[Mr David Amess in the Chair] — Backbench business — Network Rail

– in Westminster Hall at 12:00 am on 2 February 2012.

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Motion made, and Question proposed, That the sitting be now adjourned.—(Michael Fabricant.)

Photo of Anne Main Anne Main Conservative, St Albans 2:30, 2 February 2012

It is a delight to serve under your chairmanship this afternoon, Mr Amess, for what I am sure will be a lively and engaging debate. I thank the Backbench Business Committee for providing the time and all colleagues who added their support to the proposal for the debate when it went before the Committee, in particular my hon. Friends the Members for Suffolk Coastal (Dr Coffey) and for Ipswich (Ben Gummer), the vice-chair of the all-party parliamentary rail group Kelvin Hopkins, the Chair of the Public Accounts Committee Margaret Hodge and many others.

The debate is timely and much needed. Many colleagues have expressed concern that Network Rail has been failing on so many levels. It has failed to deliver a successful, well-run system that is value for money, transparent, accountable, open to scrutiny and fit for purpose. Network Rail has been subjected to serious criticisms in a recent Select Committee on Transport report and in the media. The White Paper expected in 2011 has been delayed, the McNulty report in 2011 raised major issues about Network Rail and I, too, have expressed concerns over failing performances on dozens of occasions in the House. As I said, the debate is topical and, indeed, overdue.

It is a simple premise that to deliver an efficient, mobile work force, we need a decent, well-run and affordable rail transport service. People of all ages expect a rail service fit for the 21st century. The travelling public are being asked to pay ever more for their rail fares, and we must ask serious questions about the services they are experiencing up and down the country. In my constituency of St Albans, passengers are heartily fed up, because commuters pay the highest fares in the country and routinely experience a dismal, erratic service with regular delays. In January 2010 the service was appalling, prompting me to call for an urgent question in the House. Without notice, overnight and at a stroke, the timetable was cut by 50% because the rail company could not deliver a full service schedule. Much of the problem was directly attributable to Network Rail which was leaving trains stranded south of the river and not investing in dealing with frozen rails and overruns. My constituents were angry, and it was a miserable time. Things have improved since, but they still receive a service that falls far short of what they deserve. Commuters tell me that, at a rail cost of 30p per mile, they are seriously considering going back to their cars, and who can blame them?

Sixty-four per cent. of delays to my service over the past year were directly attributable to Network Rail and its failings, with a massive impact on the passenger experience. According to recent data, the overall customer satisfaction on my First Capital Connect line, FCC, was the lowest in the country, including value for money, punctuality, sufficient room on trains, satisfaction with the stations and how the train operating companies, or TOCs, dealt with the delays. As I am sure many other right hon. and hon. Members present do, I monitor the rail service and its failings in my constituency, and I am in close contact with my train operator, FCC. I get updates, which do not always make good reading. Almost weekly, I get e-mails from FCC and from my constituents about signal failures and other problems associated with Network Rail once again causing severe delays to the line. The train operators are not without blame but it is impossible to improve a service substantially if Network Rail is at the root of so many delays and overruns—as I said, 64% in my case alone.

On a related issue, rail freight company HelioSlough is trying to cram a strategic rail freight terminal on to my green belt, in a highly contentious proposal. Numerous concerns were expressed about whether the east midlands line could cope and had the capacity. At the inquiry, my TOC asserted that the proposal would decimate passenger services; FCC illustrated its point with comprehensive data, showing that it was highly questionable whether the freight paths would truly be available, in particular after the implementation of the high-speed Thameslink project. FCC chose to attend the inquiry for several days to outline its engineering and logistical concerns, and its representatives were cross-examined by the inspector, who was extremely knowledgeable about rail. Network Rail, however, did not bother to send anyone to the inquiry or subject itself to any cross-examination of data, but just blithely asserted in a short letter—only one side of A4 paper, I think—that everything would be fine. The inspector said that he and indeed FCC must take those at Network Rail’s word for it—as “the experts”.

I wish to put on record that if the decision that currently rests with the Secretary of State is for a rail freight terminal to go ahead, the project will devastate my constituency with all the heavy good vehicles accessing the site through village roads. Network Rail did not even have the confidence to appear at the inquiry and to defend its views with the back-up of data, which I suspect would not have stood up to rigorous scrutiny or to the questioning of the inspector as experienced by my TOC. Network Rail presides over a shambolic railway, misses most of its targets for both passenger and freight and yet is still regarded as “the experts”. As the Member of Parliament for St Albans, I urge the Secretary of State, even at this late hour, to reject the unsubstantiated assertions of Network Rail on the project. They are not to be trusted. Network Rail has told me that, if enough paths for freight cannot be found, it will of course prioritise passenger services, so I should not worry. That would still leave St Albans with a massive road-to-road freight depot in my green belt, and my constituents deserve better from a body funded with taxpayers’ money.

We must ask whether there is a better way to run the railways. The debate has the simple title of “Network Rail”, and colleagues may focus on different aspects of Network Rail and its impact in their own constituencies.

The areas of concern that the debate should cover, however, include costs, executive pay, the total lack of accountability, the role of the Office of Rail Regulation, and service failures and their impact on the TOCS. Hopefully, we will then hear from the Minister about a way forward for our railways.

Network Rail accounts for 28% of the Department for Transport’s budget until 2013-14. Network Rail is a chimera, basking in the notion that it is a private company, but it is dependent on massive handouts from the British taxpayer. It was described by my hon. Friend Kwasi Kwarteng in the Select Committee as

“neither fish nor fowl...neither a private business...nor…a public business.”

Network Rail has a financial indemnity in place, so its debt is entirely supported by the Government. As of 2009-10, that debt was £23.8 billion, and it is set to rise to £31.5 billion by 2013-14. Network Rail’s debts, however, do not appear on the Government’s balance sheet. Somehow, it is classified as a fully private company, a private firm simply backed by Government, but many would question that classification. It has no shareholders and pays no dividends, but it pays itself very well. The Government seem relaxed about that debt, and the Secretary of State for Transport said in July that it was a matter of “complete indifference” to the Government whether Network Rail’s debt came on to or off the Government’s balance sheet. The taxpayer might beg to differ.

The structure is highly questionable; it was, sadly, devised under the previous Government, and it has allowed a culture of high pay and large bonuses to prevail for many years. Network Rail is reliant on the public purse but lavish with executive remuneration. One has to ask why the previous Government did not choose to tackle the issue since it created the monster. Network Rail was apparently set up with no mechanism in place to control the level of financial rewards or bonuses, which is topical, because there was a question today for the Leader of the House on that very matter. The situation is a disgrace and should be rectified.

We must now look to the future and ask for changes to be made. If we are to be seen as a Government wishing to tackle fat cats, their bonuses and lavish pay in what I believe to be the public sector, Network Rail must come under scrutiny. Until this year, the chief executive of Network Rail was the highest paid public sector employee, earning over 10 times more than the Prime Minister. In 2009-10, Iain Coucher, the chief executive at the time, had a salary of £613,000, a bonus of £641,000 and a pension payment of £178,000. I believe that he was extremely overpaid, despite delivery of poor performance; I cannot think of a bigger reward for failure.

The new chief executive of Network Rail, David Higgins, receives, according to an article in the Evening Standard—it has been hard to track down the exact figure—a salary of £560,000. However, only three days after publicly apologising for the failings of Network Rail that contributed to the deaths of two teenagers, Mr Higgins and other top executives appear to be going to their board to ask for a six-figure bonus. For Mr Higgins alone, that will be £336,000. For 2010-11, board members were all receiving salaries above £300,000 and up to £440,000, with what are deemed incentives ranging from £62,000 to £91,000. In light of such poor—indeed, abysmal—performances, one may ask what those incentives were for.

Network Rail presides over a shambolic, poorly delivering system. Top executives appear to be comfortable in the knowledge that they will collect annual bonuses regardless of poor performance. Does the Minister think it appropriate, in light of their performance, that Network Rail should pay large bonuses to top executives? If not, what mechanisms can we put in place to stop that happening?

Given the amount of taxpayer support, it would be reasonable to assume that we could know how the money is being spent, whether we are getting value for money, what the project costs are and whether they are reasonable. However, Network Rail is currently not subject to the National Audit Office, freedom of information requests or even market forces. It has been asked whether it will endure such scrutiny. The new Network Rail chief executive, David Higgins, said that he would welcome freedom of information requests. However, he also said:

“That is a decision for Ministers, and I think it is on hold until after the value for money and the White Paper…it is not a decision of Network Rail, but it is a decision that the Government and Ministers need to make. If they…do it, I welcome it. I have operated under FOI for years and I don’t have any problem with it at all.”

I am so pleased to hear that. I hope that the Government are considering taking the decision to subject Network Rail to freedom of information requests if it is in their ownership to do so. Will the Minister tell us at the end of the this debate whether he intends that Network Rail will be subject to freedom of information requests?

Photo of Roger Gale Roger Gale Parliamentary Assembly of the Council of Europe (Full Member)

On that issue, when Network Rail fails a train operating company, it has to pay compensation to the train operating company. The train operating company does not pass that compensation on to the passengers who are in turn being failed. When we ask Network Rail for the figure, we are told that we cannot have it because it is in confidence. My hon. Friend is absolutely right in her request.

Photo of Anne Main Anne Main Conservative, St Albans

I thank my hon. Friend for his intervention. The passengers are compensated to an extent, but it is a very limited form of compensation. Believe me: First Capital Connect was paying out tons of it as of 2010. As my hon. Friend will hear me go on to say, it is our money paying the fines. That is ridiculous. I hope that freedom of information requests will be allowed. It seems that that is within the Minister’s gift.

Network Rail is not audited by the National Audit Office. It is audited by PricewaterhouseCoopers, but that is simply to check whether the accounts are in order. It is not audited on the basis of value for money. The National Audit Office remarked that the Department’s

“understanding of the relationship between cost and value was weakest in rail”.

It also says that a

“lack of transparency on Network Rail’s costs is consistent with our past reports on the Department and the Office of Rail Regulation.”

That has been highlighted for a significant period; there is a long-standing concern about a lack of transparency on costs. Can the Minister tell us today whether we can expect Network Rail to be subject to auditing by the National Audit Office? I ask that because I would like clarification. The National Audit Office is saying that it cannot gain an understanding of the position because Network Rail’s own figures are vague. Will the Minister clarify that we can strengthen the role of the National Audit Office?

The Public Accounts Committee has been especially damming of Network Rail’s accountability. In a 2011 report, it said:

“Network Rail has no accountability to shareholders, nor does the National Audit Office have full access, so Network Rail is not directly accountable to Parliament.”

It went on to say that it

“unfortunately won’t be able to give a clear opinion on the whole-of-Government accounts until Network Rail’s status changes. That could well be the crux of the debate: how we change the status of Network Rail. Does the Minister accept the need to change the status of Network Rail? Does he share the concerns of the Committee that Network Rail is not accountable to anyone, particularly its paymasters in Parliament?

The Office of Rail Regulation is not holding Network Rail to account in any meaningful way. Anyone who watched the “Panorama” documentary last month will have seen Cathryn Ross, director of railway markets and economics for ORR, giving her responses. She confirmed that ORR has to be given the information by Network Rail in order to regulate it. However, as we have seen with the National Audit Office, getting any detailed information out of Network Rail is well nigh impossible. When pressed, she appeared totally unable to detail in any meaningful way any scrutiny that had been carried out on behalf of the regulator. Does the Minister find it unsatisfactory that ORR must rely on information supplied by Network Rail in order to act?

Only this week, Network Rail has been found guilty of serious failings that led to the tragic deaths of two teenagers—Olivia Bazlinton and Charlotte Thompson. There were not only failings in health and safety, but suggestions of a cover-up within Network Rail at the highest levels, aimed at concealing its mistakes. The families said in the media that they felt “lied to”, so can we really rely on Network Rail to give accurate information to anyone, even ORR?

The rail regulator is looking to expand its role. Given its mixed record on regulating Network Rail alone, its expansion is highly questionable. Michael Roberts, chief executive of the Association of Train Operating Companies, said in December:

“Train companies recognise they need to be held to account but plans to expand the ORR’s role to include more oversight of operators must be rigorously tested. The regulator needs to continue focusing on doing a better job of holding Network Rail to account, particularly on performance and cost-efficiency, before taking on new responsibilities.”

The Public Accounts Committee said in relation to ORR’s performance that

“we do not believe that the Regulator exerted sufficient pressure on Network Rail to improve its efficiency, and that there is an absence of effective sanctions for under-performance in the system...We doubt whether the Regulator is able to exert sufficient pressure on Network Rail’s performance”.

It has also said:

“The Office of Rail Regulation does not have a grip on Network Rail’s efficiency and appeared remarkably relaxed about the continuing gap in performance between Network Rail and international comparators.”

Those are hugely damning observations; they are damning in so many different areas. They question the ability of ORR to deliver on any meaningful level. Should the Government be allowing ORR to expand its role when it so obviously cannot do the role that it already has? Does the Minster share those concerns? Will he consider ways to improve the rigour of ORR’s role?

Network Rail can be financially punished by ORR through fines. However, Network Rail is financially supported by the Government. As my hon. Friend Sir Roger Gale pointed out, fines go to the Government from Network Rail, which receives Government money. That is a ludicrous circle. Highly paid executives are paying for failures with public money.

ORR can also impose enforcement orders on Network Rail if it misses its targets, which it does on numerous occasions. That may sound impressive, but it amounts to Network Rail having simply to suggest plans to meet targets. We have spoken about the current targets. There is already an admission that Network Rail is highly unlikely to meet the new targets. That is disgraceful. The organisation is a toothless tiger. That has to change.

The “members” of Network Rail, the stakeholders, are also meant to hold Network Rail to account, but they, too, rely on Network Rail’s own disclosure of the figures to do that. We keep coming back to the fact that no one can hold Network Rail to account unless Network Rail wishes to hang itself with its own figures. It simply chooses not to do so, or puts them in such a way that it is impossible for anyone to hold it to account.

The question that must be asked, and the real point of the debate, is this. What incentive is there for Network Rail to improve? I argue that, under the current system, there is none. Does the Minister believe that he can put in place mechanisms to oblige Network Rail to deliver significant improvements? I hope that today he will be able to outline some of those for us.

We have the highest track-access charges in Europe. Those costs are inevitably passed on to the travelling public. Sir Roy McNulty said in his report that running the rail network here was 30% more expensive than in comparable European countries. I admit that I do not know how that figure was arrived at, but I have not noticed anyone saying that it is inaccurate or giving a different figure. Does the Minister agree with the 30% figure, and what can his Department do to make Network Rail bring down its track access costs and other costs? On reading the details surrounding that figure, it could as easily be higher as well as lower.

The scale of the problem that faces Network Rail, which it recognises but chooses not to deal with, is illustrated by the fact that it employs 600 delay attribution staff. If anyone has talked to their own train operating company, they know how important it is to be able to attribute blame for a fault because it makes a difference as to who pays the bill. If the delay in operations is Network Rail’s fault, the fines are paid by Network Rail. If it is the fault of the train operating company, it goes on the performance data of the TOC and it has to pay the fine. As Members can imagine, the squabble can be pretty unedifying. Network Rail spends its entire time, and our taxpayers’ money, divvying up the blame and fee penalties among the train operating companies, and then using taxpayers’ money to pay the fines for any delays.

You could not make this up, Mr Amess. I am amazed that we have all decided to accept this appalling situation for such a long period of time. Network Rail has presided over a litany of high-profile failures. Some have resulted in criminal prosecutions. I do not wish to go into too much detail here, because the hon. Members representing those areas may be present in the Chamber. However, the Virgin train derailment near the Cumbrian village of Grayrigg was one such incident. Such failures are causing deaths and significant injuries, and Network Rail’s declining performance has put it in breach of its licence. Despite being “the experts”—as I said earlier, Network Rail’s expert opinion is heavily relied on—Network Rail has presided over a system in which rail freight delays are 32% worse than the end-of-target year. Long distance punctuality stands at 87%, which is well below the target of the Office of Rail Regulation. Delays have risen, which proves that the network has become less resilient to disruptions. That is important. Some workers have said to me, “I don’t want to lose my job, but I have serious concerns about the work that is being done by Network Rail on maintenance and oversight of engineers.” That is a serious issue. People within the industry feel that they must keep their mouths shut about the things that they can see not being done correctly. Network Rail does not give the travelling public any confidence that its rail service is as safe as it should be.

Photo of George Freeman George Freeman Conservative, Mid Norfolk

My hon. Friend is making a very powerful case, which many of us sympathise with; my constituents certainly will, too. She says that we need to consider new models. Does she agree that we should be really bold and radical in tackling this problem, which is a legacy of some of the mistakes of privatisation compounded massively by a botched renationalisation under the previous Government? In my own region of East Anglia, rail has a crucial role to play in driving a rebalanced economy, innovation and investment. Does she think it might be sensible for us to consider—possibly in areas such as East Anglia—putting track and train operating company back together, thereby creating a regional rail company that has full integration, a long-term franchise and the ability to invest and plan for future services?

Photo of Anne Main Anne Main Conservative, St Albans

That is an extremely valuable contribution. This debate is not simply about reading out a list of failures and then going away and allowing the situation to continue. If we were to do that, we would be failing the public again and again. Indeed, some of those tragedies that have occurred may happen again somewhere else. We must be radical. I do not wish to take up too much time at the beginning of this debate saying what we should be doing. My hon. Friend is absolutely right though. There are innovative methods. One thought is to have 10 regional areas operating on a system of alliancing. That is a phrase that I had not heard before, but it means having a deeper and more meaningful relationship with the train operating companies. Such a system relies on companies having longer franchises. Many ideas should be considered. None the less, significant issues need to be tackled. We are left with a structure that is patently not fit for purpose. I would like us to say that we will not accept a tinkering around the edges with this. I do not want us to say, “We will just remove one chief executive and stick another one in.” If we do that, we are basically left with all the same people, in the same place, presiding over yet another set of failures. Radicalisation is the only way forward. I am sure that we will hear different suggestions from hon. Members today. We need to sweep out the Augean stables of Network Rail. There are no two ways about it; we are talking about not tinkering but a fundamental change.

I wish to give other colleagues a chance to speak. As I have said, the list is long and damning. Network Rail has been fined for so many project overruns. On “Panorama”, we heard about the major investment in Reading. It is impossible to find out what the project was supposed to cost in the first place to know how much it has overrun.

Chiltern Railways wanted to have a station built. Network Rail estimated the cost at £13.2 million. Chiltern managed to build it itself for £5.2 million. One has to ask how Network Rail carries out its costings. One has to ask whether there is money washing about in the organisation in what can only be described as a negligent way. There are people who should stand before the Government to justify how they are spending our money, because it seems to be highly questionable.

I want to give other colleagues a chance to speak. As I have said, the list is long and damning, and I am sure that Members will add to it. I hope that we will explore all of the issues, including the way forward, because we need a way forward. I look forward to hearing answers to some of the questions that I have posed to the Minister.

Photo of Louise Ellman Louise Ellman Chair, Transport Committee, Chair, Transport Committee 2:56, 2 February 2012

I congratulate Mrs Main on securing this debate. She raises some extremely important issues. I know that the points that she has made will be repeated by other hon. Members who have similar experiences.

This debate takes place at an interesting time. Although we are focused on Network Rail, we are awaiting the Government’s proposals on the future of the whole rail system. Network Rail is an intrinsic part of that system; it has to enable the train operating companies to work and ensure that there is safety on the line and that trains are punctual. None the less, it cannot be considered entirely in isolation from the whole rail system. We must therefore look at how the train operating companies operate and at the role of the Department for Transport.

We must not forget that, over the past decade, rail has been a success story. More and more people use rail, which brings its own problems of overcrowding and how to address increased capacity. We want to encourage more freight on to rail. Again, that leads to discussions about how more capacity can be provided and whether that can be done without crowding out much-needed passenger services as well.

There can be no dispute over the fact that the rail system costs a lot more than it should. The McNulty report is the latest one to draw attention to that. It says that our rail system as a whole costs around 30% more than comparable European rail systems. Much—not all—of that can be attributed to Network Rail.

Photo of Anne Main Anne Main Conservative, St Albans

The hon. Lady is absolutely right to expand that point. Not only is access more expensive, but the licences are more expensive for the train operating companies and they pass on the cost to the travelling public. Network Rail’s high costs mean that travelling passengers are paying too much.

Photo of Louise Ellman Louise Ellman Chair, Transport Committee, Chair, Transport Committee

I thank the hon. Lady for her comments. She is correct. However the service is organised, it is a public service and it has to be so run. Whatever money is in the system ends up costing the taxpayer or the fare payer. Over recent years, there has been a shift in who pays for using the train. I am talking about the shift from the taxpayer to the passenger. Whatever money is in that system eventually comes out in the cost of the ticket, which is causing so much concern at the moment.

Network Rail says that it is addressing the McNulty recommendations, looking at being more competitive and reorganising itself. It is far too soon to say whether that will be sufficient, or indeed whether it will address the most important issues that have been raised. Some action has been taken in relation to the train operating companies. There will be longer franchises. For example, the franchise for the west coast main line will be for a much longer period. That could be part of the solution, but we need to see the Government’s proposals and vision for the whole rail system before it can be considered.

The hon. Lady referred to this week’s court case when Network Rail admitted its liability for two tragic deaths in 2005, when Olivia Bazlinton, aged 14, and Charlotte Thompson, aged 13, were killed on a level crossing. It emerged only last year that Network Rail had had a risk report in 2002 recommending the installation of new gates that would lock automatically when a train approached. That in itself is bad enough, but it seems that the documents had been suppressed and not made available to the police previously. Network Rail has now admitted liability. It is being charged, and it has admitted guilt. Those tragic deaths should not have happened. They were terrible, as was the cover-up afterwards. I hope that in its statement now Network Rail is more open and that it will change to a new approach.

The Office of Rail Regulation strongly criticised Network Rail and is considering whether lack of punctuality and more late trains have been a breach of its licence. It has already raised safety issues, particularly the lack of adequate reporting of safety incidents on lines. Network Rail points to cable theft as a reason for delays, and that is a factor, but it is not the only one. Only last week, the Transport Committee published its report on cable theft on the railways, and said that Network Rail could do more to make such thefts more difficult, so it has some responsibility there.

The hon. Lady made many valid points about Network Rail’s accountability. However, I recall how Network Rail came to be set up. I remember clearly that it was preceded by the conventional private sector company, Railtrack, which went into administration. It collapsed after absorbing endless amounts of taxpayer’s money and paying out bonuses to its private shareholders while letting the nation down. Structure and ownership are relevant, and we must remember that the wholly private sector company did not deliver. We must consider how the present company operates and how it could operate better.

There has been much criticism about lack of accountability in Network Rail. It has a board of around 100 members, which is not a good way to secure accountability. Efforts have been made to change how it is organised to introduce more accountability. For example, the Co-operative party’s people’s rail campaign is trying to involve more members of the public and users of the service with a much smaller board to which Network Rail would have to answer. That is one option. Certainly, the way in which it operates now is not satisfactory and must be re-examined.

The next spending period is 2014 to 2019, and we will know in July what rail projects have been proposed or agreed for investment. There are long lists of necessary investment projects from different parts of the country, including the northern hub, which is badly needed, the electrification programme and many others. If we do not secure value for money from investment, we will not receive the maximum investment in rail. That is extremely important.

The Transport Committee invited the new chief executive of Network Rail, David Higgins, to the Committee when he was first appointed, and we asked him questions about value for money, accountability, safety and other matters. We intend to repeat that, and to recall him in the near future, when we will raise issues of accountability, value for money and how Network Rail invests in the public interest. We will certainly take note of the points made today by the hon. Lady and other hon. Members.

Photo of Anne Main Anne Main Conservative, St Albans

I am extremely pleased that the Select Committee will call David Higgins back. During his “Panorama” interview last month, he said that he would release more figures and data by the summer to show Network Rail’s transparency. Is she aware of that, and will she be recalling him before or after that?

Photo of Louise Ellman Louise Ellman Chair, Transport Committee, Chair, Transport Committee

A date has not yet been fixed, but all the issues will be taken into consideration. It is important that hon. Members recognise that, whatever an organisation’s structure, Select Committees perform an important role in trying to bring accountability to people who are in charge of public services. We have stated that we think that Network Rail should be subject to freedom of information requests. We will pursue matters of public concern and matters that hon. Members raise today and on other occasions, and we will do so to the best of our ability.

Photo of Rob Wilson Rob Wilson Conservative, Reading East 3:06, 2 February 2012

I join other hon. Members in congratulating my hon. Friends the Members for St Albans (Mrs Main), for Suffolk Coastal (Dr Coffey) and for Ipswich (Ben Gummer) on securing this important debate. I apologise, Mr Amess, that I must leave the Chamber slightly early due to some child care issues that have arisen today.

Thus far, we have heard some valid criticisms of Network Rail’s performance on punctuality, delivery of long-distance and freight services through its operators, value for money and inefficiency, to name but a few issues. First Great Western, which serves my constituency, reports that 60.4% of delays are due to factors within Network Rail’s control. That figure includes 18 incidents of overrunning engineering work causing 1,053 minutes of delay, and 347 incidents of infrastructure failure causing 21,270 minutes of delay. The result is passenger inconvenience and frustration. Specifically in the Thames valley, which covers my constituency, Network Rail has caused a total of 2,976 hours of delay. That is not very good, to say the least, and considerably adrift of the targets that it was set.

The Office of Rail Regulation has said that Network Rail must improve on that, and two enforcement orders have been issued, which is highly embarrassing for such a company. I have spoken to First Great Western, and it is keen to emphasise that this is not a blame game, but a plea to work better with Network Rail to address problems that cause so much grief for so many of its passengers and our constituents. This is a long-standing plea and I had hoped that matters were improving, but it seems that I was far too optimistic about the moves that have been made to try to deal with some of the problems. Network Rail can and must improve on the terrible figures, but no organisation is perfect and we must see what can be done, and what improvements can be made.

As an organisation responsible for operating 20,000 miles of track and infrastructure, 40,000 bridges and tunnels, 18 major stations, 2,500 leased stations and 8,200 commercial properties, Network Rail has a huge responsibility. At this time of economic challenge, we need a railway infrastructure fit for purpose to keep Britain moving.

The McNulty report recommends a number of improvements, some of which have been covered in the debate and some of which will perhaps be covered later. I would like to draw from my experience of working with Network Rail on a range of issues on behalf of my constituents. That experience should not detract at all from anything in the powerful speech made by my hon. Friend the Member for St Albans, but all I can say at the outset is that my experience has been very positive.

Reading is a major transport hub in the south-east and Reading station is among the busiest stations on the country’s rail network. Every day, 700 trains pass through the station, which handles 14 million passengers each year. An £851 million redevelopment of the station is well under way, and its express aim is to provide more trains, to reduce delays and to provide a much better station overall for passengers.

In my first term in Parliament after 2005, I brought key stakeholders together to breathe life into a project that was drifting and even failing. It could not get off the ground, but I am pleased to say that Network Rail got onboard—if you will pardon the pun—and was very responsive to my requests, always positive and keen to get the job done. I am also pleased to report that to date the work has been delivered on time and on budget—although I take my hon. Friend’s point about “Panorama”. For such a large and complex project, that is welcome indeed, but it is also impressive considering that it must fit around a busy operating schedule. The Reading station redevelopment thus far stands as an example of Network Rail’s ability to deliver on ambitious plans for major rail improvements. Network Rail has shown me and my constituents that it employs good project management in this case, and has some very good people working for it.

In Reading, Network Rail is changing the track layout and building new platforms and entrances to the station to tackle congestion and to improve passenger journeys. Given the price my constituents pay for tickets—I am led to believe that it is the most expensive railway line in Europe—any work to improve passenger experience must be welcomed. New tracks and platforms mean that incoming trains will no longer need to queue outside the station, as they do now, which I am sure anybody who lives in the west country and further afield will welcome. Sitting delayed outside Reading station almost every day of the year is very frustrating, and a particular problem for passengers to the west of Reading. Network Rail engineers are building a new viaduct to the west of Reading, which is designed to take fast main lines over freight and relief lines. That work will enable the railway to cope as demand for train services increases in the years to come—a point well covered in the debate and a necessity that we cannot afford not to address.

Since 2008, I have been impressed by the emphasis that Network Rail has put on dealing with local stakeholders, ranging from myself as a local MP to Reading council and community groups. Its engagement strategies have helped stakeholders to shape the designs, not only for the station, but for the layout of the platforms and so on, and its work to keep local people updated has minimised disruption ahead of works. Thanks to its careful preplanning, a 10-day closure during the 2010 Christmas period meant that it was able to reduce—yes, reduce; I can see that there is surprise at that—the overall timetable for the project by a year. It was originally planned to be a six-year project and it will come in a year earlier than that, which is a big achievement.

The rail performance watchdog, Passenger Focus, has given positive feedback on the works to date. To Network Rail’s credit, in this instance an acceptable balance was struck between short-term disruption and a long-term reduction in the overall disruption caused by the project. Of course, there is huge room for improvement, but those efforts have been thorough and deserve a fair mention—credit where credit is due, after all. More recently, Christmas 2011 saw the completion of another major new bridge and new platforms to serve electrified southern lines. There too, Passenger Focus has given positive feedback on the works.

I am also pleased to say that all that work was completed to Network Rail’s published timetables, and I hope that that continues through to the project’s completion in 2015. If the project management at Reading station to date is anything to go by, I am confident that that can and will happen. My constituents in Reading East are ambitious for public transport services, and so am I. I am therefore pleased that, in my experience of the Reading station redevelopment, Network Rail has helped to deliver on that ambition.

I would like briefly to cite another example of my positive experience of working with Network Rail. Last month, I chaired another meeting of an ambitious group I have put together with Network Rail, BAA, London Heathrow airport, the Department for Transport and First Great Western. Our aim is to provide extended western rail access to Heathrow airport for Reading and beyond. In these tough economic times, such a link will improve business conditions in Reading and further afield, providing much needed connectivity with Europe’s busiest airport. That is important because Reading is home to many large employers and first-rate firms, such as Microsoft and Oracle, and the lack of a direct link leaves little alternative to lengthy and costly car and taxi journeys from Reading to Heathrow, which are estimated to cost local businesses £10 million a year in transport.

Reading, like other business centres, faces stiff competition regionally, nationally and internationally. We need to remain competitive, and in doing so, we must address the lack of a speedy link to Heathrow. A direct rail link is essential to our local economy over the next 20 years, and I am grateful to my right hon. Friend the Secretary of State for Transport and her predecessor, now Secretary of State for Defence, for their critical support in getting such efforts off the ground. Network Rail deserves our thanks too, because following my bringing together key stakeholders and establishing the group to drive the project forward, Network Rail has proved to be an enthusiastic team player and, again, has shown itself to be a good project manager. I commend it for that.

I hope that Network Rail’s chief executive, Sir David Higgins, and his directors will take some positives from the debate, despite the many criticisms that they must hear and take onboard. I, for one, can give the Network Rail projects and people with whom I have dealt a thumbs up, and I hope that proposed improvement changes will mean that right hon. and hon. Members can give Network Rail a thumbs up in future.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North 3:17, 2 February 2012

I congratulate Mrs Main on a first-class speech. I agreed with almost every word she said, but I am afraid that I do not share the rosy view of Network Rail that Mr Wilson expressed.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

It is not my experience. I have had many contacts with those who have worked in the rail industry over the past 15 years and before, and I have heard a stream of criticism from people fearful of being exposed because they would be victimised if their names leaked out. To illustrate that point, I deliberately forget their names, but I have heard a lot of very disturbing details.

I have a passionate interest in railways and have supported them since I served on the TUC transport committee in the 1970s. I have been a rail commuter on Thameslink for 43 years, and have travelled through St Albans in that time. I have always believed that railways are the transport of the future, which was not the view of the Department for Transport until recently—quite unexpectedly as far as it is concerned, there has been an enormous surge in rail passengers in recent years. Despite higher fares and travel problems, people have chosen to use the railways, which confirms my view that they are the transport mode of the future. There has been much investment over the past 15 years, which has been expensive, but we need a lot more of it.

Privatisation has been a hugely expensive mistake. Indeed, a Department for Transport official was heard to say privately at the time that privatisation was intended to facilitate the decline of the railways. That was the Department’s view then. It was thought that the railways were a diminishing form of transport and that eventually we would all move to our cars. The great mistake, of course, was to divide the railways between Network Rail and the train operators—to separate track and train. No other country in Europe has chosen to privatise their railways. They have seen the mistake that we made, and the problems that that caused. There have been accidents and there are serious safety problems, even now, and of course there has been a massive increase in costs.

As my hon. Friend Mrs Ellman, the Select Committee Chair, said, Railtrack was an appalling organisation. In the foyer of its headquarters it had an electronic indicator showing its share price. That is what it was concerned about—not serving the public, or safety. Eventually, of course, the previous Government were forced to abolish it and to come up with another solution. I understand that a private conversation took place in Downing street for several hours, between Stephen Byers, Tony Blair and the then Chancellor of the Exchequer. Tony Blair got bored after a certain time and walked out, saying “Well do what you have to do, but no nationalisation.” So they came up with the strange beast called Network Rail, which is neither nationalised nor privatised, and has no effective accountability at all. We have had not just privatisation but fragmentation—but that fragmentation was based on some economic theory, which was once explained to me by an economist. I said, “Costs were supposed to go down, but they went up massively.” “Yes,” he said, “our theory didn’t work.” Well, why do they not just reverse what they did and reintegrate and renationalise the railways?

There has been a massive increase in costs, in both public subsidy and fares, and, as Sir Roy McNulty concluded, at one point, our railways were up to 40% more expensive than continental railways. I have said in the Chamber, and to Roy, whom I have met twice with my hon. Friend John McDonnell, that the big difference between continental railways and ours is that the continental ones are publicly owned and integrated, while ours are privately owned and fragmented. I do not think that he was listening to me, because he clearly had his card marked, “Whatever you do, no public ownership: find another solution.” One of the things that he has done, which I completely disagree with—the railway unions have made the point—is to consider staffing cuts. The staff on the front line have apparently been judged very efficient. They are not the problem, or the ones who cause the costs, but they are the ones who will have to pay the price, because in place of a challenge to what Network Rail does, there will be cuts to staff in stations at night.

Network Rail is a dysfunctional organisation. It is expensive and bloated, and is a law unto itself. I have met David Higgins a couple of times, and I have a high regard for him. He is a decent person, but he has taken over an organisation that is out of control. He has had great difficulty in penetrating that appalling organisation. Network Rail is a rogue organisation, and impenetrable.

I have described it as an entrenched management mafia. I understand that within the organisation David Higgins suffers a degree of hostility, because every time he tries to change anything he is resisted. That is not just within the management structures; even at board level he suffers from those problems. It is down to the Government to back him up when he wants to do things, and to break the stranglehold of the corrupt management that has been there so long.

The vice-like grip of the old guard stems back to Railtrack days, and even though it was abolished some of the same people—and the same practices and culture—carried on. As I have said, I have had dozens of conversations over 15 years with staff and former staff, and they are all fearful of being whistleblowers, and I can understand why.

Photo of Anne Main Anne Main Conservative, St Albans

The hon. Gentleman is making a valid point. Some people have said to me that Network Rail is just Railtrack by another name, but with a large bung from the Government.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

Indeed, and without any proper accountability. As the hon. Lady has said, there is no means to control it.

The bullying culture in the organisation was appalling. Anyone who stood out against, challenged or criticised it, or said that things could not be done, was sorted out by a head of human resources, who has, I think, recently been paid off with a substantial sum, rather than sacked. For years he was protected by senior management. On several occasions he sacked people and, when threatened with a tribunal, settled out of court, eventually. Just to pay off staff whom he had sacked cost many millions of pounds. Eventually he was paid off to go elsewhere. He was symbolic of a culture that was about control and bullying, and making sure that individuals looked after themselves within the organisation.

Photo of George Freeman George Freeman Conservative, Mid Norfolk

I did not want to interrupt the flow of the hon. Gentleman’s interesting description, but he appears to be giving the impression that we should simply return to the days of old—of British Rail and an integrated national system. Many of us in the Chamber will remember British Rail, which was hardly a paragon of efficiency, investment or good service. Is that indeed what he suggests?

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

Indeed, I shall come to that shortly. In fact, British Rail was starved of money and did a remarkably good job in the circumstances. Those are not my words. That is how it was put by Tom Winsor, the former rail regulator, who said that British Rail worked miracles on a pittance, and that when it was handed over to the privateers it was “in good order”. A Catalyst report some years later made comparisons between British Rail and continental railways and found that British Rail’s productivity was the highest of all the European railways. That is not true of our railways now, but it was then. However, British Rail was starved of money because there were several Governments, and a Transport Department, that did not believe in railways. They thought that they were dying and did just enough to keep British Rail alive.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

Apart from the Catalyst study, most recently Christian Wolmar demonstrated that rail now has three times the subsidy that British Rail had, so there has been a tripling of subsidy and an increase in inefficiency, with higher fares.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

My hon. Friend is absolutely right, and of course that includes paying for the bloated, self-interested mass of people at the heart of Network Rail.

I like to think that David Higgins is possibly the right man for the job in the appalling organisation we have, but he has a difficult job at the moment. During the time in question there have been the accidents at Grayrigg, Potters Bar and Hatfield. There has been pressure for prosecutions, but Network Rail has constantly said “Not our fault.” It has tried to escape and avoid blame. As to the recent accidents on level crossings, it is interesting that just in the past couple of weeks David Higgins personally apologised to the parents of the two girls who were killed. That is a different attitude from that of previous Network Rail management.

Photo of Brian Binley Brian Binley Conservative, Northampton South

I do not quite have the same memories as the hon. Gentleman of British Rail, but I shall let that go and take up a more positive point, about the role of the regulator. We have got that totally wrong. It is ineffective. Is not that where we need action to help David Higgins?

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

That is another point I was going to make: regulation. At the time when Tom Winsor left the Office of the Rail Regulator, there was talk in Government circles, which leaked out, that the Government—the Treasury and, indeed, the Department for Transport—wanted light-touch regulation. They did not want the ORR to regulate too hard, because that might damage profits. It might make privatisation less popular. If a regulator of any kind is told “Light-touch regulation”, they will either go along with it and take the money, or say “I am not going to be blamed for things that go wrong,” and stand down and do something else. I suspect that that might have been the case with Tom Winsor, but there we are.

The Government must take hold of the matter. The speech today by the hon. Member for St Albans has started, I hope, to move the tectonic plates. Governments and Network Rail management have refused for years to face the problems, and the costs have been massive. If the Government want to save money, one way to do it would be by sorting out Network Rail. I suggest that they should first make it a proper public corporation again: one that is transparent and accountable—ultimately to Parliament through the Secretary of State—and subject to freedom of information inspection. There are inherent problems of cost, but those are caused by the contracting culture. Track maintenance was taken in-house when it became incredibly costly. Time and again I raised with the Secretary of State, under the previous Government, the question why track maintenance costs are four or five times higher than they were in British Rail’s day. The simple answer was that it was about contracting. There was contracting, subcontracting and sub-subcontracting. There were costs at every level whenever the work was contracted out, and of course there were project managers and lawyers negotiating contracts at every level. People were filling their pockets with public money.

British Rail directly employed its own staff at every level, from the engineers who designed and controlled the work to the track layers at the grassroots level. They were all employed in particular areas, so that they had possession and ownership of their own area of track. If things went wrong, it was the engineer’s fault. He was permanently employed and he was accountable. He knew that his life was in the railway industry being employed by British Rail and he had to get it right. In the case of subcontracted staff, perhaps from overseas—they might have signed on as subcontracted staff or contract staff from elsewhere—they disappear after the work is done. Nobody knows who has done the work, and of course there is no sense of accountability and no sense of loyalty. They are just doing a job for the money. That is quite different from the type of attitude that British Rail engineers had. They believed in railways and they were passionate about their work.

There are still many of those BR engineers about today, but they are being abused and rubbished by this appalling organisation called Network Rail, where they are employed as consultants. Network Rail has to depend on them, because they are the only people who know how to do the job, but Network Rail does not inspire loyalty and commitment to the industry. People love railways—I love railways—and when they work inside the industry, they devote their lives to it. It is like loving a work of art. They have those attitudes, which is exactly what we want. We want people back in the industry who are permanently employed, who are responsible for sections of track—their track, and if it goes wrong, it is their fault and they feel totally responsible.

We have an expensive operation. Some years ago, the Department of Transport held an internal seminar on project management and its costs. It invited Don Heath, the manager who had been the guiding light and chief engineer in charge of the east coast main line modernisation and electrification, and it called in the west coast main line privateers. Don Heath was asked how much of his total budget was spent on project management, and he said 1%. The privateers were asked how much of their budget was spent on project management, and they said 50%. It was 50 times more. Direct employment by a dedicated engineer working for BR compared with a mass of private companies and subcontractors speaks for itself.

We want the direct employment of engineers; engineers in charge; engineers who care about the railways; and engineers who are permanently employed and have a life in the railway industry and believe in it. We want committed and responsible people in charge, not fly-by-night subcontractors.

I must not take too long, but I want to raise a few more issues before I finish. I put down an early-day motion a year ago to register my opposition to the use of agency and subcontracted labour. My EDM is quoted in our debate papers. It stated:

“further notes research undertaken by the RMT union and academics demonstrating that the complex network of contractors and subcontractors means there are tens of thousands of rail workers employed by a multitude of companies undertaking renewals and that substantial savings could be achieved if renewals were instead carried out in-house as was the case before railway privatisation”.

I made that point a year ago, and it is still true today.

The Office of Rail Regulation has recently found that Network Rail is in breach of its licence and that

“major asset failures, congested routes and poor management of track condition” contributed to poor performance of the rail network in 2011.

Standardisation has collapsed as a result of the fragmentation of the railway industry. We have chaotic technical standards imposing massive costs and building up problems for the future. We have trackside land reserves being sold off—asset-stripped for profit—so track is no longer accessible for essential repair work, because the land alongside the track has been sold off. We have blue-sky contracts being issued whereby contractors are paid according to emerging costs. In other words, they can charge what they like; we will just pay the bill at the end of the day. All this needs fundamental change. With the right people at every level in the industry, we can do that, but it depends on Ministers, on Government and on the Department for Transport taking hold of Network Rail and transforming it into something that is fit for purpose.

Photo of Priti Patel Priti Patel Conservative, Witham 3:35, 2 February 2012

Thank you for your forbearance, Mr Amess, as I had to remove myself from the debate earlier. I congratulate my hon. Friend Mrs Main on securing this debate. I will declare an interest, because I used to live near my hon. Friend’s constituency when I lived in Radlett, which is close to St Albans. When I first started my working career, I used to commute along the line that she referred to, so I know exactly how expensive it was then, as it is now, and I know how unreliable it has become. I am grateful to her for securing this debate today, because in my constituency in Witham and in the county of Essex we have many problems with Network Rail, as well as with our train operating companies, so I welcome the opportunity to discuss the prospect of reform and improvements in relationships with Network Rail. We have heard a vast range of different experiences of Network Rail’s entrenched attitudes and lack of accountability to consumers. I hope that we will see improvements in the next few years, particularly with the change in management at Network Rail.

From a constituency point of view, I am now focused on the new long-term post-2014 franchise agreement for Greater Anglia. That follows the two-year franchise that has just been secured by Abellio, my new train operating company, which will run from this month until 2014. The longer franchising agreement—I hope the Minister will look into it going forward—is of real significance, because we are looking for greater integration, whoever the operator is, and a good relationship with Network Rail. Frankly, the two have been separate for far too long, and there has not been enough accountability and co-operation. National Express had the Greater Anglia franchise until January 31.

We want improved relationships, partly because commuters in Essex and in my constituency pay a lot of money. My constituents pay more than £4,000 a year for their season ticket into Liverpool street, and £5,000 if it includes zones one to six. The service was appalling under National Express, but we have had much wider issues and challenges because of Network Rail. Our train line goes into Liverpool Street, which means we also go through Stratford. The Minister will be aware that Stratford has been going through significant changes, with welcome improvements in the line over the past few years for the great Olympics, which will be coming to our great capital in the summer. However, my commuters have been disproportionately affected. All the commuters along the Greater Anglia line have been badly affected, and that has to be addressed.

Rail services in Essex, in my constituency and along the Greater Anglia line need improvement to cope with the increase in rail travel as Essex faces a significant growth in population. It is currently 1.4 million and is set to rise by more than 14% over the next 20 years, and yet there has been no investment in our rail infrastructure, in the tracks that go through Essex and Suffolk, all the way up to Norfolk. The Minister will be aware that MPs from along the line have come together to consider how we can work to secure long-term improvements in the relationship with Network Rail and our new franchise holder, and hopefully influence how we can get proper inward investment in our line.

It is fair to say that there are regular delays consistently across the line because of signalling problems, engineering works and congestion, particularly around Stratford and Liverpool Street, as I have already said. For my constituents, these journeys are nightmare journeys. Most of my constituents work in the City of London, so for them delays obviously have an economic effect in terms of their employment and what they contribute to our economy. We have severe issues with overcrowding, lack of seats and poor facilities. With the likes of National Express and Network Rail, the general customer satisfaction rating is abysmal, which is not sustainable. It must change and improve.

Photo of Anne Main Anne Main Conservative, St Albans

Does my hon. Friend share my concern that High Speed 2 is being sold to the public on the grounds that people will be able to work on the train, which will be of benefit to the economy, and yet it sounds as though her constituents, like mine, regularly travel in cattle-truck conditions, and they certainly cannot work on the train? There could be an argument for putting the investment that is going into HS2 into improving our existing railways.

Photo of Priti Patel Priti Patel Conservative, Witham

I thank my hon. Friend for her intervention and for making very valid points. I am all for investment in our railways, which obviously comes at great cost to the public purse. I am also all for getting “bang for buck” for taxpayers—there is no doubt about that—but it seems somewhat disproportionate that we are spending a vast amount of money on one particular project when there are certain lines and services that need investment. They are crying out for investment right now.

In the south-east and in the eastern region of the country, we contribute a hell of a lot to the economy. Our commuters also pay a lot in rail fares and it is now incumbent upon the Government to listen to some of these points from across the wider rail network and to start securing some long-term and strategic investment because, as I say, our constituents contribute a lot to the economy.

Photo of Nick de Bois Nick de Bois Conservative, Enfield North

Does my hon. Friend agree that there is also a desperate need for a third line between London’s Liverpool Street and Broxbourne? Those of us who travel between those stations, including those of us who use the Stansted Express, know that, for 17 miles, commuters are faced with intolerable delays, which is holding back investment in new housing, new infrastructure and business?

Photo of Priti Patel Priti Patel Conservative, Witham

I thank my hon. Friend for that intervention, and I absolutely agree with him. My constituency is 15 minutes away from Stansted airport and I am very familiar with that line, in terms of people who use it and come into Stansted airport. Investment must be made.

I come back to the need for a strategic vision. It is all very well investing in HS2, but there must be a long-term strategic vision for our railways in this country that addresses the existing lines and services, as well as the growth areas. Let us face the fact that, although we are an island nation, our population is growing and we all have housing pressures in our areas. As a result, even more commuters will be coming on to the railways, which is something that Network Rail will have to address, along with the Department for Transport.

The existing train operating companies and the companies bidding for the franchises in the future must wake up to the fact that they cannot just take over and think they can inherit a service that is okay, when in fact it is not okay. They must be ambitious for our commuters and our constituents, and look at making long-term improvements. As I have already said, we need “bang for buck” for our commuters, because they are spending a lot of their hard-earned money on travelling on the railways. That is a vital consideration.

Rail and other transport infrastructure must be modernised to reflect the significant challenges from increasing demand across the country, including in the county of Essex and the rest of the eastern region. My constituency, the rest of the county of Essex and the rest of the eastern region are all particularly attractive locations for people to live and, obviously, to travel from in order to work in London. However, we desperately need the investment in infrastructure that I have talked about.

We must also sort out issues of reliability. As I have said, in my constituency we have had a change in franchisee to Abellio. Network Rail must improve its public relations and start to engage with consumers—the commuters—directly. It cannot hide behind the faceless organisation that it has become; it must become far more accountable. It receives huge public subsidy and it also likes to spend taxpayers’ money on staff bonuses, the levels of which have been inexcusable.

This issue is about railway services now and in the future. Commuters are paying more for their travel and they deserve to see significant improvements to services. They should be able to hold organisations such as Network Rail to account. There must be more avenues for commuters to gain redress, and there must be better consumer information. At the end of the day, Network Rail, the Department for Transport and the train operating companies must take a much more strategic approach to consumer services and to rail infrastructure as a whole.

I seek reassurances from the Minister that there will be a much stronger vision. The previous Government failed completely. In my part of the country, there has been no investment in our railways for so long now, and that is simply unsustainable. A long-term vision is absolutely required now. We have congestion pinch-points along our entire network, which must be addressed by Network Rail. We need the introduction of passing loops and the dualling of tracks. They cost money, but they should all be part of a long-term strategic vision, both for my part of the country and, crucially, for our overall rail network.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington 3:45, 2 February 2012

I also congratulate Mrs Main on securing this debate. I know that offering such congratulations is usually done as an element of politesse in these debates, but I genuinely congratulate her. This debate has been really helpful, and having heard from both her and my hon. Friend Kelvin Hopkins there is not much more to be said really.

I am really pleased that Mr Wilson had that wonderful experience with Network Rail, and I hope that that experience is transposed to other constituencies, because it is very rare that we receive such a report about Network Rail. I am also sure that he will want to pay tribute to former Members who have lobbied on behalf of Reading—for example, Martin Salter—to gain the project that he described and bring it to fruition.

I want to address a limited number of health and safety issues, as so much else has already been said about other matters. Before I do so, however, I want to talk about the issue of bonuses. Way back in 2009, I tabled an early-day motion on bonuses, which was a reflection of how unaccountable Network Rail was. On that occasion, I think 51 Members of the House signed that early-day motion, and it seemed to have cross-party support. It urged Network Rail not to go ahead with the payment of bonuses that year, because it was laying off 1,500 track maintenance workers at that time. My understanding is that the bonuses were paid, on some scale.

May I draw Members’ attention to another early-day motion—early-day motion 2681—that has been tabled on Network Rail annual bonuses? So far, 28 Members have signed it. It would be very helpful if that early-day motion was supported. It is worded on a cross-party basis and draws attention to the statement by the Secretary of State for Transport in The Daily Telegraph on 19 December 2011 that

“Passengers would be extremely surprised if Network Rail attempted to award bonuses next year in the light of this action by the ORR”.

I urge hon. Members on a cross-party basis to sign that early-day motion, as well as noting the expressions of concern that have been made today about the bonus situation at Network Rail.

I am interested in rail because in my constituency we have a railway estate at Hayes. It was constructed by the old Great Western Railway and then taken over by British Rail, and it was built to house railway workers. It still is a railway estate, although most of the properties have now been sold off. Nevertheless, it still houses railway workers and their families, so I have taken an interest in rail for the past 30 years, based on the practical experiences of my constituents as they report them to me.

I must say that, tragically, my interest in rail also results from what happened under Railtrack. One of my constituents was one of the drivers killed at Paddington as a result of the tragic accident there, and there was the accident at Southall, which is literally one mile down the track from my constituency, where people were also killed. That accident also involved some of my constituents. So, I have taken a particular interest in health and safety matters on the rail network as a result of those incidents and the dialogue that I have with my constituents who are represented by their unions, the RMT, TSSA and ASLEF.

With regard to health and safety, I want to raise the issue of crossings. A number of Members have waged a campaign over many years to ensure that we rid ourselves of the crossings that we have, which are so dangerous. We heard this week about the findings against Network Rail as a result of the tragic deaths at Elsenham in 2005. Network Rail made a statement—I think it was made in early January—that it is proceeding to eliminate the crossings that it has. It says:

“Network Rail has closed 500 level crossings across Britain since April 2009 and intends to close a further 250 by 31 March 2014.”

My view, and that of many Members, is clear, and it reflects the views of the industry’s workers: the programme for the elimination of crossings must continue, and all high-risk crossings that we have identified must be removed, particularly those on high-speed rails. Replacing them with underpasses and bridges is the only way to ensure people’s safety. All other level crossings should be reassessed, with the ultimate aim of removing them also from Britain’s rail network. Although Network Rail has made its statement about the pace of change up until 2014, I urge it to consider how to increase that pace, to eliminate the risk.

The health and safety risks that resulted from privatisation, particularly from contracting out, are well documented. With Railtrack, there was contracting out—subcontracting—and then there was subcontracting of subcontracts, which meant that there was a failure to manage and monitor the quality of work. That was combined with cuts, particularly in front-line staff, even though there seemed to be a flourishing of management levels of bureaucracy within the company, which resulted in a high risk to workers on the tracks and the trains, including the drivers, and also, importantly, to the passengers. Track maintenance was brought back in to Network Rail, which was a major breakthrough, but we seem to be going down the same path as before, with a combination of a drive for cuts—it is argued that they are efficiency savings, but I would like to evidence that they are direct cuts—and potentially more contracting out. We seem to be replicating Railtrack’s mistakes.

In the current control period, 4, Network Rail is looking for the same level of efficiency savings as McNulty has called for, of about 30%, and they seem to be coming from direct cuts to staff. I shall read out some of the concerns that individual workers and groups of workers around the country have raised, via the

RMT. I have met groups of staff as I have held meetings with union representatives. The signals and telecom teams in Scotland

“have been reduced from three to two workers, resulting in a large backlog in maintenance work, leading to the company offering 12-hour overtime shifts in an attempt to clear that backlog.”

That was a criticism we had of Railtrack. Front-line staff numbers were cut and teams reduced, and therefore to achieve cuts and savings long hours of overtime were worked, which had an impact on staff’s ability to maintain safety levels.

Another current concern is that maintenance gangs:

“in Scotland are faced with vacancies being left unfilled. Furthermore, cover is not being provided when gang members take annual leave, are on long-term sick or undertake extended periods of higher-grade duty.”

Again, we had those same problems under Railtrack, with gaps in front-line service provision. The workers also report that budgetary constraints have meant that signals and telecoms teams

“from Carlisle and Warrington are filling vacancies by working overtime. The effect is that gang members are working long and arduous hours with potentially serious consequences for both health and safety at work and the integrity of the infrastructure itself.”

In the north-west of England

“track inspections are now taking place every two weeks rather than the previous once a week inspection regime.”

Members might recall that under British Rail there were track inspections three times a week, so we have gone from that to once a week, and now to once every two weeks. In some of the recent reports, the accidents have been specifically connected to the track, and the lack of adequate inspection.

I can remember the debates in the House about another problem:

“RMT inquiries into the cause of the disastrous overruns over Christmas and New Year 2007/08 found that in the Overhead Line division vacancies were being left unfilled for long periods of time…the Doncaster OHL depot had a staff compliment of 40, however at that time there were 7 vacancies that had been unfilled for some considerable time. This represented a staff shortage of almost 18%.”

Yet another concern is that in

“the Anglia region S&T Teams have also been reduced to 2 workers. Where work is planned and risk assessed in advance this can on rare occasions be an acceptable practice” because at least management can assess the work that the signals and telecoms team is going to undertake. However, in a rapid response fault team the workers do not know in advance what they are going to face, and when or where they will have work on the track, and that results almost certainly in risk but also in further delays in the work being done properly. Also in the Anglia region there are further reductions in the rate of track maintenance inspections.

What I am trying to point to is that sometimes we need to talk to the people on the very front line of the delivery of the service, which is what a number of us have done. Reports are coming back from around the country that because of the pressure under control period 4, which is looking for 30% cuts—and under the McNulty recommendations they will roll into control period 5—front-line staff are being cut and the number of inspections reduced, which will inevitably lead to the same problems we had with Railtrack, which resulted in one of my constituents dying.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I support everything my hon. Friend has said about inspections and track. A little over 10 years ago, in the last days of Railtrack, I was asked by a friend from inside the industry to look at the track north of Hadley Wood tunnel, which is not far from where I live. It is a significant bit of track. My friend was seriously concerned, and wanted me to raise the matter with John Prescott, who was then responsible for railways. I did not manage to get down with my camera because I was too busy. Just north of that track are Potters Bar and Hatfield. I think that the two might be connected.

[Andrew Rosindell in the Chair]

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

I can only state as baldy and starkly as I can that what my hon. Friend has just said is that we have been here before, under Railtrack, and that we seem to be replicating the experience under Network Rail. Everyone wants to look at the drive for efficiency and the reduction of costs, but all the reports we have seen so far are not about the lack of efficiency of front-line staff. The increasing costs are a result of the fragmentation of the industry, the division between rail and operations, and the lack of co-ordinated management across the network. My hon. Friend spelt out very clearly in his speech that that is where we fail in comparisons with the rest of Europe, where there is an integrated railway system that enables those efficiencies and economies of scale to be made. Network Rail is look for savings and efficiencies in the worst possible way, by reducing front-line staff and increasing the pressure on specialists working on the ground, which results, I think, in increased risks to the health and safety of workers and passengers.

Will the Minister clarify when the Government’s White Paper is to emerge? I hope that we can have a genuine debate on the document and that we can go at it with a blank sheet of paper, a tabula rasa for putting our ideas back in. I hope that we do not have prejudices against public ownership, but that we look at what will work. The lessons from Railtrack, and now from Network Rail, are about investment in front-line services and about ensuring that if we are looking for savings we do so by overcoming the fragmentation. We must support those people working at the front line under the tiers of bureaucratic management we have had for decades, under both Railtrack and Network Rail.

Those are just reports collected from across the country. One exercise we could do during the discussions on the White Paper—I know we have done this before—is an extensive consultation across the country with the trade unions that represent front-line workers to get a feel for what is happening on the ground. Ultimately, it was the workers on the ground who exposed what was happening within Railtrack and eventually forced the change. Tragically, that change came too late for a number of my constituents, one of whom was killed in the accident at Paddington while others were seriously injured at Southall. I hope we have learnt the lesson from that and that in the White Paper discussions, we will look to the longer-term future of investing in an integrated system in which workers and passengers have much more democratic control and say.

Photo of Brian Binley Brian Binley Conservative, Northampton South 4:00, 2 February 2012

It is a pleasure to serve under your chairmanship, Mr Rosindell, newly come as you are. I congratulate my hon. Friend Mrs Main on obtaining the debate and on her speech. As many contributors have said, this is a vital debate. I hope that many of her comments will be recognised by the Minister and acted upon, because action is needed.

I pay tribute to those hon. Members who have contributed to the debate. By the nature of their contributions, I know that they take the subject seriously. I want especially to congratulate Kelvin Hopkins, who has a long interest, massive enthusiasm and great knowledge of the subject. It is always a pleasure to listen to him, because he always speaks in such a friendly and good manner, which is a lesson to us all. I welcome this opportunity to discuss Network Rail, which is vital to the nation’s economy and well-being. That underlines the importance of the debate.

I declare an interest as chairman of the Northampton rail users group. Consequently, I will contain my remarks to issues specifically affecting my constituency. On that basis, I wish to explore three themes: the factors that make rail travel from Northampton increasingly unbearable, the urgency with which the rail industry must get a grip on its cost base—a matter that has been mentioned on a number of occasions—and the pressing issue of capacity and the need to face up to what must be done to relieve that pressure, especially for my constituents in Northampton South.

That leads me to the west coast main line, which is the nation’s most important rail artery and has the ability, given supplementation, to add enormously to our economic well-being, especially in Manchester, Leeds and the areas north of Birmingham. The current daily capacity crunch is intolerable for the west coast main line’s users and will become increasingly so as the months and years go by. Network Rail’s most recent assessment is that the line will be full to capacity by 2024. Some expert railwaymen—a number of whom sit on my rail users group, I am pleased to say—would argue that that capacity might be reached quite a bit earlier. So we are talking about an important matter.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

The hon. Gentleman is again making a very effective speech. Two possibilities could alleviate the problem of capacity on the west coast main line fairly quickly: we could develop and improve the line from Paddington to Birmingham Snow Hill to make it an express route, and we could develop a dedicated freight line to free up the west coast main line for more passenger traffic.

Photo of Brian Binley Brian Binley Conservative, Northampton South

I thank the hon. Gentleman for that contribution, which I am sure the Minister has noted. My particular favourite is to ensure that High Speed 2 comes into being and is taken further, to Manchester and Leeds, because there is no doubt that transport systems cannot operate efficiently under the current pressures. That is one reason why we have the problems that we do, and it is one reason why the track is constantly in need of maintenance and repair, which makes the hold-ups even worse. We simply have to relieve that pressure. That is why I am a major supporter of High Speed 2. I argue that we should do our best to bring it forward as quickly as possible. I do not want to see High Speed 2 up and operating in 2030; I would much rather hear the Minister say, “We can make a target of 2024.” If the Chinese can put up a hotel in 14 days, we can do a little better than 2030.

I pay tribute to London Midland, because it has achieved a modicum of success, but that needs to be seen alongside the pressure. I feel for London Midland. I think it has many faults, but it is battling against a difficult situation. I make the point again that Rugby has been a problem in recent months. Rail travellers hate to get off at Northampton to circumvent Rugby by bus or, equally, to circumvent Milton Keynes going the other way.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

I am distressed to hear my hon. Friend describe Rugby in such terms. We have a brilliant rail service and a fast-growing town, so I hope that he would look a little more kindly upon my constituency.

Photo of Brian Binley Brian Binley Conservative, Northampton South

We are on the other end of your line, mate, and I can tell you that the service is not as good as you argue. Otherwise, all my constituents would not be as up in arms and as dissatisfied as they are. My hon. Friend knows very well that we use quite a bit of the same line, and I do not believe that two towns so close together can have such differing views on the quality of rail transport in their area.

I turn to the problems specific to Northampton. The Government wish Northampton to be a growth area and have said that they want Northampton to build 56,000 extra houses by 2026. They argue a population increase of 120,000—a 50% growth—yet where those people will work is a major question. Many of them will come from the south-east, especially London, thus alleviating the housing problems of that area. Consequently, commuting will become even more important. My guess is that there will be at least another 12,000 to 14,000 regular commuters on the link from Northampton through Milton Keynes down to Euston.

Commuting is becoming prohibitively expensive for the people of Northampton. As I have said, we will have 120,000 additional residents, at least 12,000 of whom will commute to London for work, yet the cost of an annual season ticket from Northampton to London is now £4,756, and a staggering £5,628 for those who need to go further on the underground. That does not take into account £815 in parking charges. All that is more than a quarter of the disposable income of a person on a £30,000 salary.

Many people will ask whether they can really afford to look to London to continue to provide them with employment. Many of them might even decide that it is not worth being employed at all, given the cost of commuting to a job in London. The major reason why people are moving to Northampton to fill the houses that I have talked about is that they cannot afford houses in London and the south-east. These people are the service workers of our great city. They provide vital services, but they are not highly paid. They do not work in the City, making millions on small money transactions—by small, I do not refer to volume, but to the difference between buying and selling. They are not those sort of people; they work in our restaurants, retail outlets and offices. Although £30,000 is a reasonably good salary in Northampton, if people have to pay a quarter of that to travel to their job, that is a pretty bad deal that needs to be looked at seriously.

Let me turn to the problem of the McNulty review. It seems that the Government for ever think that rail increases are a battle between the taxpayer and the consumer, but there is a third element: the service provider. McNulty was open about his concerns about the cost base of the rail providers and talked about prices being 30% more expensive per passenger kilometre than other rail systems in a comparative group. They ought to be out of business, for God’s sake! No business can operate effectively at a 30% higher cost base and expect its consumers to continue to support it. Usually, they would simply go to another supplier, but therein lies the problem.

Photo of Anne Main Anne Main Conservative, St Albans

Does my hon. Friend agree that that is the real conundrum? How can it be regarded as a private company when no private company could possibly operate in such circumstances?

Photo of Brian Binley Brian Binley Conservative, Northampton South

Of course, that is right, but because Network Rail is a monopoly in some respects, it needs the Government and the regulator to be its friend and ensure that it operates competitively, but we know from McNulty that does not. McNulty has also said that there is a subsidy of 31p per passenger kilometre at present, so there is 30% more cost and 31% subsidy. What would happen if those costs were reduced? In addition to the taxpayer and the consumer, there is a third factor in cost setting and cost payment—the train operators. Let a message go out loud and clear that they have a duty and a responsibility to care for their customers in a much more efficient way than at present.

I am concerned about Network Rail’s supply chains and the way in which it bids for jobs. When I was a managing director and wanted to get work done for my business, I would talk to a number of suppliers and ask, “What’s the best way of doing this? How do I achieve the most efficient answer for this job at the most efficient cost?” Are Members aware that Network Rail does not do that? It decides internally what it wants done and then goes to people to tender on the basis of its own decisions about how best to undertake the job. We have talked about the quality of middle management in Network Rail. No wonder that costs are so high when middle management is poor and does not even look for ways to be more efficient by talking to suppliers who know what they are doing in relation to a given task.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

The hon. Gentleman is making yet another strong point. One of the problems in Network Rail is that contractors are required to work rigidly to specifications, even when those specifications are wrong. In British Rail’s day, the engineers locally would find out whether things were wrong and correct them as they went along.

Photo of Brian Binley Brian Binley Conservative, Northampton South

The hon. Gentleman talks some truth. I have never known a business man say that he wants an end product, only to ignore the supplier and say, “I’m not bothered about what you tell me is the efficient way to do it. This is how we are going to do it, because we know best.” But we do not know best—that is the reason why I would get a supplier in the first place.

Photo of Mike Weatherley Mike Weatherley Conservative, Hove

Does my hon. Friend agree that part of the problem is the blame culture that has developed at various points in Network Rail’s history?

Photo of Brian Binley Brian Binley Conservative, Northampton South

I do not know about that, but I have been interested in running efficient businesses all my life and I know that this is not efficient. That is what I am bothered about, and that is why I say to the Government that it is their job to make sure that it is efficient. If there are bad practices of this kind, it is the Government’s job to change things. The Minister represents all the consumers. They look to him as a kindly father who looks after their interests, and I am sure that he will do so.

I restate my full and enthusiastic support for high-speed rail. It is not about speed, and the nonsense about getting to Birmingham 20 minutes sooner is not the reason why it is important either. Of course, if we are to build a new railway, it must be the best that it can possibly be. Therefore, it must be the quickest and most efficient that it can possibly be. The real reason why high-speed rail is important, however, is capacity. My good friend the hon. Member for Luton North will tell us that we can only get so many trains on a line in a given hour. High-speed rail is about slots on the line and capacity. Rail will be oversubscribed by 2024—some people believe sooner—which is why high-speed rail is so vital.

Let us not have facile arguments about whether it is worth paying more to get to Birmingham sooner. That is not the point. The point is whether we get to Birmingham at all. Let that be a lesson to those who oppose High Speed 2. I know people who live in Manchester, Leeds and other such areas who know that there is a blockage in Birmingham. They know that it is increasingly difficult to go by rail through Birmingham and down to London and the south-east and then to the continent. They are looking to this Government to ensure that their part of HS2 is completed. I repeat that it is a massively important investment for the country in economic and social terms, and in ensuring that our children and grandchildren are employed on a good salary. I recommend that the Minister bring it forward to 2024. That is a target to set and, if he accomplishes that task, he will deserve a knighthood.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby 4:18, 2 February 2012

I add my congratulations to my hon. Friend Mrs Main on securing the debate, because, following on from my hon. Friend Mr Binley, the activities of whichever body is responsible for the management of our railway network have a significant impact on many of my constituents in Rugby, not only those who are commuters, travellers and users of the network, but those who live close to the railway. I shall talk about issues affecting that latter group in a moment.

The railway is important to the town of Rugby and its surrounding villages. The west coast main line runs through it. Our 50-minute service to Euston is operated by Virgin, and other trains, which take slightly longer and stop more regularly, are operated by London Midland. I do not have as much experience in the House as many other Members present, so I cannot outline history in the same way, but I intend to address three matters that affect the railway in Rugby that have been drawn to my attention in the 18 or so months since I became a Member of Parliament, two of which relate to the upgrade of the west coast main line that started in 2003 and was completed in 2008. Many of my constituents have told me about the massive disruption that they have experienced throughout that period.

I want to talk first about one of the major projects that Network Rail ran: the improvements at Rugby station that took place between 2006 and 2008. After listening to the account of my hon. Friend Mr Wilson, it seems that his constituents are going through much of the disruption and uncertainty that my constituents went through over a period of two years. The improvements that have taken place are highly welcome. Notwithstanding the remarks of my hon. Friend the Member for Northampton South, the first impressions of Rugby have been transformed. It no longer seems to be an ugly, unattractive town where arrivals have to pass down a dark and dingy tunnel. People now arrive at a modern and vibrant building that exemplifies all that is good about the town of Rugby as a go-ahead and positive location for business.

Photo of Brian Binley Brian Binley Conservative, Northampton South

May I confirm that Northampton is on a loop line? Although the main line from Rugby works very well indeed, the loop line from Rugby through Northampton and down to Milton Keynes does not. If my hon. Friend could pay a little heed to that, I would be very grateful.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

Absolutely. My hon. Friend will expect me to stand up for my constituents who receive a good service. It is very important that we maintain that service, whether or not high-speed eventually takes place.

My hon. Friend the Member for St Albans referred to the accountability of Network Rail in the costing and management of its projects. Although we have a great new station at Rugby, there are very serious questions about how much it cost to deliver. Some of those questions were aired on the BBC “Panorama” programme on 16 January, when reporters were advised by the Office of Rail Regulation that soaring costs were an oversight, but that it was not possible to determine by how much the project had overspent. Our local newspaper, the Rugby and Lutterworth Observer, spoke to a member of the Rugby rail users group who talked about setbacks in the construction process leading to train services being stopped simply because Network Rail was unable to complete its work on time. John McDonnell drew attention to that issue.

We have got a new station, but the second matter regarding the changes at Rugby is the noise nuisance from the new track that has arisen since the works upgrade on the west coast main line. I have met Network Rail staff and approximately 25 residents to try to resolve that matter. In most cases, we are talking about residents who have lived in the area for many years. They had got used to living with the railway before the upgrade and were familiar and comfortable with the noise.

Many of the works that took place in Rugby were intended to enable trains to pass faster through Rugby station. Of course, the faster that trains travel—the higher the speed that they run at—the more noise is generated. In the district of Hillmorton, there are two separate noises: first, the absolute noise that the trains make; and secondly, a distinctive one-off thud is heard each time a train passes. I will come to that in a moment.

On major noise levels, my constituent Peter Bayliss invited me into his garden to listen to the noise. He showed me hand-held sound meter readings of between 89 and 90 dB for trains passing through at great speed. That was not previously a problem because, under the old alignment, trains slowed down to pass through the station. There appears to be no resolution to the issues faced by Mr Bayliss and his neighbours.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

The M1 goes through my constituency and I have persuaded the Government to build noise barriers, which have made a considerable difference. Would noise barriers help in the hon. Gentleman’s constituency?

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

I thank the hon. Gentleman for his advice. We are continuing to talk about the problem, but we are effectively being stonewalled by Network Rail.

The thud has been the subject of correspondence between me and Mr Higgins, the chief executive, who has been mentioned. My most recent letter from Mr Higgins in that regard was dated 27 January. I was invited into a resident’s upstairs room, so that I could understand the impact of that noise disturbance. I will not detain hon. Members by telling them which room the lady constituent invited me into, but I was able to hear a very distinctive thud each time a train passed. The lady told me that the noise wakes her regularly in the morning. I use the line regularly, and as a passenger, I can identify the sound. The noise comes from something that I understand is called a switch and cross, which is a device that allows trains to maintain their speed. In his letter, Mr Higgins tells me that there is absolutely no fault with the equipment. That is something my constituents will have to live with.

In both instances, my constituents had come to live with the railway over many years and were comfortable with it. There has now been significant change. I do not think that Network Rail has taken that on board. There is little prospect of remediation for my constituents.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I am sorry about that. Another suggestion is a floating slab track, whereby the track is insulated from the source of the noise and the vibration is taken out of the ground. That is another very good method of noise reduction.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

I thank the hon. Gentleman for his advice and guidance, but I would have hoped that Network Rail would refer those things to me when I presented the problems to it. In each case, neither remedy has been proposed. Network Rail should be more responsive to a broader group of people, not only those who use the railway and its operators, but those who live by it. As a result of the improvements to the west coast main line, those people have had their quality of life significantly impaired.

My hon. Friend the Member for Northampton South referred to his enthusiasm for HS2. Those who live close to the line or who are disrupted by the building of high-speed rail will be massively compensated for the disturbance and there will be all sorts of remedial measures. Unfortunately, I am talking about an upgrade to an existing line and my constituents will not receive those benefits.

The third issue that I should like to raise is access to the west coast main line during construction of the Rugby western relief road by Warwickshire county council. That long-awaited road, which was designed to relieve traffic pressure in our town centre, eventually opened to traffic on 10 September 2010. The works required the demolition of a road bridge at Parkfield road and the construction of a new bridge on a different alignment. For a variety of reasons, the history of that road’s development shows that it was not a successful project. The costs rose from the original estimate of £36.5 million to a final out-turn of around £60 million, with a substantial delay in delivery.

A report prepared by the county council draws attention to the reasons for both the increased cost and the delay. A substantial reason given was that problems arose in gaining access to Network Rail land to get necessary works done. There was some difficulty in getting—again, this is a technical term—forms A and B approved by Network Rail. That led to uncertainty in predicting when certain works could start, which, in isolation, added a cost of £2.3 million to the project. In addition, the reprogramming of some work in the diversion of a 25 kV power supply added £635,000 to the project.

The entire issue was the subject of a letter from the leader of Warwickshire county council to the then Secretary of State for Transport dated 5 September 2011. That letter refers to the need for a works agreement with Network Rail before any work can be carried out and to the delays in getting that agreement. I understand that a template is being negotiated by the County Surveyors Society. In this instance, gaps have been left that have led in turn to issues of contention.

The problem is that Warwickshire county council felt obliged to accept the terms imposed on it by Network Rail, which was the dominant partner in the arrangement. The county council certainly believes that Network Rail was less than constructive in enabling the bringing forward of a project that would give broader economic and community benefits. The county council has called for a review to establish more equitable terms, with regard to the wider public interest. Will the Minister comment on that? I raise the point today to support such a review.

Rail connections are very important in my constituency and, as we have heard, in the whole country. We clearly need efficient management of our track. I hope that the issues raised today will lead to improvements in how we operate and maintain this essential public service.

Photo of Therese Coffey Therese Coffey Conservative, Suffolk Coastal 4:30, 2 February 2012

It is a great pleasure to participate in this debate under your chairmanship, Mr Rosindell. I was delighted to secure the debate, led by my hon. Friend the Member for St Albans (Mrs Main). On behalf of us all, I would like to ask the Minister to pass on our best wishes to my right hon. Friend the Minister of State, Department for Transport, who has responsibility for rail, who has sadly had an accident. I understand that she is back on her feet. I hope that she makes a swift recovery. I know she is very resilient, but I hope she gets the rest she needs to make a full recovery.

Network Rail is 10-years-old this year. We all know how, why and when it came into existence. It is timely and appropriate to have this debate, especially as just over a month ago the Office of Rail Regulation served a notice of breach of licence to Network Rail on two fronts: on long-distance rail and on freight rail services. I have a particular interest in freight rail, which I will come to later in my speech.

One point that has been well expressed—I will try not to repeat too many points that have already been made—is that there has been some progress with Sir David Higgins. However, that does not mean that his job already requires significant six-figure bonuses. I am sure I am not the only person whose eyebrows were raised on understanding that that would be the case. I encourage the remuneration committee of Network Rail to consider carefully—having received those two breaches and considering the ongoing challenges that our constituents face—whether that bonus would be appropriate. I have no problem at all with rewarding success, but I cannot say at the moment that there has been great success on our rail network.

Since the debate was announced, I have had a very quick response from Network Rail. I commend my hon. Friend the Member for St Albans, because I understand that she would not meet with Network Rail until the debate had taken place. I did meet people from Network Rail. It was fantastic that my original query from last summer, which I followed up in October and again in January, was finally answered—good news. It also gave me the opportunity to meet Dave Ward, who has been put in charge of the East Anglia region. He talked about some of the changes that have already happened, and what he plans to do. I will give praise where praise is due: I like some of the changes that have been proposed. However, the proof will be in the pudding.

I want to mention briefly factors beyond control, which have been talked about. Perhaps this is degenerating the debate, but Network Rail has often been called “Not work rail” or “Network fail”. The wrong kind of leaves and the wrong kind of snow—these factors are difficult and I accept that. Extraordinary incidents will happen; for example, burst water mains. Cable theft has been a growing problem. The Government have responded. That response perhaps took longer than everybody wanted, but they have done the right thing in tabling an amendment on tackling metal theft, which will include aspects of cable theft. Network Rail could have done more itself to assess the security of its own lines, whether through technology, or through the good old-fashioned use of people to check what is going on. Indeed, Mr Ward suggested to me that he is spending £2 million on security patrols to try to ensure that such theft does not happen, or at least that it is reduced, and I welcome that.

I also want to mention two Members who cannot be here today. My hon. Friend Ben Gummer, who also helped to secure the debate, is opening the wing of a hospital, or something like that, in Ipswich. I pay tribute to his relentless work in trying to improve and secure investment for the greater Anglia area. My hon. Friend Priti Patel has already spoken about the challenges for that line, so I will not repeat them. My hon. Friend the Member for Ipswich has also been working with my hon. Friend Miss Smith on the Norwich in 90 and the Suffolk in 60 campaigns, bringing together MPs from across all three counties to ensure that we get a better service.

The other hon. Member who cannot be here is my hon. Friend Karl McCartney. He also has to meet constituents today, and he wanted me to plug the fact that he is fed up with Network Rail. Anyone who has ever been to Lincoln will know that the railway line dissects it. He believes that the latest proposals for freight will mean that the level crossing will be closed for 40 minutes in every hour in daylight hours. He does not think that that is acceptable, and that is a fair point.

On issues of cost and time, we have heard some interesting ideas about what the right thing to do is. Is the right thing to go back to integration, or is it to introduce more competition? My first interaction with Network Rail came about after we lost the hourly service, which had already been agreed before I became the Member of Parliament. Passengers had to change trains—there was no through train all the way to Lowestoft and they had to change at Ipswich. That meant that passengers who were not so mobile, or those with heavy luggage, had to be escorted across the tracks. On a very tight connection time of perhaps less than six minutes, that did not always feel very safe or ideal. In fact, passengers ended up going outside the canopy and out into the open elements. Wet or icy weather added to the problem.

Network Rail was supposed to build a footbridge and lifts. It did so, but they were several months late and cost £2.7 million. I understand that £1 million a lift is the going rate, which leads me on to a general point. Everything from Network Rail seems to be costed in units of £1 million: do we want a level crossing? “Yeah, that will be £1 million.” A new academy school building is being built and more children will use a particular route on the way to school. Network Rail has lodged an objection in respect of Runnacles Way, because children walk across there. A bridge is required, which might cost £1 million, or it might cost £2 million. Meanwhile, someone who has been doing some contracting work for the Environment Agency—which used to have the same problem in my view; everything was very expensive—reckons that he can build the bridge for approximately £150,000.

We should not accept that everything just costs £1 million or more. That is why I was encouraged by the changes—I think it is called the devolution principle—that allow directors to take control of their regions. The Network Rail group that currently does a lot of small projects will be opened up. Pilots are being conducted to find out whether other firms can bid for tender. Indeed, Abellio, the new franchisee that comes online within the week, has said that it would strongly consider doing that; it does maintenance projects in the Netherlands. That presents an opportunity, but without the complexity that adds cost through procurement, as Kelvin Hopkins said. However, we need to do something about value for money. We should not accept that the cost of everything is in units of £1 million. Network Rail pulled its finger out with the floods in Cumbria and rebuilt a station in three days, which was fantastic. I would love to see that happen everywhere.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

The hon. Lady is making a strong point about cost. British Rail used to have cash-limited projects that worked within cash limits. The engineers and the directly employed people said, “How do we do this as cheaply as possible? We have to work within the cash limits and we want to do the best job possible.” That actually worked, and is one of the reasons why cost was low in BR’s day.

Photo of Therese Coffey Therese Coffey Conservative, Suffolk Coastal

The hon. Gentleman has more experience than me on those matters. Some interesting ideas are coming out today—I am sure that the Minister will take note of them—about building not just to spec, but being part of the design solution, and about other activities being constrained within a budget.

I should like to thank Network Rail, Suffolk county council and the Government for putting aside the money to ensure that we get the Beccles loop, which will reintroduce an hourly service all the way through to Lowestoft, as opposed to our only getting trains every two hours beyond a certain point. That improvement should be in by the end of this year.

Level crossings are a big challenge in my constituency. I respect the ambition of John McDonnell to see no level crossings at all. I genuinely believe it is just not feasible. I live in a rural area with nine stations and 50 crossings, but many of those are bridges built a long time ago, back in Victorian times. Of the 27 level crossings in my constituency, only 11 have automated barriers. Eight have to be opened by hand. People drive up, get out of their car and walk to the gates, use the phone, open both gates, drive over, and then come back and close the gates. Those are the examples we could find; we have been doing a bit of research. I have used such a crossing and, as hon. Members can imagine, I have avoided using that route again.

In eight places there are just lights, with no barriers at all. Two of those are on A roads, one with 15,000 traffic movements per day. There have not been that many accidents, but I am not sure whether that is due to the design or people’s patience. It is such a crossing that I have been chasing Network Rail about—the one that will cost £1 million for installing two barriers—and I am delighted to say that I was told that it would be done by 2013. I am delighted that Network Rail has committed to doing that, but its challenge is to try to do that more cheaply. I want the response paper to contain something about how we are going to tackle some of those matters. The example that I have mentioned is not the only level crossing that is needed.

In a rural area, I would rather have routes than roads blocked off. If there were an insistence on there being no level crossings at all—just an underpass or bridge—quite a lot of mobility within rural areas would be compromised. It is about taking a risk-based approach and seeing whether we can do something about some of the crossings where people have to get in and out of their cars, and so on.

I welcome the change in who can bid for work, which will be piloted. I understand that Anglia will be part of that pilot. However, it is critical that there is transparency. I want Network Rail to report on how many projects are internal and external. Starting to show value for money and the percentage, or value, of work being done externally would be a useful barometer.

Photo of Anne Main Anne Main Conservative, St Albans

My hon. Friend is making a powerful speech. When I was looking to research this debate—I did not want to get too involved—I was amazed, in respect of contract tendering, that Network Rail’s costs for a job seem to be padded out with all the worst-case scenarios and it comes up with a massive figure and adds a bit on top for good luck. If everybody operated like that, nobody would be awarded the tender. Network Rail would be forced to produce a better set of figures if others were allowed to tender as well.

Photo of Therese Coffey Therese Coffey Conservative, Suffolk Coastal

My hon. Friend makes another important contribution. I worked at the BBC for a short while, so I recognise that contingency can be a big part of any project cost. I also recognise that things sometimes go wrong and that people have to react quickly. I mentioned earlier an analogy with the Environment Agency. Some works were done by the internal drainage board. Funnily enough, the framework contractor for the Environment Agency cost about three times as much as other contractors. We do not want to fall into the trap of—I had better use my words carefully—the establishment figures being the only ones that end up doing the work, because they are almost part of the same circle. I think that that is the best way of saying it.

I welcome the closer collaboration. Abellio will be involved. There is a challenge for the industry. Things are already happening as a result of the McNulty review, before the Government have published the Command Paper. I am delighted about that.

Other things are useful, too, including technology. My remarks at this point may answer some points raised by the hon. Member for Hayes and Harlington, who mentioned checking activity. I understand that things can be added to train roofs so that, instead of a visual check happening however often, a constant check can be made every time a train goes up and down a line. Simple ideas such as that one, which may cost a bit of capital—I get that—will build in some resilience. Instead of people being paid, frankly, to walk up and down—I am not saying that that should be got rid of entirely—such technology could be used to judge more intelligently the schedule of maintenance that needs to be done.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

That is exactly what the teams do now. They are not just walking the track; they are mobile and use new technology as well, but even teams that use new technology have been cut back recently.

Photo of Therese Coffey Therese Coffey Conservative, Suffolk Coastal

I thank the hon. Gentleman for adding that point. Technology has not been put on to the East Suffolk line and East Suffolk trains, so that is news to me, although clearly not news to him.

Hon. Members have already mentioned the finger-pointing. My hon. Friend George Freeman made an interesting contribution about whether alliances are enough or whether there should be mergers in respect of this whole operation, having train and track together. Let us challenge the way that Network Rail is structured and ask whether it is fit for purpose to deliver ongoing improvements and what we need.

On structure and governance, we have already talked about the complex structure that was devised in 2002. The coalition agreement specifically says that it will make Network Rail more accountable to customers. We look forward to the Government’s move on that. It would be useful to do something radical with Network Rail’s board and, instead of the 100 members, move to a 12-person board, for example, with a passenger group focus as part of that. Trying to manage that complexity is difficult. Hopefully, such a new process would allow for more focus.

I call on the Office of Rail Regulation to be focused on that in regulating Network Rail. The possibility of it going into train operating companies and other companies may be in the coalition agreement, but I would rather it stuck to the knitting and got that right before going into other matters. Passengers are clear when they are not happy about services. One way to try to regulate that matter would be to build it into the franchise or something similar.

I encourage Network Rail to stick to what it is good at doing. I was disappointed to hear—it has gone off the idea, thank heavens—that it considered setting itself up as a broadband operator. It is a clever idea to use things alongside the tracks to carry fibre, and similar, but the thought of its being in competition with BT Openreach was bizarre. Working with somebody who knows something is fine, as is becoming a conduit, but thankfully the idea that it would be the rival to BT Openreach went away.

Why am I interested in freight? Felixstowe, the leading container port, is in my constituency. It has rail terminals and a new one is going to be built. Putting freight on to rail is an important part of trying to reduce the percentage of freight on our roads. The Government are keen to do that, because it is good environmentally and it reduces demand on the key arterial roads throughout the country.

I encourage Network Rail to work with Hutchison at the port of Felixstowe so that it puts dualling in earlier. Due to the economic challenges that Hutchison said it was facing, it secured permission from Suffolk Coastal district council to delay that activity and had its planning permission extended, but it would make sense to do it now.

Some work has already been agreed—certainly, the consultation is starting—on the Ipswich chord, which, for hon. Members not familiar with Suffolk, would just add a bit of extra track, but means that, instead of many freight trains going into London and then out again to get to the north, those can go straight up towards Nuneaton. That makes a lot of sense and will free up a lot of capacity. To give Members a view of the costs, a 1 km stretch of track will be £41 million. Admittedly, that is not only for the steel on the track but for all the complexity of the other aspects. That is another example of the eye-watering amounts of money required for what one would like to think of as straightforward—perhaps I should not say that—key projects.

I also put in a bid for work at the Ely North junction, which would help freight traffic as well as certain passenger routes. Network Rail has a tough time with freight when connecting seaports; if Felixstowe or Liverpool close down, because of wind, rough seas or whatever, there is a bit of a problem. Dare I say it, however, the Network Rail people are paid a lot of money to solve difficult problems, so they must build that resilience into their timetabling and capacity building. The answer is not to do what happened to my hon. Friend the Member for St Albans, who suddenly had half the number of trains, because that is not acceptable.

Network Rail is a fascinating organisation. It is a case study of what can go well and of what can go wrong. However, the constituents of Suffolk Coastal and, more broadly, people throughout the country are fed up of being left waiting. It is vital that the Government grab the chance offered by the McNulty review and the Command Paper to put passengers and businesses first. Network Rail can be made to work, potentially, but the proof will be in the pudding, and I suggest to Sir David Higgins that, if we do not see much change within another year, we must question whether he has the capacity to make the changes necessary.

I thank all Members who have spoken so far. My hon. Friend the Member for St Albans will be winding up. I have enjoyed the debate and I genuinely think that there have been some fresh ideas that the Minister will absorb.

Photo of John Woodcock John Woodcock Shadow Minister (Transport) 4:51, 2 February 2012

It is a pleasure to serve under your chairmanship, Mr Rosindell. I add my congratulations on securing the debate to Mrs Main and her colleagues. I echo the words of Dr Coffey in that, while it is always a delight to face the Under-Secretary of State for Transport, Norman Baker, we hope that the Minister of State, Department for Transport, Mrs Villiers, has a speedy recovery, hastened by not watching the debate and getting some rest.

The debate has been good and has included a number of powerful and well-informed contributions. I particularly enjoyed the Punch and Judy performance between the hon. Members for Rugby (Mark Pawsey) and for Northampton South (Mr Binley). On this occasion, I will resist the temptation to make another contribution about High Speed 2, leaving for another day the thuds emanating from the upper room of the constituency home of the hon. Member for Rugby.

The debate has rightly had a repeated focus on the performance and accountability of Network Rail. As hon. Members have pointed out, the debate is particularly timely given that, shortly before Christmas, the Office of Rail Regulation said that it considered Network Rail to be in breach of its licence for reliability in the freight sector and likely to be in breach for long-distance passenger services. In both sectors, performance is declining at a worrying rate. End-of-year targets for 2011 were missed and ORR remains to be convinced that Network Rail is doing all that it can to improve reliability. A striking fact that should be re-emphasised is that Network Rail has already admitted that it will not meet its 2012 target for punctuality, and yet we learn that that organisation believes that this is the right moment to put forward a fresh reward scheme worth up to 500% of salary over five years.

To state the blindingly obvious, the reliability of train service leaves a lot to be desired in so many parts of the country. The statistics are clear. In 2011, more than one in 10 long-distance services was more than 10 minutes late. Such underperformance is frustrating for passengers, damaging to business and, potentially, a real and significant drag on overall economic performance in the country and the regions. We need a railway that performs better, not least because hard-pressed passengers are being asked to pay fares that have recently risen by up to 13%.

The figures on the causes of delay are clear. A more reliable railway will require better performance from Network Rail. When our constituents complain to us about a delayed journey, the train operator as the shop front for the railway system tends to get it in the neck. Many operators, indeed, need to up their game, but month on month, year on year, the majority of delays are the responsibility of Network Rail. In the most recent period for which figures are available, the organisation was responsible for 646,000 minutes-worth of delays to trains, representing 59% of the overall total.

No one is pretending or should imagine that there is an easy solution. Network Rail, or whatever organisation or structure might be put in its place, is charged with operating a complex, extensive rail network that has seen differing levels of investment over many decades. There is more demand for rail travel now than in any peacetime period since the 1920s. Yes, some of the delays ascribed to Network Rail are largely outside its immediate control. In particular, as mentioned in the debate, cable theft has risen fast up the agenda in recent months. To dwell a moment on that, we now know that rising global metal prices have triggered an unprecedented level of theft of the more valuable metals, from the railways as from electricity suppliers, communications providers and, most despicably, churches and memorials. The theft of even a short stretch of signalling cabling from the railway can lead to the shutting down of huge sections of the network for hours on end, as we and our constituents have seen, causing immense disruption. In the current financial year, passengers are on course to suffer almost 7,000 hours-worth of delays because of cable theft, which would be a record.

Photo of Anne Main Anne Main Conservative, St Albans

The hon. Gentleman is making a powerful point. Such cases are deemed to involve force majeure, however, and something over which Network Rail has no control, unless it was derelict in its duty to police the railway line. As such, Network Rail would not be seen to be failing, but I believe that it is failing on things over which it has control.

Photo of John Woodcock John Woodcock Shadow Minister (Transport)

That is an interesting point. We should examine repeatedly how such incentive mechanisms work.

In the case of cable theft, increased action and a tougher regulatory system are needed to enable Network Rail to perform better. Of concern is that it took so many instances of main lines and major stations coming to a halt before the Government were spurred to what we hope is greater action. Even though Ministers now seem prepared to legislate for a ban on cash sales of scrap metal, at the moment their actions fall short of what is required to end the scourge of thefts. Cashless transactions alone may prove too easy to circumvent. We need a licensing system for scrap metal dealers; strengthened police powers to enter premises that they suspect of selling stolen metal and to close such premises down if necessary; and a requirement to show verifiable identification, recorded at the point of sale, for all transactions.

Ministers still have an opportunity to put more comprehensive measures in the Legal Aid, Sentencing and Punishment of Offenders Bill. They would have cross-party support in doing so. I am talking about measures that would genuinely put an end to the spiral of delay, disruption and extra cost being experienced by passengers and freight customers across the network. I hope that the Minister will outline whether he is prepared, from a transport point of view, to put pressure on his Home Office colleagues to go further on the matter.

There is a need for improved performance from Network Rail in areas over which unquestionably it has control. Those areas include the reliability of signalling systems and better management of planned shutdowns to limit overruns having an impact on the next day’s passenger services. Performance is highly variable across the network. Far more needs to be done to ensure that good practice is learnt from by all Network Rail regions.

There is real scope to improve performance by reforming the artificial barrier between track and train—one legacy of the botched privatisation of the railways. However, there remains real confusion about where the Government are heading on that. Originally, Ministers proposed handing over infrastructure to the private sector, raising questions about whether they had truly learnt the lessons of the Hatfield crash. Will the Minister make it clear whether they have abandoned those plans? In the absence of the much-delayed Command Paper, the confusion drags on, so will the Minister tell us when we can expect to see that Command Paper?

We also have concerns about something that has so far not been brought to the House but on which newspapers have been briefed, which is the Minister’s new idea about creating single management companies out of Network Rail and train operating companies, starting with a potential partnership with South West Trains. The Minister needs to say how a level playing field will be ensured when such franchises come up for renewal. How will other train operators, both passenger and freight, that use that part of the network fit into the alliance? How does the balance between a for-profit train operator and the not-for-profit Network Rail work in that context?

Hon. Members are right to focus on the need to improve efficiency. As part of that, we need to make procuring and building improvements more efficient without compromising safety. I have spoken to train operating companies, and a number of them have expressed concerns that having to use Network Rail to procure improvements to the non-safety-critical parts of the railway system, such as station buildings and car parks, significantly pushes up the costs of and delivery timeframes for those improvements. Will the Minister expand in his winding-up speech on plans either to allow TOCs to procure such works independently, or to ensure that Network Rail improves its processes?

A number of hon. Members raised, quite rightly, the issue of investment in various parts of the rail network. However, the way in which we currently manage investment in the railway system and, indeed, across the transport network needs to change. We need longer-term thinking that goes beyond artificial five-year horizons. We have a reasonable idea of where the pinchpoints in the system will be in decades to come, the capacity challenges and the emerging markets for new or faster services. We have had, for example, welcome albeit piecemeal announcements of funding for electrification. So far, that applies mainly to schemes developed by the previous Government. However, the five-year horizon of planning means that the Government are hindered from creating greater certainty about a rolling programme of electrification, which, at its best, could guard against the resources and skills employed by schemes such as the Great Western and north-west wiring schemes being lost at the end of those programmes rather than being moved to the next area, such as the midland main line or the Great Western route through to Swansea.

Labour is not calling for extra spending on rail in this comprehensive spending review period, but we do want the five-yearly assessment of what is affordable to be part of a longer plan for what is desirable and likely, so that industry can plan and British manufacturing can have the best chance of winning contracts.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

My hon. Friend is rightly emphasising costs, but a lot of the costs have to do with the method of contracting and sub-contracting that has been in use since privatisation. The contrast with British Rail is extreme, but there is also the contrast with costs abroad—other railway systems on the continent of Europe. Is that not something fundamental that we have to look at to bring those costs down, not just marginal changes to improve efficiency a bit, because we are talking about a multiple of costs?

Photo of John Woodcock John Woodcock Shadow Minister (Transport)

I thank my hon. Friend for his intervention. He is right to say that we need to look across the board at all options for improving efficiency. Avoiding inefficient procurement decisions, without returning to the days of the railway system that existed before the botched changes were made, which was not in itself operating efficiently, is the challenge and would be the challenge for any Government seeking to produce real, lasting and effective reform.

The deficit of accountability and transparency has rightly dominated speeches today. They have been powerful and well directed, but before I say more about where we share concerns in that respect, it is important to stress how far we have come since the days of Hatfield. Network Rail’s unusual structure was forged in response to the failure of its predecessor, Railtrack. The Labour Government were right to take action to bring the management of our rail infrastructure back under control, but the simple fact that we are in a relatively better place today does not mean that we can or should ignore the problems and shortcomings that beset the organisation a decade on.

The unusual nature of Network Rail has created a deficit of accountability. It does not have shareholders and does not respond directly to elected politicians, as has been demonstrated today. Most importantly, it is not properly responsive to the passengers who use the railway system. That can leave it unable properly to serve businesses, passengers and communities alike, and allow inefficient practices to continue. It has given rise to the alarming allegations that hon. Members have aired today and on which I hope the Minister will comment in his winding-up speech.


He still has 20 minutes.

Photo of John Woodcock John Woodcock Shadow Minister (Transport)

I will be brief. We want a railway that provides value for money for and is accountable to the taxpayer and the travelling public, a railway where passengers and freight customers can rely on the timetables and a railway that can plan strategically for the long term. That is why we are listening, as part of our policy review, to a wide range of ideas for improving the accountability of Network Rail, such as the Co-operative party’s proposals for mutualisation of the company. I therefore hope that the Minister will tell us where his plans to review the ownership and accountability structures of Network Rail to make it better able to serve the public have got to and whether they will include improvements to transparency.

Finally, I come to the issue of bonuses. Network Rail’s accountability has been brought into focus today by the news that Network Rail’s senior management will next week seek to award themselves a new bonus and incentive scheme. We understand that that will include an annual bonus of 60% of salary and, in addition, a five-year reward scheme worth up to 500% of salary. The public will be staggered by such proposals. Network Rail is currently in breach of its licence. It must recognise that times have changed and that bonuses on top of salaries need to be for exceptional performance and not the rule.

There is a responsibility for Ministers here, too. Network Rail’s articles of association make it plain that the Secretary of State has a clear remit over pay and bonuses. She has a right to attend the remuneration committee and the board meeting that decides these schemes, or to appoint a special member to represent her. Despite the coalition’s pledge to make Network Rail more accountable, the Secretary of State has failed to take up that right. She still has the opportunity to do so. The Minister will be keen to know that Downing street seems to take a relaxed view on this matter judging by the lobby briefing this afternoon. The Prime Minister’s official spokesman agreed that there was a vote, but said that the decision rested with the Secretary of State. In his winding up, will the Minister say if his boss or he will attend the board meeting on 10 February to make it clear that such a package is unacceptable? Warm words about accountability are not enough—

Photo of Brian Binley Brian Binley Conservative, Northampton South

On a point of order, Mr Rosindell. I want to hear the Minister speak and time is very limited.

Photo of John Woodcock John Woodcock Shadow Minister (Transport)

The hon. Gentleman is quite right to raise his point of order, but I am in my last paragraph.

The Government need to get a grip on the organisation and its future, and they must start with this unacceptable bonus culture.

Photo of Norman Baker Norman Baker The Parliamentary Under-Secretary of State for Transport 5:11, 2 February 2012

I shall have to give a high-speed reply to get through the various points that have been raised by Members this afternoon. It has been a very good debate, and I am grateful to my hon. Friend Mrs Main for introducing it.

The coalition Government are delivering the biggest and most ambitious rail upgrade programme since the Victorian era. I would go so far as to say, without hyperbole, that this is the most pro-rail Government that we have had for decades. Despite pressure on budgets, we have made a strategic choice to increase capital investment in those parts of the infrastructure that best deliver sustained and sustainable economic growth, including rail. That is why £18 billion was allocated in the 2010 spending review to deliver an ambitious programme of investment in rail infrastructure and rolling stock.

Our problem now is success: there are more people on the railway now than at any time since 1929, with a network about half the size. My hon. Friend Mr Binley is absolutely right; this is all about capacity, which is why we must get on with High Speed 2. We will try to deliver it as soon as we possibly can, and if we can, we will bring it forward, but we will not over-promise on what we can do on that or on anything else.

Many projects are going ahead, including Thameslink and Crossrail. I will not bother listing them all. Suffice it to say that we have a progressive programme of electrification that involves not simply one or two schemes. We want progressively to electrify the entire network and have already announced schemes that were not envisaged by the previous Government.

As Sir Roy McNulty found in his independent analysis of the value for money of the industry, our railway is the most expensive to run in Europe. It is up to 40% more expensive than some on the continent. Taxpayers and fare payers have shared the burden of inefficiency through some of the highest fares in Europe and some of the highest public subsidies, but this high-cost status quo is no longer an option. It is bad for passengers and bad for taxpayers, and we intend to deal with it.

Alongside our commitment to modernise and improve the network comes an equally crucial commitment to drive down costs and improve the efficiency of the railway, which was the third choice to which my hon. Friend the Member for Northampton South referred in his contribution. In large part, that involves addressing the concerns that my hon. Friend the Member for St Albans and others have raised about Network Rail’s accountability and performance.

Sir Roy concluded that efficiency savings of up to £1 billion a year could be achieved by 2018, without radically restructuring the industry, cutting services or compromising quality or safety. However, that will require all parts of the industry to focus attention on driving out waste and driving up efficiency. If they do that, we can have the long-term growth future for the railway that I for one want to see. We also want to end the era of above-inflation fare rises and the RPI plus 1% formula that was introduced and happened year on year under the previous Government.

Hon. Members have asked about the Command Paper. It will be published shortly—I think that “shortly” is an official word in civil service speak—and will build on the findings made by Sir Roy and set out a blueprint for rail reform. Developing the role of Network Rail will be at the heart of the Command Paper. Although Network Rail is not perfect, it is not Railtrack, and Sir David Higgins is not Iain Coucher, so I hope that hon. Members can take some comfort from that.

The railway needs an infrastructure operator that is responsive, accountable and able to deliver the best possible results for operators, fare payers and the wider population who fund it through the public purse. Equally, Network Rail must be better incentivised. Reform of Network Rail’s structures and governance is therefore a key part of the Government’s rail agenda. Let me give this absolute assurance to John McDonnell: we are determined that no changes should be made that would jeopardise the impressive improvements in safety and punctuality made by Network Rail and the rail industry in recent years.

We know about the tragedy of Grayrigg in February 2007. I am not being complacent when I say that that was the last tragic event in which a passenger died. It is worth pointing out that there were four deaths at level crossings in 2010-11. That is four too many, but it is the fewest such deaths that we have had for a decade. Efficiency does not mean compromising safety.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

On Grayrigg, the ORR said:

“the company’s failure to provide and implement suitable and sufficient standards, procedures, guidance, training, tools and resources for the inspection and maintenance of fixed stretcher bar points” was a key issue that caused that death. The same depot responsible for that stretch of line has just had a 15% cut in its budget.

Photo of Norman Baker Norman Baker The Parliamentary Under-Secretary of State for Transport

The fact that efficiency savings or reductions in numbers take place does not necessarily mean that safety is affected. Obviously, the hon. Gentleman’s point has been well made, and I will take it back with me. Network Rail today is a significantly improved body from what it was in February 2007. None the less, we share the Office of Rail Regulation’s concerns about certain aspects of the company’s recent performance, such as punctuality over the past 12 months, some weaknesses in safety culture and poor implementation of integrated train planning under certain conditions.

The Government look to the Office of Rail Regulation to hold Network Rail to account and to continue to drive improved value for money from the company. As part of that process, the ORR has set Network Rail a requirement to make efficiency savings of 21% in its 2009 baseline by 2014. It will continue to produce annual reports benchmarking Network Rail’s efficiency against its international peers.

The Office of Rail Regulation’s latest annual report states that Network Rail has made progress against its efficiency targets, but that it has more work to do to justify all of its claimed savings. When Network Rail delivers on its current commitments, the ORR expects it to have closed around two-thirds of this efficiency gap by 2014 and the rest by 2019.

A key part of the McNulty review is to see much closer working and alignment of incentives between Network Rail and the train operators. A number of Members raised that, and it is something that the Government are focused on and it will feature in the Command Paper.

We welcome Network Rail’s regional devolution initiative to focus its business down to the route level and to work closely with train operators. David Higgins is taking forward work on structural reform to form closer alliances with the train operators. Moves towards asset management concessions and improved supplier engagement are vital.

We recognise concerns that Network Rail’s governance has not, so far, provided adequate mechanisms for holding the company’s board to account. That has been particularly apparent in respect of bonuses. The Secretary of State for Transport has been rightly firm on that matter, as indeed has No.10, despite what we have heard this afternoon. We expect bonuses to be dealt with in a responsible and a sensible manner by Network Rail, as we do by others. However, the Government’s powers, which we inherited from the previous Administration, to deal with those bonuses are extremely limited. Let me remind John Woodcock that in 2009-10, under the previous Government, Iain Coucher received a bonus of £348,184, and the top seven directors together clocked up £1,347,000.

Photo of John Woodcock John Woodcock Shadow Minister (Transport)

The Minister will be aware that the previous chief executive waived his bonus in the 2008-09 period when he was asked to do so by the then Secretary of State, Lord Adonis. When the former Secretary of State for Transport, the now Secretary of State for Defence, raised the issue of those bonuses to Iain Coucher, he was completely ignored.

Photo of Norman Baker Norman Baker The Parliamentary Under-Secretary of State for Transport

The fact of the matter is that we have not inherited powers to deal with those bonuses. This is the Network Rail structure that we inherited, and we are now trying to sort it out.

Let me deal with Network Rail’s performance, which comes within my portfolio. It is not as good as it should have been, and passengers are rightly unhappy when their train is delayed or cancelled, especially when that happens regularly. To be fair to Network Rail, we must put that performance in context. In 1997-98, the annual public performance measure was 89.3%. After the accident at Hatfield in 2000, it fell to 74.2%. Since then, it has risen progressively, and punctuality today stands at 91.7%. I am not saying that that is good enough, but it is not the catastrophic case that is sometimes presented. It is certainly not true that, as the Labour party spokesman said, performance has been declining at an alarming rate. It has not; it has been improving. It has not met the targets, but it has been on an upward trend.

The current high level output specification for the railways specifies a further improvement to 92.6% during the period to 2014, and that is what the Department is focused on, as is the ORR. There is still a lot to do. I am concerned that performance over the last year has been iffy for various reasons, including the previous two exceptionally severe winters and an increase in the number of external events, such as cable theft. What is happening about cable theft is not the full range of the Government’s response, and it is inaccurate to present it in that way. We are simply using existing legislation to do what we can. Further measures will emerge as and when we can take them. In addition to cable theft, other issues have affected Network Rail’s performance that I am told were within its control.

Remedial plans have been put in place to enable improvements by the end of the current year, and plans are being developed for the remaining two years of the current rail control period. I am happy to tell my hon. Friend the Member for St Albans that a great deal of work has gone into much better winter resilience, including third-rail heating to prevent the sort of problems that occurred in previous winters, to which she rightly referred. I hope that she will be reassured by the fact that I meet Network Rail and the train companies monthly to examine performance with a specific analysis to ensure that they are keeping up to scratch with their plans.

As has been said, the ORR has published enforcement orders requiring Network Rail to take further steps to improve performance, particularly for long-distance passenger services and freight services. Hon. Members will know of the letter written by the ORR to Network Rail—it is fair to say that the train companies also have responsibility to do their best to ensure that punctuality and performance are maintained—and I simultaneously wrote to the train companies about their responsibilities to ensure that they are doing what they can to maintain performance at their end.

My hon. Friend the Member for St Albans referred to the National Audit Office. Network Rail is officially a private sector company. That classification is determined not by the Government, but by the independent Office for National Statistics, and that is what it has decided. I am not aware of any precedent for the National Audit Office having jurisdiction over private sector companies.

Under the terms of the Railways Act 1993, as subsequently amended, Network Rail is subject to scrutiny and regulation by the ORR, which has access to information that it needs from Network Rail, properly to assess the company’s performance and efficiency. The ORR is part of the public sector, so it is subject to National Audit Office scrutiny. The National Audit Office and the Public Accounts Committee have recently undertaken audits of the Office of Rail Regulation, taken evidence from Network Rail and others and produced reports on the regulator’s effectiveness.

We note and endorse the conclusions that the ORR must take steps to ensure that it has the capability that it needs properly to hold Network Rail to account and to drive it to close the efficiency gap with leading European comparators. I have sought assurances from the ORR that it will take such steps. Hon. Members have referred to the consultation that is taking place on the ORR’s powers. Any plans to expand the ORR’s role take account of its performance to date and its future capability, as well as comments that are received as part of the consultation process.

As a private sector company, Network Rail is not subject to the Freedom of Information Act, nor could it be without primary legislation. However, Network Rail has promised that it is in the process of developing a voluntary information rights code, which will mirror many of the provisions in the Freedom of Information Act. We welcome that initiative and believe that, if properly implemented, it will provide an alternative to legislation. We expect the company to introduce the code alongside a broader package of Government reforms later this year.

My colleagues and I in the Department for Transport, including the Minister of State, Department for Transport, my right hon. Friend Mrs Villiers—I am grateful for the comments about her accident, and I am happy to say that she is recovering well—will keep the matter under close scrutiny.

Hon. Members raised a number of specific points, but I must give my hon. Friend the Member for St Albans time to respond properly. If there are any points that I have not dealt with, I will write to the relevant hon. Members.

Photo of Anne Main Anne Main Conservative, St Albans 5:25, 2 February 2012

I thank the Minister for his rather rushed response. I accept that he was under pressure of time. I look forward to seeing his written response to any other points that were raised. This has been a valuable and conciliatory debate. As my hon. Friend Mr Binley said, it is not about a blame game; it is about ensuring that we have the railway service that our constituents deserve and that the country deserves for its prosperity and future.

We have the weird scenario of a private company supposedly supported by taxpayer’s money. I hope that we will end up with something better in future, but I am not sure what the eventual and, we hope, better child will be following privatisation, then full access to public funds and now the chimera that I described earlier. Mr Wilson was very defensive about Network Rail and praised it, but he started his speech by saying that 60.4% of delay attributions were its direct responsibility. He was very kind to Network Rail, but he recognised that it has some things to answer for.

My hon. Friend the Member for Northampton South made a powerful speech. I understand his passion for HS2, but he made a powerful business case for things to be much better than they are. I think that all hon. Members agree with that.

I thank my hon. Friend Dr Coffey for her incisive view, particularly of level crossings. My mind was boggling that someone might have to walk through them and shut the doors after them.

Hon. Members today have raised serious concerns about Network Rail. I was concerned when the Minister said that the Office of Rail Regulation has been expected to do more, given that the Public Accounts Committee said in 2011 that it doubted whether the regulator could exert sufficient pressure on Network Rail’s performance. The Minister is optimistic and I am sure that he will be sitting on its back and beating it up when necessary, but the public’s perception is that it is a toothless tiger. I suggest that he does not give it too long to get its house in order. If it is not delivering, something else must be put in its place quickly. We cannot expect Network Rail to carry on as it is.

It was apt that bonuses were referred to; they were also referred to in the House, and I gather that there is a statement on them today. It may not be possible to prevent the directors of Network Rail from receiving bonuses, but they could stand shoulder to shoulder and decline them. I suggest that, if they are arguing vociferously for a new structure that awards bonuses of 500% of their salaries, they think again after this debate and the Prime Minister’s statement, which I cannot anticipate, but I know the views of many colleagues in the House and those who supported the early-day motion. I also know that the public are disgusted by reward for failure. If Network Rail turns itself around within a short period, the directors could expect to apply for bonuses, but now is not the time, and they should stand shoulder to shoulder with the travelling public and decline bonuses. Although they can have them, they should say that they do not want them.

This debate has been valuable. I look forward to the White Paper, and I hope that we will see a way forward for our rail services in the future.

Question put and agreed to.

Sitting adjourned.