Orders of the Day — Rail Services (London-West Country)

– in the House of Commons at 9:45 pm on 30th March 1998.

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Motion made, and Question proposed, That this House do now adjourn. —[Mr. McFall.]

Photo of Steve Webb Steve Webb Shadow Spokesperson (Work and Pensions) 10:06 pm, 30th March 1998

I am pleased to have the opportunity to put before the House an issue that is important not only to my constituents, but to millions of people across the west country. Train services between Bristol and London are of most concern to me, as the Member of Parliament for Northavon, but the issues that I shall discuss touch on the concerns of hon. Members from Devon and Cornwall, from south Wales, from Gloucestershire, from Herefordshire and from a range of areas where Great Western runs trains. There was speculation that we could have heard from hon. Members who represent each station along the line had the previous debate collapsed an hour earlier.

I shall not go over old ground. The huge profits that the management of Great Western are set to make when the company is taken over by FirstGroup are a reflection of the poor deal that the British taxpayer gained from the previous Government when the franchises were first awarded; but that is history. My primary concern is to highlight for the Minister the grave dissatisfaction of people in the west at the quality of our rail services and to seek her assurance that the Government will do all they can to ensure that the service is improved in a practicable time scale.

I stress that my purpose is not to criticise the many hard-working people at Great Western rail services. We encounter them on our train journeys. The vast majority work hard, are good natured and often bear with good humour the brunt of the complaints about poor service, which is often not their fault.

I make a further promise: I undertake to refrain from sharing with hon. Members details of each delayed Great Western service that I have been on and the reasons for the delay, on the understanding that other hon. Members will show the same self-restraint.

Rather than rely on anecdotal evidence, I shall give the hard facts of Great Western's performance since it was awarded the franchise in February 1996. The target set for punctuality was 90 per cent. Nine out of 10 trains should either be on time or within 10 minutes of the scheduled time. That was broadly in line with performance in the year before the franchise began. In the first year, Great Western narrowly exceeded that target with a punctuality performance of 90.5 per cent. In the year ended December 1997, 86.7 per cent. of trains ran on time. That was not up to the required standard, and, as a result of that poor performance, season ticket holders received a discount.

The punctuality statistics exclude Sundays, bank holidays and the other days when rail services are poor, which suggests that the standard actually achieved in 1997 was very poor. Since then, performance has got worse. In the most recent four-week period, only 81.7 per cent. of trains were on time. That information was displayed this morning in Bristol Parkway station for all to see. That is the worst performance since the franchise began. In practical terms, it means that a daily commuter from Bristol to London can expect to be late twice a week. That is simply not acceptable.

The poor levels of service are no aberration. Only once in the past 12 months has Great Western achieved its target for punctuality, and that was by only a fraction of 1 per cent. I fear that Great Western passengers can look forward to another discount on their season ticket this year, although I suspect that many of them would forgo that for a decent, reliable service.

How does the poor level of service relate to the current takeover bid for Great Western by FirstGroup? The Director of Passenger Rail Franchising, John O'Brien, has the power to vary the terms of the franchise when a takeover bid is launched. Now is the perfect opportunity to secure for Great Western passengers the improvement in services that they want and which they have every right to expect—but there is good reason to believe that that opportunity has been missed.

According to a helpful written answer from the Under—Secretary of State for the Environment, Transport and the Regions, the hon. Member for Hampstead and Highgate (Ms Jackson), the franchising director was first told informally of Great Western's intention at the end of January. He was formally told on the evening of 3 March that, because of speculation in the press, FirstGroup wanted to announce its planned takeover the next day. The franchising director met FirstGroup on 4 March to discuss the franchises that it was seeking to acquire and the Great Eastern franchise, which it already held. Just two days later, on 6 March, the franchising director announced the deal whereby, in return for promises of service improvements on Great Western and Great Eastern, he would approve the takeover.

That process raises a number of concerns that I should be grateful if the Minister would address. First, the speed with which the franchising director concluded an agreement with FirstGroup was surprising. Just three days from formal notification of its intention to seek a takeover, a complex £75 million deal was agreed. How did that happen? The charitable view is that the franchising director had been working on the bid since January and that when he was formally contacted on 3 March it was only a matter of dotting the i's and crossing the t's. In that case, why did he not consult passengers?

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Environment and Transport)

This is a crucial point. Apart from the fact that real improvements should be secured—we could all mention the stations that we want upgraded and the services that we want improved—it cannot be right that the regulatory framework that was meant to represent the interests of consumers seems not to have involved proper consumer consultation. Not even the user representative groups were consulted, except when that was a statutory requirement. Certainly our user representative group was not consulted.

Photo of Steve Webb Steve Webb Shadow Spokesperson (Work and Pensions)

My hon. Friend is right.

The counter argument may be that the bid was commercially sensitive. If a company is about to launch a takeover bid, there is clearly a limit to the extent to which the franchising director can chat to whoever he fancies to find out what people think. If he knew in January that a bid was to be made, he had time to make informal inquiries, without reference to a specific bid, to find out what passengers thought, but there is little evidence that that happened.

The whole deal seems to have been put together in only three days. I feel that the franchising director must answer some questions in either case. Either he put together a complex £75 million deal in three days—which strikes me as undue haste—or he had been working on the deal since January, in which case there was inadequate consultation.

A second and related issue concerns the detail of the deal agreed by the franchising director. The promises of more rolling stock and improved security are naturally welcome, but I understand that part of the deal involves improved first-class rail facilities at Swindon and Bristol Temple Meads. I have nothing against improved first-class rail facilities, but it is hard to believe that that is one of the priorities of a railway that has been starved of investment. Again, perhaps the haste with which the deal was concluded has meant that the travelling public have not received what they might have expected.

alking of not receiving what one might have expected, hon. Members—particularly those representing constituencies in the west country—may have received a letter from the chairman of FirstGroup, whom I met recently. The letter, dated 6 March, begins: As you may have seen in the press, FirstGroup plc has taken over Great Western Holdings". That will come as a shock to those who attended the FirstGroup extraordinary general meeting today.

The letter goes on to list the conditions attached to the new bid, which include an order placed for 32 new vehicles. Initially I was terribly impressed by that, understanding a vehicle to mean a train. I have now discovered that a vehicle is a carriage. That means four new trains, which, for the benefit of the uninitiated, is rather less impressive. Extra trains are obviously welcome, but my second point is this: are these precisely the right priorities? We want extra trains, but do we really want the franchising director to press for improved first-class lounges? I have my doubts.

A third key concern, which particularly affects those of us who represent west country constituents, is the scope of the franchising director's negotiations with FirstGroup. Apart from promises of improvements on Great Western, nearly half the £75 million deal relates not to Great Western but to Great Eastern and getting rid of slam-door trains on its routes.

I have nothing against those who use Great Eastern services and would be delighted if they had trains whose doors did not slam, but the only franchises that were up for renegotiation were the Great Western and North Western franchises. Let me make a point of logic. The profit that FirstGroup expects to make from the deal will come exclusively from the pockets of Great Western travellers. It will gain nothing extra from Great Eastern travellers. I feel that Great Western travellers should gain the benefits of the renegotiation of the franchise. Similarly, when the Great Eastern franchise comes up for renegotiation, I shall expect Great Eastern passengers to benefit. Because half the benefit of the scheme went to Great Eastern passengers, passengers in my area have lost out.

Finally, I am concerned about the penalty regime. I am glad that Great Western and its successor will face penalties for lateness and cancellations, but, according to calculations by Save Our Railways, if Great Western cancelled a train it would receive more money in subsidy than it lost in the fine. Perhaps we can infer from that that if it ran no trains at all it would make a handsome profit. I do not know whether that is literally true, but it makes me wonder whether the fine regime is as severe as it might be.

I hope that the fears will prove groundless and that the new regime will be better, but I understand that at today's extraordinary general meeting of FirstGroup, one of the shareholders—a high street bank shareholder—voted against the takeover on the ground that there was no confidence in the management that FirstGroup was to put in place. That was a significant vote against the takeover.

If the company's own shareholders have reservations about the managers who will come in, I—as one who represents people in the west country—am anxious about whether the promises will be fulfilled. I hope that the Minister can reassure us that considerable pressure will be put on the company to keep the new promises.

Photo of David Drew David Drew Labour/Co-operative, Stroud

The hon. Gentleman makes a good case. I represent a neighbouring constituency and my constituents share the misery. The other ingredient to be thrown into the pot is the relationship with Railtrack. To be fair to Great Western, the delays and problems are not all of its making; many are due to the complexity of the relationship between the train operating companies and Railtrack. I am not sure of the wisdom of the bizarre relationship and the method of paying fines, but does the hon. Gentleman agree that Railtrack must not get away scot free?

Photo of Steve Webb Steve Webb Shadow Spokesperson (Work and Pensions)

The hon. Gentleman makes the fair point that the train operating companies must not be viewed in isolation. The House recently had an opportunity to discuss strategic rail issues and it is important to see matters in the round. I am sure that that is the Minister's approach.

People in the west country want a rail service that is quick, efficient and reliable. In recent years, they have been denied such a service. Many are offended by the huge sums that Great Western management is about to receive. Their one consolation was that the takeover might provide an opportunity to secure real improvement for the travelling public. I hope that the Minister can assure me that in this and subsequent takeovers she and the Government will do all they can to ensure that that is the case.

Photo of Glenda Jackson Glenda Jackson Parliamentary Under-Secretary (Department of Environment) 10:20 pm, 30th March 1998

I congratulate the hon. Member for Northavon (Mr. Webb) on securing the debate, although I am sure that he wishes—as do I, and the millions of passengers in the west country—that there was no need for a debate on the provision of rail services between London and the west country. I am sure that the hon. Gentleman is not the only hon. Member to have received complaints. He spoke about his bitter personal experience of using the rail services between London and the west country.

The substantial profits that have been made by the directors of Great Western Holdings following the takeover by FirstGroup simply add insult to injury. They are another example of the privatised railways making individuals into millionaires at the expense of passengers and taxpayers. As the hon. Gentleman said, that has happened courtesy of the contracts that were awarded by the previous Government. Regrettably, there is nothing that we can do to stop that, but we can ensure that the passenger gets the maximum possible benefit from takeover deals.

The new objectives, instructions and guidance that we issued to the franchising director last year require him to put the passenger first. Those have allowed the franchising director to negotiate a package of improvements that are worth more than £75 million not only for Great Western passengers—although I acknowledge that they are the hon. Gentleman's primary concern—but for Great Eastern and North West Trains passengers. My right hon. Friend the Deputy Prime Minister has asked the franchising director to ensure a significant passenger dividend in any future takeover of a train operating company.

As part of the package, FirstGroup will provide new rolling stock at a cost of £32 million to be in service by June 2002. Season ticket holders who have borne the brunt of Great Western's performance problems will receive a week's free travel. There will be more bus-rail through ticketing on routes that serve Newport, Bridgend, Port Talbot, Neath, Chippenham, Weston-super-Mare, Trowbridge, Frome and Shepton Mallet.

Since the franchising director announced on 6 March the package of passenger benefits that were provisionally agreed with FirstGroup, he has had further consultations and negotiations. As a result, additional benefits for passengers in the north-west and a new penalty regime in the event of late introduction of the new rolling stock have been secured. The franchising director has confirmed his approval of the change of control. I am sure that all hon. Members and their constituents will welcome the package of improvements. I do not ignore the hon. Gentleman's point that those promises must be kept.

I have no know ledge of the January date to which the hon. Gentleman referred. He raised the issue of consultation with rail users, as did the hon. Member for Truro and St. Austell (Mr. Taylor). By their nature, takeover deals are time limited and market sensitive, and I understand that the franchising director's negotiations on additional passenger benefits were conducted on a commercially confidential basis. An agreed outline package was announced on 6 March. The franchising director then entered into consultation with the passenger transport executives, which are co-signatories to the North West Trains franchise, before ratifying his approval of the change of control.

Photo of Steve Webb Steve Webb Shadow Spokesperson (Work and Pensions)

The January date to which I referred was given by the Minister in a written answer to me as the point at which the franchising director was first given informal indication that FirstGroup might be expressing some interest. My point was that, given that he knew what might be coming, he had the chance to make informal inquiries of user groups without breaching commercial sensitivity.

Photo of Glenda Jackson Glenda Jackson Parliamentary Under-Secretary (Department of Environment)

I am grateful to the hon. Gentleman. I misunderstood. He meant informal inquiries. I thought that he meant a formal application. However, I understand that this was the first takeover deal requiring consent, so, obviously, the procedures had not been tested before.

The hon. Gentleman raised the issue of whether the franchising director had secured the best possible deal. The director has a statutory value-for-money obligation under the Railways Act 1993. As my right hon. Friend the Deputy Prime Minister made clear when commenting on the change of ownership of Victory Railway Holdings Ltd., owner of the Thames Trains franchise, the Government want passengers to get the maximum benefit from buy-outs or takeovers. Such a passenger dividend has been secured by the franchising director in both the Great Western and Thames Trains cases.

The hon. Gentleman suggested that passenger benefits should not necessarily have been spread over North West Trains and Great Eastern as well as Great Western, but the franchising director has secured benefits to apply across all FirstGroup's franchise interests. That is consistent with the Government's view that there should be maximum benefit for passengers. All taxpayers, regardless of where they live, contribute to the almost £2 billion of subsidy that goes into our railways every year.

The hon. Gentleman detailed the recent reports of poor performance by train operators and falling levels of customer satisfaction. We have always made it clear that we will not accept poor performance by train operators. Poor performers must take immediate steps not only to improve their services to satisfactory levels, but to ensure that those levels are maintained.

Photo of Mr Paul Tyler Mr Paul Tyler Liberal Democrat, North Cornwall

My hon. Friend the Member for Northavon (Mr. Webb) said that we were not to go over recent experiences of train delays, so I will not mention the fact that my train from Cornwall was half an hour late today. May I press on the Minister the point that was made by the hon. Member for Stroud (Mr. Drew)? All the goodies that are now being offered by FirstGroup are way in the future. The problem is that the combination of inadequate rolling stock and inadequate maintenance of that line by Railtrack means that we will have continual delays and continual reduction in the quality of service in the next few years—long before we get the improvements that are being referred to.

Photo of Glenda Jackson Glenda Jackson Parliamentary Under-Secretary (Department of Environment)

The hon. Gentleman has somewhat pre-empted my next point. There are undoubtedly difficulties here. Like my hon. Friend the Member for Stroud (Mr. Drew), I argue that Railtrack has a significant part to play. For example, the fleet of high-speed trains that Great Western runs has been regularly depleted by train failures. It was reduced further by the accident at Southall. The company has been plagued by infrastructure failures, operational difficulties, a freight train derailment and even animals on the line.

The state of the track means regular closures of parts of the route for maintenance and improvement. Failed trains have held up other train operator services and contributed to their poor performance. Time and again, connections have been missed, yet taxpayers have paid nearly £60 million over the past year for that so-called service. Passengers have a right to expect something better. The Government intend that they shall get it.

As part of the takeover deal, Great Western will be subject to an incentive payment regime, which will directly penalise it for poor performance. That will be the first time that such a regime has been applied to inter-city services. In future, £1,000 will be levied against Great Western each time a train is cancelled. It will also be fined £250 for every train that is more half an hour late or does not complete its journey. That is a strong incentive to provide the punctual and reliable service that passengers deserve. Although—as my hon. Friend the Member for Stroud said—we are far from satisfied with Great Western's performance, I recognise that Railtrack's infrastructure problems and temporary speed restrictions have hampered its efforts to improve.

Hon. Members will be familiar with the problem of engineering works. Stretches of the route between Bristol and London have been closed to allow work to be carried out, causing passengers to endure long bus journeys or diversions. There are more works to come this summer and next year, affecting passengers travelling to and from western England and Wales. I could wish that it were not so, but it is vital that the work be completed in a timely way.

However, I expect operators to ensure that comprehensive and accurate information on the travel arrangements applying during those works is easily available to passengers, in good time. I look to the franchising director to ensure that that happens. I also expect Railtrack to plan works in a way that minimises disruption to passengers and reduces the need to close the railway.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Environment and Transport)

The hon. Lady may have heard a murmur from the Liberal Democrat Benches when she mentioned fine levels. Can it possibly be appropriate that a cancelled inter-city train is fined only £1,000, and a long-delayed train only £250? Two MPs not travelling up from the west country will cost Great Western more in lost fares than the fine.

Photo of David Drew David Drew Labour/Co-operative, Stroud

Labour Members travel second class.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Environment and Transport)

I think the hon. Gentleman does not have so far to travel.

Photo of Glenda Jackson Glenda Jackson Parliamentary Under-Secretary (Department of Environment)

I appreciate the point that the hon. Member for Truro and St. Austell (Mr. Taylor) has made, but, equally, he must be aware that one of the first things that the Deputy Prime Minister instituted when he took office was an examination of the existing powers of the present rail regulators. We are committed to the creation of a strategic rail authority; we are committed to even tighter regulation—and, indeed, reform—of the railways, but we require a legislative slot before such improvements can be made.

I am worried about the growing number of emergency speed restrictions as a result of track condition, and I look to the Health and Safety Executive's railway inspectorate to ensure that standards are maintained, and improved where necessary. I expect train operators to provide journeys that are both fast and reliable. Train operators must plan to deliver the maximum journey times specified in the passenger service requirement. Although train operators are able to increase some journeys by a few minutes to accommodate additional station stops or Railtrack-imposed speed restrictions, they cannot increase journey times significantly merely because they are unable to operate a reliable service.

As far as I am aware, Great Western has not made representations to the franchising director asking him to relax journey times in the passenger service requirement.

I would expect the franchising director to consider relaxing those requirements only where it is unavoidable, and then only after full consultation with the relevant rail users consultative committees and local authorities.

Photo of Mr David Rendel Mr David Rendel Liberal Democrat, Newbury

I am grateful to the hon. Lady for giving way, because she has given way several times. There is a specific problem with GWR, in that it is a feeder line for a number of other railway franchisees. Many people travel from my constituency, Newbury, to Reading on GWR and then need to take a Thames Trains train from there. If a GWR train is late—for the reasons that the hon. Lady has described or for some other reason—people miss their connections. Connections used to wait for the faster train; nowadays they leave without the passengers.

Photo of Glenda Jackson Glenda Jackson Parliamentary Under-Secretary (Department of Environment)

I am starting to think that Liberal Democrat Members have already read my speech, because I am just about to come to missed connections. As the hon. Gentleman said, late running means that operators are faced with a difficult choice: whether to keep connecting services waiting for a late-running train or to let them go. Either way, that results in delays for passengers. The problem of missed connections is made worse if operators fail to communicate properly with one other, so that passengers alight from one train in time to see their connecting service leave.

However, it is all very well insisting that, in those circumstances, operators must take decisions in the interests of passengers. I would much prefer that trains ran on time in the first place; if they did so, the issue of missed connections would not arise.

Several routes in the west country suffer from severe overcrowding. Holiday routes in Devon and Cornwall can experience sudden peaks in passenger numbers during the season. Ever more rolling stock is beginning to be ordered. I am pleased that, at long last, rolling stock companies are beginning to see the commercial merit in ordering their own new trains on a speculative basis.

Members of the Transport Sub-Committee and I wish there to be more rolling stock to respond to capacity pressures, wherever they arise. More short-term leasing opportunities between ROSCOs and train operators would make it easier for operators to procure additional staff on short-term contracts to deal with peaks in demand.

The Government have made clear our intention to put railways at the heart of a truly integrated transport system. I welcome the integrated bus and rail schemes that Great Western has introduced. The addition of nine other schemes as part of the proposed takeover deal will make through journeys by bus and train an attractive option for more people in the west country, and will build on Great Western's plans for joint ticketing and information schemes with local bus operators.

We are committed also to encouraging more people to cycle. A cycle-friendly railway will be good for the environment, encouraging people to travel by cycle and train and to leave the car at home. However, for that to happen, train operators must accommodate cyclists on trains and provide secure facilities for cycle storage at stations.

The voluntary code of practice, "Providing for Cyclists", which I launched last year, offers helpful guidance to operators on what they should do to make cyclists' lives easier. I am pleased that some train operators have not quailed at the technical obstacles that make it difficult to carry cycles on trains. Great Western has already equipped its high-speed trains with additional cycle racks, which I know are proving popular. As part of the proposed takeover, FirstGroup has committed itself to investing £50,000 in new cycle facilities on both Great Western Railways and North West Trains. I look forward to other train operators following suit.

Everyone acknowledges that the challenges facing the rail industry cannot be solved overnight. Clearly, in many instances, the passenger and the taxpayer are still not getting the best deal from the privatised railway, but the Government are determined to put that right. Passengers want regulation of the railways that is firm, fair and accountable—a railway with a public service ethos, not driven solely by the profit motive, which is fit for the 21st century.

Our forthcoming White Paper will state our proposals for the railways. I believe that those proposals will be a major step in the right direction and will help to create a climate in which the railways can flourish as part of an integrated transport system, not only in the west country but across the United Kingdom.

Question put and agreed to.

Adjourned accordingly at twenty-four minutes to Eleven o'clock.