Rail Franchising

NHS Winter Crisis – in the House of Commons at 4:21 pm on 10th January 2018.

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Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport 4:21 pm, 10th January 2018

I beg to move,

That this House
believes that rail franchising is failing to provide adequate services for passengers or value for money for taxpayers;
notes that regulated rail fares have risen by 32 per cent since 2010 while planned investment has been cancelled;
opposes the recent bail-out of Virgin Rail Group East Coast;
and calls on the Government to run passengers’ services under public sector operation.

I welcome the hon. Members for Orpington (Joseph Johnson) and for Wealden (Ms Ghani) to their new ministerial positions and wish them success in their new posts. I also pay tribute to Mr Hayes for his 18 years of continuous Front-Bench service. He was a pleasure to work with, and I would like to think that we can continue the sort of relationship that we had in non-contentious areas, where the result was improved legislation. I also congratulate the Secretary of State for Transport on his superb stewardship of the Conservative party. There has never been a finer record: no elections lost; no major scandals; and membership maintained at around 70,000—not bad for 27 seconds’ work.

I am delighted that the Secretary of State is in the Chamber to provide answers to a number of questions that I and other Members have for him. Unfortunately, no Minister was available on 2 January to explain the highest fare increases in five years, so I hope that he will provide us with some clarity today. Sadly, the entire rail debate is characterised by a lack of candour and transparency from both the Government and some quarters of the rail industry.

Photo of Paula Sherriff Paula Sherriff Shadow Minister (Equalities Office) (Women and Equalities)

Does my hon. Friend share my concern that my constituents who use Northern saw fare increases of nearly 5%—the biggest in the country—and that we are still having to use Pacer trains? They are virtually as old as me: 42 years old.

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

I agree entirely with my hon. Friend. It just adds insult to injury when such hikes in rail fares go alongside appalling services.

It is time that Secretary of State woke up from his state of denial. It is time for him to come clean and admit that he has made mistakes. No one is perfect, but he should acknowledge his failures, and take responsibility for the decisions he has made, the policies he has pursued and their consequences. I urge him to be entirely unambiguous with the House today. The Government’s defence of their rail franchising system is totally indefensible, and this is not the first time that the Government have been in the Chamber this week to defend the indefensible.

Photo of Madeleine Moon Madeleine Moon Chair, Defence Sub-Committee

In south Wales, First Great Western reduced and cancelled services over Christmas and new year—there was chaos—yet it has been handed a franchise extension. Is it not time we had performance-related franchises and performance-related franchise extensions, rather than franchises being extended automatically no matter what the service?

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

My hon. Friend makes a good point, and I will return to those themes.

The Government are unable to accept that the franchise model, which is demonstrably failing, is a betrayal of the public who plough billions of pounds of taxes into the railway. It is a betrayal of the passengers who face eye-watering fare rises year after year. It is a betrayal of the hundreds of thousands of dedicated and passionate people who have worked in the rail industry for decades.

Photo of Huw Merriman Huw Merriman Conservative, Bexhill and Battle

I thank the hon. Gentleman for his kindness to me just before Christmas. Will he confirm whether fare rises have been faster under this Government or the last Labour Government?

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

Labour’s position is that if we were in power, we would not raise fares by the retail prices index or by RPI plus 1. We would save each member of the travelling public £500 during this Parliament.

Several hon. Members:

rose—

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

I will make a little progress, but I will take interventions later.

In 2016, the Department for Transport set out that its aims and objectives for rail franchising were

“to encourage a flourishing, competitive passenger rail market which secures high-performing, value for money services for passengers and taxpayers whilst driving cost effectiveness.”

The Department has clearly failed to meet those objectives. The latest collapse of the east coast franchise, which was announced in November, makes a mockery of the Department’s 2016 aims. Virgin-Stagecoach did not deliver and defaulted on their contract, and the Secretary of State has given them a gift.

Photo of Hilary Benn Hilary Benn Chair, Committee on Exiting the European Union

Given that this is the third occasion in just over a decade that a private contractor has announced that it wishes to hand back the keys to the east coast franchise, was it not a fundamental mistake for the Government not to allow East Coast, which successfully ran the franchise for more than five and a half years and paid back £1 billion to the Treasury, to continue its good work? Instead, the Government ideologically said that anyone could bid to run the franchise except the state-owned company that had run it so successfully.

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

My right hon. Friend makes a perfect point. I have no doubt that that will be a consistent theme throughout this debate.

The Government should have followed Labour’s example. When the operator defaulted in 2009, Labour took the contract back into the public sector. If a company defaults, it does not deserve a contract. Taking a contract back into the public sector would mean that there is no reward for failure, and other companies in the industry would not expect the same treatment. In the light of what happened with the east coast franchise, what plans does the Secretary of State have to renegotiate the TransPennine Express, Northern and Greater Anglia franchises?

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Business, Innovation and Skills), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention)

The hon. Gentleman makes a valid point. Is not the biggest danger of the Secretary of State’s decision that other franchisees might come looking for a handout?

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

Indeed. That point is entirely consistent with the issues I am putting before the House.

Labour would not have let Virgin-Stagecoach off the hook on the east coast franchise. To return to what my right hon. Friend Hilary Benn said, did the Secretary of State consider taking the east coast franchise into the public sector following the default—yes or no? Does the Secretary of State not worry that, because he refuses to use a public sector operator even as a last resort, struggling train companies now know he has no option but to bail them out in the event of a failure?

Such failures are not confined to the east coast franchise. Today’s National Audit Office report highlights a litany of errors in the Government’s planning and management of the Thameslink, Southern and Great Northern franchise. Those blunders have caused misery to millions of people, and it is the Government’s disastrous handling of the franchise that led to industrial action on the line.

Photo of Barry Sheerman Barry Sheerman Labour/Co-operative, Huddersfield

Does my hon. Friend accept that this morning’s report was scathing about the dreadful performance of Northern rail? My constituents are not as dependent as I am on the east coast franchise to get up and down the country, but the local franchises are how ordinary people get to work.

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

My hon. Friend makes his point powerfully.

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

I will not respond in detail until I make my speech, but it is important to put on record that this morning’s report had nothing to do with the Northern rail franchise. I hope the hon. Gentleman will confirm that to the House.

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

I will do that very thing. I will confirm that the damning report was about Thameslink, Southern and Great Northern, not Northern, and showed that that franchise has been appallingly managed.

Photo of Gloria De Piero Gloria De Piero Shadow Minister (Justice)

Rail companies could do more to make passengers’ lives easier. Many local stations, such as Langley Mill in my constituency, do not have a ticket machine, so people cannot collect pre-paid tickets. Should it not be a condition of any franchise that passengers travelling from such stations can use email proof, instead of their facing this “computer says no” attitude that we get from so many rail companies?

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

We do have to think about much more flexibility across our railway, as well as greater accessibility for people from not only every walk of life, but all different localities, as some facilities are not as they should be.

Some industry commentators have said that the Secretary of State accepted rail franchise bids that were excessive and unrealistic. Can he confirm that winning bids are accepted in the expectation that they will be paid in full? Does he anticipate that the premium payments on the South Western Railway, Greater Anglia, Northern and TransPennine Express franchises will be made in full? Several other franchises look vulnerable in the light of the east coast decision. Passenger growth is slowing across the railway amid weaker consumer confidence, rising fares and changing work patterns. Rail passenger usage has fallen for consecutive reporting periods, and that has included a stark decline in season ticket purchases, which are the core business of rail companies. The fact that passengers are being priced off the railway is threatening the sustainability of the network as a whole.

Photo of Rosena Allin-Khan Rosena Allin-Khan Shadow Minister (Digital, Culture, Media and Sport) (Sport)

Since Southern rail fares went up in the new year, three quarters of rush-hour services between Balham and Victoria have not arrived on time. If the delays we have seen so far are replicated throughout the year, Balham commuters will waste a total of 30 hours stuck on delayed trains. Southern rail is not fit for purpose. Does my hon. Friend agree that it is time for action?

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

I could not agree more. It is fascinating that we still await the revelation of appendix 9 of the Chris Gibb report, which detailed the future of that franchise. We have not seen it. That report was commissioned by Southern, which set the terms and conditions. [Interruption.] The Secretary of State is muttering from a sedentary position, but that is the reality. Southern set out what that report should be about and it has not published the very kernel of that report, which was on the future of that service.

Photo of Kate Green Kate Green Labour, Stretford and Urmston

I congratulate my hon. Friend on the case he is making. He mentions the cost of season tickets. My constituents are also served by appalling services from Northern. It is hardly worth their investing in a season ticket, given that trains are often either cancelled or so crowded that they cannot get on to them. Does he agree?

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

I do agree. The great concern about all of that is that it is not achieving the modal shift we all want. It brings people to the point where they say, “The railway is not for me. I may as well get back in my car.” That is the opposite of what we should be doing.

Photo of Adrian Bailey Adrian Bailey Labour/Co-operative, West Bromwich West

My hon. Friend is making an excellent case. Does he agree that, given the widespread evidence of the lamentable failure of some of the rail companies—consumer dissatisfaction, price rises and so on—there is a strong case for developing models of ownership that involve the users of the railways, those who work on the railways and investors in the railways? Such a form of co-operative and mutual ownership may well operate effectively and efficiently, with enormous public support.

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

I am grateful to my hon. Friend for making that point. It is important that the voices of passengers and those who work in the railway industry are heard, because they are the people who not only use the service but are committed to making it work.

Photo of Caroline Lucas Caroline Lucas Green, Brighton, Pavilion

My constituents in Brighton will certainly agree with the hon. Gentleman 100% when he criticises Govia Thameslink Railway/Southern; it is adding insult to injury to put prices up when the services that people in Brighton are getting are so awful. On the issue of cost, rail fares have gone up by 23% over the past 20 years and the cost of driving has gone down by 16%. Does the hon. Gentleman agree that privatisation is absolutely failing passengers, and that instead of lining shareholders’ pockets we should be investing in our railways?

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

I could not agree more. In fact, we have seen prices rise by 32% since 2010, which underlines the hon. Lady’s point.

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

The hon. Gentleman and I have enjoyed cordial exchanges on many issues, but I suspect this will not be one of them. The point has been made about rail fare increases under privatisation. I did a little research into fare increases under nationalised British Rail over the same length of time for which the private companies have operated. In 15 of 22 years there were above-inflation increases, and over that period rail fares were 60% higher after inflation was taken into account. Why would nationalisation automatically lead to lower fares?

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

I like to think that the hon. Gentleman and I can disagree with one another without being disagreeable. He has a good memory and is going back rather a long way. The Conservative party has been in power since 2010—eight years—and we are concerned today with the record of the current Government. We are not going back through all our yesterdays.

Photo of Anna Soubry Anna Soubry Conservative, Broxtowe

The hon. Gentleman is two years younger than I am, so he will well remember the state in which the railways used to be. Does he not agree that we have seen a terrific improvement in the quality of the trains, the service and the attitude of the staff? An excellent service has been developing; would he agree that that is because of privatisation? Would he further agree that investment in our railways is at a record high?

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

I regret that many passengers’ experiences do not match the right hon. Lady’s experience. The evidence is that people are dissatisfied with the services they receive throughout the country. I respectfully suggest to her that going back over things in the way she is doing is not helpful. Had British Rail received public investment at the rate at which the Treasury has poured investment into the private operators, we would have had a gold-standard railway in this country.

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

I really want to make progress because a lot of people want to speak.

All the factors I have described undermine the growth forecasts that are so central to the Government’s model and the undeliverable bid assumptions of operators. FirstGroup won the TPETransPennine Express—franchise in December 2015 based on revenues increasing by 12% a year. In one of his first acts in office, the Secretary of State awarded the Greater Anglia franchise to the Dutch state-owned rail company Abellio in August 2016. The deal commits the company to paying the Government £3.7 billion to run the line for nine years. That is more than the east coast franchise. Reports suggest that Abellio’s bid was £600 million more than the next bidder. Like the TPE and east coast bids, Abellio’s bid was based on double-digit annual revenue growth. The company’s boss described the £3.7 billion price tag as “scary”. Does the Secretary of State guarantee that the Treasury will receive the full premium payment of £3.7 billion from Abellio Greater Anglia by 2025—yes or no?

Photo of Dan Carden Dan Carden Labour, Liverpool, Walton

My hon. Friend is making an excellent case. Is not one of the problems that these companies make such commitments and then set about destaffing and deskilling our railways to make more profit, so that they can pay back the Government?

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

The whole issue of overbidding and making promises that cannot be kept is a consistent characteristic of the modern rail environment.

If the Government’s rail franchising system cannot deliver competition and payments to the Treasury, what is the point of it? The Secretary of State will no doubt be able to give a clear and straightforward answer to that.

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

As I allow an intervention for the last time, perhaps the former Secretary of State can give us some indication of the point of a franchising system that does not deliver the promised premiums.

Photo of Patrick McLoughlin Patrick McLoughlin Conservative, Derbyshire Dales

Will the hon. Gentleman tell us, during the course of his speech, how franchising changed between 1997 and 2010, when it was defended continually by the previous Labour Government as the best way to see extra investment in the railways? While he is telling us that, will he also confirm that there are actually more people employed on the east coast main line than there were under the previous people operating that line? Will he welcome the fact that the Pacer trains, which have been referred to earlier, will actually go as a result of the new Northern franchise, which the Secretary of State has brought in?

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

Let me take the last point first. The European Union dictates that persons with restricted mobility are not served by the Pacers. The time of the Pacers has been up for a long time, and I am glad to see the back of them. I am glad that plenty of people work on the railways, and delighted that the previous Labour Government went about making the railways safe, given the disaster that was Railtrack, which delivered us Potters Bar, Hatfield and Paddington. That was the legacy that the previous Labour Government inherited, and we turned our railways into the safest in Europe, so I am very proud of what we did.

Direct awards and franchise extensions in the rail industry have been overlooked in many of the rail debates. These are contracts that the Government cannot or will not refranchise, and which they are ideologically opposed to running in the public sector. The train companies name their price to the Government for running these hand-to-mouth contracts, which simply keep the trains running in the short term and provide no long-term benefits or investment.

The west coast route has operated on a series of direct awards since 2012, with reports of another extension beyond 2019. Another key inter-city franchise, Great Western, has been operating under a direct award since 2013, when the Government cancelled the franchise competition. Scandalously, Great Western may run as a direct award for 10 years until 2023. The Government cannot refranchise the rail operation because their management of Network Rail has been so poor and the Great Western electrification programme has been such a shambles.

I predict that there will be more direct awards and contract extensions to rail franchises announced by the Government. The east midlands franchise is already on an extension to 2019 and will probably get another one. I also predict that the Secretary of State will need to give Virgin and Stagecoach a direct award on the east coast because he will not be able to deliver on his east coast partnership by 2020. It is simply inconceivable that he will be able to establish a framework, gain regulatory support, put the idea out to tender, receive and evaluate bids and award the contract within the timeframe he has set out. A direct award to Virgin/Stagecoach on the east coast will allow the companies to continue to profit from the line while they invest even less.

Once again, the Secretary of State needs to be entirely candid with this House: Does he, or does he not, anticipate giving Virgin/Stagecoach a direct award to run rail operations on the east coast while he sets out his east coast partnership? Can he confirm whether that will take place? If he does, can he tell the House how much less the value of premium payments to the Treasury would be under this arrangement than under the original franchise?

What is the Secretary of State’s solution to his failing franchising model, as competition dwindles and premiums to the Exchequer reduce? It is quite simple: more taxpayer and fare-payer support for train operating companies. The next franchises to come up are Southeastern and west coast. Under his new revenue support arrangements, taxpayers will top up revenues if growth targets are not met. What is the point of franchising if the operators do not take any risk? In return, the Government will want close financial monitoring of the operators. Do we really want civil servants in Marsham Street poring over train company balance sheets? Is there not enough DFT interference in the railway already?

Rail privatisation’s vested interests have spent more than 20 years trying to get franchising to work. Despite the Government changing and tweaking the system for them time after time, all they have done in return is to reveal ever more and new sorts of failure, while the public continue to suffer substandard services and ever-higher fares. Enough is enough. We need to change the system entirely.

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport 4:44 pm, 10th January 2018

May I begin with the one thing on which we agree this afternoon? I thank Andy McDonald for his generous comments about my right hon. Friend Mr Hayes, who has been a great servant of my Department and other Departments for a very long period. He has been on the Front Bench for 19 years, in government and in opposition. That is an epic career, and we all very much appreciate the work that he has done, particularly on legislation and on building bilateral discussions and so on, so I pay tribute to him for all that he did. I am grateful for the warm words from the hon. Member for Middlesbrough.

Apart from that, we have just heard about 45 minutes of complete nonsense from the Opposition. I suspect that you would say it would be unparliamentary of me to call them hypocritical, Madam Deputy Speaker, so I will not do so, but I have no doubt that others in the know will be astonished by the gall with which they simply forget their actions in government; with which they pretend that their ideas will not cost a penny—I keep hearing that, but it is absolutely untrue; and with which they make inaccurate claims based on a lack of facts about subjects they appear not to understand.

Let me set out why the Opposition’s ideas do not stack up and why their positions do not add up.

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

I will make some progress, then take interventions.

I shall also set out why the Opposition’s policies make no sense for the travelling public and why their pronouncements on the east coast main line are wrong. I shall also explain why it is this Government who have set about the task of modernising and upgrading our railways—the biggest programme of investment since the steam age—after 13 years of a Labour Government who quite simply failed to deliver the infrastructure improvements that this country needed. It has taken Conservatives to begin to change that.

Several hon. Members:

rose—

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

I will make some progress, then take a few interventions.

I do not like to see train fares rise. I particularly did not like, as a rail user of some 35 years, to see fares rise by nearly 20% in real terms during Labour’s years in office. I did not like, in those years, to see fares rise in cash terms by an average of 67%, so I am relieved that we have been able to limit the real increase in train fares to just 2% in real terms since 2010, even while we invest billions in upgrading the network. That increase is still more than I would wish, but it is much, much less than the increases under Labour and much less—[Interruption.] The hon. Member for Middlesbrough was simply unwilling to answer the question that my hon. Friend Huw Merriman correctly asked. Under Labour, fares rose much faster than they have under this Government.

That does not make it any easier for those who faced increases last week. I had hoped to be able to bring down the rate of increase from the higher retail prices index rate to the lower consumer prices index this year. That remains my goal, but there is a problem. The industry is locked into RPI and has been for years. The biggest barriers to change are the unions whose members’ pay amounts to almost a third of the costs of the industry. Currently their pay rises in line with or above RPI inflation every single year.

Photo of Stephen Lloyd Stephen Lloyd Liberal Democrat, Eastbourne

In a recent report, the head of the National Audit Office said:

“Some of the problems could have been avoided if the DfT had taken more care to consider the passengers in designing the rail franchise.”

Secretary of State, may I ask whether you recognise that statement, and do you apologise to the passengers?

Photo of Eleanor Laing Eleanor Laing First Deputy Chairman of Ways and Means

Order. The hon. Gentleman is not asking the Secretary of State—he is asking the Chair.

Photo of Stephen Lloyd Stephen Lloyd Liberal Democrat, Eastbourne

Through the Chair, I would like to ask whether the Secretary of State recognises that severe criticism from the head of the NAO. Will he apologise on behalf of his Department to my constituents—rail passengers from Eastbourne—and passengers across the south-east?

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

I make no apologies for the huge investment programme in the Thameslink network, the massive expansion of London Bridge station, which has just been completed and the introduction of brand-new 12-coach trains across the network. What I do apologise for is that we were not able to avoid the extraordinarily ill-judged actions of the trade unions, which caused massive trouble for passengers. The hon. Member for Middlesbrough talked about the Gibb report. Chris Gibb had a simple conclusion, which was that although there were problems on the network—that is why we are spending £300 million on improving it—by far the biggest disruptive factor was the trade unions.

Of course, we want rail staff to be paid fairly, but trade union leaders such as Mick Cash drive up ticket prices for hard-working people. The same unions that want CPI increases on fares want RPI—[Interruption.] The hon. Member for Middlesbrough should listen. The RMT guidance to their negotiators is that

“any attempt by an employer to link a pay award to CPI…must be refused.”

Mick Cash wants bigger rises for his members and lower rises for passengers. Where is the money coming from? It does not add up. Labour’s policies do not add up, and the unions’ policies do not add up.

Of course, you will remember, Madam Deputy Speaker, who pays the Labour party’s bills. Even the shadow Secretary of State has received financial contributions from the RMT. The Opposition are in the pockets of the trade unions, and that is simply not acceptable.

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

I know it has taken 100 years for the Conservative party to realise it, but we are the Labour and trade union movement. The Secretary of State needs to understand that. It is the cleanest money in politics—I would rather take from trade unions than from hedge fund managers and private health companies, as some who populate the Conservative Benches do.

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

The hon. Gentleman is bankrolled by the people who are inappropriately disrupting parts of the network and are politically driven. They disrupt the lives of passengers for political purposes. The Labour party should disown the unions and their current action. The hon. Gentleman’s conduct on this is not acceptable,

Photo of Huw Merriman Huw Merriman Conservative, Bexhill and Battle

On my daily commute, as I walked through London Bridge station—as I know my right hon. Friend does—where there have been a lot of difficulties for me and my constituents, I noted that it is now an absolute temple to travel. We should talk positively about our rail system and not just knock it.

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

On a point of order, Madam Deputy Speaker. I do not know whether you heard what I did, but I think that I have been accused of unacceptable behaviour. I really think that needs to be clarified. I have tried to conduct myself with all civility and propriety, and what the Secretary of State said is regrettable. I seek your guidance on that point.

Photo of Eleanor Laing Eleanor Laing First Deputy Chairman of Ways and Means

The Secretary of State did use a phrase that included the words “not acceptable”. He might wish to repeat what he wanted to say in slightly different words, because the shadow Secretary of State has a point about the precise use of words in the Chamber.

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

Madam Deputy Speaker, I think it is unacceptable to defend inappropriate strike action around the country by people who should not disrupt the lives of passengers. I wait with interest to hear any Labour Member say that the strikes are wrong. Sadly, I have not heard that for 18 months. I am waiting patiently. [Interruption.] The hon. Member for Middlesbrough says from a sedentary position that it is about safety, even though the safety regulatory authorities say that it is not. That is the shame of it.

Photo of Kate Hoey Kate Hoey Labour, Vauxhall

Why has the RMT been able to negotiate successfully in Scotland and in Wales the question of driver-only trains, which is concerning for the public, when we cannot get that here in England? Is it something to do with the Secretary of State?

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

Driver-only trains have been operating in this country for 30 years. The ASLEF union recently reached a perfectly sensible agreement with GTR about the development of new train technologies. Yet today the RMT is striking on South Western Railway, even though that company has said that it does not plan to take the second person off the train. That is an absurd position. Of course, the hon. Lady will remember the comments of the president of the RMT at the TUC conference, where he said that the real aim is to create a national rail strike and bring down the Government. That is my concern. It is about not passengers but political motivation, and that is not acceptable.

Photo of Chuka Umunna Chuka Umunna Labour, Streatham

I sat here and watched the Secretary of State chuckle and smile as my hon. Friend Andy McDonald made his contribution. My constituents have been suffering from the most dreadful services from Southern and Thameslink, and that is no laughing matter.

The Secretary of State refers to industrial action. The NAO report is clear that his Department did not check whether GTR had enough drivers and did not have a proper understanding of the condition of the network when it was setting the requirements of the franchise. The report is absolutely clear that the “cumulative effects” of the decisions made by his Department

“have negatively impacted on passengers.”

The Secretary of State can talk about industrial action all he wants, but when is he going to accept responsibility and, as Stephen Lloyd just demanded, apologise to our constituents for the dreadful misery they have been suffering?

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

I have been Secretary of State for 18 months. Let us be clear what I have done. There are a number of problems on the network—I have never made any attempts to hide that. The infrastructure is not good enough, which is why we have launched an immediate £300 million programme to upgrade some of the areas of the network that are failing too often and why we have changed ways of working. I asked Chris Gibb to go in and bring together the operation of the track and the train on a daily basis in order to improve things. London Bridge has been opened, and we are now able to run longer trains for passengers. Those are brand-new trains going through the hon. Gentleman’s constituency. Chris Gibb, who everybody has rightly said is a well regarded, independent figure, said that above all, the unacceptable disruption to the hon. Gentleman’s constituents was caused by the trade unions. The Labour party and the unions demanded the publication of Chris Gibb’s report. It was published, and that is what it said. They may not like it, but that is what it said.

Photo of Barry Sheerman Barry Sheerman Labour/Co-operative, Huddersfield

This could turn into a really good debate on the future of the rail industry, but I suggest that the Secretary of State is making it a bit too partisan. Could we not return to what everyone across the House knows to be the serious problem—the quality of management and the broken franchising system? Will he get on to that?

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

The biggest problem is that we have not had enough new trains or enough investment. That is why it is right and proper that this Government are spending more than any since the steam age on improving the infrastructure, and why new trains are being introduced right across the country. There are new trains on the Great Western routes, on the east coast main line and in the north. Every single train in the north of England is being replaced or refurbished as new in a transition programme of a type that has not been seen for decades and decades. That is what the railway really needs.

Photo of Desmond Swayne Desmond Swayne Conservative, New Forest West

And, indeed, there are new trains on South Western Railway. The problem is that the new trains are designed to have the doors opened by the driver. South Western Railway has guaranteed to schedule two members of staff—continuing to have a guard—on every train, so it now comes down to the ridiculous argument of which of them opens the doors. I remember when we used to be allowed to open the doors ourselves.

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

My right hon. Friend is absolutely right; it is a completely pointless strike. This is what frustrates me. I normally have a good relationship with the shadow Secretary of State, but it frustrates me that he will not stand up and say to the unions, “Why will you not stop this action?” We have been very clear that on South Western Railway, the second member of staff is staying on the train. On Southern, there are more members of staff working on trains today than there were before the industrial dispute started, so why on earth is the dispute carrying on? It is wrong. Why cannot every in this House say, “Just get back to work”?

Several hon. Members:

rose—

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

I will take two more interventions, and then I will make some progress.

Photo of Patrick McLoughlin Patrick McLoughlin Conservative, Derbyshire Dales

The Secretary of State may not actually be able to answer my question at the moment, but the Minister may be able to later. Could he give us an indication as to how much investment there will be in new infrastructure and new railway carriages between 2010 and 2020? How does it compare with the kind of investment that took place between 1997 and 2010?

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

I cannot give the exact numbers, but we are investing tens of billions of pounds in the railways over the period that my right hon. Friend mentioned. Crucially, the private sector that the Labour party seems to dislike so much is investing billions of pounds in those new trains. The new trains that are arriving in all parts of the network right now are being funded not by the Government, but by the private sector.

This is the key flaw in Labour’s arguments. Actually, if we get rid of the private sector in the rail network, there will not be any new trains, because this is about billions of pounds that is coming from elsewhere. That money comes otherwise from the Treasury—it has to compete with money for schools and hospitals. Through the public-private organisations that work side by side in our railways, we are delivering a huge infrastructure investment programme and, at the same time, a transformation of our rolling stock. That is what is necessary.

Several hon. Members:

rose—

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

I will take one more intervention and then make some progress.

Photo of Grahame Morris Grahame Morris Labour, Easington

It is an interesting concept that the travelling public have got a good deal that is paid for by the private train operating companies. I just checked what it would cost me if I left the House of Commons and went to Durham now. It would cost me £153 standard class—or £236 first class, but of course we are not allowed to do that. A similar journey at the same time of day from Frankfurt to Munich in Germany would cost £39 and tuppence. How is it that our travelling public are getting a good deal from this fragmented privatised system?

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

In this country, under Governments of both persuasions, we have taken decisions about the right balance between the cost of the railways being borne by those who use the railways and those who do not. Yes, the hon. Gentleman may be quoting walk -up fares, but he can go and buy an advance ticket for the east coast route at a fraction of the cost that he described.

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

I am going to make some progress now, I am afraid, because the shadow Secretary of State asked a variety of questions about the east coast main line and I want to respond.

The reality is that sometimes the private companies get it wrong. The situation on the east coast franchise is a clear example. Virgin and Stagecoach overbid, and they are paying, and will pay, the price. I repeat—they will pay the price.

I have listened with interest to some of the ill-informed comments about the situation on the east coast line in the past few weeks. I have heard some absurd claims from people who do not understand what they are talking about. So let me explain to the House what the position is. I am not agreeing to early termination of a contract in 2020; no one has asked me to. This railway is paying a huge premium to the taxpayer and continues to do so, but the issue is that this franchise is not delivering the profits the operator expected and is at risk of not making it as far as 2020.

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

No—forgive me, but I am going to explain this in detail.

Passenger numbers are rising on this railway; customer satisfaction is up; and the line is generating a healthy and growing operating surplus that is providing a much greater return to the taxpayer than when it was in the public sector. It is also worth saying that it is running more services and employing more staff. The money that the franchise pays to the Government is today 20% higher than it was under public ownership. But Virgin and Stagecoach got their numbers wrong. They have been losing money steadily, and have now lost the best part of £200 million in the past three years. Despite that, I am holding them to their full financial obligations, taking every last penny of the £165 million guarantee that we insisted on when they took on the franchise.

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

I am going to finish this point, and then I will take the hon. Gentleman’s intervention, if that is okay.

That is a huge sum of money for a British business with a market capitalisation of under £1 billion pounds. It is also one of the biggest bonds of its kind ever provided in the rail industry. But despite Labour’s claims, this is not a bail-out. There is no viable legal mechanism through which I can extract any more money from the company. My Department is preparing contingency plans as we do not believe that the franchise will be financially viable through to 2020. I clearly have a duty to do that for passengers. When we reach a conclusion that works, I will come back to this House and make a statement. However, I do plan to go ahead with the east coast partnership, as I indicated in my statement a month ago. People in this country do not understand the separation of track and train, and as part of our reforms we are bringing the two together, as Sir Roy McNulty recommended in his report. I now give way to the hon. Gentleman.

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

I am grateful to the Secretary of State. Can he make this clear? He is talking about the parent company guarantee, which will be paid. What about the premium payments from 2020 to 2023, which amount to £2 billion? Is the company going to pay those premiums, or not?

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

As I have just said, we are currently not convinced that the franchise will make it as far as 2020, so we will put in place alternative arrangements. The hon. Gentleman was clearly not listening to what I was saying. However, this railway will continue to deliver a substantial operating surplus—a premium to the taxpayer—whatever the situation. Whatever happens, this railway will continue to deliver large sums of money to the taxpayer.

Photo of Graham Stringer Graham Stringer Labour, Blackley and Broughton

If I heard the Secretary of State correctly, he was confirming the article in The Sunday Times saying that the full contract, as it was let, was not legally enforceable. If that is the case, will he confirm it, and will he explain to the House why he agreed a contract that was not legally enforceable? If it is not true, why will he not demand the full £2 billion?

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

The hon. Gentleman has not understood the finances of the rail industry. The money that the taxpayer receives from the operating profit—the taxpayer receives the lion’s share—will continue to flow into the public coffers whatever happens. The contract that was let between Virgin-Stagecoach and the Government will be fully enforced—I repeat, it will be fully enforced—and I make the absolute commitment to the House that that will happen.

I will now make further progress. We have heard this afternoon, more explicitly than we have previously heard it, that the Opposition’s policy is to return to the days of British Rail. There is somehow the idea that this will bring nirvana, but it actually only takes a moment’s thought to realise how flawed their thinking is, assuming they have done any thinking about it in the first place.

Our network suffers from three main problems. First, the infrastructure, which is already run in the public sector—Labour Members forget that—is often old and unreliable. About two thirds of the problems on our rail network result from issues with the publicly run infrastructure. This is not about who runs it and who owns it, but about investment in the infrastructure. That is why I am pleased to have just announced a further £20 billion renewal programme for infrastructure—concentrating on replacing older points, signals and the rest, and upgrading systems—so that we have a more reliable railway. That is the first problem, and the first solution.

The second issue is that the system is heavily congested. It would not matter who was running the railway, because routes into places such as London Waterloo or Manchester Piccadilly would still be full. What those stations and routes need is longer trains, and that is why the private sector, supported by the Government, is now investing in longer trains all around the country—in Manchester, all around London, in the west country and in the west midlands. That is the next priority. Probably the biggest renewal of rolling stock in modern times is taking place at the moment, and it is certainly by far the biggest in Europe. That is what is necessary. Someone on an eight-coach train that is full in the morning needs a 10-coach train, and that is what we are delivering. It is also why we are expanding capacity routes such as Thameslink, which will make a huge difference through central London, and why we have opened the Ordsall Chord in Manchester, which will provide linkage across the city and create extra capacity on trans-Pennine routes.

Thirdly, the system is organisationally too fragmented—too many people debating with each other, rather than solving problems for passengers—which is why our strategy is to bring back together the day-to-day operation of the track and the trains. Those are the three challenges facing the network today, and why passengers are often frustrated. We are working to address those problems with solutions to address them and investment to address them. That is the right strategy for the rail network, and shifting around the organisation, renationalisation and the rest of it will not solve those problems. Let us concentrate on the things that will make the difference for passengers, not on moving the deckchairs, as Labour Members seem to want to do.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Business, Innovation and Skills), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention)

Will the Secretary of State update the House on his discussions with the Welsh Government about devolving responsibility for the franchise in Wales? We are halfway through the bidding process, which the Welsh Government are conducting, yet powers over the franchise remain in Westminster, despite the British Government’s promises to hand them over.

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

That is simply untrue. The re-letting of the Wales and the borders franchise is being handled entirely by the Welsh Government. The interesting question is whether they are actually going to be able to deliver on their promises to electrify the Cardiff valley lines, the infrastructure of which I have given them as well. They have been given the opportunity to create an integrated metro railway for Cardiff, and I will be interested to see whether they can deliver what they have promised. They have control over the Wales and the borders franchise. The only power I have retained is to make sure that we look after the interests of people on the English side of the border. I am afraid the hon. Gentleman is just not right.

Photo of Geraint Davies Geraint Davies Labour/Co-operative, Swansea West

Has the Secretary of State seen, as he has mentioned this area, the proposals made by Professor Mark Barry for an electrified Swansea metro, which, through straightening the line, would reduce by half the time it takes to travel from Cardiff to Swansea? Implementing those proposals would provide the electrification David Cameron promised, an integrated Swansea metro and a shorter journey time.

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

I have not seen those proposals, but I say to the hon. Gentleman that I think it more likely than not that we will see on the Welsh valley lines and the Cardiff metro lines the same approach that I have taken in south Wales—that is, using hybrid technology rather than electrification. That is what I think will be done.

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

From a sedentary position, the hon. Gentleman talks about dirty diesel. What we are now seeing is the arrival of new technologies that will transform the way our railways work. We will soon see hydrogen trains. The new generation of trains—hybrid trains—is much cleaner than its predecessors. New technology is giving us extra versatility.

Many Members want to speak, so I shall conclude. Today, I am afraid that we have heard from Labour Members a position based on sand. They want lower fare rises, but will not tell us how those will be paid for because their numbers do not add up. The irony is that in London, where Labour is in power, the fares are going up by more than fares in the rest of the country. By contrast, we are addressing the real problems on the rail network. We are providing the investment that the railways need.

Somebody mentioned disruptions over Christmas. Yes, I know passengers had a disrupted time. The reason for that is that we are spending billions of pounds across the country. At some point, the work has to be done. Those people who walk into London Bridge station in the mornings, as well as those people up in the north-west where improvements are happening and people elsewhere across the country, will now see new facilities—broader facilities, expanded facilities—that will make a real difference to passengers.

Photo of John Redwood John Redwood Conservative, Wokingham

The Secretary of State is quite right that technology and investment will make a huge difference. Will he confirm that modern digital signalling will allow the railway to run many more trains an hour safely on the same piece of track, which could be the cheapest and best way to deal with the bottlenecks?

Photo of Chris Grayling Chris Grayling The Secretary of State for Transport

My right hon. Friend is absolutely right. We are already seeing that Thameslink is going to use digital signalling in a way that has never happened before in this country. We will use digital signalling in the improvements on the trans-Pennine route and elsewhere. This Government are investing in the railway. This party believes in the railways. It understands the need to expand capacity on the railways.

We have not done enough for much too long. In the years since privatisation, passenger numbers have grown and grown after the years of decline in the days of British Rail. So the pressures have increased, as have the challenge and the need to invest. That is why we are spending billions of pounds on the infrastructure, building stations such as London Bridge, building routes such as Crossrail and replacing every single train in the north of England. It is why we are acting in a way that, during 13 years in power, the Labour party never did.

Several hon. Members:

rose—

Photo of Eleanor Laing Eleanor Laing First Deputy Chairman of Ways and Means

Order. Before I call the Scottish National party spokesman, I should say that it will be obvious that a great many Members wish to speak and that we have limited time. It should be noted that a great many Members intervened on the two Front-Bench speakers. The Members concerned were generous with their time, but hon. Members, who may all now sit down, must take responsibility for the time that their interventions take up, which is noted by the Chair. Therefore, we will have an initial time limit of four minutes per speaker, but I do not anticipate everyone who has indicated to me that they wish to speak having an opportunity to do so because there simply is not enough time.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Infrastructure and Energy) 5:13 pm, 10th January 2018

A belated happy new year to you, Madam Deputy Speaker. I also welcome the new Ministers to the Front Bench and pay tribute to the work done by the previous Minister, Mr Hayes. He certainly knew how to conduct himself at the Dispatch Box, and perhaps the Secretary of State should be thinking about how he conducts himself. He said that Andy McDonald spoke for 23 minutes just talking rubbish, but he then spent 18 minutes just union bashing before getting on to any substantive point.

Let me be probably the first in the Chamber today to congratulate Virgin on its recent decision to stop selling the Daily Mail on the west coast route. I am sure that many Members will agree when I say that I hope other outlets follow suit. That is probably the last compliment I will pay Virgin, but I want to commend the hard work of its staff. I encounter them fairly regularly on the west coast route and I can certainly testify to their professionalism and hard work.

The motion covers rail franchising in general and the bail-out of Virgin East Coast in particular. It is fair to say that there are opposite views across the Chamber on the merits of privatisation and franchising—we have already seen that in this debate—but one thing I am really confident about is that the Transport Secretary wrongly connects cause and effect when it comes to the privatisation of the railway. It can be argued, and has been, that British Rail was struggling, with poor rolling stock that was outdated, but that is only half the picture. Any under-investment in British Rail and rolling stock was due to Government constraints. Passenger numbers were affected by the recession, in terms of both affordability and commuters having jobs to travel to. Spending power for investment was further hampered by the safety-critical upgrades required following the 1988 Clapham rail crash, and upgrades needed to service the Channel tunnel links—yet another example of investment in the south-east of England to the detriment of the rest of the United Kingdom.

The response of John Major’s Government to the problems in British Rail was to privatise and sell it off, but they did that at such a pace that there was no co-ordinated or strategic approach. History shows that that rushed privatisation gave us Railtrack, which eventually went bust and was replaced by Network Rail. If ever there was a demonstration that infrastructure is best owned and managed by the public sector, to avoid profit being put before safety, that is the prime example. I do not pretend that Network Rail is operating as efficiently as possible, but it certainly does not put profit before safety.

The franchise approach to privatisation gave us a model in which the countries of Great Britain were the only ones to have completely divested themselves of any public stake in passenger rail operations. Given the problems since then, that appears to be another clear example of the UK leading the world, but leading it down completely the wrong path. What rail privatisation gave us was a complex model—stuck doggedly to by the Tories and the Blair and Brown Governments—of charging, interactions, private companies requiring large profits, and ticketing arrangements, and a way for companies and the network owner to play a game of blaming each other for problems.

The problems are aptly summed up in the report on the southern rail franchise just published by the National Audit Office, the main conclusion of which is that it cannot be demonstrated that the franchise has delivered value for money. The operator blames Network Rail and the unions. The Government blame the unions, as we heard again today from the Secretary of State, but completely ignore the part they played. The bottom line is that 60% of cancellations were due to Govia Thameslink and 40% to Network Rail. It was the UK Government who set up the model that was supposed to align with the complex infrastructure upgrades; it was the UK Government who took the revenue risks, which means that strikes cost the taxpayer money; and it was the UK Government who awarded the franchise based on even further roll-out of driver-only operation; so the initial unwillingness on the part of the UK Government and Transport Secretaries to get involved is shameful.

The NAO also makes it quite clear that the Department for Transport had a large responsibility, especially in relation to access to the network and timetabling pressures. I am concerned that the DFT’s lack of understanding of pressures arising from upgrades and timetabling will have an impact on the west coast franchise and HS2 awards. Is that the reason why the invitation to tender for the west coast franchise, which was due in November 2017, still has not been issued and we do not know when it will happen?

Other franchise issues include the failed award of the west coast franchise in 2012. I am sure that, had Virgin Trains won that franchise in 2012, it would happily have taken it rather than threaten court action. As we have already heard, the case led to direct awards. According to a Library briefing, 12 of 16 franchises have now been subject to direct award. Further failures by the Department for Transport give us the worst of both worlds—there is no competition, and short-term awards provide no incentive for long-term investment, yet the companies are still guaranteed a profit. That is a poor set-up.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Cities), Shadow SNP Spokesperson (Treasury)

According to the House of Commons Library briefing, the direct award for the west coast franchise mentions a commitment to work to remodel Carstairs junction, which is seen as significant bottleneck in the network. Anyone who has travelled on the line knows that time spent at Carstairs is often time that could be shaved off a journey, therefore making rail more attractive. Does my hon. Friend agree that the Government should increase investment to remove bottlenecks such as Carstairs junction?

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Infrastructure and Energy)

I agree with my hon. Friend. Carstairs junction could be a major blockage for HS2, as well as the other operation, so I hope that the Minister was listening to her intervention and will explain why, if the remodelling was a part of the direct award, it has not happened yet.

Photo of John Penrose John Penrose Conservative, Weston-Super-Mare

The hon. Gentleman decries the lack of competition from direct awards, so have he and his party considered the report of 18 months ago from the Competition and Markets Authority calling for more on-track competition within franchises as an alternative to the increasing allocation of monopolies through franchising?

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Infrastructure and Energy)

I am not against competition per se. There is certainly lots of information about models that are deemed to work better than others. One aspect of competition is that the public sector should be allowed to make its own bids for operating franchises. A bit of competition might help to drive innovation, but in no way should the public sector be barred from the process.

We then have the Virgin Trains East Coast shambles on the east coast line. The Transport Secretary stood at the Dispatch Box again to say that there was no bail out. When he responded to me during proceedings on the statement, he claimed that the parent company guarantees would protect the taxpayer, but we now have confirmation that franchise fees were backloaded, meaning that Virgin was able to walk away without paying the £2 billion premium track fees it was supposed to pay. That was confirmed at the Dispatch Box. He said, “It’s okay, we’re going to get the £165 million parent company guarantee,” but that is considerably less than the £2 billion premium fees the taxpayer would otherwise have received, so the argument is nonsense. To say that the franchise might have failed is no excuse. It is testament, again, to the failed model currently being operated by this UK Government. The very fact that Stagecoach’s shares went up after we heard news of the new model proposed by the Transport Secretary tells us who is walking away with the best deal from the new arrangements.

The east coast main line gives us proof that public ownership can work. When the previous franchise failed, it was successfully run as a public operation that paid over £1 billion in track rental fees to the taxpayer and returned a nominal profit of £42 million from the overall operation. The large private companies would not suffer a £42 million profit, because they would think it too little, but it would be welcome for the public sector and could drive further investment. Another failing of the franchise model is that it only allows big companies to operate, and they chase massive profits, at the behest of their shareholders.

The public-private alliance model proposed by the Transport Secretary might in theory be an improvement but, again, it is bonkers not to revert to the working model under the public franchise. The new model will still contain risk in terms of multi-layer operations and interactions, and even the timetabling to get it in place, as was outlined by the hon. Member for Middlesbrough.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy)

One of these new models is the Oxford to Cambridge line, in respect of which the Transport Secretary has said he is happy to devolve power to a private company. Does my hon. Friend therefore find it strange that the right hon. Gentleman would not be willing to devolve an operation such as Network Rail to Scotland, where we could make a real difference for the travelling public?

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Infrastructure and Energy)

I agree with my hon. Friend and I was going to come to that point later. I cannot understand the UK Government’s intransigence over devolving Network Rail, which it is anticipated would save the taxpayer £30 million and increase accountability to the Scottish Government.

I have touched on some of the causes of the demise of British Rail. Since privatisation, passenger numbers and investment have increased, but again we need to go back to cause and effect, because that was not a direct consequence of privatisation. It has been possible to lever in private investment, but that is recouped through passenger fares and public subsidy—that is the bottom line. When the Government allowed private investment to come in, they decided to be a bit bolder in specifying increased services, new rolling stock and other improvements for the franchises. However, that same ambition could be replicated under either nationalisation or allowing public sector investment, rather than everything being levered in through private investment. Following privatisation, there was also an upturn in the economy, so a range of factors actually contributed to better passenger experience and increased numbers. The Transport Secretary really needs to move away from his “private equals good; public equals bad and inefficient” mentality, but I fear that today there are no signs of that changing.

In its 1997 manifesto, Labour reneged on its commitment to renationalising the rail system, but it at least commissioned the McNulty review in 2009 to identify better value for money in the railway franchise system. Incredibly, the Tory Government sat on that report for six years before coming up with modest proposals to vertically align the infrastructure and passenger operations in an alliance model.

Alliances can be made to work, or at least to work better than they do under the current franchise system. The ScotRail-Abellio alliance is the only franchise that stipulates that all staff must be paid the real living wage. It also guarantees trade union representation at every franchise board meeting, no compulsory redundancies and 100 new apprentices. Rather than making staff’s terms and conditions a mechanism for greater profit, the Scottish Government have incorporated protecting them into the contract. On passenger experience, there will be new rolling stock, 23% more carriages, a new approach to cycling interaction, and a drive to expand tourism. Those aims, ambitions and protections contrast directly with the attitude of the Secretary of State and the Tory’s southern rail franchise.

That is not to say that there were not teething problems with the new Abellio alliance, but it is now the best performing large franchise in the UK. Even so, the Scottish Government are putting in place measures to allow a public sector procurement bid to be submitted either at the end of the franchise or at the mid-point, where there is a possible break. The success of CalMac ferries in competing in the private sector shows how this can be achieved.

As we heard in the intervention made by my hon. Friend Drew Hendry, if responsibility for Network Rail was devolved to Scotland, with the body under the control of the Scottish Government, the operation of rail services in Scotland would be much more efficient, and there would be much more accountability. That would give us a better way to move forward.

Photo of Paul Sweeney Paul Sweeney Shadow Minister (Scotland)

On the devolution of Network Rail, does the hon. Gentleman accept that power over devolved franchises has already been devolved? Enhanced capability was devolved in May 2016 whereby public sector bids could be brought forward for ScotRail. That was known well in advance of the current tender. Is it not the case that ScotRail could have been in public hands today if the Scottish Government had delayed that tender?

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Infrastructure and Energy)

A small history lesson: it was the UK Labour Government who refused to hand these powers over to Scotland. They had the chance to do so in 2000 and 2005. Since the Scottish National party Government came to power in 2007, they have written to three Transport Secretaries to ask for the powers to be devolved to Scotland, and three times that has been refused. The shortlist for the ScotRail-Abellio tender process was drawn up in November 2013, so the initial invitation to tender came way before that. The contract was awarded in October 2014—a year and a half before the new powers came into play. It is absolutely ridiculous to say that the Scottish Government could have sat on their hands and waited for future powers that might not have come. They did come, the Scottish Government will use them in the future, and they are preparing that public sector bid, so I thank the hon. Gentleman for that intervention.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Cities), Shadow SNP Spokesperson (Treasury)

Does my hon. Friend agree that the experience from our casework is that Network Rail is not an accountable body at all? When we try to raise constituency cases, or make complaints about works on the line or things that it wants to do, it is very difficult to get any answers from it, because it just does not want to consult. It just wants to do things and pays lip service to community engagement.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Transport), Shadow SNP Spokesperson (Infrastructure and Energy)

It is certainly a big problem. Network Rail is too big. The fact that it is effectively accountable to two Governments, but ultimately to the UK Government, causes further problems.

The Labour party is calling for full-scale renationalisation. I am certainly not against that—there is clear merit to keeping all moneys within the public purse—but I have concerns about the model proposed in its manifesto, in that the result might be something that is too large to be fully accountable, which touches on my hon. Friend’s intervention. Labour’s proposed model shows that it believes that the railway can be nationalised within the EU single market, given the EU firewall proposed between rail access and the network/operations side of the business, so the argument that we cannot be in the single market and have national railways clearly falls, as the Labour party itself recognises. We do know that nationalisation works, given how many state-owned railway companies current operate in the UK, and of course they are doing so under EU rules. The Tory anti-nationalisation attitude is therefore clearly utter nonsense.

The Library briefing on rail structures suggests there is no agreed best model operating in the world, but it does give some excellent examples of variations in models. What is clear is that public sector involvement or state-owned franchise companies can work. The UK has a franchise model that has not worked effectively, and a change of thinking is undoubtedly required.

Several hon. Members:

rose—

Photo of Eleanor Laing Eleanor Laing First Deputy Chairman of Ways and Means

Order. There is now a limit of four minutes on Back-Bench speeches.

Photo of Martin Vickers Martin Vickers Conservative, Cleethorpes 5:30 pm, 10th January 2018

We have rightly heard from the Secretary of State that there is record investment in the railways and a record number of passengers, yet Opposition Members are here to criticise the running of the railways. I am sure we will hear many tales of woe from Opposition Back Benchers, but the reality is very different. There are problems, and we have heard from my right hon. Friend about the Virgin Trains East Coast situation, which is not desirable, but of course, to some extent Virgin predicated its income projections on improvements to be made by Network Rail, and of course Network Rail, being a nationalised organisation, usually delivers late and over budget. The Secretary of State was somewhat critical of Virgin, and it clearly should have taken note of the fact that Network Rail failed to deliver on the promises made on the west coast route some years ago, so there is some legitimate blame on both sides.

Regrettably, I am old enough to remember the days of British Rail, a failed nationalised monolith and a watchword for failure. Until 1992 there were direct train services to my constituency, but British Rail cut them, and the new Minister, whom I welcome to his place, will be hearing a lot from me about the need for through services to Grimsby and Cleethorpes.

The Government support the rail network to an enormous extent. Many of the figures cited in an article in the 13 October edition of Rail magazine were repeated in The Times last week, including that £925 million was invested by the private sector in the rail network in 2016-17. The shadow Secretary of State failed to identify how any Labour proposal would bring forth that money. The reality is that cuts are made under all Governments and usually the first thing that goes is capital infrastructure expenditure. There is no way that a renationalised network under a Labour Government would be able to raise the approaching £1 billion that the private sector is currently investing.

Photo of Grahame Morris Grahame Morris Labour, Easington

What does the hon. Gentleman think the state-owned German rail company that owns a substantial chunk of our franchises does with the profit it makes here in our privatised system? It invests that profit in its own system, through subsidised fares there. That seems ludicrous to me and most of the travelling public.

Photo of Martin Vickers Martin Vickers Conservative, Cleethorpes

Perhaps they are a little more free-market and capitalist-minded over in Germany.

At present, competition is for the franchise; what we want is more competition in the running of services, and one way we can achieve that is through open access operators. Hull Trains and Grand Central both run on the east coast main line and provide services to areas that in the main do not get a service from the main franchise holder. Indeed, I understand that Grand Central will shortly put forward a proposal for direct trains from King’s Cross through to Scunthorpe, Grimsby and Cleethorpes. I hope that the Minister will be supportive of that, because it would be a great boost to the local economy.

Photo of Will Quince Will Quince Conservative, Colchester

My hon. Friend has mentioned open access, and I agree with the points he is making. Does he agree that open access tends to produce a higher satisfaction rate among passengers and rail users?

Photo of Martin Vickers Martin Vickers Conservative, Cleethorpes

My hon. Friend is absolutely right. Hull Trains and Grand Central both get very high satisfaction ratings.

The House should take note of last year’s Transport Committee report on rail franchising. It states:

“Open access has been a success, albeit on a limited scale to date. The balance of evidence points to potential benefits in open access having an expanded role on long distance routes.”

It goes on to state:

“Reforms are needed if open access is to be expanded on the network. We recommend that the Department and the ORR work together, as they develop the financial framework for the railways over Control Period 6”.

I hope that the new Minister will make it one of his priorities to look more closely into introducing open access operations on to the railway, in order to provide genuine competition and to improve services, particularly on those routes that are struggling at the moment.

Photo of Martin Vickers Martin Vickers Conservative, Cleethorpes

I will not take any more interventions; it would be unfair to others.

Reference has been made to fare increases. It is a fair point that there has to be a balance involving what the taxpayer is prepared to put into the network. I gather that the net contribution from the taxpayer for the last financial year was £4.2 billion. That is not an insignificant amount. While mentioning fares, may I be critical of the rail operators? Tickets are often not checked, and barriers at stations often do not operate. That is something that urgently needs to be looked at.

Photo of Maria Eagle Maria Eagle Labour, Garston and Halewood 5:37 pm, 10th January 2018

No other nation in the world runs its railways like the UK has done since the flawed and ideological fragmentation and privatisation carried out by the Major Government in the mid-1990s, and there is a reason for that: it just does not work very well. In particular, it has not worked on the east coast main line. Since rail privatisation, of the three private operators of that franchise, one has gone bust, one has defaulted on the contract and one has been allowed to avoid payments of hundreds of millions of pounds—possible up to £2 billion—that it undertook to pay to the taxpayer.

This latest and grossest private franchising failure is a capitulation by the Transport Secretary to Virgin Trains’ demand to be let off the consequences of its overbidding to get the contract. The Transport Secretary has done this in an effort to prevent the embarrassing spectacle of another very public failure in the private operation of InterCity East Coast. This follows his predecessor’s ideologically motivated decision to strip Directly Operated Railways of the operation of the east coast main line mere weeks ahead of the 2015 general election. In doing this, the Transport Secretary has simply given in to the self-interested and costly demands of the train operating company.

The only east coast operator that has not gone bust, defaulted or received a bail-out from the taxpayer was East Coast Main Line, a wholly-owned subsidiary of Directly Operated Railways—itself a company wholly owned by the Government—which was established by Lord Adonis when he was Transport Secretary in 2009. In other words, it was a publicly owned company. It took over when National Express defaulted, and it ran the line very successfully. Its record is clear and stands in stark contrast to what has happened before and since. It made all its required service payments, returning more than £1 billion to the Treasury. It invested all its profits straight back into services, paying out zero dividends to greedy private owners—because it did not have any—and it achieved some of the best results on the east coast of any operator since records began.

Photo of Ian Mearns Ian Mearns Chair, Backbench Business Committee

On my hon. Friend’s point about the east coast main line, because of the ideological decision by the Government, profits of £1 billion going back to the Treasury have been forgone. At the same time, we are allowing a private franchise not to pay £2.1 billion to retain its franchise. Does she agree that it is economic madness to retain that service in the private sector?

Photo of Maria Eagle Maria Eagle Labour, Garston and Halewood

My hon. Friend is correct. Money is clearly no object in trying to avoid the embarrassment of yet another failure of the franchise in the hands of a private operator. Why did the coalition Government decide to re-privatise the operation? The date is a clue, as it happened just weeks ahead of the 2015 general election. The decision was cynical, ideologically motivated and costly to the public purse.

Our policy at that time was clear. We wanted to keep East Coast in public hands to act as a public sector comparator to the private franchises. We wanted to keep the operational expertise in Directly Operated Railways to enable us gradually to take the operation of the railways back into public ownership as franchises ended without having to pay enormous amounts of money to buy out contracts. Just changing the order of franchise competitions to enable that re-privatisation cost the public purse hundreds of millions of pounds. Indeed, the consequences of that lamentable decision are being seen today in the ongoing chaos and waste of money that the franchising system is inflicting on our railways—now spectacularly reinforced by the Transport Secretary’s capitulation to the financial interests of the private train operating companies on the east coast main line.

The Transport Secretary is effectively institutionalising massive taxpayer bail-outs, which he has renamed “partnerships”, and I predict that this will not be the last such bail-out. He is effectively institutionalising giving in to the tendency that the private companies have shown over the years of gaming the franchising system to keep taxpayer subsidies while avoiding making the payments that they are contracted to make. Virgin-Stagecoach is not the first train operating company to do that and it will not be the last. The system delivers lucrative near-monopoly rail contracts on the basis of post-dated payment promises by private companies that can simply be abandoned when they become due, with no penalty attached for behaving badly.

The Government are now institutionalising the reality that the private companies take the profits but the taxpayer provides almost all the investment in trains, track and infrastructure and covers any losses. That is the very definition of a licence to print money. Private train bosses are simply laughing all the way to the bank, and this Secretary of State, for ideological reasons, is allowing them to do so. We cannot go on like this. It is time that this costly and failing system was ended. It has not worked, and it will not work in the future. We need to ensure that we do things better.

Photo of Will Quince Will Quince Conservative, Colchester 5:42 pm, 10th January 2018

Thank you, Madam Deputy Speaker, for calling me to speak in this debate. It is a pleasure to follow Maria Eagle despite my not agreeing with what she had to say. The cost of an annual ticket from Colchester to London is now £5,104 and I am in no doubt that is a huge amount of money for my constituents. However, despite what is claimed by the Opposition, including the hon. Lady, the fares are not lining the pockets of rail companies. For every £1 spent on fares, 97p goes on the running and improvement of our railways. However, when our constituents pay such amounts to travel to work they need to see value for money.

To be fair, passengers on Abellio, which runs the service to Colchester, will see real benefits from the new franchise. Over 1,000 brand-new carriages are coming into service from next year, at a cost of over £1 billion—I assume that that is another £1 billion that Labour would borrow. There will be free wi-fi for all passengers at stations and on trains. Season ticket holders and those who buy their tickets in advance will benefit from automatic Delay Repay. All those things will make a massive difference, and I have only one ask for the Department. The new 15-minute threshold for Delay Repay was announced after Abellio was awarded the franchise, so as things stand it is likely that it will not be introduced until a new franchise is awarded in 2025. My constituents, Abellio and I would like to see that implemented earlier, so I ask the Department and the new Minister, my hon. Friend Joseph Johnson, whom I welcome to his place, to see whether they can make it happen as soon as possible.

However, I will not stand here and pretend that the current franchising system is perfect. We still have issues with competition and with the number of companies coming forward.

Photo of Huw Merriman Huw Merriman Conservative, Bexhill and Battle

On competition, my hon. Friend may remember a Transport Committee report in which we found that the same big companies were bidding and that there was not enough competition.

Photo of Will Quince Will Quince Conservative, Colchester

I have served on the Transport Committee with my hon. Friend for two years. He is right that, in the invitation to tender for our most recent franchise on the Great Eastern main line, the three companies that put in a bid were Abellio, the existing franchise holder; National Express, which had had the franchise taken away when it was given to Abellio; and FirstGroup, which had had the franchise taken away when it was given to National Express. He is right that we need to encourage more bids.

Large franchises mean that multimillion-pound bonds are put up by companies that are looking to run the services, and there is a lot of risk even for large companies. We should consider creating smaller franchises that carry less risk, thereby attracting more interest and more bids, delivering more competition and, ultimately, better value for taxpayers’ money.

Photo of Lloyd Russell-Moyle Lloyd Russell-Moyle Labour/Co-operative, Brighton, Kemptown

Would allowing councils, local authorities and other public bodies to bid for franchises not be a good way of ensuring more competition, and competition that people can control?

Photo of Will Quince Will Quince Conservative, Colchester

The honest answer is most likely not, but I agree that we need more competition. I agree with my hon. Friend Huw Merriman that we need more open access.

Photo of Thomas Tugendhat Thomas Tugendhat Chair, Foreign Affairs Committee

My hon. Friend is making a fine point. I welcome more competition, and I would welcome the involvement of groups from the charitable and non-profit sectors. The idea that the public sector should underwrite risk with taxpayers’ money is what we are moving away from.

Photo of Will Quince Will Quince Conservative, Colchester

My hon. Friend makes an eloquent point.

Photo of Sandy Martin Sandy Martin Labour, Ipswich

Will the hon. Gentleman give way?

Photo of Will Quince Will Quince Conservative, Colchester

I am sorry, but time is limited and I have taken enough interventions.

My hon. Friend the Member for Bexhill and Battle is right that we need to consider more open access in which two or more companies operate on the same franchise, where the line can support it. I appreciate that many lines cannot support such open access, and the Great Eastern main line is a prime example of where it would be very difficult. Where we do have open access, operators tend to have higher satisfaction ratings, which proves that competition can offer benefits for passengers.

Ticketing is another thing that could be improved. I would like season tickets to take inspiration from the fare capping on the London underground. Buying an annual ticket, as opposed to a monthly ticket, offers a substantial discount. If a person’s employer does not offer a season ticket loan, it can be difficult for them to afford a one-off payment of often thousands of pounds—in the case of Colchester to London, about £5,000. Passengers should not pay less just because they can afford such a large amount in one go, so I urge the Government to look into capping season ticket travel on new franchises so that passengers will never pay more than the cost of an annual ticket in a single year. That would instantly save commuters hundreds of pounds, and it would be made easier by the implementation of smart ticketing, which we are seeing rolled out across franchises.

Our rail network has undergone an extraordinary transformation since privatisation. Passenger journeys, down a third between 1960 and 1995, have doubled. We have one of the safest railway networks in Europe. The focus must now be on doubling down on competition and value for money as part of the franchising process, and not on taking away all competition and returning to the days of British Rail. I encourage the Government to set a 40-year vision to transform our railway, rather than listening to the Opposition’s plans for returning our railway to the state last seen 40 years ago.

Photo of Lisa Nandy Lisa Nandy Labour, Wigan 5:48 pm, 10th January 2018

It has been quite a week for the Transport Secretary, but even by his standards this debate might qualify as a low point. My constituents listening to this debate will be absolutely astonished to hear the rosy picture he painted. For most of my constituents in Wigan it is not so much a daily commute as a daily struggle to get on trains that are older than I am and that are often late, overcrowded, dirty and cold, for which they are rewarded by seeing their fares go up every year.

The human cost is enormous. I am contacted every week by constituents who are tired, stressed, anxious about money or seriously considering giving up their job because they do not know how many more bedtimes, bath times or story times with their kids they can miss. We are failing in one of the basic functions of the state, which is to provide a decent public transport service. There is a much wider cost in towns like mine.

Photo of Afzal Khan Afzal Khan Shadow Minister (Home Office) (Immigration)

We have been hearing from Conservative Ministers that higher fares will fund improved services. I come from Manchester, the city that had the first railway station, yet we find that the stations and railways in my constituency are in desperate need of investment. Levenshulme station is one of those. It has been hit by consistent flooding over the holidays, and lights in the station did not work for days, posing a real danger to passenger safety. In the 21st century, the station still does not have disability access. Ultimately, the passengers, who are paying higher fares—

Photo of Eleanor Laing Eleanor Laing First Deputy Chairman of Ways and Means

Order. I have tried to let the hon. Gentleman make his point, but he has now made a longer speech in that intervention than most people who are sitting here will get to make in the next half an hour, because we are going to have very tight time limits. Many Members have made very long interventions, which means some others will not get to speak at all. If hon. Members want to be fair, they know how to do so.

Photo of Lisa Nandy Lisa Nandy Labour, Wigan

My hon. Friend is right, because in a town like mine, which is typical of many around the country, people commute into nearby cities for work—Manchester is my nearby city, so I am familiar with it. Two thirds of my constituents commute out of the borough for work every day. For our town, the economic interest is enormous, because when they return to Wigan they spend in our local shops and businesses, sustaining our high streets and our local pubs. He will know as well as I do that towns across this country are ageing. The Centre for Towns research we launched last year showed that towns lost 25 million people under the age of 25 over the past 30 years, so public transport is the artery that keeps the heart beating in towns like mine. It has always been thus—towns such as Manchester and Birmingham grew and thrived because of the development of the railways, which enabled them to trade with one another. So how is it that 200 years later a report from the Institute for Public Policy Research finds that it takes longer to get from Liverpool to Hull than it does to get from London to Paris?

I will give the Minister one example of why these decisions, which are being made hundreds of miles away from the people who are affected, are broken. In 2015, the Department for Transport awarded the northern rail franchise to Arriva and, as part of that deal, which we were told would give us a better service, the decision was taken to axe the direct service from Southport through Wigan and into Manchester Piccadilly. Two thirds of people who commute from Wigan to Manchester commute to the south side of the city, but they were breezily told by their Government that instead they could commute into the north side of the city and arrive at work mid-morning. If they had been consulted at all, they would have told the Secretary of State why that was a problem. It has taken five MPs from three political parties two years of hard work to try to persuade the Government to sort this out, and we still have not managed to resolve it. No wonder four and a half times more people commute by train in London as a proportion of the population than in my region of the north-west. Decisions are made hundreds of miles away from the people who are affected, with no understanding and no thought given to the reality of their daily lives. I say to the Minister, who is not paying attention at the moment, that he will soon have to pay attention because the level of anger that this is creating across this country is immense.

The data analyst Tom Forth pointed out recently that for a scheme to be funded in Leeds, it needs to provide twice the return on investment of a scheme in London. How can that be sustainable? I just say this to the Minister: if we had been given the power to make these decisions for ourselves, we would have made very different decisions in recent years. We would have prioritised local services and connecting up our great regional cities before we started investing in High Speed 2. We would never have got into a situation where we were faced with losing the guard on the train. I will tell him what that will do: it will make our railways no-go areas for many people, including women late at night, people with disabilities and older people, who make up the bulk of my constituents.

We would talk far more about buses. In my constituency, it is now often cheaper for a family to get a taxi than a bus—how is that sustainable? The Secretary of State was very fond a few years ago of the phrase “take back control”. If he means anything at all by his word, he will give us back control, because we could hardly do worse than this Government.

Several hon. Members:

rose—

Photo of Eleanor Laing Eleanor Laing First Deputy Chairman of Ways and Means

Following on from what I said a few moments ago, I now have to reduce the time limit to three minutes.

Photo of Huw Merriman Huw Merriman Conservative, Bexhill and Battle 5:54 pm, 10th January 2018

It is a great pleasure to follow Lisa Nandy.

This morning, on my daily commute to this place—I am one of the few people who are fortunate enough to be able to commute here from East Sussex—I walked through London Bridge station, which has caused me and many of my constituents enormous difficulties because it has been rebuilt and its tracks reconstructed. It now looks absolutely fantastic and is a shining example of the £40 billion investment that the Government have put into the railways and the difference that that has made.

I wish to talk up our railways and their success. Let us remember that since 1997, under the current Administration and the previous Labour Administration, the number of passengers on our railways has doubled. The rail system now largely pays for itself; it does not need the £2 billion a year taxpayer subsidy that British Rail took to not run things properly. When we compare our rail system to those in Europe, we see that we have the second safest railway after Ireland; that we have the second best-performing railway in terms of passenger feedback, second only to Finland; that we use our rail system more than 60% more than the European average; and that we have put more investment into our railways than any other EU country. We should talk up the rail system’s success, because not only is there all that, but it employs 250,000 people, releases about £11 billion of costs that would otherwise go on congestion charging, reduces carbon dioxide emissions by 8.4 million tonnes, and adds £10 billion to our gross value added. So we should all talk about the success of our rail story.

Of course, though, there are challenges. We have certainly seen challenges with the Southern network. We have really suffered with strikes and a poorly performing operator, and that has been laid bare today. Nevertheless, we should not forget that the unionisation of the rail network has caused enormous problems. It should be well remembered that the same train drivers who have now pledged to drive the trains that they said were not safe have taken a 28.5% pay rise. That is a much greater pay rise than the passengers who are paying for their rail tickets each year got. All Members need to recognise that costs such as that result in our passengers paying more and more.

Let us give something back to the passengers. At the moment, Network Rail has to compensate rail operators for any delays it causes. Only a third of the passengers who experience those same delays claim their compensation, so train operators are keeping the money. I want the train operators to be required to bank that money.

Photo of Will Quince Will Quince Conservative, Colchester

Is my hon. Friend making the point that I suspect he is going to make about automatic Delay Repay being included in future franchise agreements?

Photo of Huw Merriman Huw Merriman Conservative, Bexhill and Battle

I am indeed; I thank my hon. Friend for helping me to finish my sentence. The rail operators should be required to bank that money and put it in a pot so that it can be spent only on new technology for trains. That technology would mean that everybody would be required to tap in and out of their train journey, and if by the time they got to their destination they were more than 15 or 30 minutes late, they could have the compensation credited to their bank account when they tapped out. In this day and age, there is no need for passengers to go through the timely, costly and bureaucratic exercise of claiming, which is why they currently do not claim. I have introduced a private Member’s Bill, which I hope will be given its Second Reading at the end of March, and I would like the Minister to get behind it. I believe that the technology does exist and that, with more will, the train operators could put it in place. That would give more back to the passenger.

It is all well and good to talk about the public good, and I recognise a lot of Network Rail’s good work, but it has also been responsible for a large proportion of the delays for which the train operators have taken the flack. It is time to do more than just stick with what we have; we should make all the track the responsibility of the train operators. We should also question whether some stations should be transferred out of Network Rail’s control.

Photo of Albert Owen Albert Owen Labour, Ynys Môn 5:58 pm, 10th January 2018

In the short time I have, I wish first to pay tribute to all the staff who work on this country’s railways. They do an excellent job of getting our trains moving under difficult circumstances. I also pay tribute to the work of the shadow Secretary of State, my hon. Friend Andy McDonald, who over the past few weeks has been standing up and making the case for the British public, who deserve a better service than they have been getting. I agree with one thing the Secretary of State said—I, too, pay tribute to the former Minister, Mr Hayes, who has now left the Department. He understood the value of trade unions. He was one of the few Conservative Ministers who would regularly meet the unions, because he understood that by working together, management and workforce, we can provide a better service.

I want to make two points. The first is that, since the botched privatisation of the 1990s—it was a privatisation too far—we have lost the important transport integration that we once had in this country. I was born and raised, and still live, in the port and railway town of Holyhead. The ferries used to be full of people coming across to our country and going to continental Europe. They would get a train, bus or another means of transport. That has now been broken by the franchise agreement. Each mode of transport now operates in a silo, and we need to get that integration back.

I believe in the private sector, the public sector and, indeed, the not-for-profit sector having a stake in British industry and in our British transport system. I wish to make the case to the Minister, whom I welcome to his place, for the not-for-profit sector. In Wales, our water is run by the not-for-profit sector, which meets all the criteria of the European Union and provides an excellent service. It invests its profits back into the company, and customers get a better service from it than they do from many of the private, ideologically run ones in England. There is therefore a model that works, and it is the not-for-profit one. The sector values its customers and its workforce, it makes money and it reinvests its profits.

During the passage of the Wales Act 2017, which was before Parliament in 2016, I and other Members asked for the Railways Act 1993 to be changed so that Wales could have a not-for-profit company for its franchise. That would have worked, but the Government resisted it. I say to the Minister that at this late hour, he should look again at the 1993 Act and allow Wales to run its affairs in a way that is good for customers, good for its communities and good for growth across the country. If the Government are serious about spreading wealth, they need to improve their rail systems and fix the broken franchise system.

Photo of Kevin Foster Kevin Foster Conservative, Torbay 6:01 pm, 10th January 2018

It is a pleasure to be called in this debate. We have talked about express trains, and I will now have to do quite an express speech.

Over the past couple of hours, I have been interested to hear the arguments being made. I must say that I do not agree that the answer to this clarion call to fix our transport network is to bring back British Rail. It is easy to look back at the past through rose-tinted spectacles. It is like those who say that they love the idea of steam trains running up and down the main lines. Yes, it is beautiful to see the Torbay Express go through, but as a practical modern transport system we have clearly moved on.

As has been touched on, the one thing that some people miss, if they think the public sector is the instant solution, is that Network Rail is in the public sector. Having sat on the Public Accounts Committee at a time when the handling of the Great Western modernisation programme was under scrutiny, I can safely say that that was nothing near a success—in fact, it was almost a textbook example of how not to manage a project. What people are interested in is the services that they get. Personally, as an MP, my priority is: what do my customers get; what do my residents get; and what services are there? It is not necessarily whether the system is publicly or privately run.

Looking at the future franchises, I am conscious that a consultation is under way about whether the Great Western franchise should be split—I can see Luke Pollard in his place—and whether our section should split away from the section that serves south Wales. When that was first proposed, I made the point that actually, the current franchise is similar to the old Great Western Railway company area—with some exceptions on the edges. Perhaps that raises some questions about franchises. Yes, it is good to have smaller franchises, as that makes services more local, but by the same token there also has to be a sustainable franchise to maintain the services of a large railway and the main rolling stock.

More locally, there are some key projects that I hope any franchise will look at taking forward. It has to start with £600,000 to fund the study of the main line through Devon. Those who know the network will know that there is only one railway line west of Exeter St Davids, which makes it particularly vulnerable at Dawlish, so we need to consider a long-term solution. Not only major schemes but schemes to improve the line and to cut journey times would be of benefit both to my constituents and to those further west. Any franchise could also look at cross-country lines, but it must be clear that it must maintain some of the direct routes from key areas for the Bay, such as from Manchester and the southern midlands directly into Paignton and Torquay. I was pleased that some of the changes were blocked by a previous Rail Minister, and I hope that that will continue to be the case.

For me, the debate must ultimately be about the outcome for passengers. It is great to sit here and talk about whether the rail service should be public or private, but, actually, ownership is not the key; it is what it delivers that makes the difference to people living in our constituencies.

Photo of Dan Carden Dan Carden Labour, Liverpool, Walton 6:04 pm, 10th January 2018

It is blindingly obvious to many of our constituents that the current model of rail franchising and profiteering from our railways is broken, inefficient, fragmented and unjustifiably expensive. Our private railways are subsidised by more than £5 billion of public money every year—and that is before the bail-out of Stagecoach-Virgin East Coast and the missing £2 billion. It is no wonder it is being called the great train robbery.

British passengers pay the highest fares in Europe to travel on sometimes packed services while rail companies are laughing all the way to the bank. Since 2010, fares have risen three times faster than wages, and the 3.6% increase last week was the steepest hike in five years. Conservative Ministers said that higher fares would fund improved services, yet long-promised investment, including rail electrification, has been scrapped.

I want to focus on the current dispute at Merseyrail, where 207 guards may be scrapped. I have had an Adjournment debate on this topic, and I will not repeat all the answers I was given in the short time available today. Against the backdrop of police cuts and rising crime, the role of the guard in Merseyside is more important than ever. The Merseyside travelling public have supported the retention of guards throughout the dispute, amidst grave concerns about passenger safety. Is it fair that Merseyside passengers should pay fares that Merseyrail’s owner, Abellio, uses to pay for Dutch public railways, but do not enjoy the same safety standards as passengers on Dutch railways?

The franchising system fails to allow for good industrial relations. Train operating companies have little interest beyond the term of their franchise agreements, effectively buying a licence to print money. Changes to staffing are strategic decisions that should be considered many years in advance with the agreement of staff and their trade unions, but that is never the case. The antagonistic strategy adopted by the Government has had an adverse impact on passengers. It is high time that we had a Labour Government willing to bring our railways back into democratic public ownership. The Merseyrail dispute is not going to disappear. Reluctantly or not, the Government and regional and local politicians will have to engage further if we are to get our railways moving again in 2018. I say to Merseyrail’s owners, Abellio and Serco, that they should not do deals on Merseyside that they think they can hide in their corporate offices.

Photo of Lee Rowley Lee Rowley Conservative, North East Derbyshire 6:07 pm, 10th January 2018

I am grateful for the opportunity to speak in this debate. I have only three minutes, so I will go as quickly as possible.

I am a new Member in the House, and regrettably I come to these debates and I hear the same stale and artificial arguments by Opposition Members. That has happened again today: we immediately reach a position where private is bad and public is good. That argument is totally stale and artificial, as Dan Carden has just demonstrated for the past three minutes or so.

Mr Sheerman, who is no longer in the Chamber, said that the discussion had become entirely partisan very early on. I think that the partisanship of the discussion was demonstrated when the motion was tabled, critiquing franchising in both concept and totality. That is the ultimate problem, because the Labour party seeks to take some examples, which I acknowledge and accept are not good, from around the country, and extrapolate from them to say that there is a systemic problem for ever with rail, which means that it needs to be changed.

The evidence from the system is that more people are travelling than ever before. We have 60 years of post-war history on the rail network. For 40 of those years the network was in public ownership and for 20 it was in private-sector ownership. Much of those 40 years was uneconomic—the railways lost an incredible amount of money and the number of passengers who travelled on them reduced by a third.

Photo of Lee Rowley Lee Rowley Conservative, North East Derbyshire

No, I will not give way to the hon. Gentleman.

In the past 20 years, 13 of which Opposition Members stood up to defend and were under a Labour Government, there has been an increase in the number of passengers using the railway, more trains than ever and greater customer satisfaction about many parts of the line.

I want to make two points in the time I have left. Given that today is an Opposition day, I looked at an Opposition day debate in 1994, in which the former right hon. Member for Holborn and St Pancras, who was shadow Secretary of State for Transport, spoke. He said that privatisation would not get the necessary investment, secure the safety of the railway network or upgrade the lines. In the past 20 years, that has been shown to be wrong.

The franchise that serves my constituency, East Midlands Trains, is an example of one that works well. It is not perfect by any means, but in the past few years, is has worked well. Transport Focus says that it is performing well, especially on punctuality and reliability. In surveys, customer satisfaction is nearly 90%.

Photo of Thomas Tugendhat Thomas Tugendhat Chair, Foreign Affairs Committee

Does my hon. Friend recognise that the highly subsidised European models get much lower satisfaction rates? All they do is transfer the burden from the passenger to the entire taxpayer population. What we have in the United Kingdom is not perfect—no system is—but at least the people who use the service pay for it.

Photo of Lee Rowley Lee Rowley Conservative, North East Derbyshire

My hon. Friend is absolutely right. Time after time, I sit in the Chamber and listen to Opposition Members who really do not understand economics and where the money comes from and do not get how we can pay for the railways and all the sweeties and goodies that they seek to give out.

If we consider the Midland Mainline franchise in 1996, a couple of years after franchising occurred, there were 14 trains a day between London and Sheffield and the average journey time was two hours and 26 minutes, with the fastest journeys taking two hours and 10 minutes. We now have more than double the number of trains on the midland main line between London and Sheffield and the average time is quicker than the fastest time was 20 years ago.

I do not want to claim that everything is perfect. Many things could be better about the midland main line and East Midlands Trains, but what I have heard today from the Opposition is, as the Secretary of State said, complete nonsense. We should recognise that much progress has been made in the past 20 years. There is much to do, but I will not sit here and listen to the sort of nonsense that has been expressed.

Photo of Jessica Morden Jessica Morden Opposition Whip (Commons) 6:12 pm, 10th January 2018

Like my hon. Friend Lisa Nandy, I want to concentrate on my constituents’ concerns about their daily struggle to get to work, which is so unlike the rosy picture that the Secretary of State painted. They just want reliable services and affordable fares, which is not happening under the Government’s failed transport policy.

Key rail routes run through my constituency. Many people commute to Cardiff or Bristol and beyond. There has been remarkable passenger growth at stations such as Severn Tunnel Junction, where usage has risen by 297% in the last 20 years. Transport links to Bristol, one of the fastest growing economies outside London, are crucial for access to employment. The Government acknowledged that in the industrial strategy, which talked about better links between Wales and England.

However, the services to Bristol and beyond have for some years been plagued by reliability problems and chronic overcrowding. Commuters are completely frustrated. The Severn Tunnel Action Group, a fantastic local rail group, along with Magor Action Group on Rail, forensically survey commuters. They showed that, on half the commuting days at the end of last year, there was standing room only for those getting on at Severn Tunnel Junction, and on many days, only three carriages were available, not five. They also catalogued the delays and cancellations. Commuters, whose fares have gone up by 33% since 2010, feed back the daily occurrences of overcrowding: people being left on the platform, people fainting on the train and people being asked to stand in the toilets so that more people can get on.

At the same time, the Government announced last year that they would extend the Great Western franchise to March 2020 and maybe longer. Yes, we are getting electrification, but what was in the announcement that gave anyone faith that things would get better? As my hon. Friend Mrs Moon said, Great Western got the extension without any conditions. The Government are rewarding the company without any notion of things getting better for my constituents. Where the Government have had an opportunity to help, they have not.

There is currently a process for the Wales and Borders franchise, which is devolved. But the Government said to the Welsh Government in the agency document last year that

“for the purposes of this franchise competition, no cross-border paths to Bristol may be proposed.”

This is a missed opportunity, when the Welsh Government are planning bold infrastructure projects such as the South Wales metro, which will improve connectivity. The UK Government’s approach could not be in starker contrast to the Welsh Labour Government’s.

A constituent who complained about services to Bristol was told recently by Great Western, “That’s just how it is nowadays.” No, it should not be. The privatised rail system is not delivering, services are getting worse and fares are going up. We need the Government and rail companies to address these problems now and to take rail back into public ownership when the rail franchises expire.

Photo of John Grogan John Grogan Labour, Keighley 6:15 pm, 10th January 2018

Bearing in mind the strictures of Lee Rowley, I will try not to be too stale in my three minutes.

We have heard a lot about the implications of the potential loss of £2 billion in premium payments following the premature ending of the east coast franchise. We have not yet heard what will happen to the promises made by Mr Branson and Mr Souter for improvements in the later years of those franchises. Are we still going to see—from Bradford, Middlesbrough and Lincoln—the two-hourly trains that were promised under those franchises? Are we going to see the direct train from Sunderland and the continuing increase in the number of trains from London King’s Cross?

There is now uncertainty over not just this franchise, but the trans-Pennine franchise in the north of England. There is lots of speculation that the operator will try to renegotiate because it promised £300 million to the Government for a service that was previously subsidised. Is it going to continue to do that? Following the remarks of my hon. Friend Maria Eagle, I think that the idea of a public sector comparator is, quite frankly, common sense. Why cannot there be a public sector comparator? I think that there was a golden age—under a Conservative Government, mostly—between 2009 and 2015 on the east coast, when the dominant provider was a public service provider.

In reaction to some comments from Martin Vickers, I do believe in open access at the margin. Open access only provides about 1% of services. I do not see why that could not continue under a system where the major franchises were in the public sector. No dominant provider—in the public or private sector—is likely to look at the needs of small towns such as Selby, which is served by Hull Trains, Eaglescliffe and Hartlepool. Morpeth is soon to be served by an open access operator. I hope that we would not neglect that under a Labour Government.

Northern Rail is owned by the German state, and I call on the Government to start talks. We can get a solution to the strikes that are affecting my constituents for three days this week. There is a simple solution in Scotland: the driver opens the door, and the guard closes the door and maintains safety. A solution can be reached, and the Government have a responsibility to try to reach it.

My final point is that we are still reasonably close to the Christmas season, which has just passed. I urge Ministers next year to fulfil the promises they made while in opposition on Boxing day trains. Fifty-eight hours is too long to close down the network. In opposition, the Conservatives said that they would do something. Trans-Pennine has made proposals that it will run trains to Manchester airport on Boxing day 2018; Northern Rail would provide 60 services. Ministers need to act.

Photo of Daniel Zeichner Daniel Zeichner Labour, Cambridge 6:18 pm, 10th January 2018

I would like to engage the House on the question whether franchising works. My local radio station, BBC Radio Cambridgeshire, will next week be celebrating 25 years since this country started on the journey from British Rail to anything but British rail. I remember it rather well because I went to a Railtrack meeting at the time and asked what I thought was a naive question: “Who is going to sort out the problems of who is responsible when things go wrong?” We might think now that people would have thought about that point then, but it is still being argued about 25 years on.

When I talk to people in the industry, they tell me about the small army of people who spend their time not helping passengers or improving the railways, but arguing over who is responsible for paying when things go wrong. Of course, there are so many opportunities to game the system. There are so many ways in which operators can make their trains just not quite late enough to incur any penalties.

I made a bit of a social gaffe at a dinner recently. I was sitting next to someone from a train operating company and asked a rather unfortunate question, which was, “What exactly is the point in train operating companies?” I wondered, like most people would, “You don’t own any trains; you don’t own any tracks, so what do you do?” They said, “Ah—we sell tickets and we innovate.” That explained it—“Kind of like ticket touts, then?” I suspect I am not going to be invited back for a follow-up. That is the problem with many of these people. It is a very complicated system.

My hon. Friends have already raised some of the issues on two of the routes that serve my city of Cambridge. I am grateful for the piece in The Sunday Times that was mentioned, where we learned a bit more about the East Anglia franchise—its £3.7 billion price tag. The managing director was right to describe it as “scary”. That was negotiated in and around the time of the referendum in 2016, and, amazingly, renegotiated very hurriedly in the days afterwards—completely out of public sight, as usual, and all shrouded in commercial confidentiality. Within six months, the company had sold a 40% stake of itself to a Japanese company. Does any of this matter? I think it does. These are our public services being bought and sold, speculated on and turned into financial instruments, when what we actually need is an environmentally sustainable, cost-effective, reliable, sensible transport system that people in my constituency can afford.

With regard to the other route, I am afraid that a National Audit Office report revealed, as also eloquently explained by some of my hon. Friends, the appalling levels of service that constituents of mine are suffering. Many of them are paying almost £5,000 a year for a season ticket—a huge amount for the many young people in my constituency to have to bear.

In conclusion, I say to the train operating companies: take a look at the station clock. Tick TOC, your time is up—just like mine.

Photo of Judith Cummins Judith Cummins Opposition Whip (Commons) 6:21 pm, 10th January 2018

The subject of this Opposition day debate clearly highlights how this Government are not running the nation’s vital transport infrastructure in the interests of the many. We have heard how the franchise model is failing the east coast mainline. The taxpayer bail-out of the franchise by the Government is yet more evidence that our railways would be better off under public ownership. Let us not forget that the east coast main line franchise returned over £1 billion to the Treasury and was the best-performing operator on the network when it was in public hands. It seems that this Government are happy to reward failing companies for mismanaging our railways.

This is not the only way that this Government are failing to deliver on transport policy, as the north of England has had a raw deal from central Government with regard to transport spending. Planned central Government spending per head of population on transport infrastructure for the next four years is £726 for Yorkshire and the Humber, versus £1,083 for London and the south-east. Meanwhile, money is frittered away on filling the pockets of private companies—money that would be better spent modernising the ageing infrastructure that is holding back places like my home city of Bradford. What is more, my constituents also have the pain of the 3.4% increase in fares this year, with average fares rising more than three times faster than wages—a slap in the face, and in the pocket, on top of years of insult from unfair underinvestment.

These figures are not acceptable, and have far-reaching consequences for the economy of the north of England and for the prosperity of my constituents. It is Whitehall’s failure to recognise that point that so enrages me. The north gets trees planted along the M62 while London gets Crossrail—hardly fair. An independent study of the north’s untapped potential set out how new investment, including High Speed 3, could unlock up to £97 billion and create 850,000 new jobs by 2050, with a stop in Bradford bringing in an annual boost of £53 million to the local economy and at least £1.3 billion for the whole region. The party of government made a manifesto promise about electrification of the trans-Pennine rail route ahead of the 2015 general election, but we are still waiting.

A radical rethink is needed from this Government to end the failed franchise model, to bring our railways back into public ownership and to invest properly in transport in the north of England. We in Bradford will not be fooled, satisfied or fobbed off with crumbs from the table.

Photo of Sarah Jones Sarah Jones Labour, Croydon Central 6:24 pm, 10th January 2018

In his speech, the Secretary of State said: “Let us concentrate on the things that will make the difference for passengers”. Today’s National Audit Office report says, among many other damning things, that

“it is not clear whether the Department considered the…effects of its approach on passenger services.”

There have been warm words, but no action.

The National Audit Office report is damning. It reveals that the Thameslink Southern and Great Northern franchise has failed to deliver value for money. Over the past three years, Croydon commuters have suffered the worst service performance on the national rail network. There have been more than double the number of delays and cancellations than the national average, and the service has the lowest satisfaction rate for any rail operator, yet fares have risen twice as fast as salaries.

In the time available, I want to point out two particular scandals to which my constituents have been subjected by the Department for Transport and Govia Thameslink Railway. The first is the design of the franchise and the vicious circle of low investment and declining performance that it threatens. Govia Thameslink’s management contract hands a guaranteed £1 billion per year to the operator, while the taxpayer shoulders the risk of ticket sale revenues. We were promised a £3.5 billion profit from this huge franchise, but instead the loss to the public purse was over £90 million last year. Lee Rowley—he insulted us all, and then left—claimed that we do not understand economics, but there is no economic sense in that model.

The abysmal performance suffered by commuters in Croydon and the inflation-busting rises meant that passenger numbers dropped last year for the first time since the franchise was created. Passengers now pick up 70% of the rail network’s costs, meaning that if passengers continue to turn away from these shoddy, overpriced services, less money will be available to invest in desperately needed upgrades. That will lead to the cycle of lower investment and higher prices that we are already seeing.

Network Rail needs £1 billion to make Govia’s network fit for purpose. We must alter the track and sort out the Windmill Bridge junction in Croydon to stop the service from collapsing in the future. The Government claim—the Secretary of State pointed to this—that the £300 million put in place last year will go towards improving the network, but will the Minister confirm how much of that taxpayers’ money will actually go back to the coffers of Govia Thameslink in the form of fines for infrastructure failures?

My second point—I will make it briefly—is that while the Government have been shown what works, they refuse to act. The TfL-controlled London Overground has been turned from one of the country’s worst rail services into one of its best. What is more, the independent Gibb report, commissioned by the Secretary of State himself, recommended that Southern services, including some from Croydon, should be transferred to TfL as soon as possible. We need action, not just warm words.

Photo of Karen Lee Karen Lee Labour, Lincoln 6:27 pm, 10th January 2018

Travelling by rail has always been something I enjoyed. My dad was a railwayman, and when I was nine, my family travelled to Italy by train, which was pretty exotic in the 1960s. Since being elected as the MP for Lincoln, I have had to use trains twice weekly, and it is often not a positive experience. I have to change trains at Newark North Gate, and I sometimes walk right across Newark to Newark Castle station, which can take up to half an hour.

Our rail network is currently unreliable. The trains are sometimes old and dirty, and the staff, who work hard, are demoralised. There is often a single coach from Newark to Lincoln, and it is usually absolutely packed, with no space for pushchairs, wheelchairs or cycles. It is an expensive way of travelling, and it does not persuade people who have a choice to do so to abandon their car, thereby making an environmentally sustainable travelling policy even harder to achieve.

As a result of the recent fiasco with the east coast main line, I, as an MP, as well as local businesses and Visit Lincoln, are worried that the six extra direct services we have been promised by Virgin Trains in 2019 may not happen in the end. Lincoln needs those services. My constituents need reliable, affordable trains, businesses need to attract customers and our tourist offer needs to keep on attracting visitors.

Lincoln has just got a brand new transport hub, of which we are very proud. It is my hope that Lincoln and the rest of this country will very soon get a Labour Government who will bring our railways back into public ownership so that we have the rail system we need and the kind of Government that this country deserves.

Photo of Luke Pollard Luke Pollard Labour/Co-operative, Plymouth, Sutton and Devonport 6:28 pm, 10th January 2018

In the time available, I will confine my remarks to two key points. First, I ask the Minister not to split the Great Western franchise, but instead to focus his time and energy on investing in our train line. George Osborne, the former Chancellor, suggested a Devon and Cornwall franchise. That might have won headlines, but it won few supporters in the far south-west. Splitting Devon and Cornwall off from the Great Western franchise would condemn rail users in the far south-west to a second-class service. Labour and Conservative Members rightly oppose that appalling idea, but it seems that no lessons have been learned in the DFT. Instead of focusing on speed, resilience and affordability for the far south-west, we now have to defend yet another attempt to split our franchise. Splitting the west country services from those that go to Wales would reduce income for the south-west train line, risk investment and fragment our railways even further. I say to the Minister, who will shortly receive and consider responses from the consultation, “Please do not do this.”

I welcome the Minister to his post, however, because I know that in the coming months he and I will speak an awful lot about trains, especially those around Dawlish. The priority for the Great Western franchise is investment, upgrades, resilience and faster journeys, not more fragmentation. The superb Peninsula Rail Task Force report—I encourage him to take it to bed to read if he has not yet done so—recommends investment in tracks, signalling, trains and timetabling from Penzance through Plymouth to Paddington. The full upgrade programme would cost £9 billion. Labour and the shadow Secretary of State, my hon. Friend Andy McDonald, have committed £2.5 billion from our infrastructure fund to upgrade the track, yet Ministers have not made any such investment or matched our pledge. It seems to voters in the far south-west that only Labour will invest in a long-term strategy for our railways.

I also recommend that the Minister reads the “Speed to the West” report, which follows the PRTF family of reports. It recommends cutting journey times between the far south-west and London from 3 hours 30 minutes from Plymouth to 2 hours 15 minutes. The first intervention on that, which would cost £600,000 and was mentioned by Kevin Foster, was, sadly, not funded by the Government before the deadline ran out at Christmas.

There is a last chance for the Minister to say that his Department will fund that £600,000. London receives billions of pounds for rail upgrades, but the far south-west was asking for just £600,000 and was ignored. Will he look at that again?

While there is cross-party support for rail investment in the far south-west, there is a sense in the west country that we are ignored by Ministers and this Government. The new trains that First has ordered for our route will come online this year. I welcome that investment, but I would be grateful if the Minister, in his new role, gave us the news that we want and the funding that we need for the train line in the far south-west.

Photo of Liz Twist Liz Twist Labour, Blaydon 6:31 pm, 10th January 2018

In my constituency of Blaydon, as elsewhere in the north-east, the future of our railways is of great interest. We have our own experience in our region, with the example of a directly operated railway on the east coast main line. That service was taken under public control following the failure of two contracts in 2009. My constituents and others, including hon. Members in the Chamber, were out there campaigning to retain the east coast main line in public ownership. Not only have the trains provided a good service, but the company has returned £1 billion of premiums to the public purse. That is why it was, and still is, galling for so many people in the north-east that the franchise was re-privatised in 2015 on the basis that that represented “best value” for rail users and taxpayers.

No wonder so many of my constituents expressed disbelief at the Secretary of State again looking to tear up the contract and at the current franchisees—Stagecoach and Virgin, which are known to be struggling to make their anticipated profit—being allowed to walk away from their commitment to make payments worth more than £2 billion under the current contract. It is therefore hardly surprising that folk in the north-east are enthusiastic about Labour’s commitment to take back rail franchises as they expire. Rail franchising has proved ineffective and costly, encouraging bidders to submit over-optimistic and unrealistic bids. It is about time we looked at bringing rail back into public ownership so that we get the best possible value and the best possible service for passengers from their rail services.

I want to refer to the National Audit Office report that was published this morning and the Secretary of State’s response to it—blaming the trade unions. The Government set the contract terms and specifications for franchises. The Government say, “You don’t need a second guard on trains.” They bear responsibility for the problems in the rail industry and the industrial disputes that we face.

Photo of Sandy Martin Sandy Martin Labour, Ipswich 6:33 pm, 10th January 2018

In my region, Abellio is running some trains with guards and some without. It is using its plans to introduce new trains in East Anglia as an excuse for threatening to remove guards’ ability to supervise the closing of the doors. I have a great fear that my constituents’ travel needs will be sacrificed on the altar of the rail operator’s intransigence. Abellio is quite capable of running brand new, safe and viable trains with guards who fully supervise the train, including by closing the doors. It can do that in Scotland and do it in the Netherlands.

The Conservatives say that our train operators are better than they would be if they were state owned, but many of our train operators are state owned—just not by this state. Dutch democratic decision takers believe that passengers in their country deserve rail services that involve guards ensuring the safe closure of doors, but here in England, Abellio is awarded a franchise that is based on the removal of that safety measure, and once the franchise is awarded, the Government claim that any disruption caused by industrial action is nothing to do with them. The franchising system reduces every decision to what the train operator can afford to do within the franchise it has agreed. I want a railway based on the best interests of passengers and of our country.

Photo of Grahame Morris Grahame Morris Labour, Easington 6:35 pm, 10th January 2018

I have had to take the Beeching axe to my speech, but I will make a couple of points in the few minutes available to me.

I wanted to take up some of the points made by previous speakers, including the Secretary of State, with which I completely disagreed and which, frankly, were fake news. If we look at the evidence and compare train fares in the United Kingdom and European countries—their state operators own many of the franchises—the difference is stark. I do not accept that this is about particular fares in peak periods.

It is worth looking at the German-owned operators. Deutsche Bahn owns Northern Rail, which is the principal operator in my region. Some 42% of Deutsche Bahn’s revenue is made outside Germany, much of it here in the UK, but 93% of its investment is in the German railway, so the company is creating profits here to improve services back in Germany.

It is clear that regulated rail fares have risen by an average of 32% since 2010, which is three times faster than the average median wage has grown. The Secretary of State said that fares increased more rapidly, or to higher levels, under the previous Labour Government, but we have to factor in average wages. The Conservative policy of raising regulated fares by the retail prices index ensures above-inflation fare increases every year. Compare that with Labour’s stance as set out in the motion, which I support. We would peg fare rises to the consumer prices index, which would save the average season ticket holder £500 over the course of a year. That would affect everyone’s constituents. Indeed, the annual cost of a season ticket for one of the Prime Minister’s constituents travelling between Maidenhead and Paddington has risen by £732 since 2010.

Passengers on our railways pay some of the highest fares in Europe for increasingly unreliable and crowded services, and that has been my experience. Passengers, our economy and our environment need affordable fares and reliable services, which I do not think the Tories’ policy is capable of delivering. Labour would take back our railways into public ownership as franchises expire and use the savings to cap fares, and we would upgrade and extend the rail network.

Photo of Paul Sweeney Paul Sweeney Shadow Minister (Scotland) 6:38 pm, 10th January 2018

The debate has demonstrated that privatisation has led to a disastrous combination of service failure, disinvestment and profiteering from public subsidy. A particular absurdity of the Railways Act 1993 was that it banned any British public sector bids for franchises, but permitted overseas state-owned railway firms to bid. Hong Kong’s state railways will run Crossrail, the French state has stakes in the London Midland, Southeastern and Thameslink franchises, and Dutch state railways run the Greater Anglia and Scotrail franchises, having been awarded the latter contract, worth £6 billion, by the Scottish Government in October 2014. That came about after rail franchising powers were devolved to the Scottish Government in 2005. Labour, ASLEF, the Transport Salaried Staffs Association and the RMT trade unions appealed to the Scottish Government in October 2014 to delay the award of the new Scotrail franchise until the power to create a public sector bid was enabled by the passing of the Scotland Act 2016, which came into force in May that year and had been known about at the time of the franchise award. This practical measure to accelerate the return of a publicly owned and operated railway in Scotland was disregarded by the SNP, and as a result we are stuck with a railway in Scotland that will be owned by the Dutch state for another decade.

In the year since Abellio was awarded the franchise, fares have risen by over 12%, yet wages have increased by only 1.8%. Performance targets have been missed, many routes have been overcrowded, stops have been skipped—that has left passengers stranded—and customer satisfaction has not improved. All the while, Abellio sends its profits back to be invested in the Dutch railway network.

My constituency was once the centre of the British locomotive manufacturing industry. As a result of privatisation, British Rail’s world-class engineering and manufacturing divisions were sold off to foreign companies. They have subsequently been run down to the point where much of the UK’s rolling stock is imported from Europe or Japan, with virtually nothing exported from the UK. Other nations view their railways as a core part of their industrial and advanced manufacturing strategies. Restoring the public ownership of rail franchises would be an excellent first step towards a renaissance in the wider railway industry in Britain, the nation that gave railways to the world. I will be supporting the motion tonight.

Photo of Mohammad Yasin Mohammad Yasin Labour, Bedford 6:40 pm, 10th January 2018

Just before the summer recess, the Government announced they were abandoning plans for the electrification of the midland main line. A consultation on the new east midlands rail franchise announcement followed—a process that was rushed, chaotic and, as has recently come to light, a sham. Throughout the time when my constituents were feeding into the consultation process in good faith, much bigger plans were being put together behind the scenes, without consultation or even a whisper in Whitehall, under which Bedford train users will lose their peak-time east midlands service in May.

The announcement has hit my constituents hard. Many fear they will lose their jobs or have to give up work because the changes to the timetable will mean they cannot balance, or rearrange their lives around, their family commitments. Rail users nationwide have been betrayed by this Government, but Bedford commuters are taking a bigger hit than most. Bedford passengers are being forced into trains run by Govia Thameslink, which we learned today is the worst train operating company in the country. It is clear from the NAO report that the Government awarded the franchise to Govia in the full knowledge that disruption would be very likely. Bedford passengers have felt that disruption.

There is something fundamentally wrong with the franchising process. I expect the Transport Secretary to recommend to East Midlands Trains and Thameslink that Bedford rail users are entitled to reduced fares for their reduced services. Bedford is a growing commuter town, and the use of services is increasing year on year. It markets itself as an affordable place to live with a 36-minute commute to the capital. Over the last five years, the use of Bedford station has risen by 20%. The Government should be improving and increasing services, not reducing them, and I hope that the Transport Secretary will now commit to doing so and ensure that the new franchise includes a solution for peak-time trains to be reintroduced in Bedford.

Photo of Ruth George Ruth George Labour, High Peak 6:43 pm, 10th January 2018

Rail fares in this country are five times those in Europe as a proportion of wages. No wonder UK commuters are fed up with rising prices and worse services and 76% of people now support renationalisation of the railways. The Government are in a minority position, running a railway for a few by the few. In my constituency, prices for off-peak fares have risen by 43% since Northern Rail took over the franchise just 18 months ago, hitting commuters, students and people who simply need to get to work.

When I asked Northern Rail why it had seen the need to raise prices by so much, it simply said, “Because we can.” This franchising model is a licence to print money and rip off commuters. My constituents tell me that they do not even want a seat on a train; all they want is to be able to stand up and not get pressure bruises, have their feet stood on or have to stand crammed with three other people in a stinking toilet space. Those are the sorts of journeys that constituents are suffering for an hour or more—we have the longest journey times in Europe—to get to work. The Minister might think it is funny, but will he ride a commuter train from my constituency to experience the service that my constituents face? I ask him to address that, because the Government do not seem to understand the needs of commuters—ordinary working people who need a decent train service at a time when our roads are congested and overcrowded.

There is no investment where it is needed. We get no answer from the Department for Transport on the Hope Valley capacity scheme, relating to journeys between Manchester and Sheffield—the most crowded and needed services. That small increased capacity scheme has sat there for 18 months. That is the record of this Government. They are failing commuters and the British people.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Transport) 6:45 pm, 10th January 2018

Fares, franchises and failure, all entwined: that is how my hon. Friends have summarised the issues that dominate passengers’ experience of the railways today. My hon. Friends the Members for Lincoln (Ms Lee), for Wigan (Lisa Nandy), for Newport East (Jessica Morden), for High Peak (Ruth George) and for Bedford (Mohammad Yasin) really brought to the fore the impact that this is having.

The rail sector is full of fantastic people, but it is distracted from its core function of providing passengers with affordable access to a fully integrated system—train and track, wheel and steel—that works across the entire network and enables seamless intermodal travel. While the Secretary of State is firmly at the faultline, defending a broken system that he has made far more centralist in its control than even Labour’s national rail service will be, it is passengers who have to straddle the cracks, continually having to pay, and pay again, for the basic purpose of going to work or having a day out with the family, and as we have heard, they pay for poor performance, as my hon. Friend Sarah Jones set out.

It is not just Labour Members who are increasingly highlighting the failure of the Government; Martin Vickers also spoke of problems with franchising. “Putting passengers at the heart of the rail service” should be the Government’s mantra, but sadly it is not. Research by Transport Focus, the official voice of the travelling public, found in the largest survey of its kind that failure on ticketing is the No. 1 issue for passengers. The issue is not only the 32% rise in fares since 2010—three times the rise in wages, as my hon. Friend Grahame Morris said—the 3.4% increase on last year’s ticket prices and the 3.6% increase for season ticket holders; everyone believes that they are being diddled out of a fair price—and they are right. There is different pricing depending on which operator runs the service, what time a person logs on to book their ticket, and when and at what time of day their journey is.

When this is coupled with extortionate ticket price increases, passengers ask where their hard-earned cash is going—and it is a good question. Let me tell them: £725 million went straight into the pockets of shareholders. While Thomas might be under the Fat Controller’s orders, today passengers are most certainly under those of the fat cats. It is a great train robbery. Then there is the financial haemorrhage from multiple tiers of private subcontractors across the network, each taking their cut, and the exorbitant cost of leasing trains and the huge profits harvested there. Fragmentation brings additional costs, too. But this scandal pales into insignificance when passengers consider that when Richard Branson’s Virgin Group gets into a bit of a pickle, it goes cap in hand to the Secretary of State, and makes demands of him. Just look at how quickly the Secretary of State buckled on this—a point made eloquently by my hon. Friend Maria Eagle, joined by my hon. Friends the Members for Gateshead (Ian Mearns), for Keighley (John Grogan), for Bradford South (Judith Cummins), for Blaydon (Liz Twist), and for Glasgow North East (Mr Sweeney).

The Department for Transport, under the Secretary of State’s orders, set up a franchise on the east coast that would involve Network Rail in delivering infrastructure upgrades, but due to the Government’s failed control period 5 process and the scaling down of the infrastructure upgrades, Network Rail was unable to deliver. The Government did not even speak to Network Rail about this when touting for an operator who would rip the service out of public hands—which, by the way, put £1 billion into the Treasury, to be reinvested in public transport. No, they just blindly put out a contract that was undeliverable, and the Government need to understand that it is their responsibility; they let the franchise. VTEC said it could not reap the gains it was hoping to under the infrastructure improvements, and guess what it did? It went to the Government to put the pressure on and now has been let off £2 billion, and the Secretary of State will not come to the Dispatch Box to deny this fact. It is a complete and utter shambles, as are so many other services; we have heard today from my hon. Friends the Members for Cambridge (Daniel Zeichner) and for Plymouth, Sutton and Devonport (Luke Pollard) about the impact these services are having on their communities.

So not only are the passengers paying for this now, but they are also having to prop up dodgy deals. And they are dodgy deals: we just need to look at the way these train operators are working their way through the system to get as much money as possible not just out of ticketing, but also by threatening to sue the Government and seeking compensation payments. It is a complete scandal.

The problems are clear: a failed, fragmented franchise system; private profits over passenger interest, with a resultant decline in patronage, as we are now seeing; and a Secretary of State who refuses to put the passengers’ interests at the heart of the railway. That is why Labour will introduce a new public railway owned by the public and working for the public. This is not about going back, as we will not revisit the models of railways past, but take us forward—and not just take our rail services forward, but our economy too.

Drawing on global best practice, Labour’s rail system will really be for the many and not the few—fares overhauled; smart ticketing; new lines opening; more capacity; more seats; more trains; embracing high tech and digital rail; making space for freight and smart logistics; clean and green with electrification, not a return to dirty diesel; planning for the long term; and no more on-off, start-stop funding. The whole railway system will be working as one, with passengers and businesses knowing the deal and being at the heart of the deal, as my hon. Friend Albert Owen has called for for Wales—and my hon. Friend the Member for Glasgow North East has said he does not want to see the fragmentation reintroduced now by the Scottish Government.

As my hon. Friends the Members for Liverpool, Walton (Dan Carden) and for Ipswich (Sandy Martin) said, we must make our railways safe, and we will make them safe and accessible by ending the scrapping of the guards—a resolve the trade unions are calling for today—so that disabled people can have their dignity restored in using rail, while women can feel safe on trains both day and night. This is the rail service that the British people are demanding, and it will take a Labour Government to deliver it.

Before I sit down, may I welcome the new Transport Minister to his place, and hope that he does not take to defending the indefensible in his new role, as he sought to in his previous role earlier this week? We have a transport crisis and we need this Government to do something about it or, better still, make way for a Government who will.

Photo of Jo Johnson Jo Johnson Minister of State (Department for Education) (Universities and Science) (Joint with the Department for Business, Energy and Industrial Strategy), Minister of State (Department for Transport), Minister of State (London) 6:53 pm, 10th January 2018

We have had a full and excellent debate on the important subject of rail franchising, and I thank the Members on both sides of the House who welcomed me to my new position. I pay tribute to my predecessor, my right hon. Friend Mr Hayes, who acquitted himself exceptionally well in this role over a considerable period of time.

A lot has been said in today’s cordial debate—it has certainly been a more pleasant debate for me to sit through than the urgent question on Monday—and I will endeavour to respond to as many of the points raised as possible, but let me start by recapping some of what has been achieved, initially by looking at privatisation in the round. The statistics are compelling: last year we published our rail spending commitments for 2019-24, and we will be investing £48 billion in our railways, as well as investment from private sources.

My right hon. Friend Sir Patrick McLoughlin asked for specific comparisons between investment from 1997 to 2010 and from 2010 to 2020. As we have repeatedly made clear, this Government are making the largest investment in our railways since the Victorian era, with £48 billion over the five years from 2019. Let me give the House an example of what that means in practice. We will have ordered 7,122 vehicles for the rolling stock fleet, compared with 5,720 in the period from 1997 to 2010. That should give Members a feel for the tangible and practical impact that the increased investment will have. It will mean improvements in punctuality and reliability for passengers, as well as supporting thousands of jobs in the supply chain and activity in the wider economy.

The privatisation of our railways has succeeded. Passenger journeys have more than doubled since 1995, and we have a claim to being the most improved railway in Europe, and the safest major railway, too. And all this is happening in what is not only one of the oldest railway networks in the world but one of the most intensively used. In fact, more people are travelling on our railways today than in any year since the 1920s, and on a smaller network. It is thanks to this success that we are investing £38 billion in Crossrail and HS2 in the period up to 2019, and £48 billion in the years to come.

Photo of Maria Eagle Maria Eagle Labour, Garston and Halewood

The Minister has just said that the privatisation of our railways has succeeded. Will he tell us whether the Government will vote against the motion this evening?

Photo of Jo Johnson Jo Johnson Minister of State (Department for Education) (Universities and Science) (Joint with the Department for Business, Energy and Industrial Strategy), Minister of State (Department for Transport), Minister of State (London)

Privatisation is succeeding, and we can see that in the increased numbers of passengers using the network. The motion speaks for itself, and hon. Members are welcome to—

Photo of Neil O'Brien Neil O'Brien Conservative, Harborough

I welcome the new Minister to his place, and I hope that he will be as successful in this job as he was in his last one—[Interruption.] He was very successful. As he is listing investments, I hope that he will not forget the £1 billion investment that we are making in the midland main line.

Photo of Jo Johnson Jo Johnson Minister of State (Department for Education) (Universities and Science) (Joint with the Department for Business, Energy and Industrial Strategy), Minister of State (Department for Transport), Minister of State (London)

I certainly do welcome that investment in the midland main line. That is one of the many investments that we are making across the country, and it is part of the £38 billion that we are spending in the control period to 2019. As I said, a further £48 billion is yet to come. This will mean new stations and rejuvenated older ones.

Before Christmas, my right hon. Friend the Secretary of State set out a new approach to delivering rail services. It does not require the colossal reorganisations of the kind that nationalisation would entail. It will deliver the best of both worlds, keeping the benefits of privatisation while maintaining vital infrastructure in public hands and preparing our railway to meet the challenges of the future. Earlier in the debate, the Secretary of State addressed the recent accusations regarding the east coast franchise. It is wrong to describe this as a bail-out. When Virgin Trains East Coast was awarded the contract, it committed £165 million to support the business if it failed to perform as expected. As my right hon. Friend said, we will hold the company to that commitment in full. It has met all its commitments to the taxpayer so far and it is continuing to do so. Make no mistake: we will hold all guarantors, including Stagecoach, to those financial commitments.

We have been making significant progress with industry on the Secretary of State’s vision for the east coast partnership from 2020, and on plans to meet that commitment. We stand by that commitment in full. I was asked about a direct award to Virgin-Stagecoach, and I refer the House to the answer that the Secretary of State gave earlier. My Department is preparing contingency plans, as we do not believe that the Virgin Trains east coast franchise will be financially viable through to 2020. We intend to return to the House in due course, once those plans are in place.

Many hon. Members raised the issue of fares. These are at the heart of the massive investment that is going into the railways, and it is of course right that that investment should be derived not just from taxpayers’ money. Passengers benefit from the improvements that our investment programme is delivering, and it is right that they make a contribution towards it. On average, 97p in every pound that passengers pay—

Photo of Alan Campbell Alan Campbell Opposition Deputy Chief Whip (Commons)

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put.

Question agreed to.

Resolved,

That this House
believes that rail franchising is failing to provide adequate services for passengers or value for money for taxpayers;
notes that regulated rail fares have risen by 32 per cent since 2010 while planned investment has been cancelled;
opposes the recent bail-out of Virgin Rail Group East Coast;
and calls on the Government to run passengers’ services under public sector operation.

Photo of Andy McDonald Andy McDonald Shadow Secretary of State for Transport

On a point of order, Madam Deputy Speaker. The motion has been passed unanimously by the House, demonstrating that the rail franchising system has failed and that the railways should be run by the public sector. When can we expect a statement from the Secretary of State to outline his plans for implementing the will of the House?

Photo of Rosie Winterton Rosie Winterton Second Deputy Chairman of Ways and Means

The hon. Gentleman is quite right to say that the House has agreed to the motion. The Leader of the House has said that, following such occasions, the relevant Secretary of State will return to the House over the next few weeks to indicate what action the Government propose to take as a result of the motion being passed.