[Hugh Bayley in the Chair] — Rail Industry

Part of the debate – in Westminster Hall at 9:30 am on 3rd June 2009.

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Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington 9:30 am, 3rd June 2009

My hon. Friend and I have discussed First Great Western's yellow card and how it has been monitored with successive Ministers with responsibility for rail.

My point is that the franchises want to have it all ways. They want profits in the good times, but when the franchises become too expensive, they want Government subsidies or to hand it back and negotiate management contracts. I am bitter about National Express laying off 750 workers on the East Anglia and east coast lines. We also know that, in April, Stagecoach went into dispute with the Department for Transport over its support payment system, and the case has now gone to arbitration. Again, it is arguing that there will be an operating loss if the arbitration is not resolved in its favour. On 13 May, First Group announced increases in its rail division of £2.1 billion and an operating profit of £94.2 million, but at the same time its managing director was reassuring shareholders not to worry because the company was accepting taxpayers' subsidies to maintain other franchises in operation. This is the economics of the madhouse, and it is time to stand back.

The Government recognise that they will have to intervene. We are aware of that because the DFT recently advertised on its public tenders website for consultants to ensure "continuity of train services" and, if necessary, run a rail franchise on the Government's behalf. If they are admitting in adverts that they will have to intervene in some instances, we need to ensure that there is a statement to the House about how they plan to do that, especially where, when and how.

I know that other hon. Members want to speak, so I shall end on these points. It is time for the Government, and indeed all of us, to stand back and have a rethink. We need to turn this rail crisis into an opportunity. We need to move away from the dogmatic obsession with privatisation and franchising arrangements. I cannot understand why the Government are refusing to consider other options, particularly a public sector option or role. Like a number of hon. Members present, I have been asking questions about how existing franchises are assessed and whether there could be a public sector benchmark or evaluation, such as a value-for-money assessment of alternatives in the public sector as against the private sector. When Connex was taken into the public sector and lost its south-east franchise, it was run successfully by the public sector for two years. A number of us argued then that we should step back from the dogma and keep at least one franchise in the public sector that could be a benchmark against private sector operators, but what did the Government do? They reprivatised it.