Railways: Franchises

Part of the debate – in the House of Lords at 4:29 pm on 18 January 2007.

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Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) 4:29, 18 January 2007

My Lords, I am grateful for the good wishes from various parts of the House, but this debate has been as painful for me as usual in the challenge it has laid down. I did not notice any kindly let-up just because this is the last time I will be speaking on rail, at least for a while, from this Dispatch Box.

I thank the noble Lord, Lord Chidgey, for introducing this important debate. It is at the centre of the issue with regard to rail, which is a very important part of our transport provision. I appreciated the very fair way in which he introduced the topic, knowing, as I do, that he has a keen interest in the West Country and the lines that go from there. Of all the issues in the debate, First Great Western has loomed as problem number one, and I thought he was a little kinder than others in his approach. I will refer to it in due course; I am aware that it is a central point of the debate.

The exercise with regard to franchises is almost bound to create opportunities for members of the public, their representatives in the other place and noble Lords to focus on the worst performances and then to damn the whole system because of weaknesses in certain areas. That is not entirely fair. The noble Lord, Lord Chidgey, introduced the central point of the debate and that was followed by many other noble Lords. I refer to the length of the franchise. I have heard the representations; not for the first time has it been mooted that everything in the garden would be so much better if only train companies had much longer franchises and were therefore able to invest at the requisite level. We are not convinced of that. It would be a very odd perspective if one did not see that there may be an incentive to greater investment if one knows that one is holding a franchise for 15 to 20 years. I can see the attraction of that proposal.

It is also the case, as every noble Lord who has spoken has emphasised, that passengers have rather shorter-term demands than the state of the service in 15 to 20 years. Passengers, rightly, are concerned with what is going on in the here and now. The recurrent themes throughout the debate have been, "Why don't you take the longer-term view and extend the franchise?" and, "Why don't you hold these people to account today for what they failed to do yesterday?". We cannot have it both ways.

The Government think it is important, through the duration of the franchise, that structures are in place to hold the operating companies to account. But I do not think that would be aided by the extension of the franchise to 15 or 20 years, as has been suggested. My noble friend Lord Snape pointed out that it is easy to say that one company does pretty well out of this: Chiltern Railways is a model railway which has a 15-year franchise—therefore, case proven. As my noble friend pointed out, there are particularly felicitous aspects with regard to Chiltern and its franchise which do not obtain across the far more difficult and complex franchises elsewhere in the United Kingdom to make that a particularly good illustration of how we solve the problems.

I maintain that the current franchise system is delivering. I shall come on to the weaknesses in the system and will erect a defence even for the less than defensible, in so far as it is within my power to do so. I will therefore talk about First Great Western in a moment.

The system is delivering. More than 1 billion passenger journeys were made last year, 40 per cent more than 10 years ago. That is a rail system which is responsive. Is it delivering all these passengers to their greatest satisfaction in terms of punctuality and comfort? Of course not. We fall short of that in many ways. Nevertheless, train punctuality is up in general terms from 75 per cent 10 years ago to 85 per cent now.

The noble Lord, Lord Cotter, gave us a diatribe on the ills of First Great Western—and I will be the first to recognise that First Great Western's recent performance, as I said earlier this week, is far from satisfactory, to put it mildly. Therefore, I am not surprised that passengers are demonstrating their frustration at the quality of the service. But the noble Lord said that its punctuality over a month or two was as low as 75 per cent. He is absolutely right, but in all fairness to the rail company, one must take a slightly longer view. First Great Western's performance on punctuality for the past year is 85 per cent—only just at the bottom of the achievements of the rail industry, but it is there. First, that is a good deal better than 10 years ago; and, secondly, it would not be right to say that what is happening on that line and the surrounding area in Bristol is utterly and totally calamitous. I recognise the significant points about its weaknesses, but those problems are not resolvable by the broad point that has come through from noble Lords who are seeking to be constructive in this debate—namely, that the issue revolves around the length of the franchise.

The noble Lord, Lord Snape, entertained us all—on buses one day and rail the next. I am trying to wean him on to aircraft because none of us has recently found anything particularly entertaining about aircraft. He must make a contribution to that debate. The 50 mile an hour restrictions are not universal in the UK. They are applied on Met Office advice according to reports from the Met Office and apply only in those areas where very high winds are present, not across the network as a whole. The noble Lord may as well say that the Swiss are much better at clearing snow than we are. Of course they are, because they have weather systems where they have to provide for their rail system against such extremities. On the whole in Britain, we do not often get 50 mile an hour restrictions on our railway system as a result of winds. However, I hear what the noble Lord says and it will not hurt the railway authorities to hear his diatribe and to consider whether the gantries and structures that sustain our overhead lines are sufficiently robust for us to sustain our trains even in the worst of the weather, which we hope is a short-lived problem.

He also raised the question of the Brighton mainline route. I hear what he ways about not interfering with the Gatwick Express. However, if he brings to my attention the threat that Richard Branson will move his passengers by road via the M25 as his solution during the Olympic Games, all I can say is that his appreciation of our transport system is rather less than I think it is. It sounds an idle threat, but I respect the fact that the noble Lord is saying that we should cherish and recognise the value of a very good service from Gatwick to Victoria. It is a good service and we want to see it sustained. We are trying to see whether the Brighton mainline route can incorporate aspects of that service and provide a better service for commuters who travel from further down the line than Gatwick, but I respect his basic point that any changes must recognise the importance of sustaining an effective route to Gatwick.

The noble Lord, Lord Teverson, also concentrated overwhelmingly on the franchise arrangements. Those arrangements, of which we have had experience over a considerable time, are sophisticated operations. The noble Lord, Lord Bradshaw, emphasised the fact that franchises must include aspects such as punctuality, must look at the investment demands required and must put train operating companies on the spot when they sign up to the specifications. Well, they do—and they do not only put them on the spot when the companies win the franchise. My noble friend Lord Snape said how extraordinarily complex the submissions were; that is because the demands are so great. But there is not just that—there is regular monitoring, too. The train companies are subject to monitoring. As the Minister responsible for rail in the other place said the other day, he has regular meetings with train operating companies to ensure they recognise that we are keeping the closest possible eye on performance. So I do not think there is much more to be said about monitoring the franchises than what we are committed to doing and are doing at present.

My noble friend Lord Rosser always speaks with great authority from his long interest and work with the railways. He referred to the technological dimension, which needs to be taken on board. One worry must be that with the fragmentation of the industry, which is obviously a part of having separate train operating companies, fundamental research into trains could be lost. We have certainly put a great emphasis in our recent franchise competitions on innovative solutions from bidders. We have focused on aspects such as regenerative braking, for example, and made that a specification. We are therefore expecting to introduce necessary technological change into the remit that the rail companies should consider.

My noble friend Lord Faulkner, as always, got to the heart of the significant debate by emphasising the achievements of rail and where it is also necessary for improvements to be made. I would dispute one point, however: air policy is important in transport policy; we can see benefits in weaning people off internal air flights on to the railway, as the railway becomes more competitive and effective. It will not do to suggest that our air policy is formed on the basis that we build, construct and provide where people want to fly. Even under the expansion at Stansted and Heathrow that is contemplated, we will still be two runways short of the likely demand for people flying in 2015. That is not an automatic response to people's demands but a measured response to meet people's needs as best we can while recognising that there are other necessary constraints.

The constraint that my noble friend introduced into the debate is of great importance—namely, climate change and the role that air travel plays in that. As we have explained, aviation is a difficult issue to tackle with regard to climate change, because no one country can tackle it on its own. The Government are not only alert and committed to ensuring that aviation plays its full part with regard to pollution; there is not doubt that part of our transport policy will be, through our increased investment in rail, to ensure that the competition between rail and air internally in the country should greatly improve. And it is improving. If one looks at current journey times from Glasgow via Manchester to London, one sees the benefits of the finally successful, huge investment in the west coast main line, which is making that line competitive with aircraft.

My noble friend Lord Snape and other noble Lords said that there are absurdities about a policy whereby different solutions are produced in different parts of the country with regard to franchising. However, the solutions are different because the problems are different. The problem with Virgin and the west coast main line was not Virgin's investment in trains; it was the fact that the track was not providing the framework in which it could offer the service. Therefore, the Government reasonably took upon themselves the recognition that costs had to be borne until the track was up to standard. The east coast main line is entirely different: there is nothing wrong with the track. There is nothing much wrong with GNER either; it just happens to be a subsidiary of a larger company, Sea Containers, which is in severe financial difficulties, and GNER has a real problem in being able to maintain its commitments. The Government's response to that is straightforward: GNER must keep to its commitments until another franchise can be arrived at, because we owe a duty to the passengers to sustain the service. I reassure my noble friend Lord Snape that they are two very different lines, two different strategies and policies, because they are two very different problems.

I was asked why we could not have vertical integration between track and trains in the Merseyrail area. One can see the obvious attraction of the concept. I have no doubt that if one extrapolates it a long way, one will eventually arrive at British Rail as an integrated system. First, we are a long way from British Rail. Secondly, my noble friend Lord Faulkner was right—he was buttressed by several other noble Lords—in saying that another reorganisation is just what the rail industry does not want. What it needs is capacity to plan against proper objectives and certainties, and reorganisation would not do that job.

The Merseyrail issue is quite straightforward. As the noble Baroness, Lady Hanham, indicated, it takes two to produce a virtual party and one of the players did not want to play. That may be regretted, but one cannot get virtual integration unless both parties see merit in it. Whereas Merseyrail saw great advantages in that position, that was not the case for Network Rail.

I have again been given the greatest sense of foreboding by the noble Lord, Lord Bradshaw. He always makes me shiver to the bones when he describes what chaos will result from certain of the franchise arrangements that we are making. He said, "We haven't seen anything yet. You wait until the new Cross Country franchise is established". I hear what he says. His tales of foreboding may come to pass. I hope that they do not and I am sure that he hopes not, too, because, although of a pessimistic vein, he is a fair man and will acknowledge it when we overcome problems. He exaggerated the extent to which everything will fall on Birmingham New Street as an interchange. With the suspension of the direct routes from Glasgow and Manchester to the south-west, people will have to change trains, but there will be many more changing points than just New Street. Passengers heading to the West Country will be able to change at other places such as Wolverhampton, Banbury, Derby or Cheltenham. Not everyone will have to use New Street as an interchange, although I respect the point that the noble Lord makes. New Street is an important station; it is going through major redevelopment, which will cause problems, and he is right to send out a degree of warning on that.

I have reached the end of my final debate on rail. I have a very sad tale to tell the House: although I do, regrettably, have to yield on the transport brief for a time, I hope to see the concessionary fares Bill through the House. I cannot exactly call it my baby, but it is extremely attractive and I am reluctant to give it up. So, I intend to spend a couple of hours seeing that Bill on to the statute book. Otherwise, this is my last debate on rail. I thank everyone for their good wishes. I have enjoyed our debates enormously, even when I have lost them.