West Coast Main Line

HC Deb 01 December 1993 vol 233 cc533-4W

Mr. Day

To ask the Secretary of State for Transport if he will make a statement about the modernisation of the west coast main line infrastructure.

Mr. MacGregor

My right hon. Friend the Chancellor of the Exchequer announced in his Budget statement that the Government have decided that the modernisation of the west main line will be taken forward as a privately managed and financed investment as part of the private finance initiative. The investment made by the private sector will be additional to the investment which Railtrack will be able to fund under the public expenditure plans announced in the Budget.

Principles for using private sector management and finance have been agreed between the Department of Transport and Railtrack following a study carried out by Hambros Bank Ltd. Under these:

Railtrack will be responsible for project definition and will draw up performance standards for the line in association with the private sector. Railtrack will be inviting expressions of interest in the next few days.

Once the new performance standards have been set, a competition will be held in late 1994 to select a private sector consortium to modernise the line and to maintain it for a defined period. The responsibility for project management and design will also rest with the successful consortium.

The successful consortium will be remunerated by service payments from Railtrack during the contract period. These payments will be subject to penalties and bonuses linked to the performance of the consortium in meeting the new performance standards and the consequential impact this will have on revenue losses and gains on the line.

The new standards will stipulate minimum performance criteria. Where commercially justified, the InterCity west coast franchisee (and, possibly, other train operators) will be able to contract for linespeed and other improvements in exchange for increased access payments.

To facilitate this the InterCity west coast franchise will be let at the earliest practicable date.

The principles have been devised to transfer risks out of the public sector to those who can control them best. The risk that the infrastructure fails to perform to specification will be transferred to the private sector consortium. That consortium will also bear revenue risk insofar as it is affected by the performance of the infrastructure. The bulk of the remainder of the revenue risk will be transferred to the train operating companies and the providers of private sector funds.

This approach will bring together private and public sector expertise to modernise the line in a way which will ensure that its full potential is realised without the capital cost coming out of public funds.