Scotland’s Railway

– in the Scottish Parliament on 17th March 2021.

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Photo of Christine Grahame Christine Grahame Scottish National Party

The next item of business is a statement by Michael Matheson on Scotland’s railway. The cabinet secretary will take questions at the end of his statement; there should therefore be no interventions or interruptions.

Photo of Michael Matheson Michael Matheson Scottish National Party

I wish to update the Parliament on arrangements for Scotland’s rail services over the coming period and as we look to the future. In doing so, I look to provide certainty to rail staff, rail users and the businesses and communities that are served by our railway.

Covid-19 has impacted all parts of Scottish society, and rail services are no different. I thank rail workers across Scotland for their efforts in ensuring that passenger and freight rail services have continued to run throughout the pandemic.

We must recognise the fundamental impact that our difficult, but necessary, decisions to restrict travel have had on the financial position of passenger rail services, with revenue dropping to less than 10 per cent of pre-pandemic levels.

Throughout the restrictions, the Scottish Government has provided essential funding to ensure the continuation of passenger rail services and to provide security of employment for rail staff. The funding has been provided through emergency measures agreements, which temporarily vary both the ScotRail and Caledonian Sleeper franchise agreements.

The current agreements are due to end on 31 March 2021. I can now confirm that we will seek to put in place further agreements until 19 September 2021. Any further agreements beyond that date will be subject to approval by ministers and additional consequential funding being made available to the Scottish Government.

It is right that we focus our collective efforts at this time on tackling this horrendous virus, but we should take a moment to reflect on a time in the future when circumstances will allow passengers to return to our railway. In future, I want to see a commuter offer that matches modern working patterns. I want to see our railway play a central role in tourism and railway heritage, enabling our visitors and rail enthusiasts to explore all that is great about Scotland. I want our railway to support businesses, through connectivity and innovation in technology and railway manufacturing. I want to see our rail freight sector continue to deliver the goods for Scotland.

It remains my strongly held view that a public sector controlled, integrated passenger railway is the model that will best deliver that for Scotland. Such a model would enable a more cohesive, fleet of foot, strategic decision-making structure between rail infrastructure and services, with full accountability to the Scottish Government.

However, that model cannot be delivered under the existing legislative framework, which is reserved. That is why we have repeatedly sought the full devolution of rail powers to this Parliament. Our requests to the United Kingdom Government have so far been rejected.

On more immediate matters, the current ScotRail franchise is expected to end in March 2022. I am therefore required at this time to make decisions on what will come after the current ScotRail contract. As I have stated many times, I believe that the current franchising system is no longer fit for purpose. Keith Williams, who led the UK rail review, has said publicly:

“franchising cannot continue in the way that it is today.”

He expressed the same view to me when I met him in June 2019.

Despite UK ministers stating on 9 December 2020 that the white paper would be “out within six weeks”, still we wait.

The impact of the pandemic and the continued uncertainty about pending reform makes any franchise competition especially unwise at this time. The cost and risk involved would be significant and I will not divert scarce time and resources to pursue a competition that risks failing. I therefore confirm that we will not hold a franchise procurement competition to secure successor arrangements for the ScotRail franchise.

In December 2019, the Scottish ministers decided not to rebase and continue the current ScotRail franchise beyond the scheduled break point expected in March 2022. I know that Abellio was disappointed by that outcome, but its response has been professional, particularly in dealing with the impact of the pandemic. I place on record my thanks to Abellio and its staff.

I have carefully considered the possibility of directly awarding a contract to Abellio to continue to run services beyond March 2022 and, in particular, how that option would align with our recently published revised franchising policy statement. Based on those considerations, I have concluded that a direct award to Abellio would not be conducive to the fulfilment of our policy objectives.

My officials have been working closely with rail industry partners over time to explore the potential for a greater integration of rail services and the benefits that that may bring. We have the energy and commitment to progress that with pace, but the continued UK Government delay in concluding its rail review has hampered our progress.

Following detailed consideration of all options against the background of the current legislation, the revised franchising policy statement and the continuing uncertainty arising from the Covid-19 pandemic and the delay in the UK white paper, I consider that the award of a franchise agreement to any party at this time would be detrimental to the fulfilment of our rail policy objectives.

Over the past year, my officials at Transport Scotland have been making preparations to ensure that operator-of-last-resort arrangements are ready to be deployed. I therefore confirm that the operator of last resort will run ScotRail services after the end of the current franchise contract. That means that from the expiry of the current franchise, ScotRail services will be provided within the public sector by an arm’s-length company owned and controlled by the Scottish Government.

That will provide stability and certainty for passengers and staff, and will place the operation of ScotRail services in public hands from the end of the current contract. ScotRail staff will transfer to the new Scottish Government-owned company with their terms and conditions protected. That period of stability will provide a platform from which we can assess the scale and pace of recovery from Covid-19 and progress options for reform—in particular, my preferred model of an integrated public sector-controlled railway. Standing the lack of clarity in relation to rail reform proposals, I am not able at this stage to confirm how long I expect operator-of-last-resort arrangements to be in place. That will be considered further as the shape and pace of reform becomes clearer.

The rail industry has faced unprecedented challenges through Covid-19 and I thank rail workers across our country for their efforts. As we look to a period of necessary and overdue reform, it is my duty to secure the continued operation of stable and efficient rail services within the existing legislative framework.

In taking the approach that I have announced today, we will secure the stable delivery of rail services within public hands and under Scottish Government control, which will provide certainty for passengers and rail staff. I firmly believe that that approach will best serve the interests of passengers and taxpayers in the future.

The Deputy Presiding Officer:

The cabinet secretary will now take questions on the issues raised in his statement. We have about 20 minutes for that. It would be helpful if any member who wishes to ask a question could press their request-to-speak button or type R in the chat box, if they are remote.

Photo of Graham Simpson Graham Simpson Conservative

I too thank all the staff on Scotland’s railways for the work that they are doing during the pandemic.

I thank the cabinet secretary for advance sight of his statement, in which he seems to be blaming the UK Government for the problems in Scotland’s railways. However, it is the Scottish Government that has presided over cancelled services, delayed services, stop skipping—the list goes on.

Now, the Scottish Government is putting forward this proposal. Nearly £500 million has been spent on emergency measures that were designed, rightly, to keep services going during the pandemic. Therefore, will the cabinet secretary confirm that the emergency agreement that is in place with ScotRail could be extended to March next year? I know that he has said that it will not be, but could it be, in order to ensure stability for railway staff and customers? Can he also say what the cost of the new body that he will set up will be, and how he will ensure that it will be viable when it is competing for money with other public services?

Finally, the cabinet secretary mentioned the Williams review, which we are all awaiting with interest. Could his plans change when that report is published?

Photo of Michael Matheson Michael Matheson Scottish National Party

Mr Simpson suggested that we are in some way trying to blame the UK Government for some of the challenges that we have on Scotland’s railways. He will be aware that ScotRail is one of the highest-performing train operating companies in the whole of the UK. The UK Government can take responsibility for its own rail failings, which are significant across a range of its franchises. I do blame the UK Government for being wedded to the need to ensure that rail services operate within the private sector. It believes that that is the way in which it should operate, not for practical but for dogmatic reasons. That constrains our ability to configure Scotland’s rail services in a way that can best meet the needs of our communities and the travelling public who make use of the services. That is why we need a much more integrated rail system in Scotland. We should have infrastructure and passenger services that are much more aligned rather than following the fractured, broken approach that we have as a result of the UK Government’s policy agenda and the legislation within which we have to operate.

I will deal with each of the other points that Mr Simpson raises. The EMA that I have set out will cost in the region of £173 million between now and September. That could be less, depending on passenger recovery rates. As I said, given the lack of sight that we have from the UK Government on future consequentials for Covid recovery, at this stage, we do not have a line of sight beyond September, so we cannot say whether we can run it forward into March of next year. However, should that funding be available, our intention is to complete the process to March of next year.

On the cost of the new body, that will be met internally within the existing rail budget. It will not be an additional cost over and above what we are already investing in rail.

We are awaiting the outcome of the Williams review, which has been completed—it has been completed for almost a year. The reason why we are waiting appears to be serial incompetence on the part of UK Government ministers who are unable to publish a white paper that is informed by the review. The consequence of that is that we are prevented from taking forward reforms that could improve rail services in Scotland, and others are prevented from taking forward reforms that, I suspect, would very much improve rail services in parts of England. I hope that Mr Simpson will use his hotline to his colleagues in Westminster and tell them to get their finger out and start moving forward with their rail reform programme, including here in Scotland.

Photo of Alex Rowley Alex Rowley Labour

I welcome the cabinet secretary’s announcement, which I believe will be widely welcomed by rail users and workers. We should remember that, when Scottish National Party ministers awarded that contract to Abellio, they said that the services would be world leading, but the reality was that we have been plagued by cancellations, overcrowded services and spiralling fares, which have forced that franchise to be axed.

Given where we are now, first, does the cabinet secretary agree that the trade unions—the workers and their representatives—need to be part of the discussion and planning moving forward? Secondly, will he commit to addressing the issue of affordability? Many constituents across Mid Scotland and Fife tell me that they can no longer afford to use the railways.

Photo of Michael Matheson Michael Matheson Scottish National Party

I am grateful to Mr Rowley for his contribution. This is the first opportunity that I have had to welcome him to his portfolio. I wish him well and look forward to working with him over the next 10 days or so before Parliament goes into recess.

On the first of the specific points that he raised, trade unions will of course be involved in the planning process and in considering the arrangements that will be put in place as we move towards bringing ScotRail into public hands next March. I will ensure that the trade unions are able to make representations in the process of taking the planning forward

Secondly, I recognise the issue of the affordability of using our rail services. In Scotland, we have a cap on rail fare increases, which means that, on average, rail fares in Scotland are about 20 per cent cheaper than they are anywhere else across mainland UK, as a result of our specific policy on that issue. Mr Rowley will be aware of the limited increase to rail fares in Scotland as a result of the change in January, which was the lowest for any part of the UK, including the increase that his colleagues introduced in Wales. However, there is a need for us to minimise the cost increases to the travelling public, because we want to encourage people to use our rail services, given the environmental benefits that can come from making greater use of public transport overall.

The Deputy Presiding Officer:

I have allowed the first couple of questions to be of some length, but I have 13 minutes and 11 questioners, so members can do the arithmetic. I would like short questions and short answers.

Photo of John Mason John Mason Scottish National Party

Can the cabinet secretary expand on what will happen between now and March 2022? Can he assure us that there will be a smooth handover and that passengers will not be impacted?

Photo of Michael Matheson Michael Matheson Scottish National Party

Considerable work has already been undertaken around planning for the operator of last resort. Those plans will now be activated and arrangements will be put in place to start to populate a management structure with staff who will take forward the management of the transfer. It is intended that we do that through as smooth a process as possible, because we want to minimise disruption to staff and passengers. I am confident that that can be achieved if we work together in order to do it. That process, and the structures that are necessary to make the transfer as smooth as possible, will start to move forward over the next couple of months.

Photo of Alexander Burnett Alexander Burnett Conservative

Creating yet another public body to take the blame for Scottish Government failings is the usual way for the SNP, but why has it taken so long— after 14 years in Government and nearly 3 million minutes of delays in the past nine years? Can the cabinet secretary not just apologise to commuters and taxpayers for the delays and money wasted and explain how the body will help commuters in the north-east?

Photo of Michael Matheson Michael Matheson Scottish National Party

I am somewhat surprised at Alexander Burnett’s question. He clearly has little knowledge of Scotland’s rail network and how effective it is compared with the vast majority of train operating companies across the UK, and of the £8 billion of investment that we have made in our rail network since 2007. The people in the north-east of Scotland have had significant benefits from that investment, with new railway stations and infrastructure, new and refurbished rolling stock and the renovation of Aberdeen railway station that we are taking forward.

We will continue to make sure that we are ambitious about Scotland’s rail infrastructure; that will continue when it is under public control—the control of the Scottish Government—and we will continue our record investment of almost £5 billion between now and 2024.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

Will the cabinet secretary advise the Parliament what targets will be set for improvements in rail services by the new arm’s-length company and over what timescale they will be set?

Photo of Michael Matheson Michael Matheson Scottish National Party

For any rail service to operate effectively, there has to be a matrix of performance targets to drive forward the delivery of services, in much the same way that targets operate at present for franchises. Targets are embedded in the existing emergency measure agreements around punctuality, passenger experience, affordability, quality of rolling stock and other measures. Those measures will be built into the matrix that will be provided for in the changed contract arrangements. In that way, we can ensure that we hold fully to account those who are responsible for running our rail services, and we can ensure that they are driving forward improvements.

Photo of Colin Smyth Colin Smyth Labour

I welcome today’s announcement. The cabinet secretary is a late convert to something that I have been calling for him to do for some time. If he is genuinely in favour of public ownership, why has he not ended the Serco Caledonian sleeper franchise and used the powers that he holds to run those services through an operator of last resort, in the way that he has done for the Abellio ScotRail franchise?

Photo of Michael Matheson Michael Matheson Scottish National Party

We have taken the decision in this way because of the end of the Abellio ScotRail contract in March 2022. Following the change in contract for the ScotRail services, we will review the existing franchise arrangements that we have in place for the Caledonian sleeper.

I very much hope that we now have Colin Smyth on board and that he accepts that there should be full devolution of rail powers to Scotland and not the approach that has been taken previously, whereby Network Rail remains a UK body and rail powers are centralised in London. Instead, to allow us to make decisions in the interests of the people who use Scotland’s rail network, all aspects of our rail services should be devolved to the Scottish Parliament.

Photo of Annabelle Ewing Annabelle Ewing Scottish National Party

I very much welcome the cabinet secretary’s announcement. However, will he clarify what the implications will be for the promised improvements to the Fife circle, which is an issue of particular interest to my Cowdenbeath constituents?

Photo of Michael Matheson Michael Matheson Scottish National Party

Annabelle Ewing raises a good point. As a result of moving ScotRail services into public ownership, the investment in Fife will continue. For example, our investment in the reopening of the Levenmouth line will continue; that work has already started. Annabelle Ewing will be aware that, in the phase 1 report of the second strategic transport projects review process, I set out the partial electrification of the Fife circle, alongside the use of battery electric trains, to improve not only the environmental aspects of services but punctuality and the quality of the rolling stock, all of which will benefit people in Fife. That investment will continue with the move into public ownership of ScotRail.

Photo of John Finnie John Finnie Green

I warmly welcome the cabinet secretary’s statement. We support the full devolution of rail powers. The cabinet secretary said that he would allow the trade unions to make representations. Rather than the trade unions responding to decisions that have already been taken, will he ensure that they are round the table shaping the new service?

Photo of Michael Matheson Michael Matheson Scottish National Party

I recognise John Finnie’s long-standing interest in the matter and his shared view of the need to have a publicly controlled integrated rail network in Scotland. I will ensure that the trade unions are part of the process in taking forward the change to public ownership of ScotRail services.

This might be the final opportunity that I have to respond to my colleague John Finnie before he retires from the Parliament. I wish him well for the future. Throughout the years, I have always enjoyed our engagement across the chamber and in committees.

Photo of Willie Rennie Willie Rennie Liberal Democrat

[

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.]—privatisation is the “poll tax on wheels”—[

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.]—a Conservative MP over 25 years ago. It is about time that the Conservatives finally listened to his advice. As passenger numbers were in decline before the pandemic, how will the new model help to integrate different modes of transport and make public transport more attractive?

The Deputy Presiding Officer:

Cabinet secretary, did you get most of that?

Photo of Michael Matheson Michael Matheson Scottish National Party

I think that I got most of the latter part of Mr Rennie’s question.

Passenger numbers on our rail network have been increasing, largely because of the expansion of services, opening of additional routes and expansion of timetables. We have seen that growth over a number of years; we want to build on it and to maintain it as we come out of the pandemic. A key part of that will be in making sure that we have a range of products to help to incentivise commuters back on to our rail network, when they are able to use it—as they return to their places of work and as we ease the restrictions. I assure the member that I am keen to make sure that passengers return to our rail network in the numbers that were there prior to the pandemic and that we will be considering all the measures that we can put in place in order for that to happen.

Photo of Emma Harper Emma Harper Scottish National Party

Will the cabinet secretary expand on the limitations that arise from the network not being 100 per cent accountable to Scottish ministers, such as across my South Scotland region, in which the Stranraer to Ayr and Dumfries to Glasgow lines are owned by Network Rail?

Photo of Michael Matheson Michael Matheson Scottish National Party

An on-going problem within the rail network in Scotland and across the whole UK is the fractured nature of how passenger services operate and the fact that they are not aligned with the infrastructure provision that is run by Network Rail. Fundamentally, that has to be addressed if we are to resolve those issues. The vast majority of delays and problems on our rail network are caused not by the rail operating company but by infrastructure failures. We need to address that effectively. That is why an integrated rail body that can deliver our rail services in the south-west of Scotland—such as in Emma Harper’s region—are absolutely critical. That is what we must have the powers to do here in Scotland, as part of any rail reform package that is brought forward by the UK Government.

Photo of Bill Bowman Bill Bowman Conservative

I n the coming weeks, the rail trade unions may press ahead with strike action in their claim to get more money for overtime. Does the cabinet secretary support such action or view it as counterproductive, given that the railway in Scotland is suffering from the most significant crisis in its history?

Photo of Michael Matheson Michael Matheson Scottish National Party

I recognise and respect the right of trade unions to make representations on behalf of their workers. That is fundamental in any basic society. However, I would encourage both the trade unions and the employers to remain engaged in trying to find a resolution to those issues. I am aware that one of the trade unions has already agreed to a limited period of extension of the existing arrangements, given the difficulties that the pandemic has caused, such as with the limited ability to train drivers, which has an impact on rest-day arrangements. I encourage the other trade unions to follow suit. However, we should also respect the right of trade unions to take forward matters and to make representations on behalf of their members.

Photo of Stuart McMillan Stuart McMillan Scottish National Party

Does the cabinet secretary share my disappointment that some other members, including those from the Labour Party, will not join us in calling for a Scottish rail service, in Scotland‘s hands, with a full transfer of rail powers?

Photo of Michael Matheson Michael Matheson Scottish National Party

The fundamental issues that hamper our ability to reform Scotland’s rail sector and rail services are the fractures between the different component parts that I previously mentioned and the limits to our powers under the existing railways legislation. The best way to shape our rail services and the delivery of our rail network in Scotland, in a way that reflects our needs and aspirations and the desires of our communities and those who use those services, is for that to be done here in Scotland. Instead of having timetabling carried out in Milton Keynes and then sent up to us, or decisions being made by Network Rail in its centralised headquarters and then passed down to us here in Scotland so we just have to suck it up, if you like, decisions should be arrived at here in Scotland that reflect our needs and circumstances and—importantly—there should be accountability for that to the Parliament and its members.

The Deputy Presiding Officer:

I will just manage a very brief question from Neil Findlay.

Photo of Neil Findlay Neil Findlay Labour

After years of being told that this was not possible, it now happens. It is very welcome news that the railways will be coming back into public organisation. It is absolutely essential that trade unions have representation on the board of any new company—not just consultation but representation on the board—to ensure that we do not get into the mess that we got into with Abellio.

Given that I am on my feet, I will ask this: will the cabinet secretary sort out the bus situation in Edinburgh, which is a disaster?

The Deputy Presiding Officer:

That was opportunistic.

Photo of Michael Matheson Michael Matheson Scottish National Party

I must correct Mr Findlay. No one has ever said that this is not possible. We are using the operator of last resort process. We can put that measure in place, but it will not reform our rail services as they should be reformed under public sector control.

I warn Mr Findlay not to delude himself into thinking that that is the answer. Unless he supports the full devolution of control of rail powers to this Parliament, his aspirations will not be achieved. I hope that he will take that position, which has not been the position of his party. I hope that he will be able to convert his fellow members to supporting that position on the full devolution of powers.

I can assure him that we will look to engage trade unions in the process. I assure the member that it is our intention to do that as constructively as possible to ensure that the voice of unions is properly heard.

The Deputy Presiding Officer:

That concludes questions on the statement. I thank the cabinet secretary and members. We got everyone in, plus one more. That is good going.