National Express East Coast Franchise

Bill Presented — Sustainable Energy (Local Plans) Bill – in the House of Commons at 7:53 pm on 1st July 2009.

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport) 7:53 pm, 1st July 2009

With permission, Mr. Speaker, I wish to repeat a statement made a little earlier by my noble Friend the Secretary of State for Transport about the National Express east coast franchise.

"I will make a statement about rail services on the east coast main line. The House will understand that, because of the imperative for the Government to respond immediately to the trading statement made by National Express when the markets opened this morning, it was also essential for me to make a written ministerial statement earlier.

For some months now, National Express has been seeking to renegotiate the terms of the franchise agreement to operate services on the east coast main line between London, west Yorkshire, the north-east and Scotland that it signed in 2007. My position has been consistently clear—that the Government do not renegotiate rail franchises. That remains the position today.

This morning, National Express Group announced that it will not provide the further financial support necessary to ensure that its subsidiary, National Express East Coast, remains solvent. As a consequence, National Express East Coast is no longer able to continue operations to the full term of its franchise, and expects to become insolvent later this year.

The decision of National Express to break the contract is regrettable and disappointing. All other rail companies are fulfilling their contracts, despite the economic downturn. It is simply unacceptable to reap the benefits of contracts when times are good only to walk away from them when times become more challenging.

My first and overriding obligation in this situation is to ensure continuity of service to passengers, with no disruption or diminution of service standards. When the Government have had to step in to protect rail services in the past, there has been no such impact on passengers.

I have therefore established a publicly owned company that will take over this franchise from the point at which National Express East Coast ceases to operate. We will agree an orderly handover with National Express. Until that date, National Express will operate services on the current basis; after that date, the new public company will do so. There will be no interruption of services. Existing operational staff—who continue to provide a good service—will transfer to the new East Coast Main Line Company, and so will the assets necessary for the continuation of the service. I can assure the travelling public that services will continue without disruption and that all tickets will be honoured. I have today appointed Elaine Holt, until recently managing director of First Capital Connect, a major train operating company, as chief executive designate of the new East Coast Main Line Company.

The failure of National Express East Coast obviously entails the loss of some future premium payments to which the company was contractually committed. However, while the franchise is under public control, the Government will receive the full revenues of a business that continues to make an operating profit. We will also gain the benefit of any premium payments from the new franchise once it is re-let. This represents a far better deal for the taxpayer than the only alternative course of action, which was to renegotiate the franchise in an exclusive manner with National Express, with no recourse to what is a highly competitive market for rail franchises. The cost of re-letting the franchise will be met from the performance bond of £32 million, to which the company is contractually bound in the event of termination.

National Express also operates rail services on the East Anglia main line and associated commuter routes. The company has said that it does not intend to default on its obligations in respect of these franchises. Notwithstanding this, the Government believe that we may have grounds to terminate these franchises, and we are exploring all options in the light of the group's statement this morning. In the meantime, we expect National Express to meet its obligations on these franchises in full.

The Department's procurement procedures test a company's track record and its ability to deliver a franchise and to demonstrate value for money in doing so. It would clearly be reasonable not to invite a company to bid for future franchises in circumstances where it had recently failed to deliver on a previous franchise. A company that had defaulted in the way that National Express now intends would not have pre-qualified for any previous franchises let by the Department. I note that the parent groups of previous franchise failures are no longer in the UK rail business.

It is the Government's intention to tender for a new east coast franchise operator from the end of 2010. The specification of the new franchise will reflect my concern to secure better passenger services and facilities. In particular, I will be seeking to secure significant further improvements to service quality, including to station security, bike and car parking facilities at stations, bus interchange facilities and train catering. This will ensure a step change improvement for passengers from a new east coast franchise. I intend to consult fully on the new franchise specification, including with passenger groups, parliamentarians and the Scottish Executive.

I have explained the action that I have taken to ensure that passengers are not affected by the decision of the National Express Group, and have explained the consequences for that group of its decision. Let me also put the events in a wider context. No other train operator has defaulted on its franchise or indicated to us any intention to do so. Nor has any other company sought to renegotiate its franchise. Today's events do not represent the failure of the system, but the failure of one company. The rail franchising system was examined by the National Audit Office last year, and was found to deliver good value for money. The NAO also concluded:

"The Department's arrangements for identifying and managing risks, including handling the failure of a train operator, are well planned and follow good practice."

It is that good practice that we are following in today's announcement, and I would welcome a further examination by the National Audit Office once the franchise is re-let.

Rail services at large are steadily improving. Passenger numbers are at their highest levels since the 1940s, punctuality is more than 90 per cent. and overall passenger satisfaction is rising, as was shown in the latest independent national passenger survey, published yesterday. Moreover, the revenue from rail franchises is enabling us to make record investment in upgrading the network and services on it. We saw that as recently as last month, in the award of the new south central franchise for services on lines through south London, Surrey and Sussex. That process was conducted during the recession, yet it yielded a winning franchise bidder—the existing operator—that is committed to paying a premium of £534 million to the taxpayer over nearly six years. That will be in place of the previous contract, under which the operator was subsidised by the taxpayer. That bodes well for future franchise awards, including for services on the east coast main line."

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Photo of Theresa Villiers Theresa Villiers Shadow Secretary of State for Transport

Twelve hours after the stock exchange, 11 and a half hours after "Today" programme listeners, and some four hours after the House of Lords, we finally get to hear the news officially. What we have heard is evidence of the incompetence and failure that has characterised the Government's handling of the rail franchising system. Two franchises have collapsed in the space of two and a half years on one of the nation's most important transport corridors, on which millions of people and businesses rely, both in England and Scotland. To borrow a well-known phrase, to lose one east coast franchise might be said to be unfortunate; to lose two looks like carelessness.

The Secretary of State told their lordships that he hoped that the next franchise would be better than the last. Clearly, for Labour, it is third time lucky, or so it hopes. On the "Today" programme, the Secretary of State seemed to be saying that National Express East Coast was already in default of its contracts, yet that allegation was not repeated in the written statement, or the statement from the Minister today. Does the Minister stand by the statement made by his boss this morning?

The Secretary of State has claimed that the "Nat Ex" holding company is not prepared to "stand by" its loss-making subsidiary. Does the Minister regret that his Government signed up to a deal that caps the liability of the holding company, and apparently entitles it just to walk away when the going gets tough? Does he accept that the incredibly detailed—even invasive, some would say—due diligence process that the Department for Transport carries out in relation to the credibility of franchise bids and bidders has wholly failed in this case? How much will re-letting the franchise cost? How much did the original franchise process cost? What assessment has the Minister made of alternative solutions to direct Government control, such as getting another operator to run the line under a management contract? How much will the fiasco cost the taxpayer in total? Will the money come out of the control period 4 funding settlement? If not, which part of the DFT budget will be raided to cover it? National Express East Coast was due to pay £1.4 billion over the lifetime of the franchise to help fund CP4. What will be the shortfall on that income? How will the Minister plug the resulting black hole in the funding for CP4?

Can the Minister tell us whether he expects the Government to be able to exercise the cross-default clauses, either immediately or in the future, and will he guarantee that in that event, the Government will not let services be disrupted? How can the Secretary of State possibly say with credibility today that 15 out of the country's 16 franchises are completely fine, and that it is just a "Nat Ex" problem, when everyone knows that there is a red-light list of other franchises? Will the Minister come clean and tell us which franchises are on it?

In conclusion, this debacle shows that Labour learned nothing from the collapse of the Great North Eastern Railway franchise. It has continued to press train operators to make wildly over-optimistic bids. It has wholly failed to get a grip on rising costs in the rail industry and in Network Rail. It has tried to plug the gap by squeezing passengers for higher and higher fares. It cut a deal that capped the liability of holding companies and allows them to walk away from their subsidiaries with impunity. They cannot wash their hands of the problem by saying that "Nat Ex" got its numbers wrong. The extensive risk assessment by the Department for Transport of the business case underlying the franchise bid has wholly failed, and as a result we have had yet another accidental renationalisation by Labour to add to the lengthening list that began with Network Rail. It is yet another blow to the public finances, and yet another bill for Labour failure has landed with the long-suffering taxpayers, who have already received such punishment at the hands of this increasingly incompetent Government.

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

I had hoped to have the opportunity to become friends with the Opposition spokesperson before showing the disrespect in which I hold her comments, which lack vigour and do not reflect the facts. I heard Dermot Murnaghan say on "Sky" that he struggled to understand her arguments, and I know exactly what he means. She is the spokesperson for a party that privatised the railways, that led us to Railtrack— [ Interruption. ]

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

That led us to the mess that was Railtrack, but the hon. Lady has the audacity to tell us that the private sector is naive, and has been hoodwinked by civil servants to bid higher than it should for a contract to run the east coast main line. The idea that the chief executive who resigned today from National Express and Brian Souter from Stagecoach are patsies who have been hoodwinked by the Department for Transport to overbid for a contract beggars belief, as does making knee-jerk policy on "Sky News", rather than looking at the facts.

I have talked about vigour. Anybody who has taken the time to read the National Audit Office report—not simply the research prepared by a researcher—entitled "Letting Rail Franchises 2005-2007", will see that it says of the approach to running rail franchises:

"The Department's arrangements for identifying and managing risks, including handling the failure of a train operator, are well planned and follow good practice."

Let us look further. [ Interruption. ] Stephen Hammond chunters from a sedentary position, and says, "You've had plenty of practice." Forty-one franchises have been given out—two have failed, or 4.97 per cent. When I want the hon. Gentleman's advice, I will ask him for it. The NAO, which is the expert, rather than people who go for a cheap soundbite on "Sky News", says of value- for-money assessment:

"The Department's approach to rail franchising produces generally well thought through service specifications and generates keen bidding competition."

I would have hoped, on a day on which a private company making lots of profits seeks to walk away from a franchise, and seeks to walk away from passengers who will receive a less good service unless we step in, that the Opposition party would join us, and stand side by side with us, and say to that private company, "This is not good enough. We need a holding company to protect the public and make sure that we have a calm period to reflect on the failures that have occurred, so that when the contract is retendered we have the best possible arrangements not only for passengers but for taxpayers."

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Photo of Louise Ellman Louise Ellman Chair, Transport Committee, Chair, Transport Committee

It is regrettable and unacceptable that the House is indeed the last place to be able to question a major decision. I am pleased, however, about the decision that has been made, and I am pleased that the Secretary of State has adhered to the commitment that he gave the Select Committee on Transport that he would not renegotiate a failed franchise. Will my right hon. Friend assure me that this is indeed a time of change, in which standards for passengers will increase, and in which a private company cannot benefit from the profits of its successor while, at the same time, the public purse picks up the tab for its failure? Can we have a public sector operator to act as a comparator with the private sector franchise operators?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

I thank my hon. Friend for her comments. I am pleased that members of the Select Committee are able to be present to contribute to this important statement.

May I explain to my hon. Friend one of the reasons that the option suggested by Opposition that another operating company should take over in the interim is such a bad idea? It would cost us £12 million to start with, it would be a huge advantage to that company when it comes to applying for the contract later on, and the company would have to be incentivised to make the arrangement work. The Government's course of action provides the best value for the taxpayer.

My hon. Friend raises an important point about the role of the holding company and who is best placed to run the franchise. I hope that, after a period of reflection, she will speak to the Secretary of State, to me and to others in order to put forward her views. We will speak to parliamentarians, passenger groups, other stakeholder groups and the Scottish Executive, and make sure that we have time for reflection so that we can get the best deal possible.

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Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

I mean no disrespect to the Transport Secretary, the Minister of State or you, Mr. Speaker, but it is not satisfactory that we are having the statement seven and a half hours after we would have had it, had the Secretary of State been a Member of this House, rather than of the House of Lords. We need to find a way of having Secretaries of State from the Lords in the Chamber to make statements. If that is not possible, the Minister of State should be able to make statements ahead of the Secretary of State, at the normal time.

In respect of the action taken today, first, it was the right decision not to give in to pressure from National Express for further handouts from the public purse. Had the Secretary of State done so, there would have been a queue of train operating companies at his door wanting contracts renegotiated and wanting further handouts from the public. He had no option but to take the position that he did. However, there will be a cost—£1.4 billion was the premium that was to be paid. There will now be a loss of that premium payment, although a profit will be made from the operation in the private sector. However, there will be a gap. Can the Minister tell us what the gap will be between what National Express would have paid and what will now be recouped from the public purse?

Secondly, does the Minister agree that if National Express finally defaults, as now looks extremely likely although it has not defaulted yet, that will call into question its competence and commitment as an operator? Under those circumstances, would it not be right for the two other franchises that it holds to be removed from it? After all, why should National Express keep the franchises that it deems to be in its interest and lose the one that it wants to hand back to the public?

The matter has been under discussion for some time in the Department for Transport. The Department ought to have reached a view on whether it is legal for the two other franchises to be taken back by the Department, or whether they are deemed to be separate entities under the National Express heading. Can the Minister tell us what that legal advice is and whether it is possible, should the Secretary of State wish to do so, for the companies to be taken back into the public sector, or has that not yet been decided? If the Department ends up with all three franchises, can the Minister assure the House that it has enough qualified management to hand to run all three competently?

Lastly, I turn to the position that the Government have set out with the intention of re-letting the franchise from the end of 2010. I am delighted by the comments of the Chair of the Transport Committee. Instead of retaining the franchise temporarily before re-letting it, what consideration has the Minister given to retaining it for a much longer period as a public interest comparator driven by passenger-oriented targets, instead of the pure financial considerations of the Treasury? Would not such an approach provide a passenger-friendly benchmark that would drive up performance in the other franchise areas? Will he consider that proposal?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

I thank the hon. Gentleman for his questions and for looking at the facts before asking them. Much as I am tempted to do so, I will not indulge in discussion of constitutional matters and where is the right place to make a statement and at what time. His comments about us not caving in to the private sector are welcome, and I appreciate his support.

The hon. Gentleman asked a number of important questions. On cost, we can recover some of the cost from the performance bond worth £32 million. We will be entitled to the premium until National Express walks away, which is its intention, as set out to the stock market today. Other premiums will become available once the contract is re-let. The revenues that we receive will depend on numbers of passengers who use the rail service, the class of passenger and the amount of fare that they pay, so I cannot give specifics, for reasons that the hon. Gentleman will understand.

The hon. Gentleman raised an important question about what we call cross-default—that is, the ability of the Government to take back dirty contracts that the parent company has in subsidiary holding companies. We are exploring all our options, but he will understand if I do not disclose privileged legal advice on the Floor of the House. I appreciate—I have read the quotation—that, if one wants a secret kept a secret, one should announce it on the Floor of the House, but he will appreciate that representatives of people whom we may sue may be watching the proceedings or may read Hansard. What I can say is that we will explore our options. We have tried to ensure that we preserve taxpayers' interests and passengers' interests. That means exploring all the options that are available to us.

The hon. Gentleman asked about our ability and the holding company's competence, and that is a really important question. We have an excellent designated chief executive taking over, and we have an excellent team that we think will be able to take over the running of the contract as and when National Express decides to walk away.

On the question whether we want to keep the service in Government hands through a holding company or a permanent holding company, or to tender for a new franchise, let us be clear: one reason we are able to invest record sums in our railway service is the revenues that the franchises bring in and the premiums that they pay; one reason we are able to do the work on High Speed 2, which will lead to a high-speed link from the south to the north, is the system that we have in place; and one reason we are able to electrify lines as fast as we possibly can is the investment that we receive from that structure.

There are two ways of securing revenue in the rail sector, and the hon. Gentleman knows about them: one is via fare payers, and the other is via taxpayers. We are trying to ensure that we maximise as much inward investment in the rail sector as we can.

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Several hon. Members:

rose —

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Photo of John Bercow John Bercow Chair, Members Estimate Committee, Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Members Estimate Committee, Chair, Speaker's Committee on the Electoral Commission

Order. Twenty three hon. and right hon. Members are seeking to catch my eye, and I am keen to accommodate as many of them as possible, so I am looking to each Back Bencher to ask one brief supplementary question and to the Minister, of course, to offer the House an economical reply.

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Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

This is the second time that the franchise has failed in less than three years in private hands. When we had the same failure with Connex, we brought it into public ownership, it ran for two years as South West Trains, it was the most successful sector of the railway network and it gave us the public sector comparator. Why cannot we keep the franchise in public ownership? Or, why cannot we at least allow the public sector to bid when the tender goes out again?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

I have no problems with anybody bidding for the contract when it comes up for tender. The Connex example that my hon. Friend gave is now doing really well. He will have seen the new Javelin train, which displays remarkable speed and reflects remarkable ingenuity on the part of Govia, the company that is running it.

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Photo of John Redwood John Redwood Conservative, Wokingham

How much money will be put in to the new company as share capital and how much money as working capital?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

If the right hon. Gentleman means the holding company, I should say that the intention is for the holding company to take over the day-to-day running of the line until we are able to tender the contract, which we think will be in late 2010.

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Photo of Mark Lazarowicz Mark Lazarowicz Labour, Edinburgh North and Leith

The decision to re-let the franchise will inevitably lead to a lot of uncertainty for the passengers and staff of National Express. Would it not be much better if we decided either to keep the franchise in public ownership or to have it operated by a not-for-profit mutual, so that the customers' interest came first, not the interest of shareholders?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

As a number of Members from all parts of the House have said, this is not the first time that a franchise has failed. On both previous occasions, we provided stability to passengers and staff. We have confirmed that operational staff will be transferred to the holding company and that passengers will not suffer. No one will suffer in terms of tickets or the timetable.

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Photo of John Gummer John Gummer Conservative, Suffolk Coastal

The Minister must be aware that my constituents are served by one of the other franchises that National Express owns, and his announcement causes a good deal of concern, therefore, because he has not given any indication of the time that it will take him to make up his mind. Will he please do so as quickly as possible? My constituents have suffered under a nationalised system before; they get a much better service now; and they want to make sure that they keep it.

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

I undertake to make sure that I keep all Members with an interest informed of developments in relation to exploring all our options. I appreciate the right hon. Gentleman's concerns about the rail service to which he refers, and that is why we will keep all Members updated either via the Floor of the House—this House—or via correspondence. I shall make sure that I do that.

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Photo of Hugh Bayley Hugh Bayley NATO Parliamentary Assembly UK Delegation

I thank the Minister for calling me this morning to update me. There is great concern in York, not only because the headquarters of the company and hundreds of jobs are based there, but because the line is so strategically important to Yorkshire and, indeed, to the whole east of England and Scotland. Given that this is the second franchise to go belly up in three years, will the Minister use the time in which a public company is running the service to pause for thought and consider whether franchising—the poisoned chalice that we inherited from the Conservatives—is an appropriate way to determine the management of a service that is so strategically and economically important?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

The consultations that my noble Friend the Secretary of State and I will carry out in the coming period will be interesting. The headquarters to which my hon. Friend referred are in York. I can reassure him that when the holding company takes over the running of the contract later on this year, the headquarters will stay in York.

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Photo of Adam Afriyie Adam Afriyie Shadow Minister (Science and Innovation)

The Minister complains that a private company has walked away, in the interests of its shareholders, from a contract with the Government. Given that the Government wrote the contract and capped the liability on the private company's holding company, does the Minister accept that they have any responsibility for this mess up?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

I direct the hon. Gentleman to the report by the National Audit Office, whose views he may respect far more than he does mine. If he takes the time to read it, he will be looking into the capital arrangements, when the taxpayer subsidises a rail company and when a train operating company pays the taxpayer back.

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Photo of John Battle John Battle Labour, Leeds West

I thank the Minister for his statement and welcome the Government's action. My city of Leeds is highly dependent on a link with London, not least because it is this country's second financial and commercial centre. We have taken a hit from the banking crisis, and without that link to London our city would find it difficult to recover. Will the Minister assure us that there will be no reduction in services, and that in the short term there could also be a review of high prices, to ensure that people have a chance to use the line?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

I shall try to respond to those three points in one sentence. There will be no reduction or change in services; we are talking about a prestige line, and that is one of the reasons we are investing in high-speed links—not only to Manchester, but to Leeds, the west midlands and Scotland.

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Photo of Malcolm Bruce Malcolm Bruce Chair, International Development Committee, Chair, International Development Committee

Passengers from Aberdeen will very much regret this second debacle, and they always regretted the loss of GNER anyway. What can the Minister do in this interim time to ensure that we get competitive fares rather than the extra charges that National Express imposed? We need to compete with the airlines, because it is now cheaper to fly than to use the railways.

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

The right hon. Gentleman raises a really important issue. There are two issues, relating to regulated and unregulated fares. He will be aware that the train operating companies have agreed to increase their fares only by RPI plus 1 per cent. The pundits tell us that the RPI should be lower this July, when the figures are taken, so in January we expect regulated fares to reduce. However, we cannot escape the fact that unregulated fares can go up. We advise passengers who go for the cheap airline tickets also to look for cheap train tickets, which can be obtained if they are booked far enough in advance.

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Photo of Colin Challen Colin Challen Labour, Morley and Rothwell

This time around, the public ownership option will not be brushed aside. In the period of calm reflection that we will now have, will the Minister undertake an urgent review of all the other franchises? He has said that none of them is about to default, but can we have a review so that we can understand how healthy they are?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

I reassure my hon. Friend that we are in regular contact with all the train operating franchises. We know their state of health; part of the franchise agreement is that they have to keep us up to date about their position. I reassure my hon. Friend that no other franchise is in a position such as that of National Express.

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Photo of Anne McIntosh Anne McIntosh Shadow Minister (Environment, Food and Rural Affairs)

This is a sad day for those who work on and use the east coast main line. Does the Minister accept that the model that GNER used for the bid, and National Express repeated, was based on a false premise—the number of premium fares that it was assumed would be paid at a time of credit crunch? Does he also accept that the franchise model will work only if the risk is passed to the private sector and does not remain with the taxpayer?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

I do not accept that the former chief executive of National Express, who resigned today, and who was previously head of the Strategic Rail Authority, is naive and does not understand how the market works or how to predict the future. He made a bid with open eyes, and was successful; those who were unsuccessful were not far behind the successful bid, either.

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Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

I thank the Minister for his statement, and welcome what the Government have done today. However, surely this proves that only the public sector can be relied on to maintain and run the railway system. Can he therefore give us the good news that the line will not be handed back to the private sector but will remain a publicly owned, publicly run and publicly accountable railway, so that we will not have such debacles in future?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

I hear what my hon. Friend says, but I do not agree with him. Fifteen of the 16 franchises are doing a good job; more passengers are using our railways than at any time since the 1940s; punctuality is above 92 per cent.; a survey published yesterday shows a high satisfaction rate among customers; and we have more investment in our railways than ever before.

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Photo of Alan Beith Alan Beith Chair, Justice Committee, Chair, Justice Committee

Does the Minister not recognise that the bidding process has produced two defaulting operators on this line? If he looks for the level of premiums that he has had from it in the past he will drive away not only passengers, because of high fares, but future bidders for the franchise.

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

There would be evidence for what the right hon. Gentleman says if the National Audit Office agreed with him, but it does not. As the Secretary of State said earlier, we welcome the NAO's looking at the whole process of franchising once we have re-let it. He can be reassured that the process is not at fault: the company is at fault, and it is the company that is walking away from the contract.

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Photo of David Anderson David Anderson Labour, Blaydon

May I suggest to the Minister that the only thing that has happened in the past two years is that costs have gone up and services have gone down? The only people to come out of this with any real respect are the staff, who have tried to hold the service together. Will he ensure that when he talks to people, he asks the staff and their unions what they want to see? They will say that they want public railways in this country, and they will be right.

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

I thank my hon. Friend for what he says about the staff. The railways employ more than 2,000 staff—very good staff who do an invaluable job in ensuring that the trains run well. I can assure him that we will include the staff when we speak to stakeholders to ensure that we get the best deal possible, not only for passengers and taxpayers but for staff.

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Photo of Robert Goodwill Robert Goodwill Shadow Minister (Transport)

National Express got no brownie points at all when it recently introduced a £2.50 each-way seat reservation charge. That discriminates against elderly people who cannot run the risk of standing on the train and families who wish to travel together. Will he prevail on the new interim operating company to reduce this fare rise made by stealth?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

The hon. Gentleman raises a very good point. That is one of the reasons Labour Members believe in regulating. When we re-tender the contract, we will ensure that such things do not happen, instead of allowing the market to dictate what happens on trains.

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Photo of Hilary Armstrong Hilary Armstrong Labour, North West Durham

I congratulate my right hon. Friend and our noble Friend the Secretary of State on their statements. Can he reassure us that the new trains that are due for the east coast line are still on track, given the decisions announced today?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

We will ensure that we keep to the targets we have set and the agreements we have reached. That includes not only the quality of service that passengers receive but investment for the future.

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Photo of Bernard Jenkin Bernard Jenkin Conservative, North Essex

Why have the Government effectively served notice on National Express with regard to the East Anglia franchise and told the country, "I note that the parent groups of previous franchise failures are no longer in the UK rail business", when it is obvious that the Government do not have the power to terminate that franchise, and are going to get locked into a legal dispute? Having created maximum uncertainty for passengers on the East Anglia franchise, will the Government be able to deliver the coup de grâce to National Express or will there be a long period of protracted dispute and uncertainty for passengers?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

We have said both in this House and in the other House that we are going to explore all our options. It is a statement of fact that the two other parent companies—Sea Containers and Connex—no longer run trains in the UK.

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Photo of Gavin Strang Gavin Strang Labour, Edinburgh East

As an Edinburgh-based regular user of the east coast main line, may I ask my right hon. Friend whether he agrees that it is a great asset, which is why National Express signed up to put in £1.4 billion to operate it for 10 years? We should welcome the Government's intervention, but may I put it to him that the key thing is to sustain this service? Will he do all he can to maintain it and go forward and build on it for the future? We have had a statement today, but we need more statements in future, because we are all concerned not only about the lines that we use regularly—many of us use this line regularly, and we have to maintain the quality of service, frequency and everything else—but the railway network generally.

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

My right hon. Friend, who is clearly an expert in this area, understands and confirms what we all know—that this is a prestige line. That is why there was huge interest in it when it was last up for tender. It is why, as those who read newspapers will know, takeover attempts were reported in the press in relation to the company. I am sure that there will be a lot of interest when the contract comes up for re-tender towards the end of next year. I add that we recently had the experience of the South Central line, in which there was huge interest and for which we got £534 million over a six-year period.

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Photo of Michael Moore Michael Moore Shadow Secretary of State for International Development

In the 1,500 square miles of my constituency there is not a single railway station, which makes the one at Berwick-upon-Tweed, in my right hon. Friend's constituency, of great strategic importance to my constituents. Will the Minister give a specific pledge that under Government control and the new contract, services to and from Berwick-upon-Tweed will not be altered unless they are improved?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

The hon. Gentleman has given one example of the sort of thing that we will consider when the contract next goes to tender. We will see whether we can include such things as a new station. We need to ensure that we take on board the concerns and issues raised by parliamentarians and stakeholders to get the best deal possible for passengers.

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Photo of Stewart Jackson Stewart Jackson Shadow Minister (Communities and Local Government)

In view of the comments that have been made throughout the day about the Government's changing attitude to the viability of National Express East Coast, and the position taken on the two other companies, which my hon. Friend Mr. Jenkin alluded to, what specific legal advice has the Minister or the Secretary of State received on the advisability of proceeding to remove National Express from the other two franchises? What analysis has been made of the financial ramifications of those actions?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

I am slightly confused, because I have answered that question three times. We are going to explore all the options, legal and otherwise, to ensure that we get the best deal for the taxpayer, for passengers and for staff.

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Photo of John Mason John Mason Scottish National Party, Glasgow East

Can the Minister assure us that he will be working closely with Scottish Government Ministers both on the refranchising and on any changes in the interim period?

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

I confirm that we will, and we already are. That is very important.

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Photo of Greg Mulholland Greg Mulholland Shadow Minister (Health)

I welcome the substance of the announcement, considering that National Express has, frankly, run down the service. However, the way in which it has been made has been chaos tinged with farce, with press release politics, developments being heard on the "Today" programme and later National Express going on the radio to say that this was actually not happening. There has been confusion in Leeds and other areas. May I ask the Minister, first, to say why the GNER-Virgin bid was not accepted at the time, as it seemed a better one? Secondly, will he conduct an urgent review of—

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Photo of John Bercow John Bercow Chair, Members Estimate Committee, Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Members Estimate Committee, Chair, Speaker's Committee on the Electoral Commission

Order. I think one question will do. [Interruption.] Order. I gently say to the hon. Gentleman that I implored Members to ask one question, and I think that that will do. The Minister has got the gist.

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Photo of Sadiq Khan Sadiq Khan Minister of State (Department for Transport)

Just in case the hon. Gentleman is in danger of putting out a press release about this, let me make it clear that we got wind that National Express was going to make a report to the stock market—a pre-close statement—today. We liaised with your office, Mr. Speaker, and that of the Lord Speaker, to ensure that we gave due courtesy to both Chambers. Before my noble Friend the Secretary of State did any media—there were no press releases—he issued a written ministerial statement at 7 am, to which you have alluded, Mr. Speaker. To show the House respect and courtesy, I repeated it in my name, also at 7 am. To suggest that we put out press releases is disingenuous, and I hope that on reflection the hon. Gentleman will withdraw that suggestion.

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Photo of Stewart Jackson Stewart Jackson Shadow Minister (Communities and Local Government)

On a point of order, Mr. Speaker. You made a point earlier, in answer to a question asked by my right hon. Friend Mr. Duncan Smith, about the transmission of an interview with Lord Adonis, the Secretary of State for Transport. It was about whether the transcript of that interview showed that commercial information or a policy statement had been given about today's decision by the Government. Have you had a chance to review that transcript, and are you in a position to report back to the House the results of your review?

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Photo of Bernard Jenkin Bernard Jenkin Conservative, North Essex

Further to that point of order, Mr. Speaker

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Photo of John Bercow John Bercow Chair, Members Estimate Committee, Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Members Estimate Committee, Chair, Speaker's Committee on the Electoral Commission

Order. With great respect, before the hon. Gentleman makes his point, I say gently to Mr. Jackson that I have of course had the opportunity to review the position. I thought that that was perhaps apparent from what I said to the House earlier, and I hoped that I had made the position abundantly clear.

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Photo of Bernard Jenkin Bernard Jenkin Conservative, North Essex

Further to that point of order, Mr. Speaker. The House is grateful for the statement that you made before the Minister's statement, but it raises a new question. I realise that it is an extremely difficult matter for you to tackle and I greatly appreciate your efforts in that regard. However, if it is now possible for Ministers to issue a written statement to the House at 7 o'clock in the morning, which then allows them to go on the "Today" programme before Members of Parliament—here or in the other place—have had a chance to cross-examine them, we are back to square one. I do not know what the solution is, but I hope that you will consider the matter carefully.

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Photo of John Bercow John Bercow Chair, Members Estimate Committee, Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Members Estimate Committee, Chair, Speaker's Committee on the Electoral Commission

First, I say to the hon. Gentleman that I am not complaining about any extreme difficulty. It does not seem to me to be quite as difficult as he suggests. Secondly, I thought that I had made it clear that there was a response to a commercial situation. Thirdly, it is fair to say to the hon. Gentleman and the House that it is not reasonable to be expected to be drawn into a continuing debate about those matters when one has already made the position clear. The position may not be liked by all hon. Members, but I thought that I had made my intention clear at lunchtime—to go away and consider the situation, which I duly did. I thought that I made the position even clearer by what I said before the Minister made his statement. I hope that, with that, the matter may be laid to rest.

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Photo of Anne McIntosh Anne McIntosh Shadow Minister (Environment, Food and Rural Affairs)

Further to that point of order, Mr. Speaker. I was here at a quarter to 8 this morning, and would have loved to read the written statement. Where could I have found it at that time? As you know, statements often find their way to the Press Gallery before they reach the Library. Normally the House of Commons Library receives statements at 9 o'clock at the earliest. If I wanted to respond to constituents' queries at a quarter to 8, where could I have found the statement?

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Photo of John Bercow John Bercow Chair, Members Estimate Committee, Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Chair, Members Estimate Committee, Chair, Speaker's Committee on the Electoral Commission

I am not at all sure that the hon. Lady would have found it easy to do that. That is a reasonable point, into which I will look further. I think that I made it clear that the circumstances that arose today should be either relatively rare or, better still, exceptional. I would not expect such circumstances to repeat themselves on a regular basis. I thought that I had already said that. Nevertheless, in so far as the hon. Lady has legitimately challenged me, I am happy to repeat the point.

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