bodies in the bid evaluation; I just get the feeling you know when it comes round to the rail franchises that it seems very complex, it does not feel like you go out and try and seek the views of people, it does not feel like you get involved and find out what people want and what the feelings are about the time of the train service. It just feels like there is not much competition, one of the companies is going to get it and you just make do with the best of a bad lot.
Dr Mitchell: Quite the reverse; the train franchises so far have been hotly contested and we have recognised that there is more we can do to involve local bodies as we have done with the South Central franchise, first of all by involving Passenger Focus which of course directly represents the passengers on the route, but also by making sure that local bodies are consulted directly, not just circularised and asked for their comments. That is showing good results on South Central, so I am happy with that and I think we should continue to do that. There have been occasions in the past-again I can think of Great Western-where that was not done as well as it might have been and we paid the price.
Chairman: Your last questioner before we move into private session will be Mr Alan Williams and there will be one or two supplementaries. Could I please urge you to speak up because we are finding a little difficult to hear. It may be that in your training you are told that permanent secretaries are meant to speak as softly as possibly, but it does not help us so speak up. Mr Alan Williams.
Q136 Mr Williams: Thank you. We are told in the supplementary briefing that in the event of adverse economic conditions train operators have contingency plans to reduce costs. These of course were agreed, I assume, as part of the agreement you have with them.
Dr Mitchell: Yes.
Q137 Mr Williams: What scale of adverse conditions were they envisaging at the time the contracts were entered into?
Dr Mitchell: I do not know what their contingency plans were.
Q138 Mr Williams: But they were unlikely to be at this level unless you were one of the few percipient people in the United Kingdom.
Dr Mitchell: The train companies are of course free to vary things which they may have introduced over and above their franchise obligations. We cannot, clearly, force them to do things which they were not contracted to do so I guess the first thing they would do would be to revert to what the franchise calls for and to deliver the actual contract. The secretary of state is quite clear that these are commercial contracts with private companies and we expect them to be delivered.
Q139 Mr Williams: If there were contingency plans obviously they would meet any contingent that you could envisage. In light of what had been recent history of 20 or 30 years at least before the contracts were drawn up you could not have envisaged anything like what is happening now; are the contingency plans remotely capable of dealing with what it looks as if we are moving into?
Dr Mitchell: I think so, up to a limit of course, depending on what were to occur. Based on what we know now and what we believe the train companies' current results are, as revealed by their very recent statements, we are not anticipating having to do anything other than what we already have in hand. The sort of thing we would do would be if a company were unable to fulfil its obligations then we would seek to re-let the franchise-if a company is actually unable to deliver on its performance. If it was a temporary downturn we would expect the company to ride the storm and to carry that loss if there was one, but we would not expect to renegotiate a contract nor would we expect to give them an easement against the terms of it.
Q140 Mr Williams: We are told that the Department has a statutory duty to intervene should the train operator be unable to continue operations; what would be the extent of that potential intervention?
Dr Mitchell: In the case of GNER, which is mentioned in the Report, we made an arrangement with GNER to carry out the functions of the franchisee on a management basis; in other words we paid GNER to run the franchise while we re-let it. That decision was on the basis that GNER were a good and competent operator; they had fallen on hard times but there was no reason why they should not continue and, as events proved, they ran the franchise extremely well during that 11 months or so of the contract. In the event that that is not possible you are quite right that section 30 of the Act allows that the DfT has a duty to intervene and run the franchise.