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Transport Secretary Stephen Byers
Transport Secretary Stephen Byers

Please note "BBC Breakfast with Frost" must be credited if any part of this transcript is used

DAVID FROST: But right now we can talk to the man we mentioned, the man we trailed at the beginning of the programme and that's of course Stephen Byers, the transport man. Good morning.

STEPHEN BYERS: Good morning David.

DAVID FROST: Let's start with Railtrack and the future for a minute.


DAVID FROST: You put Railtrack into administration, how long will it be before you can get it out again?

STEPHEN BYERS: It's probably worth saying David why we put Railtrack into administration, it was a petition that I put to the High Court because Railtrack simply couldn't pay its debts and it was a, an application that was unopposed by Railtrack.

DAVID FROST: Yes they would say, I want to talk about the future but, but they would, they would say that in fact you'd, you'd clobbered and gagged the rail regulator before, the announcement on the Sunday meant that there was no bank lines open on Monday and that in fact it was, as they say, there's a chat up line nowadays in London which is in the bars where a man goes up to a girl and say, oh if only you were Railtrack and I was Stephen Byers, and so that's what a lot of people think about that. But we'll come back to that.

STEPHEN BYERS: I've not heard that line myself, perhaps I'm going to the wrong bars.

DAVID FROST: That's right, you'd have to look in the mirror I suppose since you are Stephen Byers. But just, but how long will it take before it comes out of administration?

STEPHEN BYERS: The administrator is obviously now going through looking at the assets, looking at the liabilities, he's actually found the situation far worse than we originally expected, so it may well take more than six months unfortunately. But the important thing is that when it comes out of administration that we have a strong foundation to build a railway system which is fit for the 21st century.

DAVID FROST: Yes so you, so, so it's going to be a year or 18 months?

STEPHEN BYERS: I don't think it'll be that long David actually.

DAVID FROST: Not that long?

STEPHEN BYERS: No I hope not.

DAVID FROST: But who's going to run it in that time, I mean if we're now talking of a year who's going to run it?

STEPHEN BYERS: Well I think it'll be a little over six months, I'm not sure it'll be as long as a year but that, I say, is for the administrator who has legal obligations in these matters. One of the options will be a company limited by guarantee which will have as a number one priority putting the interests of the travelling public first, they won't have the dilemma of on the one hand having to increase shareholder value whilst at the same time trying to invest in the infrastructure¿

DAVID FROST: No but Alistair Morton said here last week, didn't he, that in fact that you've made it much more difficult for, for the money to be raised for Railtrack because the government reneged on its promises, pulled out the rug and they'll all be terrified you're going to do it again?

STEPHEN BYERS: Well all of the promises that we had and all of the legal obligations that we had were met as far as Railtrack's concerned, I mean we paid over £337 million on the 1st of October, just five days before I took the final decision that no extra taxpayers money would be made available. What I think most people recognise is that there's a world of difference between Railtrack which was, I think most people now recognise a mistaken and a failed privatisation and the sort of public-private partnerships that we want to enter into as far as investment in railways.

DAVID FROST: But people will be worried that the government will do again what you just did?

STEPHEN BYERS: Well no because I think we met all our legal obligations in relation to Railtrack and so people will know that and will know that we will meet our legal obligations and where there's a contractual relationship¿

DAVID FROST: They reneged on all sorts of promises?

STEPHEN BYERS: No we didn't David, I know that that's an accusation that's been made, when people look at the facts they will see that the agreement that we entered on the 2nd of April was met in full, all of our legal obligations were met in full and that's the situation.

DAVID FROST: But I mean in this situation we've got this period, who is going to run it? Clearly at the moment it's being run by Railtrack employees, existing Railtrack employees and they are obviously about to rush out and try and find, are already rushing out and finding other jobs because it's impossible to recruit new people in this current situation. And at the same time they're the people who you've condemned as incompetent and so on and now you're entrusting them for another year, and I just fear that there could be on the basis of all these statistics a real meltdown?

STEPHEN BYERS: Well I think we've, we've been very critical of the senior management in Railtrack because what's become increasingly clear and I think the travelling public are aware of this, was that Railtrack became part of the problem for the railway network and were not part of the solution. But there's many very good people working in Railtrack and what I want them to have is a structure within which their talents and abilities can be brought to the fore and that does mean a change and there will be a change and that's for the administrator to decide. One of the options will be a company limited by guarantee with a clear focus of putting the interests of the travelling public first.

DAVID FROST: But, but Stephen at the same time people say this £3.5 million black hole which is only £1.4 and, and which everyone says is a black hole, if there's a black hole there it's of your own digging, I mean they say, the management of Railtrack say that the reason things are worse now than they were before October the 5th is one, that their detailed plans to eliminate over 1100 jobs have been shelved by the administrator. That suppliers, obviously, and trade creditors, terrified about what's happening, are asking for earlier payments, that the Renewco transaction didn't go ahead obviously. That for all these reasons that the troubles now are of your making and not of theirs?

STEPHEN BYERS: Well that simply isn't the case, I mean it's six weeks or so since Railtrack went into administration, the Railtrack, it's worth reminding people, actually wanted a blank cheque from the government and I had to take a decision. Were we going to put yet more taxpayers money, your money David and my money, into Railtrack who'd basically failed the railway system, who'd failed the travelling public, or take the tough decision that was necessary to say no, enough is enough, let's move forward. If we're serious about creating a railway system in this country which is fit for the 21st century, which we haven't got at the moment, you've got to take tough decisions. The action I took in relation to Railtrack was a difficult decision but I'm convinced it was the right one.

DAVID FROST: Talking of that, what, when will the shareholders, leaving aside exactly how much, when can the shareholders expect their compensation and in fact one paper this week said 2004, is that right?

STEPHEN BYERS: Well I think there are two separate issues here, one is there is clearly value in Railtrack and that's the value which shareholders are entitled to. Secondly there is the issue of compensation and the government has made it very clear that we're not in the business of providing more taxpayers money into Railtrack to compensate the shareholders of Railtrack. They've said they want £3.60 per share, that's over, that would be over a billion pounds of taxpayers money going into compensate the shareholders of Railtrack, we're not prepared to do that, that was their investment, investments can go down as well as up and that's the nature of the market.

DAVID FROST: But in terms of the value, the true shareholder value, when will they get that?

STEPHEN BYERS: Well that, once again, is a matter for the administrator, it is a company in administration, in these circumstances the administrator has a legal obligation to the shareholders and it's one he will discharge.

DAVID FROST: But if the situation is that there are still legal actions going on they, until those legal actions are settled you can't set up the new system?

STEPHEN BYERS: Well we may well be able to do that and we don't know the nature of these legal actions but I think the administrator will still be able to move ahead and to get a successor to Railtrack and that's what we all want to see because this is about actually creating a railway system that is fit for the, you know we've got the fourth biggest economy in the world¿

DAVID FROST: Fit for the 21st century, you said that the other day and someone said well the 19th would be nice but do you, do you hope that a private bidder comes forward and solves all your problems with an acceptable offer or will you try and scare them away?

STEPHEN BYERS: No we've been very clear that we would welcome expressions of interest, we've laid down very clear guidelines to encourage people to look carefully at what the opportunities might be, the important point is we want a successor to Railtrack that doesn't make the mistakes of Railtrack, this is the chance, a really a golden opportunity for a new beginning for our railway network here in the United Kingdom.

DAVID FROST: What about the tube for a moment, and where that stands, there are two tests coming up both of which you've said that you will abide by, there's a safety test and there's a value-for-money test. The safety test, the estimate of that is April, yes?

STEPHEN BYERS: I think it might be a bit sooner than that, in fact there are two tests, there's one specifically in relation to London Underground and then there's a second test in relation to the, the preferred bidders. I think April is probably, by the time the whole thing is concluded, will be about right. But what we have said is that there can be no safety on compromise, no compromise on safety and that does mean that if the Health and Safety Executive says this system is not safe then we won't proceed with the, with the public-private partnership.

DAVID FROST: Right and the same is true on the value-for-money test?

STEPHEN BYERS: It is, I'll be getting independent advice on whether the, the contracts represent value for money and once again there'll be a judgement there but we've got to secure value for money, we want to see something like £13 billion going into the Underground over the next 15 years and that's got to achieve value for money, it's a big sum of money. The London Underground, as we all know, as been under-invested in for years now and we've got to change that and this money will, must drive real improvements.

DAVID FROST: And in terms of who will, who will make that test, will it be the National Audit Office or will it be Ernst and Young?

STEPHEN BYERS: Well London Underground will make their own decision, quite separately I'll have advice from Ernst and Young on the value for money aspects and the National Audit Office will, will make recommendations on the whole process which has been adopted by the London Underground and then I have to arrive at my decision.

DAVID FROST: Is there a conflict of interest for Ernst and Young there because you're paying them £2 million a month with one hand, is there, is there a conflict of interest there?

STEPHEN BYERS: Well you're right to say Ernst and Young are the administrators.


STEPHEN BYERS: But they were appointed by the courts, that's quite separate from anything I might do as Secretary of State.

DAVID FROST: And if, in fact, one of, one of these two tests is failed, or both, but I mean if one of them is failed then the whole scheme drops as you just said, right, and you have to start again?

STEPHEN BYERS: Well certainly as far as the Health and Safety is concerned then we need to look again. With the value for money test the, basically there are three contracts and it may mean, may be that two of them achieve value for money and the third doesn't in which case there will need to be a public sector solution as far as that third contract is concerned. But we must get value for money.

DAVID FROST: Deloittes of course, their, their previous report said that this scheme was flawed and simplistic and so on, so, so it's going to be a close run thing whether that value for money test gets past, isn't it?

STEPHEN BYERS: I think it's going to be one of those difficult decisions that I have quite a few of nowadays David. But I think the important thing is whether it's Railtrack or the London Underground, what we've got to do is to take these tough decisions and get the investment going in because I take the view that we do not have a transport system here in the United Kingdom that we can be proud of and that means that I've got to take the difficult decisions that will make a real difference.

DAVID FROST: And, and in terms of this you said you think and hope that the new Railtrack will be up and running, if the money can be found and so on, within a year?

STEPHEN BYERS: Within a year.

DAVID FROST: Within a year, not the three to six months. And when will the new Transport for London, or whatever we call it, London Underground, three, three companies or three, three linked companies, or unlinked but Balfour Beatty have got two of them haven't they?


DAVID FROST: When will that scheme in fact swing into action, because it was going to be the spring at one stage wasn't it?

STEPHEN BYERS: It is, well it depends on the negotiations being successfully concluded and what I don't want to do is to rush into agreements which are not in the long-term interests of the travelling public in London. So spring, perhaps the new financial year, April/May, it may be that sort of time but let's see how the negotiations go but certainly within the first half of next year I would want to see the whole project transferred to Transport for London.

DAVID FROST: In the first half of next year and then they will swing into action obviously, the next morning.

STEPHEN BYERS: And then we get the investment going in, I mean the problem with the London Underground is that for generations really, you know it's a Victorian system and we haven't seen the investment going into it and we've got to change that.

DAVID FROST: And one other vital issue I must just raise, whenever people talk about Stephen Byers and they talk about Railtrack and then they talk about Jo Moore of course, and there's a story this week that in fact she's been shunted, Railtrack language, shunted sideways and replaced by Martin Sixsmith, is that correct?

STEPHEN BYERS: Well Martin Sixsmith is coming into the department and he's starting work tomorrow but he's, he's a civil servant, he's director of communications, he isn't doing the job as a special advisor, he's actually a separate appointment which I've had nothing to do with, he's appointed according to the normal civil service rules. Jo Moore remains as my special advisor, she made a terrible error of judgement on, about September the 11th, there's no getting away from that, she's apologised and she's now got to live with the consequences of that terrible thing she did.

DAVID FROST: Did you get a message from Number 10 as people report, to sack her?

STEPHEN BYERS: I get many messages from Number 10 David and there was no message to sack Jo Moore. Because for the simple reason that she is a serving civil servant and she was dealt with under the normal civil service procedures by Sir Richard Mottram, it's not for me or for Number 10 to discipline civil servants.

DAVID FROST: But she's got to live with it, you said, in other words it obviously was a setback to her career?

STEPHEN BYERS: It clearly was, I mean it was a terrible error of judgement, it was stupid and it was a horrible thing to have done.

DAVID FROST: But you've forgiven her now?

STEPHEN BYERS: We, we had a very difficult set of conversations as a result of, of what she did.

DAVID FROST: Tony Blair said this weekend, many best friends but Gordon Blair, [sic] Gordon Brown said that in fact Tony Blair was his best friend in politics, who's your best friend in politics?

STEPHEN BYERS: Well I have, hopefully I have many best friends in politics David, I think the important thing about the, the Gordon Brown-Tony Blair incident is that we have two great politicians and if we look at the strengths of the government, I mean they are the rock on which this government is founded. We have a Prime Minister who, you know, is doing wonderful things internationally and within the United Kingdom. We've got Gordon Brown who has been an amazingly successful Chancellor and the strength of our economy, the fact that all of the international bodies are saying, you know we're in the best position to weather any world slowdown is due to the efforts and the actions of Gordon Brown.

DAVID FROST: The rock, or maybe two separate rocks?

STEPHEN BYERS: No I think one, one rock with one commitment which is to see in our country economic efficiency and social justice, they both believe in that and that's what this government is delivering.

DAVID FROST: Stephen thank you very much, an update on the news headlines now from Sian Williams.


DAVID FROST: Sian thank you very much indeed, thank you to all our guests and Stephen thank you very much for being here this morning, top of the morning, good morning.


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