Railways (Public Sector Operators)

– in the House of Commons at 12:34 pm on 29th October 2014.

Alert me about debates like this

Votes in this debate

Motion for leave to bring in a Bill (Standing Order No. 23)

Photo of Andy Sawford Andy Sawford Shadow Minister (Communities and Local Government) 12:42 pm, 29th October 2014

I beg to move,

That leave be given to bring in a Bill to amend the Railways Act 1993 to permit public sector railway operators;
and for connected purposes.

Twenty years after privatisation, it is clear that passengers are getting a raw deal. The Tories’ botched privatisation in the 1990s has led to a fragmented railway, which is less efficient to run and more expensive to use than other networks across Europe. The franchise process simply does not work in its current form. The collapse of the west coast main line franchise, at a cost of more than £55 million to the taxpayer, shows just how broken the system is.

On the east coast, where a public operator has performed really well in recent years, it is banned by law from seeking to carry on as the operator. How can it be right that East Coast Main Line Ltd is the only operator in the world that cannot bid to run this service in the future, despite a track record of success? East Coast has shown that a public option can work for our railways. Every penny of profit that it makes has been reinvested back into the service. For example, East Coast contributed £1.3 million to the £3.3 million upgrade of Peterborough station, which I and my constituents use.

Instead of continuing this success story, the Government want to re-privatise the east coast main line at an estimated cost of £6 million. That money would be better spent on improving the service, rather than satisfying the Tory obsession with privatisation. Labour is the only party with a plan to reform the railways and put passengers first. With this Bill, I am very pleased to support the brilliant work of my hon. Friend Lilian Greenwood, the shadow rail Minister, and my hon. Friend Mary Creagh, the shadow Transport Secretary, who have set out the reforms that we need.

The next Labour Government will review this Government’s failed franchising process as a priority. After the chaos of recent years, we will act to safeguard taxpayer and passenger interests by putting in place a system that is fit for purpose. We will learn the lessons of the east coast main line, where we have seen the benefits of a not-for-dividend operator, by legislating to allow a public sector operator to take on lines and challenge the train operators on a genuinely level playing field and in the public interest. That will help to secure value for money for passengers and taxpayers.

As a Co-operative MP, I am pleased that we have pledged that the next Labour Government will explore co-operative and mutual solutions and the benefits of co-operative principles, and increase the involvement of passengers and employees in transport by giving them a much greater say in the industry. The Co-operative party’s reports, “Rail Cymru” and “A People’s Railway for Scotland”, explore the options for Scotland and Wales. As a localist, I am pleased that Labour is committed to devolving decisions across all areas of the UK on the running of regional and local services, so that areas can bring trains, buses, ferries and trams together into a single network.

We must tackle the monopoly market for rail rolling stock by giving Network Rail greater responsibility for developing a long-term plan for the procurement and leasing of new rail rolling stock. We will create a guiding mind for the railways by bringing Network Rail together with a representative passenger rail body to contract routes; co-ordinate services and skills in the industry; oversee stations, fares and tickets; and ensure that there is customer satisfaction across the network. We will ease the pressure on fare payers through the efficiencies that our reforms release, by capping annual fare rises on every route, by simplifying fare structures and by creating a new legal right to the cheapest ticket. I know that those proposals will be welcomed by many of my constituents.

Corby and east Northamptonshire are served by private and public sector rail operators. The contrasting experiences of my constituents demonstrate the need for my Bill. Corby, which is served by East Midlands Trains, recently celebrated five years since Labour opened the new railway station. Corby is the fastest growing town in the country. It was once known as the largest town in Europe without access to a railway system. Use of the station has doubled since it was opened in 2009. It takes 70 minutes on the train from St Pancras. The station is a symbol of Labour’s investment in the regeneration of Corby and it has given a big boost to the local economy. It was campaigned for by the former Labour MP, Phil Hope, and by Labour councillors, and it was delivered by a Labour Government. We are now working to increase the frequency of trains and calling for new northbound services.

However, we cannot celebrate the fares that passengers face. They are way too high and they price out many people. A constituent told me the other day that he had a medical appointment in London, but he did not know how he would find the more than £100 needed to get there. A Corby to London season ticket costs £7,400 and an open return costs £105. Many constituents in the east Northamptonshire side of my constituency, such as those who live in the town of Oundle or in villages such as Warmington, travel from Peterborough station on the east coast line.

Although the fares on the east coast main line are still high, the rate at which they have increased has been hugely different. Since 2010, a standard anytime open return ticket from Peterborough to London has increased by £12, or 14%. The equivalent fare from Corby on East Midlands Trains has risen by £20 since 2010, which is almost twice the rate of increase at 24%. This year, East Coast has raised its fares by an average of 1.21%, which represents a genuine real-terms cut in the cost of living for passengers. No private franchisee has taken that step. It would be fair to say that many of my constituents who use Peterborough station still feel that fares are too high, but by comparison, East Coast is keeping fare rises down.

More than that, East Coast is performing better for passengers. It has achieved record passenger satisfaction and punctuality rates since 2009. It has introduced almost 7,000 more trains a year, and 500,000 more passengers are travelling on the franchise. East Coast has partly funded and helped to deliver a major programme of station upgrades, including at Peterborough station. It is also performing for the taxpayer, having returned more than £800 million to the Treasury.

East Coast’s passengers and the employees who have worked to make East Coast a success in public hands will not understand why the operator is prevented from taking on the running of other lines, let alone why it is banned from continuing to operate the east coast line. Because of the Tory rules, we will have a situation where European public rail companies can run lines in this country, but our British-owned operator cannot.

I completely agree with my hon. Friends the Members for Wakefield and for Nottingham South that, instead of Tory dogma and an obsession with privatisation, we need a different approach that puts the public interest first, that reverses the presumption against the public sector and that serves the passenger properly. It is time for reform of an industry that sucks up a vast amount of subsidy, and seems loth to invest it back into the service of which it is custodian, and that provides little redress for passengers stung by ever-increasing fare hikes—[Interruption.]

The Tories and the Lib Dems are wedded to the status quo: only Labour has a plan for reforming the railways—a new model, with a strong voice from and control by the people who pay for the railways, the taxpayer and the fare payer, and a strong voice for employees who stay working on the railway no matter the colour of the uniform or the paint on the trains. The next Labour Government will review the failed franchising process; legislate to allow a public sector operator to take on the lines; devolve decisions over the running of regional and local services; tackle the monopoly market for rail rolling stock; address the cost of living by capping annual fare rises on every route; simplify fare structures; create a new legal right to the cheapest ticket; and, as Conservative Members have shown today, we will do it all in the face of their opposition. They are standing up for the wrong people. The Bill is just the first step to a railway in which passengers are put first.

Photo of Martin Vickers Martin Vickers Conservative, Cleethorpes 12:50 pm, 29th October 2014

I oppose the motion and urge the House to reject the arguments put forward. The privatised industry is actually a success—freight tonnage is up and passenger numbers continue to rise. What we have heard from Andy Sawford will be detrimental to the industry, to employees and especially to passengers. It is based on a redundant political dogma. Labour Members who yearn for bygone days when people were prepared to look to the state to run their buses and trains should come to terms with the modern world.

Wisely, the previous Labour Government made no attempt to reverse the policy during their 13 years of misrule—[Interruption.] Thirteen wasted years, indeed. The change in direction since the days of Tony Blair is striking. The Opposition clearly have no ambition to win elections any more. The very phrase “directly operated railways” conjures memories of a past in which giant state conglomerates ran great swathes of our industry at enormous expense to the taxpayer—[Interruption.] The eyes of Labour Members light up at talk of subsidy. They yearn for the opportunity to subsidise failed industries again—[Interruption.]

Photo of Martin Vickers Martin Vickers Conservative, Cleethorpes

Subsidies and propping up ailing businesses at taxpayers’ expense are things that Labour Members understand, but taxpayers want value for money. They want reduced fares, lower taxes and a good railway, which is what we are achieving under the privatised system. Is Labour actually advocating renationalisation? That is what it sounds like. The plan would take us back a generation. It would create a rigged market and passengers would suffer. Under Labour’s plan, the state would write the rules of the franchise, then the state would bid and then the state would decide who had won the race. It would be complex, costly and about an ideological obsession.

The east coast is a service on life support. It was rescued by the Department for Transport and it does not pay the same access charges. Labour’s plan would be costly—up to £500 million. First, the state would have to pay the cost of compiling the bids at up to £10 million a bid. With 15 franchises in England alone, the bill could be more than £100 million. The hon. Member for Corby did not say where that money would be found. Presumably, in line with normal Labour practice, it would be an additional burden on the taxpayer. Secondly, under Labour’s plan, the state would also have to take on the working capital cost of any franchise it operated, amounting to £400 million for the network. In addition, if the bidding process were to be truly level, performance bonds, season ticket bonds, risk capital and default would all have to be taken into account.

My constituency takes its name from the east coast’s premier seaside resort, but it also contains the largest port complex in the UK, an international airport and 10 railway stations. Only last week, a parliamentary Committee gave the go-ahead for the development of the south Humber marine energy park by Able UK, with 4,000 potential jobs. That further strengthens the need for better connectivity and the Under-Secretary of State for Transport, my hon. Friend Claire Perry—whom I was delighted to welcome to Cleethorpes only two weeks ago—will know that that would improve the potential of south Humber and north Lincolnshire even more.

It is private sector railway companies that will provide better services. I remember the days when I could jump on a train in Cleethorpes to go to Doncaster and I would share the carriage with one man and his dog. Thanks to the private operator First TransPennine Express, we have an excellent hourly service and I have every confidence that the Minister will maintain it. We need services expanding and electrification of the line into Immingham, where 25% of the nation’s rail freight starts or ends. I urge the House to reject the motion. The Bill would be a step backwards that my party and I will not support.

Question put (Standing Order No. 23).

The House divided:

Ayes 196, Noes 38.

Division number 65 Railways (Public Sector Operators)

A majority of MPs voted to permit public sector railway operators.

Aye: 197 MPs

No: 38 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Absent: 410 MPs

Absents: A-Z by last name

Question accordingly agreed to.

Ordered,

That Andy Sawford, Mrs Emma Lewell-Buck, Andy McDonald, Roberta Blackman-Woods, Fiona O’Donnell, Ian Murray, Sheila Gilmore, Alex Cunningham, Ian Mearns, Mrs Sharon Hodgson and Julie Elliott present the Bill.

Andy Sawford accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 16 January 2015, and to be printed (Bill 111).