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[Relevant Documents; The Tenth Report from the Transport Committee, Session 2007- 0 8, HC 219, on Delivering a sustainable railway: a 30-year strategy for the railways?, and the Government response, HC 1105, Session 2007-08; and oral evidence taken by the Committee on
Motion made, and Question proposed,
That, for the year ending with
(1) further resources, not exceeding £8,244,816,000, be authorised for use as set out in HC 221, and
(2) limits as so set out be set on appropriations in aid. — (Mr. Ian Austin.)
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I am pleased to open this estimates day debate on rail. There is no doubt that rail is great success story, but it also faces challenges related to the recession, and there are question marks over its structure and about whether it is achieving value for money. The Select Committee on Transport's report "Delivering a sustainable railway: a 30-year strategy for the railways?", which was published on
The report considered the rail White Paper, which combines the Government's strategy for the next 30 years with proposals for the next five years in its high level output statement. It anticipates the doubling of passenger and freight traffic over a 30-year period. The Committee welcomed the growth strategy but criticised the report for lacking vision, particularly in relation to high-speed rail and electrification. It is reassuring to see how much progress has been made on both issues since the Committee's report was published. They are both of critical importance and the Committee will be pursuing them. We are pleased that studies are being undertaken, but we want to see commitment to action within a realistic time scale.
In today's debate, I want to concentrate on a number of key financial issues that challenge fundamental parts of the rail system as it operates today, as well as raising specific questions about the estimates before us. The Committee warned in its report that
"if a full-scale economic downturn were to develop, passenger numbers are unlikely to grow as fast as projected in the High Level Output Statement. This situation could jeopardise the current hard-won level of financial stability."
The latest information available from the House of Commons Library gives cause for concern. It shows a small reduction in the number of passengers in the third quarter of 2008-09 compared with the third quarter of 2007-08. The first two quarters of that year showed small increases compared with comparable periods in the previous year. If that trend continues and there is a reduction in the number of rail passengers or in the number of anticipated rail passengers, that will have major implications for the franchising system for rail services and rail finances.
Public funding for the period 2009 to 2014 assumes a 34 per cent. increase in passenger revenues. Reduced numbers of actual or predicted passengers from those anticipated when companies bid for and acquired franchises could threaten the viability of rail services and pose a serious financial challenge for the Department for Transport. It is not clear in the estimates whether the scale of that challenge has been assessed or, indeed, provided for. In those circumstances the train operating companies might seek renegotiation of their franchise agreements. They might default on premiums due or seek to increase subsidies, perhaps activating the revenue- sharing agreements that are already in place. They might try to reduce services—indeed, that has already started—or to walk away from their franchises. Concerns have already been raised about all those possibilities, and jobs in the rail industry are already being shed.
Of course, whatever the financial state of the train operators, they all need track to run on. As the hon. Lady will know as the distinguished Chairman of the Select Committee, Network Rail has a subsidy of more than £3 billion from the taxpayer. Does she share my concern at the reports that the chief executive of Network Rail, Iain Coucher, and two other directors, known as the two Hendersons, are to receive bonuses of up to £600,000? Would she like to put it on the record that she thinks that at this time, when Network Rail messed up big-time on Liverpool Lime Street and when there are still problems on the west coast main line, those people should not receive those bonuses?
The hon. Gentleman will recall that the Transport Committee's report roundly condemned the payment of bonuses to chief executives of Network Rail after failures. I shall return to the whole issue of efficiency at Network Rail and value for money later in my speech.
In view of the obvious problems that passengers are now starting to face—whether with car parking charges, rail fares, overcrowding or reliability—does the hon. Lady believe that now is the time to give the Office of Rail Regulation more teeth so that it can better represent the interests of passengers? It has been quite ineffective to date.
It is important for passenger interests to be recognised and I think that Passenger Focus has done a very good job, but there is a need for more action and more teeth. I am not completely satisfied that the rail regulator is the right person to do that, but I take the hon. Gentleman's general point.
How the rail companies might react in the face of recession and possibly declining passenger numbers has been raised with my noble Friend the Minister of State in the Department for Transport. He told the Transport Committee on
Can the hon. Lady confirm the information that I have heard, which is that the train operating companies have been told that if they abandon or walk away from one franchise they will be expected to walk away from all the franchises that they hold? Some, of course, hold multiple franchises. Whether that is the correct system or not, does she agree that there are significant doubts about whether there is a default mechanism in place for the Department for Transport, or any other mechanism, to run a franchise that has suddenly been abandoned? There is no expertise there to do that.
The hon. Gentleman refers to a key section of the financial arrangements between the train operating companies that hold the franchises and the Department. He raises serious issues about what would happen if one or more than one train operating company sought to enable such a change to take effect. My noble Friend the Minister of State reiterated before the Committee that his Department was the operator of last resort. It is legitimate to consider what would happen if a number of train operating companies withdrew from their franchises or were unable to follow the agreements that they have entered into. That raises big questions about how train services would operate and it also raises major financial questions. What provisions have been made to accommodate that and what credibility would there be for operators who took up the new franchises when they saw how people who did not want to continue with their obligations were being allowed to renege on the agreements they had made? Those are big, serious questions and a realistic reading of the economic situation suggests that a crisis in railways or rail funding might not be far away. I want to seek reassurance that the Department is ready for such a crisis and is ready to address it so that the travelling public do not suffer.
We have already had the experience of one franchise that was run for a little time in the public sector. During that time, it was more efficient and it produced a better service than it did in the private sector. If all the franchises collapse back into the public sector, will we not see an improvement in our railways and more efficiency? Could we not then simply take over the rolling stock leasing companies, which are now owned by the banks, which are now in the public sector, and recreate something that we might call British Rail?
I am not able to explain that item in detail, and I hope that the right hon. Gentleman will address that question to the Under-Secretary of State for Transport, my hon. Friend Paul Clark. Given the question marks over the operation of the rail service, and given the economic climate, it may well be that a number of items will be called.
Rail fares are another important issue, and the Select Committee's report addresses the issue. Indeed, the Committee called on the Government to review their decision to change the funding balance between taxpayers and passengers so sharply. In 2006-07, Government support for the railways totalled £6.3 billion, whereas £5 billion came from passengers. Under the Government's plans, by 2013-14, those figures will have been dramatically reversed. The Government project that their support will total £3 billion, while the projected support from passengers will reach £9 billion—a dramatic increase.
If we look at the whole of the next control period, which is 2009 to 2014, we see that it is projected that Government support will total just under two fifths of the money that is expected to be raised from passengers; the former will be £15 billion, and the latter £39 billion. If we compare that with the current control period, which is nearing its end, we see that between 2003 to 2008—the last period for which figures are available—the Government more than matched the revenue raised from passengers; there was £23 billion from passengers, and £24 billion from Government. In the next control period, which is due to start at the beginning of April, the Government plan a dramatic switch from the taxpayer to the passenger.
I thank my hon. Friend for giving way yet again. Are those plans not absolutely astonishing? We already have the highest rail fares in Europe. If there is a massive shift from taxpayer or Government funding to the fare-paying passenger, at a time when a reduction in passengers is likely, rail fares will go through the roof. It will be beyond anybody's capability to pay them. The exception, perhaps, will be those whose fares are paid for them, such as Members of Parliament.
My hon. Friend raises an important point to which I will refer a little later. In January this year, there was public outcry from passengers who experienced increases to regulated fares—ones over which the Government have some control. The increases were, on average, six or seven times the current rate of inflation, yet they followed the agreed formula. I am pleased to say that the Government have now rejected the request from train operating companies to abandon the formula when that formula might lead to fares being reduced; my noble Friend Lord Adonis informed the Select Committee of that when we questioned him very closely indeed on the issue. The formula means that regulated fares can be increased, on average, in a so-called basket of fares, by the retail prices index plus 1 per cent., although in reality that can mean increases that are six or seven times the rate of inflation. If inflation reduces next year, as is predicted, the application of the formula could mean a reduction in fares. I understand that the train operating companies made a request to the Government that the formula be not adhered to, and I am pleased to hear that their request was turned down. It was good to hear from my noble Friend that it is possible that fares will be reduced next year; I hope that that can happen.
As my hon. Friend Kelvin Hopkins, suggested, it is important that people are not priced off the railway. It would be a double whammy if we combined reduced numbers of commuters on the railways as a consequence of the recession with falling numbers of passengers as a result of passengers being priced off the railways as an act of policy. We should be wary of that.
I absolutely share the hon. Lady's desire to see rail fares controlled; they are far too high, and are in danger of getting higher. There may be a different double whammy from the one that she mentions. There could be the double whammy of reduced income for the train operating companies, and a reduced number of passengers, if the recession kicks in. However, there would be the same overheads, over which they have little flexibility, although there may be a bit of flexibility at the edge, with regard to booking offices and so on. Under those circumstances, and given the architecture that is in place, is not the real danger that those circumstances make the defaulting of the franchise more likely?
The hon. Gentleman reinforces my point. His argument points to issues to do with the whole structure of the rail system and the way in which it is financed. The Government may well have to look again at the structure of our rail system and how it is funded.
My hon. Friend the Member for Luton, North, referred to ROSCOs—the rolling stock leasing companies. Those companies are already the subject of a Competition Commission inquiry. I ask the Minister whether the Government have given any consideration to the possibility that the financial institutions that fund the ROSCOs, perhaps already affected by the banking crisis, might consider retreating to their core business, thus jeopardising the future purchase of rolling stock. I do not think that that issue has been raised before, but we should at least give some thought to it in the current economic circumstances.
Hon. Members have referred to the important issue of securing value for money, a subject that the Select Committee's report addressed. It looked specifically at Network Rail. Information on its expenditure was compared to that for similar European companies. It was found that there was an efficiency deficit amounting to £263 million per annum in relation to maintenance, and one of £846 million per annum in relation to renewals. Network Rail has now accepted the rail regulator's decision to reduce the sum that it requested for the next control period from £31.1 billion to £28.5 billion—a reduction of £2.6 billion.
The chief executive of Network Rail recently wrote to me, confirming that the rail regulator has assumed 24 per cent. efficiencies in track renewals between 2009 and 2014. The letter says that Network Rail will now defer 25 per cent. of track renewals planned for 2009-10. It anticipates that there will be more efficient new plant and off-site assembly methods in place in 2010 for progressing those track renewals.
Does the hon. Lady agree that a graphic demonstration of the failure of Network Rail is the state of much of the infrastructure in and around railway stations for which it is responsible? Train operating companies have done their best in many areas to improve the state of railway stations, but they are often frustrated by Network Rail, particularly when it comes to railway bridges, which often look very shabby indeed set against a smartened-up railway station.
I am sure that there are examples of neglect by Network Rail, but while criticising it and rightly seeking greater efficiencies, we should all remember that it is infinitely better than the dreadful Railtrack, which it replaced. On the deferment of significant parts of the track renewal programme, is my hon. Friend the Minister satisfied that those deferrals are compatible with safety and efficiency considerations?
Pursuant to the point made by my hon. Friend Dr. Murrison, there is sometimes a lack of clarity between Network Rail and the train operators as to which is responsible for painting, modernising and maintaining various parts of the station. Surely the Government could do more to help with co-ordination between the two.
I am delighted that my hon. Friend has reminded the House how infinitely better Network Rail is than its predecessor, Railtrack. Notwithstanding the enormous improvement that we have seen in the performance of Network Rail, does she agree that there is a fundamental problem with the way in which it is governed, and its accountability? There is a desperate need for an improvement in the governance structure and the accountability of the organisation.
I certainly agree with my hon. Friend in raising questions about the accountability of Network Rail and its structure. The matter was considered in the Select Committee's report. I am pleased to note that the members of Network Rail commissioned a special report to look specifically at governance, but it is a matter of some disappointment that Network Rail apparently does not wish to release the report, although I note that somehow it has made its way to the newspapers, and I do not think it will be kept secret for much longer. It is important that Network Rail review the way it is run, improve its accountability and look again at the way its members operate, and the possibility of setting up a smaller supervisory board that could exert much more control and accountability.
The hon. Lady rightly says that the report is likely to find its way into the newspapers, for indeed it has. A number of comments appeared in the Evening Standard last week. On accountability, she will have noted that the report supposedly accuses Network Rail of stuffing its board with second-rate non-executive directors.
What matters is that Network Rail improve its accountability and revisit its governance.
I wish to raise one specific matter in relation to the estimates before us this evening. The explanatory letter accompanying the estimates suggests that the bulk of the additional network grant—£404 million out of the £447 million increase—is a grant from the Department for Transport to Network Rail to fund capital investment. It states that the increased contribution from the Department will be matched by a reduced contribution from the train operating companies, which will pay lower track access charges, and that the net effect on the train operating companies will be nil, yet it is not clear from the estimates exactly how that will be achieved. There is no mention of reduced funding to the train operating companies in the estimates. I should be grateful if my hon. Friend the Minister would inform us how the matter is to be addressed.
In my remarks this evening, I have made a number of comments that go to the heart of the operation of the rail system in the current climate and point towards the way in which changes could be made for its future, but there is no doubt that rail has been and is a great success story for both passengers and freight, with a 40 per cent. increase in the past decade. The recession must not be allowed to set the railways back, and the Government must now rise to the challenge.
I am even more grateful, Mr. Deputy Speaker.
I followed with interest the comments of the Chairman of the Select Committee, who raised a number of important points of detail about the estimates. She also raised some fundamental issues about the structure of the industry in years to come, and I shall be interested to hear the Minister's response.
We have seen, as we will doubtless be told by the Minister in his winding-up speech, a renaissance in the railways in recent times, with passenger numbers now at their highest since 1946. In response to that, somewhat slowly but finally, the Government are moving towards the high-speed rail option that my party has been advocating for some years, and have adopted the electrification process that we have long advocated. However, I am concerned that the Department for Transport seems to be continually behind the curve and unable to deal with the problems that manifest themselves until they have been there for some time. Passengers suffer as a consequence.
In my contribution, I shall speak about the problems relating to fares, overcrowding, rolling stock, and the centralisation instincts of the Department for Transport and the consequences of that for the rail industry. It is not satisfactory—the Select Committee Chairman referred to this—for the balance of funding to be moved ever increasingly towards the passenger and away from the taxpayer. That is not sensible in economic, social or environmental terms.
Since 1997, the cost of travelling by train has risen 6 per cent. above inflation, whereas the cost of travelling by car has dropped 10 per cent. In case the Minister thinks I am particularly attacking the Government for that, I should say that that is a 30-year trend which, since 1977, has seen the cost of travelling by train rise by 52 per cent. and the cost of travelling by car fall by 10 per cent. over that period. Since 1977, regulated fares have increased by 43 per cent. on average.
According to Passenger Focus, a standard commuter season ticket now costs around twice as much as it would cost in France. My party's research shows that for £10 one can get only 26 miles from London—that is, as far as Basildon—whereas in Serbia, which I admit is an extreme example, one can get 512 miles, which is equivalent to travelling to the Swiss alps, assuming that one could get to the Swiss alps by rail, which might be possible with high-speed rail opening up.
Yes, that is the case with top-line fares, but does not the hon. Gentleman acknowledge that many cheaper fares are available? One can get from York to London for £5 if one buys the right ticket.
It is sometimes cheaper to go to New York than it is to go to York from London, given the way that the fare structure is arranged. Even with the off-peak return ticket in the UK, £10 buys 56 miles of travel on the railways, on average, making Britain's off-peak returns more expensive than single tickets in more than half the European countries.
We have set out in great detail in our policy paper the benefits of high-speed rail and other rail improvements. Those come down to a £30 surcharge on domestic flights—we have been very open about that—and a lorry road user charge, and we have indicated how we would get more money out of existing train operating companies. That is all in black and white. I am happy to send the hon. Gentleman a copy of our paper. We are the only one of the three parties to specify how we would pay for improvements to the railway service in this country.
Before the hon. Gentleman moves on, does he accept that the Office of Rail Regulation speaks for passengers and that it needs to be given more teeth and needs to be more energetic in fighting for passengers, so that passengers get the better deal that he wants for the money that they have paid in fares, and for the benefit of the economy and the environment? I agree with him on most points.
The Office of Rail Regulation does quite a good job, but it is tied by its specific legal remit, which is to look at the delivery of Government programmes set some years in advance. Even though it may want to take account of changing circumstances, it is tied to an earlier Department for Transport policy. Its flexibility is the issue.
I have mentioned only fares, but overcrowding is also of great concern to passengers. As we know, rail travel has increased dramatically in the past few years, but the consequence has been that overcrowding—particularly on commuter trains; not only those to London, but to places such as Manchester and Bristol—is increasing enormously. Part of the reason for that is the failure of the Government and the rolling stock companies, which together constitute the architecture of the rail industry, sufficiently to predict the increase and to have in train—no pun intended—sufficient rolling stock to meet the challenge.
At the moment, there is a grotesque shortage of rolling stock. There are virtually no trains anywhere in the country, and rolling stock is cascaded from one operator to another as if in some sort of merry-go-round—Southern takes some stuff from South West Trains, and then some more carriages are handed over to First Capital Connect. There are not enough trains. There are many examples across the country of passengers being asked to travel in grotesquely overcrowded conditions. The other day, for example, I was on the train from Newport to Hereford—
The hon. Gentleman may be familiar with the service. It was grotesquely overcrowded; the carriages were like a couple of conjoined sardine cans.
The hon. Gentleman is absolutely right. Some services in Shropshire are extremely overcrowded, particularly Arriva services. How much compensation does he think travellers should get from operators if they are forced to stand during their journey?
I am not necessarily talking about whether they are forced to stand, but the compensation regime is entirely inadequate. For example, the Government's targets measure whether an inter-city train arrives within 10 minutes of the due time or later, and whether a local train arrives within five minutes of the due time or later. As far as I can tell, there is no incentive for operators to deliver a train 11 minutes late rather than 59 minutes late. That is one example of when the compensation scheme does not work.
There ought to be a discount of a third on the ticket price if the passenger has to use a bus for part of the journey. Despite Network Rail's alleged endeavours to get to a 24/7 railway, the number of engineering works for this year is substantially the same as that for last year. As far as I can tell, Network Rail has made no progress on reducing the number of engineering works that cause people to be diverted on to replacement bus services. Financial incentives to repay passengers and force the industry to recognise the disruption that it is causing are long overdue.
I am afraid that that is the case. Many operators are reducing the number of carriages through necessity because there are none, or did so early on—perhaps three or four years ago—because it suited them better to pay less by way of track access charges.
The Government have continually said that they have ordered 1,300 or 1,400 new carriages, and the indication has been that the order is being speeded up and the carriages are being delivered as soon as possible. Announcements are made at regular intervals to tell us how it is all getting on. Yet a parliamentary answer to me from the Minister, dated
It all comes back to the statement on rolling stock that the Secretary of State for Transport made the other day. He spoke in complimentary terms, saying that the trains would be greener, more environmentally friendly and good for British jobs. We now know that the consortium was not British-led, although that is how the Department for Transport described it. It was a Japanese-led consortium, with John Laing as a minor partner. Furthermore, of the 12,500 jobs talked about, 10,000 are existing jobs at third-party companies that may conceivably benefit over the lifetime of the billed contract; even the other 2,500 jobs are disputable as the initial 70 engines and carriages are being built in Japan.
When we read the small print of the "good news" for British industry announced by the Transport Secretary, it disappeared and vanished into the ether. As far as the statement that the new rolling stock would be green and environmentally friendly is concerned, the claim was that the stock would consume less energy. That, however, is not correct: when we divide the total energy consumption based on total passenger capacity of the rolling stock, with a new, greater seat complement, we find that it is less energy-efficient than the inter-city trains that it is replacing. I mention that because, apart from the fact that it all seems expensive and that there seems to be an environmental question mark over the Government's train-ordering process, we are moving away from rolling stock leasing companies towards a more centralised ordering of trains.
The Government have made clear their dissatisfaction and unhappiness with the ROSCOs—the rolling stock leasing companies. I do not want to defend the privatisation foisted on us by a previous Conservative Government; in many ways, that failed and we are still picking up the pieces. Furthermore, the creation of ROSCOs enabled a great deal of money to be made to no real benefit, especially in the early days. But we are where we are. The Government do not like the ROSCOs and referred them to the Competition Commission, whose draft report indicated that the issue was a boomerang from the Government. The Government largely got the blame for the arrangements, not the ROSCOs. The Government's response has been to take hold of the InterCity express programme and order a train that is overpriced, not energy-efficient and does not particularly help British industry.
On top of that, last week Diesel Trains Ltd, a new rolling stock company that is owned by the state, was set up. We are told that it will produce a whole lot of new diesel trains. That is rather curious: how will that give an incentive to the ROSCOs to produce trains on spec, as they have been, in anticipation of orders? If they are to be squeezed out of the rolling stock market, they will have no incentive to build anything other than on the basis of firm orders. If they build only on that basis, when passenger numbers pick up—and they are doing so, in fact—there will be no rolling stock for the train operating companies to get hold of. That is precisely what is happening at the moment. The Government's over-centralisation of rolling stock ordering is causing a shortage of rolling stock rather than solving the problem, as the Government say they are doing.
The public sector ROSCO that I mentioned is being created by the Government in direct competition to the private sector. The hon. Member for St. Albans—
I beg the hon. Gentleman's pardon; I moved him down the country a little. He may be interested to know that there is such creeping nationalisation of the railways. In due course, we may have to consider restructuring the industry, but we will have to do so with our eyes open and in a coherent and structured way rather than in the hidden way in which it is happening.
The hon. Gentleman mentioned me. I represent Luton, North; St. Albans is held by a Conservative.
The ROSCOs were ripping off the rail industry by charging up to 30 per cent. a year on the value of stock that lasts for 20, 30 or 40 years. It was a complete rip-off. I am glad to say that a state ROSCO is now being created. Would it not be sensible to bring the whole lot under state control? The Department for Transport could plan what trains we needed way ahead and we would overcome all the problems that the hon. Gentleman is mentioning.
That way forward should be discussed; I am not, however, in favour of the stealth moves that the Government are making without necessarily thinking through the consequences. They are causing some negative consequences as a result.
The hon. Gentleman suggests that a lot of the problems result from privatisation. Is that his opinion? If so, is he against all privatisations? As we all know, his party favours the privatisation of Royal Mail.
We are not against all privatisations; we take each issue on its merits. To be frank, there were elements of rail privatisation that were unsuccessful. The train operating companies have largely been a success. However, Railtrack was a disaster, which has now been sorted out. Network Rail in its current form was originally a Liberal Democrat proposal, but the ROSCOs were not a successful creation. Some elements did not work, and some did. We now have to see where we are and how we can best build up the industry without throwing all the pieces up in the air and trying to restart the machine, which would cause years and years of chaos and more legislation and uncertainty.
We should try to correct the many problems that exist. My case on the ROSCOs is that the Government are making the situation worse by creating Diesel Trains Ltd without having thought through the consequences. One consequence is that there will be a relationship between train operating companies and Diesel Trains Ltd. What will be the contractual arrangement between those two bodies, given that Diesel Trains is owned by the Government? Where will be the shouts of, "Foul!" when the train operating companies object to the terms imposed on them to get their diesel trains? I see all sorts of problems.
There is also the question of whether the ROSCOs are in some way already nationalised, given the stake that the banks have in them and that the Government now have in the banks. Whether the Government are seeking to influence the ROSCOs through that process needs to be clarified. I hope that the Minister will respond to these issues. Over the past couple of years, there have been several moves on this, almost through the back door and without any clear indication what the Government's policy is, so let us have that outlined today.
One of the solutions to the rolling stock problem would be to give the train companies longer franchises. We advocate rolling franchises with a 30-year lifespan that is reviewed every five years. Providing that passenger satisfaction targets were met, the franchise would stay with the company that was awarded it. The advantages of that would be twofold: first, the train companies could look to getting their own rolling stock, thereby bypassing the ROSCOs, which could be a useful step forward; and secondly, it would enable them to plan ahead and see the financial case themselves for infrastructure improvements, which we have not seen to any large degree so far in the 10 years of this Government. For example, Chiltern Railways is effectively creating a new line between Oxford and London as a consequence of alterations that it is making to one particular section of the track, and that would not be possible unless it had the long franchise that it does.
The hon. Gentleman suggests that we should have a 30-year franchise so that people could plan ahead, but then says that it would have to be reviewed every five years. I presume that it could therefore be cancelled every five years, so it would really be a five-year franchise.
The position is clear; I am sorry if I did not make it clear to the hon. Gentleman. A franchise would be awarded for 30 years, but there would be five-year checks to ensure that the franchise conditions were being met, and if so the franchise would automatically stay with the company that was awarded it in the first place rather than being re-tendered. The alternative is what we have at the moment, whereby, for example, the Southern franchise is being re-tendered for a period of five years and eight or 10 months. With the best will in the world, what can a train company possibly do in that period other than paint the stations and sort out one or two car parks? It cannot possibly make the necessary investment.
It sounds like a good idea that a company would be able to invest ahead at the start of a 30-year franchise. However, that would kill off the ROSCOs, and what would happen in the last five or 10 years of a franchise—investment would stop still, would it not?
If the hon. Gentleman is arguing that in the last five or 10 years of a franchise investment stops still, he must be arguing that no investment takes place under a franchise at the present time. Franchises currently run for five or 10 years, so there is, by definition, only five or 10 years to go on existing franchises. That is how long they are.
The hon. Gentleman cannot have heard what I said. Because we have relatively short franchises, there is another mechanism—the ROSCOs—for rolling stock and locomotive investment. If we expected investment to take place in-house within the franchise, that would kill off the ROSCOs and there would be no investment in the last five or 10 years. How would he deal with that problem in the closing stages of a franchise?
In that unlikely scenario, it would be perfectly possible to have an arrangement whereby we had investment of last resort or had the franchise for the following 30 years awarded earlier than the expiry of the 30-year period in sufficient time for rolling stock to be ordered for the following period. The problem would be easy to get round. Although I am happy to accept that any scenario will have difficulties, I argue that the difficulties presented by my suggested solution are far less serious than the ones presented by the current arrangements, whereby no investment takes place from the train operating companies in rolling stock, or in anything much else, given the limited range of franchises.
I want to refer to the centralisation of the Department for Transport. In Ministers' efforts to improve the railways—they have got hold of where they need to be improved and invested in; I am grateful that are seeing a sea change from the laissez-faire approach of a few years ago—their instincts are to intervene more and more in small details. That is wrong in terms of rolling stock for the reasons that I have given. It is also wrong in terms of some of the timetable arrangements that are being imposed on the railways. We have just seen a new timetable produced for the Southern region that has been catastrophically ineffective and caused a record level of complaints to the train company, which is not responsible for the problems that have arisen. The problems in the Southern region are a consequence of the Government giving in, as they always do, to the aviation industry—at Gatwick in this case—so that a timetable has been constructed that suits Gatwick airport and, frankly, screws the rest of the Southern network. That is a direct consequence of the Government's intervention. They overruled the preferred timetable from Southern and from Network Rail, which should have maximised journey opportunities for those in Brighton and other areas of the south coast, including my constituency. I fear that we are moving towards a situation in which Department for Transport officials intervene to micromanage in a way that is counter-productive in terms of delivering a good railway. We need to ensure that we expand the network.
I support the expansion of the network. Does the hon. Gentleman agree that one of the best ways to achieve that is to reintroduce passenger rail services on lines that carry goods and services? That would probably be the easiest and cheapest way to start the process.
I certainly agree that significant lines used only for freight could be used for passenger services. Some go to quarries, and would be less used by passengers, but others could be used in that way—for example, Exeter to Okehampton in Devon. Okehampton is not served by passenger services except on some days in summer, but there is a perfectly serviceable line that could be used for a regular commuter service.
It is not sufficient to argue, as the Government have, that expansion is simply a matter for Network Rail, which is then constrained by the Office of Rail Regulation. The ORR operates on a past Department for Transport policy and is unable even to agree, say, to the doubling of the Swindon to Kemble line, which everybody in the rail industry accepts is a sensible proposal that should be taken forward. We have not seen a plethora of new or reopened lines or stations, despite the growth in passenger numbers in the past 10 years, and those that have come have done so almost in the teeth of opposition from the Department for Transport: I am thinking of Stirling to Alloa and the Ebbw Vale line in Wales. The devolved Assemblies and Governments have been producing the lines, not the British Government here, who have delivered almost nothing in the way of improved rail connections in England since 1997. That is very sad.
As Mr. Murphy said, a plethora of lines and stations should be considered for reopening. I must mention Lewes to Uckfield, of course, but there are plenty of others up and down the country. Yet it seems that the Department for Transport still has the mindset that money spent on roads is investment and money spent on rail is subsidy. We have to change that if we are to meet the environmental and economic challenges ahead. A longer franchise agreement for 30 years would enable train companies to look at what might be sensible for them to invest in without even having recourse to the public purse. Essential to that is the reform of NATA—the new approach to appraisal—which is the archaic formula that the Government use to work out the benefits of rail schemes. Under NATA, if a new rail line is opened, a calculation is made as to how many people would transfer from road to rail, and the Treasury then counts the loss of fuel duty as a disbenefit to the scheme. It is hardly surprising that lines do not open given that sort of mad economics. The Department continually underestimates the number of passengers. Stirling to Alloa, for example, has seen a massive increase, way above the projection given for passenger numbers.
It is important for the Minister to come clean on his plans for ROSCOs, on his plans for fares—giving passengers an assurance that they will not be cascaded through the roof—and on what he is going to do to tackle the overcrowding on trains and the centralisation at the Department for Transport.
That debate was about the closure of the Settle to Carlisle railway line. It was a very good Adjournment debate, which happened to take an hour and a half. Some of my hon. Friends spoke, including Peter Pike from Burnley and the late Bob Cryer from Bradford, and Mr. Curry. The reason for the debate was that British Rail wanted to close the line, but the Conservative Government wanted to privatise it. Of course, nothing happened and it was saved. April will be the 20th anniversary of the saving of the Settle to Carlisle railway line and, hopefully, we will have an Adjournment debate about that anniversary, when we can pat everybody on the back and say what a good idea it was. That was the last attempt by any Government of any colour to close a major railway line. In many ways, it was the start of the renaissance of the railways. Unfortunately, the Conservative party decided to go through the trauma of privatisation. It discounted it in the case of the Settle line, but went for the big experiment.
We have heard comments about Network Rail, and my hon. Friend Mrs. Ellman, the Chairman of the Select Committee, reminded people that Network Rail may not be perfect, but it is a lot better than what we had under Railtrack. I remind hon. Members about that. It cost about £8.8 million to upgrade the west coast main line.
I thank the hon. Gentleman for correcting me: it cost £8.8 billion. The estimate given by Railtrack was £13 billion, and nobody in this Chamber believes that it would ever have been completed by Railtrack. I would like to pay tribute to my right hon. Friend Mr. Byers, the Secretary of State who had the courage to put Railtrack into administration. If he had not done so, we would not be talking about a successful railway today. Hon. Members should remember that our railways have the most advanced rolling stock of anywhere in Europe, but listening to the comments from the Liberal Democrat spokesman, one would not believe it. We have the most passengers using the railways since the 1950s and there has been a massive increase in freight. That has all taken place over the past 10 years.
We are talking about a railway that is successful, but it still has problems. A very good report was published last month, called "Fares and Ticketing Study". When looking at it carefully, I found that it asked a lot of questions, one of which is: "What is the cost of a rail ticket?" The answer, of course, is that nobody knows. One day it is this, the next it is that, and if we look a bit later, we find the price has gone up again. I would like some sort of price list on the window at the station saying how much people will actually pay for a ticket. There is no doubt that the train companies are creating confusion, which is benefiting them.
My hon. Friend Hugh Bayley mentioned that people can get a £5 ticket, and I am sure he is right, but many of us believe that it is easier to win the lottery than to get such cheap tickets. We just do not know about them. There is no transparency, but there should be. We need transparency from the train companies. The Government did a lot of work simplifying the fares this summer, because they used to be even more complicated, but we need to know their true cost. We need a system whereby the difference between the highest price and the lowest price is reduced.
On the Manchester to London line, there is now a fast, efficient train every 20 minutes. We almost have a system whereby someone can walk to the station, get the train and go—it does not matter if they miss one because they can catch the next one. However, people cannot do that because they would then have to pay the highest price, which penalises them. Even though we have a train every 20 minutes, people have to book, sometimes weeks in advance, to get a reasonable price.
Does my hon. Friend agree that there is a strong case for including in the franchise an obligation on the train operating company to offer the customer the very best value fare that is available, rather than, as is the case at the moment, the customer having to search hard to find that fare?
I agree totally with my hon. Friend. For someone travelling from Carlisle to London, it may be cheaper to buy a single to Preston, and then one from Preston to Crewe, and then one to London. That makes no sense. If British Rail did one thing, it was to tell people the price of a ticket, and they knew what they were paying for. That is not now the case. The Government tried to simplify matters, but we have to return to this issue and give people reasonable value for money.
The Chair of the Select Committee, my hon. Friend the Member for Liverpool, Riverside, made pertinent references to the price of the tickets. I am not sure that any of us in this Chamber have yet said that we should increase the subsidy. If we are to reduce the price, or keep it the same, we can do two things: we can increase the subsidy or we can reduce the investment in the railways. The latter would be a major problem for us. It could easily be done and nobody would notice. My understanding is that the Conservative policy is to build a high-speed line from existing resources. That would mean that the maintenance of the rest of the line and the upgrade of the rest of the railways would be reduced—it is a sleight of hand. We need to decide among ourselves whether there will be extra subsidy, or whether money will come from the fare box.
During the previous debate, I made the point that there are parts of the country—my constituency is one—where people rarely use the train. Unlike London, their public transport system is made up of buses, and in urban areas those buses are not subsidised. In the big commuter areas, fares are considerably subsidised. If we are saying to my constituents, who might get on a train once or twice a year, that they should pay more subsidy to the railways so that other people will benefit, we should make that clear. But people should remember that not everybody uses a train very often.
I am conscious that I am coming to the end of my time. We have a railway that we can be proud of, but we are reaching a point where we are going to hit major problems. To get out of the recession and overcome the problems that the rail companies have, we will have to put in more subsidy. What we must not do is lose track of what we are about: creating a better railway for the future. We will get over this recession. We may have to put more money in, and perhaps later we can take it out again, but we should not start making major cuts that would mean we would not have a railway fit for purpose when we came out of the recession.
The railway station in Shrewsbury is important because it is the first thing that many tourists see on arrival in our county town. Tourism is extremely important for us—it is our No. 1 income generator—and first impressions count. I can tell the Minister that the staff at Shrewsbury railway station are excellent. They are friendly and helpful and I pay tribute to the work that they do. They certainly make the experience of visiting Shrewsbury station more enjoyable.
We do, however, have certain problems such as weeds on the tracks, peeling paint, dirty tracks and various other aesthetic problems at the railway station. I would like to clear it up myself, during the recess. I would like to spend a few days with some volunteers clearing up the weeds and doing a bit of painting, but with all the health and safety legislation now in place, it seems quite difficult to organise. I ask the Minister whether he would agree to help me to organise a clean-up of Shrewsbury station, and whether he would join me during the recess. If he could organise that, we could both paint a few peeling walls.
I asked the chief executive of Arriva trains to come to Shrewsbury, which he did, and he said that the problem is—I made this point earlier when I intervened on the Chair of the Select Committee, Mrs. Ellman—that there is misinformation about who is responsible for maintaining and looking after various facilities, even a whole structure. In certain areas, parts of a structure above 2 m high are the responsibility of Network Rail and parts under 2 m are the responsibility of the train operator. I am exactly 2 m tall, so in those areas anything above my height is the responsibility of Network Rail. That simply cannot continue. I urge the Minister to bang a few heads together at Network Rail and the train operating companies, so that there is clear accountability, and we know who is responsible for maintaining and painting bridges and other structures at railway stations.
In Shropshire, we fought very hard to get a direct rail service from London to Shrewsbury. We were the only county town—apart from that of the Isle of Wight, for obvious reasons—without a direct rail link to our capital, and my No. 1 pledge in my election manifesto in 2005 was that we would get a direct rail service. We now have that service. It is the Wrexham to Marylebone service, which passes through Shrewsbury. Again, the staff are fantastic, the trains are punctual and the service is extremely good. That brings more tourism and business investment into Shrewsbury.
However, there have been extraordinary problems with Arriva and Virgin Trains trying to scupper that service since its birth. They have used their size to try to cajole and manoeuvre the Office of Rail Regulation to put in place as many impediments as possible. I urge the Minister in all sincerity to do everything possible to ensure that such large operators are not allowed to use their size to try to snuff out competition from other important rail companies that initiate vital services.
One thing that hampers progress for people using the train is a lack of car parking facilities at stations. I am sometimes prevented from using the direct rail service because there are no spaces in the car park next to Shrewsbury station. It is shared with the post office, and there are a lot of post vans there. I urge the Minister to redouble his efforts to ensure that more investment is put into increasing the number of car parking spaces next to railway stations such as that at Shrewsbury.
I totally agree, and I hope that the Minister will take that on board.
I would like to have my traditional pop at Virgin Trains, which seems to be one of my favourite pastimes. I find its tickets extraordinarily expensive. When I use the service from Wolverhampton to Euston, I try to buy my tickets in advance and always give a specific time for travelling there and back. Sometimes I have had to run like the wind, pushing everybody aside, to get on the specified train. If a passenger misses their train by a few seconds, their ticket is null and void and they have to buy another one. There must surely be a little more flexibility from Virgin Trains in how they sell tickets. The system is extremely complicated.
Arriva operates a service between Shrewsbury and Birmingham, which I have used in the past. It is extraordinarily overcrowded during the summer months, and the windows are extremely dirty. They are sealed, so they cannot be opened, and there is no air conditioning. I have felt physically sick travelling on Arriva trains on that route in the summer months. It is an extremely unpleasant experience, and I have sometimes counted 18, 19, 20 or 21 people standing in each carriage, which is simply not acceptable in this day and age. I hope that the Minister will speak to Arriva and highlight some of my constituents' concerns about the safety aspects involved when so many people are standing.
I called Mr. Bob Holland, the then chief executive of Arriva, and kept complaining about the situation so much that he finally agreed to accompany me on an Arriva service between Shrewsbury and Wolverhampton. Lo and behold, all of a sudden, when the chief executive appeared, the train arrived on time for the first time ever. We had extra carriages and, amazingly, they served tea and coffee and sold cakes, which was an experience that I had never come across before. The whole service was extremely smooth. It took me back to the days when I visited communist Romania and everything was prepared specially for President Ceausescu, to give him a false perspective on reality. If chief executives of train operating companies really want to know what it is like on their services, they should go incognito and without announcement. When they announce that they are coming, they get a spurious understanding of what it is like to use on a daily basis services such as those run by Arriva.
I pay tribute to a group of people in my constituency whose conference I attended at Shrewsbury railway station a few weeks ago. They are people who work at the station or are associated with it who have an interest in passengers with autism. They held a conference to learn how best to look after, help and facilitate passengers with autism, both children and adults. I congratulate them on that tremendous initiative. Perhaps I will send the Minister the minutes of the meeting so that he is aware of their tremendous plan. I hope that other railway stations will follow Shrewsbury's example and do more to assist passengers with autism.
Finally, we can never be complacent about railway station facilities for people who are in wheelchairs. I often raise that point with Network Rail and the train operators. I have been MP for Shrewsbury for four years, and I am still dissatisfied with aspects of those facilities at Shrewsbury station. I will certainly write to the Minister about those concerns, and I hope he will take action.
The increasing gap between per capita expenditure on railways in London and the south-east and in the rest of the country is unjustifiable. When Ministers have appeared before the Select Committee on Transport or been asked questions on the Floor of the House, very few of them have justified that gap. In some cases, they have not known where their investment was going. Those who have attempted to justify it have used the Eddington report, which states that the rail network is good enough and that we should invest in the parts of the system where there is congestion. The problem with that approach, which is a bit like the one suggested in the Barker report on housing, is that it is fundamentally reactionary. It leads to money and investment being put where investment already exists, to the detriment of the rest of the county.
In the new ministerial team at the Department for Transport, we have a team with real vision. They have put electrification back on the agenda and are talking about High Speed 2. I am delighted about that, because transport is not just about making right what is already in place. When it is invested in properly and produces better transport, it transforms any economy. There is a need to be proactive.
There is a bit of a competition going on for high-speed routes. People are discussing whether, after Birmingham, the high-speed link should go to Manchester or Leeds on its way to Scotland. I do not want to get into that competition, because we can have our cake and eat it. The Victorians built railways at both ends of the country because they did not have the engineering capacity to get through or over the Pennines. After London, population density in the country is highest in Birmingham, west midlands, Manchester, Leeds, Newcastle, Edinburgh and Glasgow. We have got the technology to go over or through the Pennines, which would be the best route. Why do we not build a high speed link across the Pennines and kill two birds with one stone?
The other side of the coin is that we do not have to start in the south-east. We could start with the route between Manchester and Leeds and have a Crossrail of the north. We could then build high-speed links from there. That would transform the economy, and be good for the environment and transport.
The hon. Gentleman has been successful in getting good publicity in the local newspapers today for his proposal for a high-speed rail link between Manchester and Leeds. Does he propose a brand new line, or does he envisage using existing lines? Has he done any work on the impact on local services, which are often affected by improvements to inter-city services?
We are talking about a 20-year project. We would have to start with engineering, financial feasibility, route feasibility and so on. When considering such investment, we can afford to examine whether we go under the Pennines or use existing lines. All that must be on the agenda.
The hon. Gentleman anticipated my next point. In considering investing in high-speed routes, we should not forget that, London may have Thameslink, but exactly the same problems exist in the Manchester system, which affect the whole of the north of England. We refer to the Manchester hub, but perhaps we should say "the Irwell link" or "the northern link" to try to take the bottlenecks out of the Manchester system. While a high-speed link is built, bottlenecks need to be removed to ensure that the rest of the system works.
In a debate in Westminster Hall on
I want to make four or five points, then I will give way.
Salford Crescent is a pinchpoint, next to where the routes to Wigan and Bolton meet. There are only two platforms, which take five trains. Salford council, the urban development company in the area and all the partners would like investment in that site so that there can be four platforms to ease congestion. That would benefit the whole of the north of England and start balancing investment between the north and the south of England. It would also be good for regeneration, and a bus station could be sited there.
My next point is about investment. High-speed rail would be good for the whole country, and getting rid of the congestion in the Greater Manchester system would be good for the north of England. The Government have said that they want to bring forward expenditure. We recently had a debate on the transport innovation fund and "congestion-TIF", as it was called. The people of Greater Manchester rejected that, but the money is still sitting in the pot. I do not see the point of leaving it hanging around for three or four years, when it will probably disappear, given that the economy needs that investment now. It should be transferred to a productivity pot for which all districts and councils in the country can bid. Otherwise, it will not be spent. In Greater Manchester, it would be best to spend it on tram links or heavy rail links to Manchester airport, which is one of the major international access points to this country. That would have an economic benefit.
Obviously, I do not agree with my hon. Friend about where the railway line should go, but that is not the point that I want to make. He said that a line between Manchester and Leeds would be good for the environment. I believe that that is a myth, because conventional trains use much less energy than a high-speed train, and nobody catches a plane from Manchester to Leeds. A high-speed line may have many benefits, but not environmental benefits.
Carbon dioxide costs become negative at over 200 mph approximately. There is a big change- around point at that speed. Of course, very few people fly between Leeds and Manchester, but having a route the whole length of the country would take some passengers off aeroplanes.
The hon. Gentleman is right.
My next point deals with the conundrum of expenditure on Network Rail. If one imagines British Rail with the number of passengers that now travel on the rail system, and an average of £5 billion of subsidy every year—in real terms, approximately three times what British Rail had—it would be in huge surplus. That is the first indication of inefficiency in the Network Rail system. I have asked many Ministers why rail in this country costs so much. The answer is beginning to become clearer. One obvious answer is that 100 companies are now involved in the railways, with 100 chief executives, 100 finance officers and 100 bottom lines, out of which to make profits. Obviously, that costs.
There are also perverse incentives. When lines are closed, Network Rail pays the train operating companies. If a business is to benefit from something—investment means that the railway system will be getting better for those train operating companies—it normally pays. We are talking about a perverse incentive and a perverse reward.
I guess that most people do not know the next reason for the cost of Network Rail. When Network Rail closes a line for improvements or because something has gone wrong, it puts on buses, and calls that—it is a dreadful word—"bustitution". Twelve of the 13 major rail franchises that bus companies run effectively use themselves as agents. Arriva uses Arriva; National Express uses National Express; FirstGroup uses FirstGroup; Stagecoach uses Stagecoach and so on. That means that anyone bidding does not get the bus service operator grant because it goes to the agent of the main company. There is very little control over the costs.
I have talked to representatives of bus operating companies that have been put out of business because they do not believe that they can compete with bodies that effectively award the contracts to themselves. They are told that it is a matter of quality as well as price, but when one talks to the bus drivers, one finds that the agents are paid two and three times what the competitors would charge. There is a cost to Network Rail and there is, therefore, a cost to the public purse. I have talked to several bus operators. One—Fraser Eagle—was recently put into administration. It believes that that has happened because of those unfair, if not corrupt, practices by train operating companies that also run the buses. Those are most of the points that I want to make.
I say to my hon. Friend Mr. Martlew that it makes sense to run a high-speed line into the main centres of population, but that does not mean that when the line is a success, as it undoubtedly will be, we cannot have tracks running off it. We are talking about a huge investment over a long period. The £60 billion of benefits from a high-speed line that were identified in the second Atkins report will come about only if it goes to the major centres of population. Let us make that a success, and then we can have routes to Liverpool and up to Carlisle and Glasgow. We should not limit our horizons in seeing what high-speed trains can do for this country.
It has passed into folklore that the privatisation of our railways was a disastrous error, without mitigation, that it was driven not by pragmatism and necessity but by ideology, and that it destroyed a golden age—I was almost misty- eyed listening to Mr. Martlew—between Dr. Beeching's axe and the mid-1990s and the Railways Act 1993. There has never been any evidence for those assertions or for the lazy received wisdom of the commentariat and those with an axe to grind.
I will make some progress first.
More to the point, what was the policy alternative? In the period immediately before privatisation, the number of passenger miles travelled was dropping each year. In 1980, investment in the railways was £900 million; by 2003, it was £4 billion. The state-owned monolith of British Rail would never have secured the requisite funding to invest in major capital infrastructure and the upgrading of rolling stock, signals, the permanent way and stations. British Rail was only ever an inert supplicant for inadequate state funding, under both Labour and Conservative Administrations, with poor management and planning. It could never have developed a coherent case for rebalancing our transport policy away from road freight and car use towards greater equilibrium and sustainability.
I am afraid that the hon. Gentleman is just in error. Tom Winsor, the former rail regulator, said that when British Rail handed over the railways to the privateers, they were handed over in good order and that British Rail had worked miracles on a pittance. A report was produced three or four years ago showing that at the time British Rail had the highest level of productivity in Europe, simply because it was so starved of funds that it worked miracles on a pittance.
The last two years of British Rail's existence was under a Conservative Government, when it was indeed making progress. However, I am talking about facts, not a set of value judgments, although I respect the hon. Gentleman's consistency and policy clarity on the issue.
I will not. I will make some further progress.
Critics point to the disaggregation of the railways after privatisation, but they disregard the growth in passenger numbers and the increase in rail freight that followed on from those structural changes, as well as disregarding better punctuality and safety and enhanced investment in stations and rolling stock. It is an inconvenient truth that privatisation arrested a 50-year decline in freight traffic. After all, if privatisation was "a privatisation too far", the key question is: why did the Labour Government never renationalise the railways?
The political agenda of this Government from 1997 was viscerally hostile to Railtrack and, later, to the rail regulator. They pursued a policy of undermining the system of rail governance by stealth, in a quite deliberate and cowardly way, eventually forcing Railtrack into receivership and seeking to destroy it by subversion, as they had neither the political courage nor, most importantly, the taxpayer funds to renationalise the railways. In addition, despite paying lip service to the unreconstructed left on their Back Benches, even this Government had to concede that privatisation was a success. Private investment in the rail system rose by an unprecedented level, from £120 million in 1995 to £1.4 billion in 1997.
Would the hon. Gentleman at least have the decency to accept that his constituency got the benefit of electrification under British Rail? Could he also explain why the then Conservative Chairman of the Transport Committee, Robert Adley, was so passionately opposed to rail privatisation?
Neither of us is in a position to ask my former esteemed colleague the reasons for that. He made his views clear before privatisation and the debate on the 1993 Act.
I will not invite the hon. Gentleman to intervene again, as time does not permit.
The former rail regulator wrote last week in The Times of his experience of "government by vendetta", as the then Secretary of State for Transport, with the connivance of the then Chancellor and now Prime Minister, used threats of primary legislation to avoid the inconvenience of contractual liabilities between Railtrack, the train operating companies and the Government. The defenestration of Railtrack in October 2001, the traducing of the independent regulator and the duplicity inherent in so much of this Government's modus operandi represented a shattering blow to private sector confidence and to the prospects for long-term investment, from which some might argue the rail industry has yet to recover.
That brings me to the east coast main line franchise, which is of particular interest to my constituents. Its current holder, National Express East Coast, won the franchise in August 2007 after the previous franchisee, GNER, was forced to relinquish it after 11 years when its parent company, Sea Containers, applied for chapter 11 bankruptcy status in the United States. National Express East Coast's franchise payments are due to grow steeply in the next five years, from £85 million to £395 million by 2015. It has already made 750 people redundant, and it is pursuing a major cost-cutting programme in addition to being encumbered by a £1.2 billion debt. In order to meet its next payment on the east coast franchise of £133 million, the company needs revenue growth of 10 per cent. and an estimated increase in passenger numbers of 4 per cent. That will need to happen against a background of falling passenger journeys and declining passenger revenues across the country in the year to December 2008.
One wonders whether any comprehensive analysis of the macro-economic impact of a recession or depression on passenger numbers, income streams, debt servicing and liquidity was undertaken by the company, the Office of Rail Regulation or the Department for Transport in August 2007. In the absence of any undertaking by Ministers to assist the train operating companies, we could be forgiven for asking two pertinent questions. First, was the east coast franchise overpriced and a product of Treasury greed and myopia? Secondly, what is the Government's plan B, if the costs prove prohibitive for the company? The medium-term financial viability of the franchisees on the east coast main line is integral to Network Rail's proposal to upgrade Peterborough station over the next few years, and that project is inextricably linked to the regeneration of Peterborough city centre and the economic competitiveness of the greater Peterborough travel-to-work area.
My hon. Friend Mrs. Villiers is on record as wishing to move to a culture of longer franchises in order to facilitate more stable business planning and investment and less interference in the day-to-day running of the railways by the Department for Transport. Certainly, the idea of renegotiating franchises to deliver a worse service, at the same time as increasing fares, would be the worst option to pursue, as the Campaign for Better Transport has stressed. It cannot be impossible for the Department for Transport to undertake a modelling exercise, or even a pilot programme, in which the RPI plus 1 formula is revisited and fares could be reduced.
According to the Office of Rail Regulation, ticket prices have risen by 13.6 per cent. in real terms since 1995, yet passengers consistently complain of poor service and a lack of value for money. Indeed, I am sure that my constituents who use First Capital Connect to travel to King's Cross will have been reassured by the comment of the Department for Transport spokesman, who said in June 2007 that rising fares were
"a good commercial solution to the problem of overcrowding."
Above-inflation rises in fares are a sure method of driving people back into their cars and losing their custom, possibly on a permanent basis.
My party is a strong supporter of rail, not least because it is a low-carbon mode of transport, and of enabling people to make intelligent choices other than those involving ever more car journeys. Over the past 12 years, the Government have failed to tackle the issues of overcrowding on our rail network and achieving better value for money for our railways. Why, for instance, is a walk-on train fare on average almost five times as expensive as an advance ticket? Why is our ticketing system still so complicated? If the Government are truly committed to sustainable transport—I speak as someone who represents a sustainable transport local authority—why did it take them 11 years to launch the 31 pilot schemes for station travel plans, following on from the rail White Paper published in 2007?
Are we surprised that some lines are operating at 170 per cent. capacity and that passengers are paying more for an inferior service? On a related point, there is little evidence of any co-ordination between the planning of rail services and either the development of other transport infrastructure or large-scale housing developments in areas such as my own, the south midlands and the Milton Keynes sustainable growth area.
The hon. Gentleman seems to be arguing against the commercial decision taken by National Express to bid as it did for the franchise, and the commercial decision to set the ticket prices that it has set, but surely those are examples of the necessary consequences of privatisation, which encourages such decisions being made in the first place.
I do not agree with the hon. Gentleman. The superstructure of rail governance has been set and established by this Government at least since 2001—post-Railtrack—so it was incumbent on them to make the necessary changes.
My party has called for an overhaul and reform of the transport innovation fund in order to allow very local sustainable capital projects to be facilitated by local authorities and other key partners such as urban regeneration companies and community rail partnerships. We need to think local and to think small.
Let me finish by looking at the issue of the high-speed rail link. It has been looked at by my hon. Friend the Member for Chipping Barnet, and it is a coherent policy. Quite frankly, the reaction of organisations such as the Institute of Directors, which has sought to rubbish our proposals, has been like Pavlov's dog. The viewpoint of those organisations, and of Labour Members, has been short-termism. High-speed rail links work; they have social and environmental benefits, as well as massive economic benefits, as Graham Stringer mentioned. We have a coherent programme which is also costed to bring economic benefits, particularly to the north of England.
This Government have had 12 years of economic growth, built on the solid foundation of a Conservative Government, in which to tackle the endemic problems in the railways, whether they be overcrowding, reliability, fare increases or whatever. By low politics and skulduggery, they have failed to deliver what people expected of them. In so many areas, they are exhausted, bereft of ideas and resorting to stealing Conservative ideas. They have run out of steam and in 14 months' time, they will be out of office.
The recent decision to award the inter-city express programme for 1,300 carriages to the Agility consortium has already been mentioned by Norman Baker and I would like to expand on the subject. As he said, the consortium is based on Hitachi, a Japanese supplier, and the decision has been greeted with anger and gloom in Derby—the home of Bombardier, which employs 2,200 people in the area with a large supply chain concentrated close to the city; it is the only major rail manufacturer in the UK. Obviously, as a Member whose constituency includes part of Derby, I am concerned about that and I want to share my concern with the House. I shall develop four points in that regard.
First, the commitment to British manufacturing and technology within the Hitachi bid is, to date, extraordinarily light. It seems likely that its tender will commit only to assembly and maintenance in the UK; the reference to 70 per cent. of jobs being here is largely based around the maintenance activity, which is already located here. No growth in employment is being offered.
If, as the Government stated in their announcement, we are to place the UK in a strong position for rolling stock supply across Europe, it is critical that any contract ensures that high-value manufacturing of the vehicles takes place here and that the technologies to support that development of the industry are based in the UK. Mere kit assembly will proffer us no competitive advantage whatever in a European marketplace. It is intriguing to note that the welding technology that Hitachi has claimed as being critical to its bid and unique to its company was actually originally developed at the Welding Institute at Abingdon. The company has certainly supplemented that technology over time, but must we see our key technologies in a sector that we used to dominate once again reliant on foreign exploitation?
Secondly, the scale of UK employment in the Hitachi bid has been questioned. Hitachi itself has not made the claim, but the Government have stated that 12,500 jobs will be created or secured. It has so far proved impossible to get close to that figure, which appears to have been based on the fact that in its bid Bombardier quoted 12,500 jobs created or protected, but the company already had a large base in the UK that the project would indeed have protected. It appears that the Government's estimate is based on the unrealistic multiple of four supply chain jobs to every one directly employed job. Most people would regard that as an exaggeration and would consider that a ratio of about 2:1 might be closer to reason.
So far, Hitachi has had limited contact with the supply chain network in the UK, and the company has specified that it is in discussion with 20 supply chain operators. The Derby rail forum, which encompasses the supply network in Derby, is far larger than that. Hitachi already has some relationships with Derby-based companies, but it seems most unlikely that the company will be able to achieve an integrated UK supply chain. There is genuine anxiety about where it will serve a large proportion of the high-value supply chain business from.
The hon. Gentleman is talking about the fact that Hitachi does not have a supply chain in the UK. Does he agree that Bombardier does have a supply chain and that both in Derby, where trains are made and assembled, and in Crewe, where they are overhauled and maintained, we already have skilled work forces available to carry out the work for which Hitachi has been given a contract? Does he agree that awarding the contract to Hitachi does not safeguard jobs in Bombardier?
I agree 100 per cent. It is most unlikely that the local supply chain will enjoy the multiplication of opportunities that a Bombardier-awarded contract would have given.
My third point is that since the new Secretary of State at BERR returned from Europe he has brought valuable experience of manufacturing clusters. The principle, long established in many countries, is that businesses in particular industries cluster in particular regions. That makes the sourcing, training and retention of skilled labour easier and the sourcing of materials and services from which no business derives competitive advantage easier and cheaper, and allows the location of shared infrastructure.
The area around Derby is the only major manufacturing centre in the UK for rail technologies. It thus has a test track for vehicles and a large concentration of supply chain businesses. Highly skilled engineers and technologists find a ready market for their skills. Without wishing to be negative, I think Hitachi appears to be considering manufacturing in parts of the country where nobody has manufactured a train for 100 years. If we are to build an internationally competitive railway technology sector, we should ensure that it has critical mass and that it concentrates its capacity as efficiently as possible. There is no case for determining location on the basis of grants that may be available or generalised labour availability.
My hon. Friend and neighbour will be aware that the town of Ashby-de-la-Zouch has been mooted as one of the three options for assembly—the other two being Sheffield and Gateshead. My hon. Friend is dubious that 12,500 jobs will be created or sustained. Is he also dubious about the figure given by the Government that of the final delivered value about 70 per cent. will be of UK origin? Is that not the key figure?
I certainly share my hon. Friend and neighbour's doubts. Much more thorough disclosure is needed of the thinking behind the awarding of the contract. The data issued so far have failed to satisfy most of the questions that could be put, both about labour utilisation and the value of the contracts issued within the UK.
The fourth point is that one wonders whether the right choice has been made anyway. The full reasons for awarding the contract to Agility have not been disclosed, but I understand that price was the critical factor. Was it the case that technology differences—for example, the use of lighter vehicles—increased the initial cost of the Bombardier bid? We all accept that constructing lighter vehicles is likely to be more expensive at first, but it might gain greater efficiencies in fuel utilisation over the life of the vehicles. How was that factored into the assessment of the technologies offered by the various bids?
Were both bids compliant with the technical specification in the first place? I would welcome a clear analysis of that. Is Hitachi equipped to supply an order of such scale? I understand that it is 12 months behind on a contract delivering trains to Australia, and has subcontracted substantial elements of that work to China. Is that the sort of future that we can expect on the fulfilment of the contract under discussion?
The Government have a period to reflect on the contract before committing to it. If they must pursue the Agility tender, they should focus strongly on the manufacturing strategy that was said to lie behind that decision—ensuring high-value manufacturing, access to and exploitation of key technologies, utilisation of existing supply chain businesses and rational location choice to maximise competitiveness and quality.
I recognise, as everyone does, that railways are expensive and heavily subsidised. I believe that that is partly a result of the legacy of botched privatisation, about which other Members have spoken, which leaves an unworkable and bizarre structure in place. It leads to unclear accountability, needless friction, short-termism, and virtual private monopolies such as ROSCOs.
Despite that, we all recognise that railways are needed more than ever—by the traveller, who cannot cope with road congestion; by the environment, which cannot cope with car pollution; and by the economy, given the capacity of railway to transform and boost the local economy. I agree entirely with Graham Stringer, who made precisely that point. Like him, I am also concerned that although we appreciate the need for rail, our appreciation of that need is fairly selective.
Let us consider rail expansion and investment. London has Docklands light railway, Thameslink and Crossrail. The Government have already made a £5 billion investment in a £15 billion scheme under the most expensive real estate on the entire planet. Millions have been spent on lawyers, millions have been committed to buy off objectors, and millions will be spent on consultants. Hours and hours of Members' time—some of them are present—has already been used up on the project to join Heathrow to Canary Wharf, and to get those financiers, who do us so much good, and some other people, across London a little more quickly.
We are promised new trains, and the provision of new carriages has been announced recently. Some of those will appear—it is a matter of faith with me. But where will they go? Out of the first 1,300, 900 will go to London. London already has an excellent tube system, which is to be completely refurbished—it is a public-private partnership, it is not ideal, and we do have Metronet, but still, it is being refurbished. London has the best bus service in Europe. If the only problem London has is bendy buses, it is in an enviable position. If the only thing one has to worry about is how much the buses bend, one has worries that other people would be quite happy to have if they had a decent bus service. London will get more and more.
However, what about the north-west, which I represent —the place where the railways began and where rolling stock is the most ancient? There is not a penny to be spent in extending track in that area—not a foot and not a rail. We struggled to get freight smoothly off Liverpool docks, even though there was an unassailable case for it, and the project would have taken place at first sight in London had it been mooted. We are told that Liverpool Central station in Merseyside is suited to a modern city, although in fact it is an absolute pit and a King's Cross waiting to happen.
When we complain—and we do complain—we are reminded by the powers that be of the over-cost west coast main line. We should be content, it seems, to know that huge sums are being spent not only in London, but on getting us provincials to London, perhaps a few minutes earlier than we got there before. After all, what more could colonials like us expect? Greater connectivity between northern cities? There is not much of that. A quick journey across the country? Anyone who has tried it will know how difficult it is. That seems to be asking far too much of our current masters. Moreover, there is no real promise of carriages for Northern Rail.
Well, there you have it. We already have some of the oldest stock in the United Kingdom. We have bus chassis on rail: that is what some of those 142s are. We also have some of the most overcrowded overground trains, particularly those coming out of Manchester. We have critical but entirely soluble snarl-ups on the network, again around Manchester.
Ours is a supplicant attitude, evident even in our approach to new schemes. In the north we have good, viable, non-anorak-type schemes, predicated on rational expectation of increased passenger numbers and increased profits—schemes that would genuinely boost local economies. I am thinking of, for instance, the Burscough curves, the Halton curves and the Todmorden curves. All those are doable with the lawyers' fees, the consultants' fees or even the tea money set aside for Crossrail. They are small schemes with big local benefits—genuine benefits.
So sad is our psychology in the north-west, however, that we do not work together on such schemes. We know that the chances of the railway raj in London helping us are not that good. We hope that it can be cajoled into possibly doing something some time, although possibly not other things. We compete for attention. The net effect is that our London masters at the Department for Transport say "You cannot expect us to do all these things," and then do none of them. They carry on laying the track in London, digging the tunnels in London, and spending the billions in London. It is a case of "Divide and rule".
Let me issue a challenge. Disraeli spoke of two nations, referring to the rich and poor. I could speak, in transport terms, of two nations, north and south. However, I can be proved wrong. All that is needed is for some kindly soul in the Department to show me one yard, or one metre, of new track in the north-west. I do not mind whether it is in Todmorden, Halton or Burscough. I will reduce the demand: I should like a train less than 20 years old to arrive in my own town, at Southport station. But I am not holding my breath.
I want to explore some ideas about the role that our railways could play to help our country out of recession. The railways are vital economic arteries connecting businesses to markets, and connecting the north and west of the country to London and the south-east. As we heard earlier in the debate, they carry more passengers now than at any time since the second world war. I believe that the Government need to adopt policies that will reinforce the role that the railways can play in helping our country to emerge from recession in three specific ways. First, they need to encourage business confidence, especially in core railway businesses such as the train operating companies, Network Rail, and the infrastructure companies that build, maintain and renew the track. Secondly, they need to ensure best use of our existing assets by means of more efficient timetabling. Thirdly, they need to provide as much new investment as possible to stimulate economic activity and safeguard jobs in the industry.
These are uncertain economic times, but the Government can boost business confidence during the downturn by creating greater certainty in the industry. As has already been mentioned in the debate, two years ago GNER, a train operating company that was well regarded by both the industry and the passengers who used its services, lost the east coast main line franchise. Its successor, National Express East Coast, is doing well, but the hiatus when the GNER franchise collapsed lasted for a year and created uncertainty both in the rail industry and for businesses up and down the east coast line that rely on that railway service to reach their customers and markets.
We must remember that GNER was forced out of business, first, because its parent company, Sea Containers, ran into difficult trading conditions in north America, which faced the economic downturn earlier than us in Europe, and secondly, because it faced uncertainty over the competition it had from open-access operators. I would not want National Express East Coast, or any other train operating company, to go the same way as GNER, so I ask the Government to say this evening what they are doing to reduce the risk of any other franchisee going under during the downturn.
The Government must, of course, honour the open-access agreements that have already been agreed—such as the one to Shrewsbury, which we heard about earlier. Grand Central, a York-based company, deserves a return on the investment it has made on a direct service from Sunderland, through intermediate stations, to York and then down to London. However, open-access services are not part of the strategic rail network, unlike franchises. During a downturn, the Government should give priority to the strategic railway, and when line capacity is short, it does not make sense to award a train path to a four or five-carriage open-access train when an eight-carriage franchise train could use the slot.
I was a member of the Standing Committee that considered the 1993 Railways Bill. One of the key criticisms of privatisation was that it would lead to fragmentation, and that has been borne out in practice. We have a less integrated timetable now than we had before privatisation, and that was a direct consequence of franchising. The problem has been exacerbated by open-access services.
Since the Strategic Rail Authority was wound up, there is no office or agency with a strategic responsibility for timetabling. The basic objective of timetabling is to connect point A with point B, with a direct service if possible, and with the fewest changes where that is impossible, and for any changes that are necessary to be brisk. It is a simple principle that is used by timetablers in other European countries, but, sadly, not in our country.
The Office of Rail Regulation says it is not its job to provide a timetable; its job is to adjudicate between applications from different operating companies for train slots. Yet its recent decisions on train paths on the east coast main line have enormous implications for the timetable. As a result of awarding additional paths to open-access operators, it has postponed the National Express East Coast franchise commitment to delivering five trains per hour as a standard pattern.
My constituent, Jonathan Tyler, argues that the ORR decision is misguided. He has done so powerfully in two recent articles in Modern Railways, and he advocates that the UK should adopt the same principles and timetabling tools used in other European countries. I ask my hon. Friend the Minister to look at the articles, or to get a brief from the official in his Department, Geoffrey Appleby, who is in charge of the rail utilisation strategy, about the proposals my constituent puts forward.
Let me give just one example of how railway fragmentation gets in the way of timetabling. The passenger flow by railway between York and Leeds is broadly the same as that between Manchester and Liverpool or Edinburgh and Glasgow, and it needs four trains per hour. Three trains are run at 15-minute intervals by First TransPennine Express and the fourth train is run by CrossCountry, but its train runs in between two of those others and, consequently, there are four trains in half an hour and no trains for the next half hour. Over lunch today, the Secretary of State told me that he would look at these problems. I know that Mr. Tyler has been in correspondence with Lord Adonis, and I very much welcome the fact that the Secretary of State has said that he will look at this too—I shall write to him.
The Government have a good story to tell on investment, and in an economic downturn investing in infrastructure is an effective way to create jobs and to get money flowing through into the wider economy. Franklin D. Roosevelt's new deal invested billions of dollars in public infrastructure. That lesson has been learned by Barack Obama and it should not be lost on our Government. I am glad that the Government have increased Network Rail's budget for track renewals over the next five years, but I am extremely concerned that Network Rail is planning to spend less next year on track renewals than it did this year. If it were to do so, that would make many skilled men redundant and the policy would fly in the face of everything the Government are saying about fighting the recession. I call on them to get Network Rail to think again.
I welcome the Government's decision to invest £7.5 billion in new inter-city express trains. If the preferred bidder that they have identified is appointed, I hope that 75 per cent. of the value of the contract is spent in the United Kingdom. We are told that the assembly plant for these new carriages will employ 500 train builders. My hon. Friend Mr. Todd has questioned whether the three preferred locations—Ashby de la Zouch, Sheffield and Gateshead—are the best places in which to build the trains. The Government should look closely at the location, and the Minister will not be at all surprised when I remind him that there is a perfectly good railway carriage factory in York. If the factory, which is currently used by Network Rail, is unavailable or deemed inappropriate, I should also remind him that the York central site, which abuts the York carriage works and has directly access to the railway, is one of the biggest industrial development sites in Europe and would be an ideal place for a new plant. I have already discussed this possibility with the York inward investment board, and I hope that we will be discussing the merits of York, among the other places, with officials in the Department.
I welcome the opportunity to take part in this debate, because Chelmsford is a significant commuter town for journeys down to London. If one looks on the positive side, one can see that some significant improvements have been made over the past 20 years to the infrastructure and to the services provided to my constituents: in the late 1980s and early 1990s, a multi-million pound redevelopment and enhancement of Liverpool Street station took place; during the 1990s Chelmsford station was rebuilt and significantly improved; and, in addition, improvements have been made to the rolling stock. I recall that 20 years ago one could travel from Chelmsford to Liverpool Street during the day and although it might have been bright and sunny outside, the carriage windows were so dirty that one would have imagined it was late evening. That is a thing of the past, and we have seen real and significant improvements and investment.
There are, however, downsides that my constituents have to put up with day in, day out, the first of which is significant overcrowding on the trains. Not only is it a safety problem but, to my mind, it is unacceptable that having paid through the nose through the fare structure for the service down to Liverpool Street, they all too often cannot find a seat during the rush hours in the morning and in the late afternoon and early evening. My solution would be to have longer trains with more carriages during that period to take the overcrowding and to ameliorate that problem. Too little is being done at the moment to solve the problem.
The other issue of grave concern is rail fares. Because commuters are a captive audience it seems that there are significant increases in fares over and above the rate of inflation, so that the price of an annual season ticket for people going down to London to work makes up an exorbitant part of their salaries. Something has to be done to ensure that people get a fair deal and value for money and that they do not have to pay through the nose, year in, year out. It will be extremely interesting at the back end of this year and the beginning of next year to see what the annual increase in fares will be, given the fact that the retail prices index, as opposed to the consumer prices index, is now at 0.1 per cent. on an annual basis—the first time that we have had that situation in living memory and beyond. The regulator and the powers that be that set the fares have to think again in this unusual time of extremely low inflation to ensure that hard-pressed commuters are not penalised once more and that they do not have to pay through the nose.
The other issue that I want to raise tonight is the fact that, on environmental grounds, it would be sensible to build a new station on the outskirts of Chelmsford, somewhere between north Springfield and Boreham, to stop all those motorists who travel into Chelmsford to get the train into London when they do not live in Chelmsford. They come from the Dengie peninsula and from areas north of Chelmsford, up near Braintree and Witham and beyond. If they could go to a station there, that would relieve the traffic in the centre of the town and would provide a steadier and more responsible way of people getting on to and alighting from trains. That proposal is in the Chelmsford borough council structure plan. We can argue about and discuss exactly where a new station should be, but I welcome the fact that it is in the plans and that it is an accepted fact that it should come to pass.
I will not, because I do not have enough time.
I only hope that the current economic situation will not cause a dream that is about to be realised to be postponed through a lack of finance.
I do not want to take any longer, as I know that a number of other hon. Members want to take part in the debate.
No, I will not, for the very reason I have just given.
I urge the Government to use their influence to ensure that next year, when fares increase, commuters are not used as a whipping boy because they are a captive market. They should not have to suffer, yet again, a significant increase in the fares that they have to pay without a significant improvement in the quality of the service. Severe disruptions happen too often. Sometimes, to be fair to the rail provider, those disruptions are not due to the provider but to vandalism, but we need to ensure that the overall service improves. We need to ensure that the work on the overhead electrification cables, which involves investment to replace infrastructure that is 20 years-plus old and that is out of date, is enhanced and moved along the line towards Chelmsford and beyond to Colchester more quickly and that the plans for the timetable ensure that we can all benefit from those improvements.
I welcome this debate. I want to concentrate principally on the issue of investment in high-speed rail networks, as did my hon. Friend Graham Stringer. To some extent, I want to make common cause with my friend from the other side of the Pennines, unusual though that may seem.
It was good to hear recent announcements about the formation of the High Speed 2 company, and I am sure that we all await further statements on that topic with interest. Of course, anyone could be forgiven for finding it difficult to accept that further high-speed networks will be built until we actually see the relevant signatures on the dotted lines. To be honest, our country's history has, for decades, been one of short-term decisions at the expense of long-term investments. As Steve Richards of The Guardian said recently, there has been a "perverse indifference" to the issue.
However, the Government appear to be on the verge of doing something bold and exciting, and I can only urge our Ministers to stick with their instincts, and to deliver what it appears that they are promising to deliver as soon as they can. That we have moved to such a position is, in many ways, quite an achievement, given where we were only a short time ago. The Eddington report, for instance, argued that economic returns from high-speed rail in the UK were unlikely to be as large as returns on investments in alternative projects. Eddington argued that that was due to the compact geography of the UK and an extensive air network, among other things, but many disagreed with him, and their contributions to the debate have helped to lead us where we are today. Public opinion is more aligned towards the progressive position than it has been for some years, and recognises that it is right to challenge aviation as the principal means of travelling within the country. I support the third runway at Heathrow, but it is absolutely right that we challenge aviation and provide a greener alternative wherever we can.
The Atkins report argued that the economic benefit to the UK of high-speed rail would be £63 billion, and the Commission for Integrated Transport made a significant contribution to the debate. The well-respected Professor David Begg argued that
"shrinking journey times between main cities" was
"essential if we are to deal with capacity constraints that are building up on our intercity network."
That point was well made earlier by my hon. Friend the Member for Manchester, Blackley. In other words, the capacity that was apparent in the 1970s and 1980s has been soaked up.
One option for dealing with the lack of capacity on the network would be to price passengers off the trains. It is clearly an option, and it may well be the chosen route of the train operators, but I believe, as do most progressive thinkers, that that would not be the right way forward. It would make much more sense to invest in new capacity and so free up capacity on our existing network. Given the increasing pressure on our highway network, would it not make much more sense to get more passengers and more freight off our roads and on to our trains? After all, as Professor Begg has pointed out, increasing congestion on our roads is leading to reductions in average travel speeds, and that, of course, has a negative impact on economic activity. Surely common sense, if nothing else, needs to prevail; we need to recognise that the only way out of the situation is to build more and—this is the key point—better railway capacity.
The Northern Way is the other organisation that has made the case for high-speed networks for both the east and west. I now come to the point on which I do not entirely agree with my hon. Friend the Member for Manchester, Blackley. The Northern Way—a group of regional development agencies—argues that we need high-speed routes up the east and west coasts, linked by the trans-Pennine route. It predicts that such an investment would have an economic impact of £10 billion on the economy of the north.
All in all, then, there is a powerful economic case for high-speed rail, which could help to rebalance our economy by encouraging the integration of our regional economies. As I pointed out in a debate in Westminster Hall the other week, we talk a lot nowadays about rebalancing our economy by developing our manufacturing base, but I believe strongly that we need to do so by considering not just whether we need more manufacturing and less of a financial services sector, but whether we develop the economy of the north and the rest of the country, and balance those regions with London and the south-east.
However, the environmental case is powerful too, for only a reliable fast rail network offering a comfortable journey at a reasonable price will be able to compete against the car and the plane. I echo entirely the comments of my hon. Friend Mr. Martlew about the inconsistencies and the difficulties experienced by passengers in getting the best deal on the trains, and the disincentive that the current fare structure presents for people who make a last-minute decision to hop on a train. They find it much easier to get in the car to make that journey, because the cost of travelling on the train at the last minute is prohibitively high.
A modal shift is critical to our environmental and economic future, and I therefore call on Ministers to commit the Government to this vision for our rail network. Economically, socially and environmentally, that is the right thing to do. That vision should include in the first phase of High Speed 2 the reopening of the trans-Pennine link, preferably based, as everyone would expect me to say, on the reopening of the Woodhead line.
The Woodhead line runs deep in the hearts of most railway commentators. I have had letters from up and down the country on that subject. It was the first line in the country to be electrified and it provides a fast link of just 35 minutes between Sheffield and Manchester. It would be the best option environmentally for a new trans-Pennine link because the environmental impact of reopening that line would be much less than that of building a brand new link between, say, Manchester and Sheffield, or elsewhere.
There are other things that we need to do. Before we start investing in the high-speed network, we need, for instance, to sort out the logistical problems that dog Manchester's rail network. It might seem strange that a Member representing Sheffield should support Manchester in wanting to get its problems sorted, but the problems of Manchester impact on every major city in the north. We need the Manchester hub, and we need it quickly. Progress in the north cannot move forward much further until that is resolved.
We need the electrification of lines such as the Great Western and midland main line, in order to bring cities such as Leicester, Derby and Sheffield closer to London as soon as possible. The journey takes two hours and seven minutes at best from Sheffield to London, but Sheffield is the UK's fourth largest city. We could bring the journey time below two hours, but there are still certain times of the day when it is more like three hours. We need to make progress in that respect.
In conclusion, although I welcome many of the proposals to improve rail services in the medium to long term, there are many things that the Department for Transport can do in the short term. By improving the quality of stations and providing safety and disability access measures, we can improve the travelling experience for train passengers. I commend my right hon. Friend the Secretary of State for making available £35 million for such upgrades. I am delighted that upgrades are in the pipeline for stations on the much used Huddersfield to Sheffield line, which is one of those sardine-tin lines that is packed for most of the time that the rolling stock is in operation. Investment is promised for Penistone, Silkstone Common and Dodworth. More of this type of short-term investment would be good for our railways and provide a useful stimulus to our ailing economy.
Finally, with reference to Sheffield being shortlisted for the new inter-city rolling stock, it would be wrong to underestimate the city's history of railway component making and manufacturing, or its capacity to deliver that new stock.
I will be as brief as I can. As part of the argument for an expansion of the rail network, I draw attention to the Ashington, Blyth and Tyne railway line, which is a fully maintained, operational, mostly double-track freight line that last saw regular passenger services in the 1960s. It forms an important part of our regional network. The main trunk runs from Newcastle through Northumberland Park, which has a Metro station connection, then to Seghill, Seaton Delaval, Newsham—for Blyth—Bebside, Bedlington and Ashington. There is a further branch, which runs from Bedlington, through Choppington, connecting back to the east coast main line at Morpeth. There are other freight branches to the Alcan aluminium smelter and the port of Blyth.
Supported by other funding partners, the North East assembly has already completed a technical report into restoring passenger rail services on the line. The report concluded that there would be a one-off cost of £4.1 million and an annual operating subsidy of only £50,000 per annum for an hourly service to Newcastle until early evening—or of £100,000 per annum for a half-hourly service until midnight, which is our preferred option. No extra rolling stock would be required as, instead of waiting 30 minutes at Morpeth, the train would continue along the line to Bedlington. That would double the train frequency and provide a service until midnight for both Cramlington and Morpeth.
The proposal to open the main section of Ashington to Newcastle via Northumberland Park was the subject of a technical study funded by Nexus. It concluded that an hourly service was easily achievable in addition to existing freight traffic. The study did not examine capital costs, revenue or operating costs, but as Ashington is a much larger community than Bedlington and its station is in a prime town centre position, it can be assumed that patronage and revenues would be much higher if Ashington were included.
A Network Rail guide to railway investment projects 3 study, or GRIP 3 study, on the prospect of restoring passenger rail services from the Metro centre outside Newcastle into Ashington has just started. At the same time, a freight operator has requested a study on significantly increasing freight movement on that line. A new coal-fired power station is proposed for north Blyth; it would require 6 million tonnes of coal per year and approximately 3 million tonnes of that would come in on the rail line.
I conclude by asking the Minister to consider the request to reopen the railway to passenger rail services and by informing the House that my right hon. Friend the Secretary of State has agreed to visit Ashington and Bedlington to see for himself the benefits that that would bring.
I am very short of time, so I cannot do justice to my theme of rail freight. I strongly believe that we need heavy investment in dedicated rail freight and in infrastructure linking the channel tunnel to Glasgow. With colleagues from the rail and haulage industries, I have been supporting the EuroRail freight route scheme for some time. We have a detailed, worked-out scheme, and I am glad to say that we have put it directly to the Secretary of State and the Minister with responsibility for railways. They know the detail.
I want to emphasise that the issue of rail freight is underplayed by the Government. The rail White Paper allocated only £200 million for rail freight over a five-year period. That is a tiny amount of money—just one eightieth of the proposed spending on Crossrail, one fortieth of what has been spent on west coast main line modernisation and half of what will be spent on modernising Birmingham New Street station. It is a tiny amount, and the Government are not taking rail freight seriously.
If we want those major economic regions in Scotland, the north and the midlands to be linked to the continent of Europe, a dedicated rail freight line going through the channel tunnel to those regions is vital. The existing routes cannot take double-stack containers and most cannot take full-size containers. They cannot take lorries on trains. They will not be used by hauliers without regular services accessible through terminals close to motorways; hauliers could load their lorries and get them delivered to Dortmund, Rome or wherever the next day. That is what we need and we have to invest in it.
We estimate that our detailed scheme would cost £4 billion—a tiny fraction of what would be spent on a high-speed passenger service, and of what is being spent on many other schemes. I would have liked much longer to speak about the scheme. I have just touched on it, but I hope that the Minister will take note.
Let me start with the question put to the Minister by my right hon. Friend Mr. Redwood. The estimates book states that £7.5 billion out of the total £23.5 billion relates to financial instruments. Does that not create a huge risk? I understand that these estimates involve Government guarantees against London and Continental Railways, Network Rail debt issuance and the Air Travel Trust fund. To enable the House to assess the risks attached, can the Minister confirm when those guarantees were put in place, for how long they will extend, and what risk analysis has been undertaken; and will he put into the Library the probability analysis that was undertaken by the Department prior to making a risk assessment?
I want to refer to the White Paper, "Delivering a Sustainable Railway". It is unfortunate, to say the least, that less than two years after the publication of that so-called 30-year strategy, it is already out of date and falling to pieces. It is no wonder that the Select Committee concluded that
"the Government should seek to develop a genuine 30-year rail strategy", for the document that they produced is clearly not that. At the time of its publication, it was rightly lambasted by all industry experts for its lack of vision and detachment from reality. Where does one start? It was over-hyped by the then Secretary of State; it has ultimately proved to be visionless; and although the high-level output specification contained many good things, they were, like so much from this Government, recycled or double counted, and the new things have yet to materialise.
So what, in reality, did the White Paper contain? There was the re-announcement about Birmingham New Street and Reading, there was £100 million for all station improvements outside London, and there were the much-vaunted 1,300 carriages, which went from being "new" to "extra" carriages, and all of which had been announced by the two Secretaries of State prior to the Secretary of State at that time. Quotations about "Delivering a Sustainable Railway" include:
"The level of ambition is too modest";
"We urge the Government to be bolder";
"It is deeply disappointing the Government dodged";
"Hesitation means years of avoidable misery"; and
"The white paper dismisses electrification too easily".
Those are not my words—they come from the Select Committee report. In the end, one is forced to conclude that the Government's 30-year strategy was an expensive waste of paper and printing.
In the less than two years since the strategy was produced, it has been seen to be wanting. The White Paper's dismissal of high-speed rail and electrification has been rendered obsolete by the Government's U-turns. On high-speed rail, the new Minister of State has clearly reversed the catastrophic opposition of the then Secretary of State. It is a shame that the Government's plans for high-speed rail are rather less extensive than those announced by the Conservatives. The plans are so far uncosted, and we do not know where the trains are going to start from or go to.
I certainly praise the fact that the Government have joined the Conservative party in recognising that, like so much they have done on the railways, they have got it wrong and we have got it right. I do not know whether that was due to the Select Committee or the announcement that we made prior to that of the Select Committee. The hon. Lady will know that my hon. Friend Mrs. Villiers announced our investigation in 2007, and our policy in 2008.
Would the hon. Gentleman find it surprising to be told that those looking in on this debate would reflect on the appalling legacy that was left to this Government in 1997 and assume that the Opposition would need industrial-strength chutzpah by the shed load to expect to be taken seriously on this issue, when a long period of silent contrition would be more appropriate?
My hon. Friend is right: we will inherit a bankrupt economy, and given the fiasco of British Rail left by the previous Labour Administration for the incoming Conservative Government in 1979, history may not treat the comments of David Taylor that kindly.
Does my hon. Friend not think that it is a badge of shame for this Government that when questioned last year it would seem that not one civil servant in the Department for Transport was allocated the task of looking at high-speed rail? In fact, after 11 years of Labour Government, we have just 113 km of high-speed rail, while France has 1,900 km.
Indeed I do. The fact that no civil servants were looking at high-speed rail was confirmed by the then Minister responsible for rail, Mr. Harris. My hon. Friend's point is absolutely accurate, and like him I might conclude that the Government have finally joined us in our far-sighted policy.
The capacity shortage on the network should be the top priority for the industry. The Government's attempts to tackle the shortage have been misguided and totally inadequate, which was borne out by the evidence taken by the Select Committee. In its report, the Committee said that it was concerned that the Government were failing to deal with the concerns of the industry. It recommended that the Department revise its method of costing rail patronage, and it said that the Government's approach to increasing rail capacity was over-cautious. That may be one word for it, but I bet that the commuters from the constituency of my hon. Friend Mr. Burns, of whose struggle he spoke so eloquently, do not use the word "over-cautious". A stronger, more unified strategy for tackling overcrowding and keeping costs down is urgently required. That will help to take the pressure off rising fares, and more importantly, it would drive better value for money for the fare payer, the taxpayer and the traveller.
Hon. Members have raised a number of points tonight, but we have spent a lot of time listening to comments about the extra carriages, which are clearly the key to delivering extra capacity in the short term. The high-level output specification outlined 1,300 extra carriages, and we would welcome that. But are they new? How many of them are new? How many are cascaded? How many of them have actually been ordered? Will Thameslink phase 1 be delayed? How many carriages will be delivered and when? The process is close to a shambles.
Will the Minister clarify which of the class 323 carriages will be new and which will be cascaded, and to which operators? I still do not believe that anyone knows what the promise of 1,300 carriages really means. Even by the Department for Transport's lamentably low standards of responses to questions, the one that I have mentioned must be regarded as inadequate and poor.
The shambles is further highlighted by an answer that Lord Adonis gave. He stated:
"The Department for Transport does not determine the amount of rolling stock for First Great Western...or any other train operator."—[ Hansard, House of Lords, 4 November 2008; Vol. 705, c. WA43.]
That is palpably absurd, because the Under-Secretary of State for Transport, the hon. Member for Gillingham, gave me a written answer that contradicts it. It is nonsense also because the Department now has an updated rolling stock plan which, as Lord Adonis concluded in the same answer, envisages an extra 52 carriages for First Great Western. In one sentence he said that the Government did not intend to tell any operator where carriages should go or how many they should have, and later in the answer he told us exactly how many First Great Western would have. The DFT is controlling procurement, and it is doing so shambolically. Will the Minister clarify exactly where all the carriages have gone?
A number of contributions to the debate have been about the inter-city express programme. The Minister might at least explain something about that. When the Secretary of State announced the IEP, he talked about the 12,500 jobs that would be safeguarded or created. Hitachi has confirmed that its initial investment in the United Kingdom will create 200 jobs, which is likely to rise to 500. To be generous, there might be 2,000 maintenance jobs. That makes 2,500 of the 12,500. When my hon. Friend the Member for Chipping Barnet asked the Secretary of State on
There have been speeches about high-speed rail in the debate. For far too long it was absolutely clear that the Government had no interest in high-speed rail. When Ruth Kelly was Secretary of State, she said that it was "risky and expensive" and would not help to meet passenger demand. That was clearly seen to be wrong, and how things have changed, led by the Conservatives' innovative announcement last week. I am pleased to see that the Government have finally seen the light, and I welcome the fact that Graham Stringer has been converted to our policy and supports the Conservative party's plans for high-speed rail to be built, in phase 1, from London to Birmingham, Manchester and Leeds, and then in later phases across the whole country.
Tonight, we have had the chance to examine, all too briefly, some of the Government's plans for the railways. Their 30-year rail strategy has been proved palpably inadequate, the Competition Commission's findings about their rolling stock procurement policy have been scathing and there have been major failings in Network Rail that we have not had the chance to touch on. The Government's policy towards rail is both shambolic and ill-prepared.
We have had a wide-ranging debate, with substantial contributions from many hon. Members. However, it is interesting that, at the outset of his speech, Stephen Hammond could not bring himself to acknowledge the work of the Transport Committee or to congratulate my hon. Friend Mrs. Ellman on her work as Chair. I would like to put my congratulations to her on the record.
Contributions included bids for additional funding in several different ways and bids for investment in specific constituencies, which is understandable. Some contributions frankly disregarded any changes in the past 10 years or any improvements to our rail system.
We all know that good transport networks are essential to people's everyday lives and to the health of the UK economy. That remains true, especially in today's challenging economic conditions. That is why the Government remain committed to substantial investment in our transport system.
We have therefore led and promoted several major long-term infrastructure projects, which will provide a major boost to our economy. We are investing £15 billion between 2009 and 2014 to increase capacity for up to 183 million passengers a year. For the long term, our aim is a rail network that can carry double the current number of passengers.
However, in spite of the record investment, people's increasing demand for travel means that in many places, our transport infrastructure is operating at, or near capacity. We need not only to address the problem, but to do so in an environmentally sustainable manner.
Rail already has an impressive and established record of being a highly sustainable form of transport. Carbon emissions from rail are around a third of those for road transport. Electric trains in particular are not only cheaper to operate than diesels, but emit far less carbon. That is one reason for the further work on the case for electrifying the busiest parts of our network, including the Great Western main line and the midland main line, with decisions to be announced later this year.
Some hon. Members referred to times gone by. Thirty years ago, the railway was being written off as an expensive, outdated and declining mode of transport. Times change—thanks to the substantial investment that we have made, Britain's railways have enjoyed a spectacular renaissance.
Some hon. Members claimed that the railways had improved because of privatisation. I well remember in 1997 that the railway lines in my neck of the woods suffered from gross under-investment, were unreliable and had rolling stock from the 1960s and 1970s. [Interruption. ] That is not nonsense.
Our rail network now carries more people and more freight than at any time in the past 50 years, and performance continues to improve. In the past year, 90.8 per cent. of passenger trains arrived on time. It is important that that improvement continues. The Government have, therefore, specified an improvement in reliability to 92.6 per cent. by 2014. In addition, we are specifying 25 per cent. reductions in delays of more than 30 minutes.
As I said, passenger numbers have grown around 40 per cent in the past 10 years. That is why we are going to such lengths to upgrade existing track. We want to tackle the major problems that we identified for the control period to 2014: overcrowding and capacity. That is our main focus between now and 2014, and that is why we have upgraded the existing track, as on the west coast main line, as well as investing in new trains. [ Interruption. ] I will come shortly to the number of carriages, which was raised by the hon. Member for Wimbledon and others.
We are investing £5.5 billion in the Thameslink scheme, which will deliver greater frequency and capacity across London services and more than 14,000 more seats on some of the most congested routes in London. Crossrail will give commuters to the east and west of London direct access to the heart of the capital and mean that 1.5 million more people will be within an hour of London's business centres.
Some 1,300 extra carriages are to come into service between now and 2014. Norman Baker referred to the grotesque shortage of rolling stock, as did Daniel Kawczynski. Those 1,300 extra carriages will go to some of the areas suffering from the worst overcrowding; indeed, 423 additional carriages have already been ordered, before the control period has even started. That is a sign of the Government's decision to press on with procurement. All those carriages will be in place by 2014.
I can confirm that the 423 new carriages to be delivered between 2009 and 2011 will be distributed as follows: 92 to Southern; 217 to London Midland; eight to Chiltern; and 106 to Virgin West Coast. That means that 423 have already been ordered. Invitations to tender have been issued for a further 320 vehicles and officials are currently in commercial discussions with train operating companies to secure the remainder, after which we will announce where those additional carriages will go.
I have just laid out clearly—I do not know whether this is difficult to understand—that 423 of the 1,300 carriages have already been ordered, that invitations to tender have been issued on 320 and that we are discussing the rest. [ Interruption. ] My right hon. Friend the Secretary of State for Transport asks from a sedentary position which ones the Conservatives would cut as a result of the £840 million of cuts that would be made in three weeks' time if the hon. Gentleman were in power.
I will not give way, because I want to cover the points raised by other hon. Members.
My hon. Friend Mr. Todd mentioned the inter-city express programme, as did the hon. Member for Lewes and others, including the Chair of the Select Committee. We have set out a £7.5 billion investment programme to replace the existing, ageing inter-city trains. The benefit for passengers will be substantial, with 21 per cent. more seats available on longer trains and shorter journeys. Typically, the journey time will be shortened between London and Leeds by 10 minutes, between London and Edinburgh by 12 minutes and between London and Bristol by 10 minutes.
I am delighted that Hitachi has committed to build a new manufacturing plant here in the UK; indeed, I have heard the bids from my hon. Friends the Members for City of York (Hugh Bayley) and for Sheffield, Hillsborough (Ms Smith) and others. We will ensure that those commitments are delivered as soon as possible. However, I would say to right hon. and hon. Members that safeguarding jobs is as important as getting new jobs. It is important that we ensure that those jobs remain. It is not a question of the Government micro-managing the process, because there is substantial work to be done, never mind the long time that it takes to design and deliver the programme. Indeed, the trains will be used by a number of different operators.
I note that the representative from Unite, Bob Rixham, who had met Hitachi's European chief, said:
"The undertakings Hitachi have given mean they are here for the long term and, if so, we would be crackers not to welcome a second big player in train manufacturing in Britain."
That is an important point to bear in mind. The evaluation of the bids was based on an assessment of compliance, delivery and value for money. Those criteria were published on the DFT's website. Of course, the content of the bids remains commercially confidential.
On investment, a new rail line beginning in London and going to the west midlands, approaching London via a Heathrow international interchange, creates the potential for faster journeys to the north and Scotland. That is why we have set up a new company—High Speed 2—to consider all the options and possibilities, recognising the need to move forward beyond 2014.
My hon. Friends the Members for Luton, North (Kelvin Hopkins) and for Carlisle (Mr. Martlew) spoke about rail freight, to which we remain committed. In the past 10 years, the amount of freight carried by rail has increased by some 60 per cent., with goods such as drinks and groceries now being carried by rail alongside the traditional fare of bulk loads such as coal and aggregates. We are planning £200 million for the strategic rail freight network, which will be capable of handling more and longer trains. The campaign by my hon. Friend the Member for Luton, North for a dedicated rail freight line is well known.
The Transport Committee dealt in some detail with the engineering works over the new year in 2008. Network Rail is accountable to its members for its performance against its business plan, and to the independent Office of Rail Regulation.
I will not give way, because I wish to cover a number of points, including some that relate to the hon. Gentleman's contribution.
The disruption experienced by passengers and freight customers on the west coast main line in early January last year was unacceptable.
A number of Members asked questions about the bonuses for Network Rail. They are a matter for the company's remuneration committee, and not for the Government. They are set out in accordance with criteria set out in the management incentive plan. Having said that, my noble Friend, Lord Adonis said in another place:
"I am sure that that House would expect Network Rail's remuneration committee to be mindful of the public mood on bonuses and not to award bonuses that the travelling public would consider unjustified by their own experience of Network Rail's performance."—[ Hansard, House of Lords, 2 March 2009; Vol. 708, c. 498.]
Questions were raised about the economic downturn. It is bound to affect passenger numbers, but, thanks to record levels of growth and investment, we are confident that the rail industry can remain competitive in these challenging circumstances. However, under the current regulatory system, the risks and rewards of the rail industry are shared between the operators and the Government. Most franchises are set up to ensure that operators are supported during periods of economic slowdown and, in turn, share their profits with the Government at times of strong economic growth. I would say in response to my hon. Friend the Member for Liverpool, Riverside that the independent Office of Rail Regulation has robust powers to enforce the licences of Network Rail and the train operators. On track maintenance, I can assure the House that we are carrying out careful inspection to ensure that track renewals undertaken by the private contractors meet the required standards.
A number of Members raised questions about the regulation of fares. We have already made it clear that, come January next year, the use of the retail prices index plus 1 formula, and the impact of a negative RPI in July, means that we will allow fare prices to fall. This was confirmed by my noble Friend Lord Adonis.
In conclusion, we have a rail network that has been a remarkable success story over the past 10 years, with more passenger numbers than at any time since the second world war and regular investment. I commend the estimates.
Question deferred (
The Deputy Speaker put the deferred Questions (