With permission, Mr Speaker, I wish to make a statement about the future of our railways. It is a positive future. It is almost 50 years ago to the day since Dr Beeching published his report. No one would have imagined then, or even 20 years ago, when the Government privatised the railways, which were still in decline, that the industry would now be booming. Traffic has doubled since privatisation, from 750 million journeys a year to 1.5 billion now. There are more services and record levels of investment, and our railways have the best recent safety record in Europe. That has not been achieved despite privatisation; it has been achieved because of privatisation.
Today I am setting out a programme that can achieve even more, because our country has to compete for jobs and growth. We need a transport system that is second to none, so we are spending unprecedented sums on infrastructure, such as Crossrail, the biggest construction project in Europe, and the northern hub cross-Manchester link, which will transform services across the Pennines. In return, it is right that we demand more from the industry, because for the money that passengers and taxpayers are putting in, we should expect ambition, innovation and even better performance for passengers. This is the way we are going to get it.
Last year, serious and unacceptable mistakes were made when it came to refranchising the west coast main line, but I have put in place a new structure and process in the Department, as the Laidlaw report recommended. In January, I announced our initial proposals for the three franchises most immediately affected: Great Western, Essex Thameside and Thameslink. Today I can confirm that I am accepting the next stage of the findings of the Brown review of rail franchising. I am also pleased that Richard Brown has agreed to chair a new franchise advisory board. I am publishing its terms of reference today. The Brown review called for a full refranchising programme to be announced by the end of April. I am pleased to be announcing it today.
I want to be as open as possible with the market, which is why I am publishing a prior information notice to set out not just the programme for franchising, but the way in which franchises will be let and the benefits they will bring. In doing so, I have applied three principles: first, that the passenger gains; secondly, that the rail industry thrives, with growing companies and new competitors coming into the market; and thirdly, that the taxpayer gains, through a more efficient use of public money and less waste in the industry. Those three principles are essential points on which the future of our railways rests.
Let me turn in detail to what I am announcing today —a programme that will give great improvements to the passenger, certainty to industry and a fair deal to the taxpayer. It will provide stability, so that we can invest more, and flexibility, so that different routes with different demands can be managed in different ways. The programme will also give fair weight to passenger satisfaction, which has not always been respected as it should have been, with long-term franchises that can run for up to 15 years if operators meet the standards they promise at the start. To ensure a competitive market, we will hold no more than three to four competitions a year, starting with a smaller number as the programme gets up to full speed and extending up to 12 current franchises to give certainty to passengers and allow the full programme to get under way.
There are those who would like our railways to go back to the days of state ownership, decline and under-investment. They are wrong. I share the view of the last Labour Government, who said that franchising worked. In 2009, Ministers brought in Directly Operated Railways on the east coast as a short-term stand-in. They did what was needed in difficult circumstances, but the east coast main line, upgraded in the 1980s, now needs revitalising. New trains, to be built in the north-east, are now on order. Now is the right time to invite bidders to put forward proposals for investing and improving those services. This will be the first of the new inter-city franchises to be awarded in 2014 in a programme that meets my three essential principles of better service, better competition and better value.
I wish to make one final point. The Beeching report was about closures and cutbacks, but its 50th anniversary tomorrow sees an industry marked by growth, not decline—investing in High Speed 2 for the future, as well as providing better services today. That is why I am pleased to announce the front runners in our fund to open new stations. They are Lea Bridge in Walthamstow, Pye Corner in Newport West and Ilkeston in Erewash. I expect to announce further winners soon. I commend this statement to the House.
I thank the Secretary of State for advance sight of his statement. He inherited a Department in crisis and a rail franchising system in chaos. I acknowledge that he has had to work hard to try to put things back on track. He has rightly reversed many of the decisions of his two predecessors, not least by restoring some of the key posts in the Department that had recklessly been axed by them. We welcome the speed with which the right hon. Gentleman has worked with Richard Brown and his departmental officials to put together the plans he has set out today. However, it is also true that his revised franchising timetable has exposed the full impact of the failure of his predecessors, all of whom either remain in the Cabinet or have been promoted to it.
The Great Western contract will be awarded in July 2016—three years and three months later than planned. The west coast contract will not be awarded until April 2017—four years and four months late. Some competitions are to be delayed by as much as 50 months—not five months, but 50—yet instead of focusing on the chaos in franchising caused by his Government’s incompetence, the Secretary of State has decided to embark on an unnecessary and costly privatisation of the east coast inter-city services—a privatisation due to take place weeks before the date of the next general election.
The right hon. Gentleman hinted that investment was dependent on that happening, but will he acknowledge that the planned investment in the east coast main line, to be delivered by Network Rail, and the new generation of inter-city trains will happen regardless of this privatisation? Is it not the case that Directly Operated
Railways has reinvested all of its £40 million profit in the east coast service on top of the £640 million paid to Government, with every pound of profit going back in for the benefit of passengers? That profit will, under the Secretary of State’s new plans, be shared with shareholders in future. Instead of talking down the current operator of the east coast, will he join me in praising the team there for the work they have done, and think again about his plans?
Will the Secretary of State update the House on the latest cost of the franchising fiasco, not least since his Department appears to be facing legal action from several more train operating companies? Will he correct the claim in his Department’s press notice today that this is the first time that a full franchise timetable has been published? I have with me the previous full timetable that was inherited from the previous Government and republished by his Government. Does he accept that what has changed is simply the fact that all the competitions have now been delayed?
The Secretary of State has also changed the proposed order of the competitions, leading in some cases to very long extensions to existing contracts. What is his thinking behind that decision? Will he clarify the role of the new franchising advisory board that Richard Brown recommended in his review and is now to chair? The first version of the written ministerial statement this morning stated that it would be a cross-industry body and that it would support bidders, but the corrected version appears to have dropped those claims. What, then, is it to do exactly?
What has happened to the Government’s previous enthusiasm for devolution? Will the right hon. Gentleman update the House on discussions with transport authorities covering the Northern and TransPennine franchises and services in the midlands? Does he still anticipate devolving responsibility at the revised start date for these franchises? Have the Government given further consideration to the calls from the Mayor of London and Transport for London for devolution of the remaining former Network SouthEast services?
For the sake of passengers, taxpayers and those working across the rail industry, the whole House wants to see us get beyond the problems of the past year. I wish the Secretary of State well in doing that, but I urge him to focus his efforts on getting back on track the bits of the system that need fixing, rather than those that do not.
I thank the hon. Lady for her response to my statement. It was not quite as warm as that of the CBI, Passenger Focus or the British Chambers of Commerce, which were much fuller in their acknowledgement of our putting the future for the rail industry so clearly.
“The Government believe that the ability of private sector operators to attract more passengers, grow the market, improve the service and receive revenue benefits of such actions is a key element in the current franchise model and one of the reasons for the significant growth delivered in recent years.”—[Hansard, House of Lords, 9 February 2010; Vol. 717, c. WA122.]
It is certainly true that we are talking about a huge growth in rail traffic and rail transportation, with people relying on the railways. I could go on to quote—but I know you prefer shorter answers, Mr Speaker—the right hon. Member for Tooting (Sadiq Khan) who occupied my position before the last general election, as he praised the role of franchising.
I believe that the east coast line should be the first under the new system. I pay tribute to the work done by Directly Operated Railways, which has operated it, but when the hon. Lady talks about figures, she should look at the track access charges paid in control period 3 by National Express when it ran the east coast line. It paid £210 million in track access charges, whereas DOR now has to pay its track access charges of £92 million. [Interruption.] I can tell the shadow Leader of the House that that was paid in the year to which I referred.
That explains why we have set out a very clear set of proposals about where we are going, notifying the industry about the future, which I think is a bright one, and setting out the huge investment that we—and, indeed, Network Rail—are putting into the rail industry.
Order. A great many hon. and right hon. Members are seeking to catch my eye, but I remind the House that a further statement is to follow and then no fewer than three Back-Bench-inspired debates to which 48 Members wish to contribute. There is therefore a premium on brevity for Back and Front-Bench Members alike.
It is evident from today’s announcements that the Secretary of State’s Department will be under a great deal of pressure to deliver a vast programme of infrastructure projects. That pressure has obviously been intensified by the west coast main line franchise failure and of course the recent judicial review failure on the consultation process for HS2. Given those failures, what reassurances can the Secretary of State give us that his Department is still not overstretched and under-resourced?
I am grateful to my right hon. Friend for what I think was support at least for what I am doing on franchising. She talks about judicial reviews, but it is fair to say that of the 10 judicial reviews on HS2, the Department was found not to be wanting in nine cases. Only one judicial review went against us, and I am fully prepared to accept it. I wish the protesters, too, would accept the decisions made by the courts.
I can assure my right hon. Friend that my Department has the resources, and I am mindful of what Sam Laidlaw said in his report about what needed to be put into operation, and we have done that. I think that the Government’s setting up of the franchising advisory board was important—I am sorry that I failed to respond to the hon. Lady’s point about it earlier. It will report directly to the Government and to my advisory board on how the franchises are doing. I am sorry that a mistake was put out in one of the earlier press notices.
I think the hon. Gentleman will know that we are undertaking a full review of fares. That will report later this year, probably in June; the date may move a bit, but I hope it will report in June. He will make his points on fares during that review. However, I would point out that, on a number of routes, cheap fares are available if people book in advance.
By deciding to refranchise the east coast main line, we risk not being able to assess whether the public sector or the private sector is best for the passenger, the taxpayer and the railways in general. Surely as a minimum, therefore, we should allow Directly Operated Railways to bid for the franchise.
That is not the case—Directly Operated Railways is not a company in its own right; it is a company owned by the Department for Transport. We will certainly be able to see how the companies are doing. The process will be open. I have already seen reports, although I have not had it confirmed, that Virgin will put in a bid for the east coast main line, and a lot of people were very happy with the service they received on the west coast main line.
On that very point, given that Directly Operated Railways is owned by the Department for Transport, surely the Secretary of State could instruct Directly Operated Railways to put in a public sector comparative bid so that we can judge who will provide best value for money and best value for the customers.
I would just point out to the hon. Gentleman, who has been in the House some time, that he was very happy to support a Government whose Secretary of State said:
“I do not believe that it would be in the public interest for us to have a nationalised train operating company indefinitely”. —[Hansard, House of Lords, 1 July 2009; Vol. 712, c. 232.]
The east coast main line is integral to the economy of Peterborough, and my constituents are concerned about value for money, punctuality and cleanliness. The Secretary of State rightly mentions the PAC report, which found that this Government inherited systemic lack of leadership and of oversight, miscalculation of risk capital and failure to heed legal advice. Is he absolutely convinced that, in respect of the east coast main line, we have learnt those lessons and that mistakes will not be made again?
I can certainly assure my hon. Friend that we have learnt a number of lessons as a result of what happened with the west coast franchise. I well understand the importance to his constituents of the service that is provided on the east coast main line. It will be one of the first lines to get the new intercity express programme trains, which are due to come into service in 2018-19.
As a north-east MP, I have been approached by a number of the companies that hope to bid for the east coast line, all of which are backed by foreign countries. Why does the Secretary of
State think that it is not okay for the Government to run British railways, but it is okay for the French, German and Dutch to run them?
I think I pointed out clearly in the statement the vast growth we have seen in the railways. I do not think that that would have happened without privatisation. We have seen levels of investment that were not seen beforehand. I point out to the hon. lady the simple fact that I inherited the system of franchising that operated under the previous Government.
Reading station, in my hon. Friend’s constituency, has seen a major refurbishment. That will make a huge difference. There will be closures over Easter, but more platforms will open and the work at the station will conclude in two years. About £800 million has been invested. We would not be investing that kind of money if we were not getting a good return for the passenger, his constituents and those who are served further along that line by First Great Western.
Passengers on the east coast main line have twice suffered the catastrophic collapse of a private franchise. What guarantee can the Secretary of State give that whichever company gets the new franchise will not collapse, and will the railway headquarters remain in York?
As for where the headquarters will be, that will depend on the case that is put forward by the various companies that I hope will compete for the franchise. The hon. Gentleman is right: two franchises collapsed under the previous Government, so that and this Government have both had some problems with franchising. I hope we have learnt our lessons. The rail industry has become a lot better at competing for these franchises.
The Secretary of State rightly spoke of the innovation and ambition that he expects from the new franchise companies. Can he assure me that that innovation and ambition will extend to providing services off the east coast main line, most notably to Cleethorpes?
I am certainly willing to discuss in greater detail with my hon. Friend the services to his constituency, which I know have been very badly disrupted because of earth movements, which must be put right; the work is taking longer than we would have hoped.
The Secretary of State says that success on the railways has been achieved because of privatisation. The rolling stock in east Lancashire must be among the worst in the UK—it is absolutely dreadful. Privatisation has certainly not worked. The northern franchise is coming up, so what will he do to ensure that my constituents and others in east Lancashire benefit from that success?
I very much welcome the statement as a sensible way forward for franchising, but may I urge my right hon. Friend to use the temporary extension of the west coast franchise to urge Virgin and London Midland to work together temporarily to ease overcrowding on services from Euston, in the evening peak at least, until the full franchise is let and London Midland’s new train order comes through?
I am grateful to my hon. Friend, who follows this subject particularly closely, not just for his constituents but as a member of the Select Committee on Transport. I know that he sent me and my right hon. Friend the Minister of State, Department for Transport a fairly comprehensive letter, which I hope to respond to shortly, and I will see what can be done.
That is not because of privatisation, but because the public sector bailed out the private sector. There is huge support for continued public ownership. The private sector has already let down the travelling public on this route twice. Why risk it again when we are returning so much money to the taxpayer?
I was simply referring to what was said by the Secretary of State in the previous Government. It was a short-term measure. By putting out the franchise to the private sector, there will be better services. That is what I am interested in. I am not particularly interested in who owns it. I am interested in getting better services to the hon. Gentleman’s constituents, who want to take advantage of them.
I think that that was a welcome for the new station and for the greater investment. Of course one always has to strike a balance when these cases are put forward, but I think that Ilkeston, Derbyshire county council and my hon. Friend Jessica Lee made a strong case for why Ilkeston should be successful. The case was judged by a panel that did not include me, and I am very pleased that Ilkeston has been successful.
So much for the Government’s grand promises to radically change franchising—only three franchises will be let before the next election. Some of the extension periods are enormous, following the extensions that operators have already had. What guarantees has the Secretary of State had that there will be investment by those companies during the extension periods?
I can assure the hon. Lady that there will be investment during those periods. In anything where I negotiate directly in awarding contracts, I look at the way services can be improved, and I hope to be able to make a statement shortly on some of those particular services.
The Secretary of State will be aware that Southeastern is consistently one of the worst performing and most expensive train-operating companies in the country. Can he therefore explain why it has been given the longest extension—50 months? Can he assure my constituents that the extension is not a reward for failure? What opportunity will passengers have to engage in the process of direct awards as it is finalised?
None of these direct awards will be made without getting the maximum we can out of the companies, talking to them and getting improvements in services. Where there have been let-downs, I will certainly want the companies concerned to address those problems.
May I suggest to the Secretary of State that there is indeed a public sector comparator for Britain’s railways: the nationalised railway systems on the continent of Europe? McNulty found that they are up to 40% cheaper to run than ours. We have the highest fares in Europe and a ballooning public subsidy. Is not keeping the railways in the private sector just driven by ideology and a desire to put public money into private pockets?
I am somewhat surprised—I am not sure whether the hon. Gentleman was expressing support for the McNulty recommendation that we should take costs out of the railways. I did not expect such support from the hon. Gentleman, but any help I can get, I am always happy to bag.
I know the hon. Gentleman was unable to attend my meeting with First Great Western because of other engagements. I am very keen to improve services, particularly in his part of the country. I am going there in a little while to look at those services first hand, and I will certainly pass on the representations he has made when I have discussions with First Great Western—and Network Rail, as both are involved.
I welcome the certainty today’s statement brings and the opening of the east coast main line franchise. Can my right hon. Friend confirm that passenger gain will be at the forefront of the franchising process?
I assure my hon. Friend that we are going to take passengers’ views very much into account in this system. That has not happened before, and today Passenger Focus has welcomed that development. It is part of the judgement that we must make when considering whether franchises are achieving their targets.
Is the Secretary of State aware that tomorrow, to mark the 50th anniversary of Beeching, passenger groups and trade unions will demonstrate outside 80 railway stations against privatisation and job losses? Will he protect passenger safety and rule out job losses on the railways?
I am not sure the hon. Lady was listening to my statement. I pointed out that we have had a better safety record on our railways in the past few years than for a number of years, and we are one of the safest rail operators in Europe. Jobs have been created as a result of more people using the railways. Privatisation has doubled the number of people using the railways. I would have expected the hon. Lady to welcome that, and unions to be out welcoming it too.
In the light of the 27-month extension that has been given to the Greater Anglia franchise, what improvements to services will be appended to the existing franchise as a condition, so that local commuters see improvements to the service before the next franchise comes up?
I am grateful to my hon. Friend, who, along with colleagues from the Greater Anglia area, have given me a pamphlet setting out the changes being made. The Minister of State, Department for Transport, my right hon. Friend Mr Burns, does not lose an opportunity to tell us how we must improve the services used by not only my hon. Friend’s constituents, but his.
The Secretary of State’s response to my hon. Friend Hugh Bayley was disturbing. He said that he was not bothered who would run the franchise or where they came from, and could not confirm where such a company would be headquartered. Can he not use the tendering process to ensure that these details are nailed down and that the headquarters are in the United Kingdom?
I fear that the hon. Gentleman is taking me out of context. What I said was that my main concern is the service to the passenger, which I care very much about and want to see improve. The location of the headquarters will be up to the individual franchisees when they put their case forward, and they may make strong representations.
The Secretary of State and I, and our constituents, use the midland main line. Will he confirm when the franchise is up for renewal, and will he allow prospective bidders to come forward with proposals for new electric trains, instead of the Department insisting that they use recycled trains from other lines?
The date of the new contract for East Midlands will be mid-way through 2017, and a direct-operated tender deal will come to fruition in 2015. I hope my hon. Friend accepts that the fact that electrification of that line is included in next set of Network Rail works shows our commitment to it. I know how important—
The hon. Lady says that, but the process starts in 2014, which is in this Parliament. I can assure her that 2014 will be in this Parliament, not the next Parliament, in which case we will be electrifying that line.
Before she attends to her next pressing commitment, let us hear from Catherine McKinnell.
Thank you, Mr Speaker. I agree with the Secretary of State that if our country is to compete on jobs and growth, we need a transport infrastructure that is second to none. Can he therefore reassure me that today’s announcement is in no way driven by the view expressed by the chief executive of the North Eastern local enterprise partnership that there is no need to invest in north-east transport, and that he does not share that view?
There is every need to invest in transport across the United Kingdom, and LEPs have a very important role to play. I have not seen the exact quote, and I should like to see it in context.
I congratulate my right hon. Friend on today’s statement, particularly the great news about Ilkeston station, which will immediately transform and regenerate the area by providing connectivity. Is this the new dawn for the National Forest line—the old Ivanhoe line; can we look forward to that, too?
I am sure I will hear a lot more about the Ivanhoe line from my hon. Friend. I am pleased that she welcomes the opening of the station at Ilkeston, along with the other two stations I have announced today. There will be further work on that, but she is right: the fact that I, as Transport Secretary, have appeared at the Dispatch Box today is a reflection of Members wanting more services. That is why it is so important that we get the investment levels right and the train companies operating the kind of services passengers want.
Wiltshire’s passenger rail offer stands to benefit from a multi-million pound grant from the coalition Government’s local sustainable transport fund. Now that the future of the franchise is clear, what is the Secretary of State’s advice to the promoter, Wiltshire council, and to First Great Western? Is it more “wait and see”, or that they should now get on with it?
I very much welcome my right hon. Friend’s statement. Thameslink and Southern Railway recently announced new rolling stock to operate from the four stations within my constituency. Can he assure me that the changes to rail franchising announced today will not affect the delivery of that rolling stock?
It certainly should not affect the delivery of the new trains. I know of no reason why it should and if I am wrong, I will obviously write to my hon. Friend.
Portsmouth’s experience of franchises awarded under the last Government was that the rolling stock was downgraded from the agreement. When will passenger comfort and service standards be written into the agreements, to ensure that passengers have access to a toilet and that commuters are not crippled by suburban rolling stock being used on main line routes?
I am very disturbed to hear what my hon. Friend says, and I will certainly look into her points and get back to her in more detail in the very near future.
There have been massive improvements on the west coast main line since privatisation and Virgin, but one way to improve things in the future—to continue improving competition and to keep down costs—would be by encouraging more operators to enter the market. Is there anything in my right hon. Friend’s statement that would encourage open access operators to come in on more existing services?
Rail users in Rugby will welcome the Secretary of State’s announcement about the Virgin franchise being extended on the west coast main line. Will he reassure my constituents that an extra 29 months will be enough to encourage Virgin to continue to invest in the railway?
I know that Virgin is keen to continue with investments on that line and is happy to receive representations, both from my hon. Friend and from me, if good cases are made for investment that has a positive return.
I thank the Secretary of State for his statement. May I also thank him for reducing train fares in the south-east by reducing the retail prices index plus 3% provision to RPI plus 1%? Under the previous Government, Southeastern had RPI plus 3% whereas the rest of the country had RPI plus 1%, and that was exceptionally unfair.
I am grateful to my hon. Friend for that. The truth is that we are putting massive further investment into the railways. That has to be paid for by both the fare payer and the taxpayer, but it is right that we try to get that balance right. I am pleased that the Chancellor was able to take the increases down to RPI plus 1%, not only for this year, but for next year.
I welcome my right hon. Friend’s statement and his intent to put the interests of passengers at the heart of rail franchising. The best interests of rail passengers in my constituency would be served by the reinstatement of fast off-peak services to Nuneaton, which were taken away by the previous Labour Government in 2008. Will he come to Nuneaton and meet me to discuss this vital issue at greater length?
I am certainly more than happy to meet my hon. Friend at Nuneaton station. I believe that a date is going in my diary this afternoon—if it was not already, it will be now.
Suffolk commuters will be disappointed by the delay, although they are used to it as passengers, even though things have improved under Abellio. Will my right hon. Friend assure me that this will not deter or delay the needed investment in the freight line from Felixstowe to Nuneaton?
The announcements I have made today will have nothing to do with the freight line. Again, I make the point to my hon. Friend that we are seeing not only an increase in passenger numbers, but a huge increase in the amount of freight using our railways—I believe that the figure is about 60%. I know that most colleagues and the general public welcome that very much.
Order. Questions from 34 Back Benchers were answered by the Secretary of State in 25 minutes of exclusively Back-Bench time, which is an impressive record. Might I suggest that rather than sending his ministerial colleagues an Easter egg, the Secretary of State should send a DVD of the statement and the exchanges on it, which will be a great example for them to follow in the future?
The hon. Gentleman wants to raise a point of order, but I am afraid that he will have to be patient. There is another statement, and statements come before points of order, as the hon. Gentleman, having been here 11 years, should know.