[Mr Peter Bone in the Chair] — Backbench Business — West Coast Main Line

– in Westminster Hall at 12:00 am on 17th September 2012.

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[Relevant documents: U ncorrected transcripts of oral evidence taken before the Transport Committee on 10 September 2012, on Rail 2020: West Coast Main Line, HC 537-i, and on 12 September 2012, on The Work of the Department for Transport, HC 584- i.]

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire 4:30 pm, 17th September 2012

I beg to move,

That this House
has considered the e-petition from Ross McKillop and others relating to the West Coast Mainline franchise decision.

The motion reflects the concerns of more than 170,000 people who have signed the e-petition and it calls on the Government to reconsider the decision to award the west coast main line franchise to FirstGroup.

It is a pleasure to serve under your chairmanship today, Mr Bone. I understand that this is the first Backbench Business Committee debate to take place in Westminster Hall on a Monday. I wish to thank the Committee for accepting the application for this debate and for granting us time before the conference recess. I congratulate the Minister on his new role at the Department for Transport. I am sure that he would have welcomed a less contentious issue so early in his post.

Due to Committee business, members of the Transport Committee are unable to join us today. My hon. Friend Mrs Ellman and her Committee colleagues are already interrogating people over this matter.

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire

I am glad that the hon. Gentleman is here and is able to contribute to the debate. His colleagues, I believe, are away on business.

The Transport Committee is considering this matter through the work of its Rail 2020 inquiry. Several hon. Members from Lancashire, who are currently attending a meeting with Ministers on employment matters in their constituencies, wish, with your permission, Mr Bone, to speak later in the debate.

More than 170,000 people put their name to an e-petition, which was started by Ross McKillop, calling on the Government to reconsider their decision on the west coast main line franchise. That huge number of signatures, which was collected over a short period of time, reflects strong feelings and shows that the subject deserves to be debated in the House.

On the west coast main line, we are talking about 31 million passenger journeys a year and a £5.5 billion contract that will last for 15 years—that is this Parliament and the two that follow it. Hon. Members from all parts of the House have called on Transport Ministers to give Members an opportunity to scrutinise in more detail the actual process through which the decision was made. In August, my hon. Friend Maria Eagle wrote to the then Secretary of State for Transport, asking her to make a statement to the House. This will be the first opportunity for Members from all parts of the House, apart from the Transport Committee, to ask questions of the Minister, to begin to scrutinise the decision and to put their views and those of their constituents directly to the Minister.

A considerable amount of press coverage and opinion seeks to make the issue one of FirstGroup versus Virgin. Personally, I do not care much about the name of the company that provides the service. My priority is to ensure that the final decision, taken by the Department for Transport, is the best deal for taxpayers and fare payers. I hope to get from the Minister today the guarantees and reassurances necessary to be satisfied that the decision-making process is robust, so that the right decision is made with taxpayers’ money.

Given the determined efforts of Transport Ministers to avoid answering questions on this franchise decision, I do not begin this debate from a position of resounding confidence. We are told over and over that the process is rigorous, detailed and fair. It is as if by repeating that mantra we will all believe it. Yet there have been many complaints that the process does not even deliver against its own objectives.

The basis of the judicial review is that the Department for Transport broke its own rules when evaluating the bids, and we need to get to the bottom of that. There are those who argue that the entire franchise bidding process is flawed, and driven solely by the promise of large sums of money no matter what the cost, and irrespective of the stated objectives.

Photo of Dave Watts Dave Watts Labour, St Helens North

Does my hon. Friend share my concern that the Department for Transport officials, who looked at the Virgin contract when it was let, underestimated the amount of money that would be made by Virgin? Given that there is that lack of credibility, how much credibility does she place on the assessment of the First bid?

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire

I was not a Member of this House when that decision was taken, so was not in a position rigorously to examine it. Overall, though, I do not have great confidence in the various projections of the Department.

To continue, let us take, for example, the objective to achieve sustainable value for money. That is a stated objective, yet the process encourages risky bids because companies know that if their bid is £250 million more than any other bid their competitors’ bids do not go forward for further evaluation. I have deep reservations about a system that does not attempt to answer why one bid is so much higher than all the rest, and then does not quantify the difference.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

The hon. Lady intimates that she has concerns about the way in which matters are carried out at the Department for Transport. Like me, she was at a meeting when Virgin Trains, which had been invited to talk to MPs, said very clearly that it had discussed its concerns with Lord Adonis. What did the previous Labour Administration do to allay Virgin’s fears at the time?

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire

I did not clearly hear that part of the meeting. Perhaps it happened before I arrived. I was there when the hon. Gentleman said that he called the meeting so that Virgin and FirstGroup could say how they had arrived at their current situation—of one being awarded the contract and the other having started a judicial review. I pointed out that nobody from the Government had bothered to turn up to answer MPs’ questions and that democracy had been short-changed.

I understand that the Government use a computer programme to test the assumptions within the bid, which the Minister will no doubt tell me is a robust approach. My response would be to ask whether this was the same modelling package that was used by the consultants who said that the west coast main line should be carrying an extra £15 million of fares during the period of the Olympics and Paralympics? It was never physically possible to get that volume of passengers within that time frame to deliver £15 million of sales. In the end, the additional revenues amounted to between £1 million and £2 million. Such projections were for a single event over a short period of time and they were way, way off. How much confidence does that instil in us over projections that are supposed to last 15 years?

Photo of Tim Farron Tim Farron Party Chair, Liberal Democrats

The hon. Lady points out that it is very easy for all of us to be experts after the fact. Does that not demonstrate that the real problem here is that this decision was taken maybe completely appropriately, but it was announced during the summer recess so that Parliament had no chance to discuss or interrogate this issue? Moreover, perhaps one criterion that ought to be added to the process is what the public and the users of the service think about it.

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire

The hon. Gentleman raises several of the points that I am about to discuss in more detail, but I absolutely agree with him.

Surely projections about the contract should score highly on the basis of value for money for the taxpayer and the commuter. There is a belief that passenger growth could continue to be 10% per annum. However, such growth figures were achieved at the top of the economy. Even for a non-economist such as me, it does not take a great leap of faith to think that such growth rates are not sustainable in an economy that is in the doldrums and with fears of a double-dip recession not having gone away.

Photo of David Mowat David Mowat Conservative, Warrington South

The hon. Lady is quite right to say that all these projections for the future are estimates and guesses, that they may be too low or too high and that FirstGroup made very aggressive ones. However, is not the key point of a procurement process to ensure that the risk in respect of those projections is with FirstGroup’s shareholders and not with the passengers? The issue is how we manage that risk and not what the estimates were.

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire

Absolutely, and I will come on to that point later in my remarks, because it is absolutely clear that the risk here, with such a small guaranteed sum, is with the taxpayer.

Photo of Joan Walley Joan Walley Chair, Environmental Audit Committee, Chair, Environmental Audit Committee

I congratulate my hon. Friend on securing this debate, because it is important that this matter is debated in Parliament. However, the particular issue that we are considering here needs to relate to the deliverability of the process by which the contract has been offered, and there is no real way that we can assess, all those years into the future, whether the winning bidder can produce what is meant to be there. Therefore it is a matter of great concern that there does not seem to be a proper assessment process about how the bid is actually given out.

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire

I agree, and again my hon. Friend raises points that I will return to later in my remarks.

It is absolutely for sure that we are dealing with risk—risk in the assumptions and economic risk. However, the only bidder for the contract that does not seem to have put up a lot of money is the company that has been awarded the contract. Again, I will return to that point later.

Economic assumptions are central to franchise bids. Governments expect rail companies to predict GDP trends over the lifetime of a franchise. As the Government cannot manage to predict GDP over the short term, how can we have confidence that any bids based on long-term projections have credibility? If an economist can tell me that those projections are credible, I suggest that the Government employ that economist as the current lot of economists cannot manage to.

Photo of Dave Watts Dave Watts Labour, St Helens North

Is not the point that the Department for Transport has a long record of getting everything wrong? It gets it wrong on roads, on airports and on rail. The only thing that it seems will protect the Minister is that some penalties will be imposed if the contract is not delivered in the way that his officials propose. Should not we be transparent and absolutely clear about how this contract was let, know how any penalties are going to work and be quite clear that there will be no payment by the taxpayer if things go wrong?

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire

I absolutely agree with those comments, and those points are central to why I asked the Backbench Business Committee to allow a debate on this subject today. It is clear that there should be an open and transparent process. Perhaps we should be at the point now of comparing bids.

Let me return to my train of thought. There are other anomalies. For instance, the Virgin bid offers £133 million more in the period of the franchise up to March 2020. After that point, FirstGroup says that it will pay £1.23 billion more between March 2020 and March 2026. It does so based on a forecast of huge growth in passenger numbers, which comes at a time when there is no planned investment and when there will be huge disruption from the High Speed 2 rail project. So I ask again: how is sustainability at the heart of this decision?

Besides the computer modelling, there is also the anonymised scoring system, which I hope would prioritise sustainable value for money over high-value promises.

Photo of Bill Cash Bill Cash Chair, European Scrutiny Committee, Chair, European Scrutiny Committee

We know that the Transport Committee is looking at this issue. Has the hon. Lady asked whether the Public Accounts Committee should look at it? As we are dealing with public money and value for money, is not what she is referring to today an ideal issue for the PAC to consider? Perhaps later, after the debate, she could address that question to Margaret Hodge, who is the Chairman of the PAC.

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire

I will indeed do that. I had not considered the idea of asking the PAC to look at this issue, but I undertake now to ensure that I send a letter to that effect to the Chairman of the PAC before I leave Parliament today.

Photo of Joan Walley Joan Walley Chair, Environmental Audit Committee, Chair, Environmental Audit Committee

When my hon. Friend does so, will she ensure that she asks for the recommendations of an earlier PAC report on procurement to be considered within the context that has just been described by Mr Cash?

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire

Indeed I will, and I will seek further advice from my hon. Friend on that point as well.

There is considerable difference in value when one bidder offers £800 million worth of investment and the other bidder offers £350 million. Unbelievably, there are reports that FirstGroup scored higher in the bidding process on customer service than Virgin did. Can the Minister tell me how the scoring system squares that with the results from various customer satisfaction surveys of FirstGroup’s current users—in other words, FirstGroup’s passengers—that show that those users rated the Great Western service as the second worst service around? It is not unfair or illogical to assume that, if a company offers a certain service on one line, it may offer something similar on another line. So can he explain how an anonymised scoring system is better informed than the passengers who actually use the railway system and FirstGroup in particular?

Sustainability is one of the watchwords in every aspect of public expenditure. Ensuring that the bids that are submitted can be sustained over the life of a franchise is essential. One of the reasons why hon. Members asked for the debate is that recent franchise experiences have shown that the highest bids—the riskiest bids—are not necessarily sustainable bids. The Government have even admitted that the successful bid for the west coast main line is indeed the riskier bid.

I was intrigued to hear that, during the tendering process, the Department for Transport informed one bidder that it did not view a 5% margin as sustainable. In the light of that information, that bidder reworked its bid and achieved a 7% margin. That leaves me perplexed, when I read that the successful bid is based on a 5% margin. If that is true—I assume that it is—given the lack of information and transparency, a whole series of questions are raised. Does the DFT believe that a 5% margin is sustainable? Did DFT officials give each of the bidders the same information? If they did offer the same view on sustainability to each bidder, why was a bid accepted with a figure that they believed to be unsustainable? That is an important question because it relates to risk and, in turn, how that relates to the guarantees being sought by the Government.

There is considerable contention about the guarantee that the successful bidder was asked to put against the bid. In the first case, my understanding of the guarantee is that it is based on the assessment of risk using a set formula. It is argued that if the Department had applied that formula uniformly, FirstGroup would expect, reasonably, to have been asked to put up a guarantee of around £600 million, not just the £215 million asked of it initially, which was finally reduced to £200 million. Secondly, did any negotiation take place with FirstGroup on the level of guarantee? If so, what were the circumstances? How did we reach the very small guarantee figure of £200 million, if the Department had been applying the same formula across all bids? If there was no provision within the invitation to tender for the guarantee to be negotiated, how does the Minister explain the variation in the figures from potentially £600 million down to £215 million, and finally to £200 million? Those figures are relevant to mitigating taxpayer risk.

We must not forget that in recent years a number of train operators have handed the keys back to the Government on franchises such as the east coast main line. I believe that Members want to be assured that that will not happen again and that taxpayers have an assurance that they will not be held to ransom by Dick Turpin train operators asking them to stand and deliver, having secured the contract on a bogus premise, taking their profits and scarpering when it is time to deliver the promised high return.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

I hope that the hon. Lady is not referring to any train operators as Dick Turpin-type figures.

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire

Oh, I think there are a lot of Dick Turpin-type figures about.

I would very much like to hear from the Minister on this precise point: has the Department applied its own rules or not? Given the whole handling of the process, a judicial review has been applied for, which has left us in a position where re-nationalising the line is being considered. The new Secretary of State for Transport has stated that he would seek to re-nationalise the west coast main line if there is a failure to reach an agreement before 9 December.

Photo of David Mowat David Mowat Conservative, Warrington South

The hon. Lady suggests that an operator might walk away from a franchise having made the money in the early years of the contract. Is it not key for the Government to make clear at this point that if the operator did that—giving the keys back, as she said—it would do no further work with the Government in any other contract? Therefore, for all intents and purposes, they would be barred from any further procurement processes in the future. If the Government made that clear, they would be acting in a much more private sector-type mentality, in a way that Governments often do not do. Does she agree?

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire

I would agree that, initially, we need a proper figure to mitigate taxpayer risk, to ensure that taxpayer costs are covered in the eventuality. However, if we have any more shenanigans, those operators should be barred from Government contracts.

Photo of Dave Watts Dave Watts Labour, St Helens North

One of the problems that we see daily is that companies can go out of business and then start again under a new name. If First did that, could it not overcome that problem by reorganising itself, developing a new company and then bidding for future contracts? I do not see how we could legally stop it from doing so.

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire

I think that is a real option. I understand from the grapevine that First does not intend to brand the west coast main line “FirstGroup”, but that there is a great possibility that it will be called Horizon. We might be in that kind of territory; I am not sure.

If there is a failure to reach an agreement before 9 December, it would mean instituting a directly operated railway service on the west coast, matching the current system on the east coast. The Government’s own guidance says that 120 days are required to get that kind of operation in place, and here we are 90 days away from the end of the current west coast franchise. Will the Minister enlighten us on how that will be achieved to ensure the smooth transfer of services to the DOR, if necessary? There is much to consider and address: safety matters; employment and contracting issues; even the simple thing of setting up a website to sell tickets. What would be the associated costs of the DOR in the initial set-up and the monthly costs thereafter? Those costs would be incurred by the taxpayer because of the Government’s failure to handle the situation adequately.

We must consider the staff. Come 9 December, they will have no idea for whom they will be working—FirstGroup, the DOR, or perhaps even Virgin. As part of any transfer of a franchise, there is a responsibility for the incumbent to work with the new operator.

Photo of Stephen Hammond Stephen Hammond The Parliamentary Under-Secretary of State for Transport

The hon. Lady has been speculating quite a lot about the steps that the Secretary of State may or may not take as a result of a comment that he made yesterday. Let us be clear: he has a statutory duty under section 30 of the Railways Act 1993 to provide or secure the provision of services. As he made clear, that would be a temporary measure should the franchising arrangements not come into place.

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire

Is the Minister saying that any offer from Virgin to run the service at no cost and the best-value operation will affect his decision? I will ask him some questions about the associated costs should we set up a DOR.

I understand that two mobilisation processes are running side by side. Will the Minister tell us how that is working in practice? What are the associated risks and costs that arise from the lack of clarity? What assurances can he offer staff that their positions will be secure and the situation resolved?

The Minister has partially intimated the answer to the question that I am going to ask. If a DOR is to run the service, will it have the contract for a defined period, or will another mobilisation process be undertaken where an operator is awarded the contract? What will be the cost of that process?

One of the reasons for securing this debate is the manner in which the Department has handled the entire process, from the timing of the announcement to the consistent reluctance to answer hon. Members’ questions. We keep being told that this Government are open and transparent, and I want to believe that. We are told by the Department that it is confident in its decision on the west coast franchise. If I accept that both those statements are true, why have Transport Ministers not had the courage of their convictions and been willing come to the House to make a statement to allow scrutiny of the process and the decision? There is a claim that one of the bidders had submitted questions to the Department seeking clarification on certain matters, but it has yet to receive a response. We are basically being told by the Department, “Trust us. Trust what we are telling you.”

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

Before the announcement was made before the recess, I asked the Prime Minister a question about the process at Prime Minister’s Question Time. I do not recall hearing any questions from shadow Ministers or Labour Members challenging the process or the timing of when the decision would be made. Is that not the Labour party jumping on the bandwagon after concerns were generated in the media?

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire

Protecting taxpayers’ interests is a great bandwagon to jump on. We will protect their interests. The Department says, “Trust us. Trust us. Trust us,” and the hon. Gentleman is inferring that we should trust it. In the week that we had the Hillsborough revelations, “Trust us” is a very hollow call; I am not simply being cynical.

If the Government believe the decision is right, they should open the books and allow the bids to be compared. They should be open and transparent. To be honest, within the context of the east coast main line and the Great Western line, sadly I do not think we can put our faith in the Department.

During my comments, I have raised questions on the risk assessment, the funnelling of bids, the application of the rules and the soundness of growth projections. I ask the Department to try putting its faith in the democratic process and the parliamentary system so that, through debate, questioning and scrutiny, we can be assured that we have arrived at the best outcome for all parties.

Those who fail to learn the lessons of history are doomed to repeat them. The Government will not be forgiven if they allow history to repeat itself with any company taking profits from running our railways and then walking away from the contract without paying a huge penalty to cover taxpayers’ costs and, as David Mowat said, being barred from future Government contracts. Unless the Government can evidentially support their case, I, as one of the 170,000 people who signed the e-petition, call for them to reconsider their position.

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South 5:01 pm, 17th September 2012

It is always a pleasure to serve under your chairmanship, Mr Bone.

I draw attention to my entry in the Register of Members’ Financial Interests. My interests in this important subject are threefold. First, as I suspect is true for most hon. Members in the room, the west coast main line serves my constituency. Secondly, I use the line on a regular basis for both business and leisure. Finally, I am a member of the Select Committee on Transport and, as Rosie Cooper has mentioned, we are undertaking an inquiry into the bidding process as part of our general Rail 2020 inquiry. I stress that I speak today entirely in a personal capacity and not on behalf of the Committee.

I want to take a step back and remind hon. Members of what we are debating. We are talking about a highly congested, highly used multi-use railway line that links Glasgow, north-west England, the midlands and London. The west coast main line is one of the country’s key railway arteries and has seen exceptional rises in demand from both passengers and freight over recent years. All the indications are that that demand will continue to grow over the next 10 to 15 years. Indeed, that is one of the main reasons for the High Speed 2 debate, because the line will eventually run out of capacity and intermediate steps such as lengthening trains, remodelling junctions and the rest will not deliver the capacity we need.

Within the passenger context, there is also a conflict of needs on the west coast main line. Some users want London, Birmingham, Manchester and Liverpool to be linked with very fast services, and other places on the line, such as my constituency, want inter-regional services that stop so people can travel from Milton Keynes to Glasgow or from Nuneaton, Rugby and elsewhere to other destinations on the line. Plus, of course, there is all the commuter traffic in and around the major conurbations on the line. The west coast main line is a complex railway system, and it is vital that, over the next 15 years before High Speed 2, we make the most efficient use of that line.

No one, other than the Department’s senior officials and Ministers, has seen the full detail of the two bids, which I believe run into thousands of pages and have been assessed over many months. We should, therefore, be a little careful how we approach this debate. We have all heard the accusations and counter-accusations made by the two companies, but we have not seen that information. Indeed, picking up on one of the points raised by the hon. Member for West Lancashire, I am not sure we can see the bids in any detail because the information they contain is commercially sensitive, and no bidder would want such information released during the bidding process.

Several hon. Members:


Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

I will first give way to my fellow Hutchesonian.

Photo of Anas Sarwar Anas Sarwar Labour, Glasgow Central

I am not sure that is something I want said with some of my Labour colleagues in the room!

There has been a debate on the two companies, but does the hon. Gentleman agree that it is not about which company operates the line but about getting the right deal for the taxpayer and the passenger? People need reassurance that we will get the same quality and frequency of service and the same low fares and that taxpayers will not eventually have to foot the bill.

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

I agree with the hon. Gentleman. I also put it on record that I have no preference as to whether Virgin or FirstGroup wins the franchise. Virgin operated the franchise perfectly competently, and I would have had no problem had it been the successful bidder. Equally, FirstGroup has made a very attractive offer, so I approach this from a neutral perspective.

Photo of Albert Owen Albert Owen Labour, Ynys Môn

In his introduction, the hon. Gentleman omitted the fact that the west cost main line also serves north Wales. I will address that important point if I catch your eye, Mr Bone.

The hon. Gentleman mentioned that we may never know the detail of the bids, but surely that is the purpose of the Transport Committee’s inquiry. Ministers are there to answer such questions, and it would be in the Government’s interest if we were to have at least a summary so that we could clear up some of what he calls “speculation.”

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

I apologise to the hon. Gentleman; of course the route also serves Chester and the north Wales coast, and I will refer to that a little later.

We have had a summary of the respective bids, but to assess fully whether the FirstGroup bid is deliverable in preference to the Virgin bid, we would need to see the very detailed evidence that supports the headlines we all know about. My contention is that we cannot expect to see that while the bidding process is ongoing, because the bids contain commercially sensitive information. That would be like a card game in which each player has to reveal their hand before they play.

Photo of David Mowat David Mowat Conservative, Warrington South

My hon. Friend is right that the bids contain a huge amount of detail that is very hard for anyone here to understand. In his Select Committee role, he might like to investigate—I have heard this several times—the Virgin bid not being evaluated against the other bid because of the £250 million price gap, which has been highlighted by Rosie Cooper. That would be worth understanding.

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

That is a fair question. I cannot answer, but perhaps the Minister will.

Photo of Brian H Donohoe Brian H Donohoe Labour, Central Ayrshire

What is the purpose of the Select Committee’s report, or an inquiry, if it cannot be given the evidence that will show the difference, if there is a difference, between the two bids? The press, for instance, have suggested that the FirstGroup bid is back-loaded. How will the Select Committee work to the advantage of the taxpayer in such circumstances?

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

That is a fair question. When the Select Committee debated whether we should call Sir Richard Branson, Tim O'Toole and their colleagues, I made the point that we would not be able to probe them fully because we did not have access to the information because of the legal position. I would love to be able to go further, but we shine as much light as we can.

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

I will give way one last time, but I must then make some progress.

Photo of Russell Brown Russell Brown Labour, Dumfries and Galloway

I thank the hon. Gentleman for giving way. Obviously, the bids contain significant detail. As he and other hon. Members have indicated, we may never find out all of it. There are so many claims and counter-claims, and through the Select Committee and this debate we are looking for a clear indication from the Minister, without the detail, of whether every claim and counter-claim was carefully considered. Has he covered everything to ensure that the outcome is fair for the taxpayer?

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

Some of those questions are for the Minister to answer. I shall come in a moment to some reasons for my own conclusions about the two bids, but there is a caveat attached to what I say, because I do not have access to that information.

For the first half of the franchise period, up to eight to 10 years, the two bids are remarkably similar. There may be a higher premium payment from one than the other in a given year, but the lines on a graph are broadly consistent. They diverge only in the last period. The shorthand explanation is that FirstGroup believes it can continue to grow the market throughout the franchise, whereas Virgin believes that revenue growth and passenger numbers will tail off towards the end. The first bid is therefore more ambitious, and consequently riskier. What we must assess is whether that risk is acceptable. My conclusion is that it is within the bounds of acceptability.

My first reason for believing that is that population growth along the route is likely to be considerable over the 15 years. The Milton Keynes area has 25,000 housing permissions over the lifetime of the bid, and other towns and cities on the route have similar housing growth ambitions for that time. Feeder services into the main line will also be enhanced. The east-west rail link in my area will, I hope, open by 2017. One of its attractions is that it will build feeder services into the west coast, for people from Oxford or Bedford who might want to travel to stations in the north-west, or Scotland. That will drive demand on the line. Similarly, in the Manchester area, the northern hub will we hope attract more rail users on to the line and enable it to continue its ambitious growth, taking passengers away from the air route. For those reasons I believe there will be sustainable demand in the next 15 years.

The next question is whether the line can deliver the capacity to meet the demand. One of Virgin’s accusations was that by the end of the franchise First will have to fill every seat on every train every day to meet its premium payments. We need to examine the detail of what First proposes. It proposes more trains than the Virgin bid does. Both companies propose to buy new electric train sets for parts of the network. I understand that the difference is that First will augment the existing fleet. Virgin would replace the Voyagers with the new electric ones, whereas FirstGroup would keep the Voyager fleet and lengthen five-car trains into 10-car trains. First also wants to use more ambitious ticketing structures: a new class of travel between standard class and first class. It makes a point about capacity; the figure for the trains across the week is only 35%, whereas other franchises run at near 50%.

Photo of Anas Sarwar Anas Sarwar Labour, Glasgow Central

Is not the hon. Gentleman concerned that with that predicted doubling of user numbers on the service in the next 15 years, and given that figure for capacity of 35%, fares will go up, and will be much higher in peak times, to attract people to travel off-peak? That could lead to a massive increase in fares for people using the service at the most important times.

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

Without wanting to put words in his mouth, I think, from our questioning in Committee of Tim O’Toole of FirstGroup, that he would reflect whatever changes the Government make to the definition of the peak period. The ambition is indeed to try to get a more equitable spread of rail demand across the day so that trains are not packed at certain times while others run comparatively empty. That is a sensible ambition. However, the long-term answer to the hon. Gentleman’s question is a step change in rail capacity, which will come with High Speed 2. In the mean time, the question is how to make best use of the capacity that we have.

Photo of John Leech John Leech Liberal Democrat, Manchester, Withington

I thank my fellow Select Committee member for giving way. I felt that one problem with the questions to Tim O’Toole was that he seemed to argue that First would be able to get people on to those peak-time trains that are under-utilised at the moment with a 15% discount on rail fares. However, that still seems significantly more expensive than the off-peak saver returns or first advance tickets. There is a danger that the ambition to fill those trains will not be realised without increasing the cost of some first advance tickets, so that people cannot get them on off-peak trains.

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

I thank my hon. Friend and fellow Select Committee member for that point. There will still be a peak period and an off-peak period. My perspective is that we should be able to manage a more effective distribution. However, Mr O’Toole also made the point that he will not realise his ambition to fill the trains if fares are so high that people will not use them. His ambition is to achieve a modal shift from car and air to train.

Photo of Dave Watts Dave Watts Labour, St Helens North

Perhaps the hon. Gentleman can clarify one point. The operators do not buy the trains; they lease them. If the increase in question does not happen, and Virgin is right and First is wrong, will First be forced to lease trains in the 10th, 11th, or 12th years—up to 15 years? Alternatively, will it just be able to decide that perhaps it will not increase capacity then, because there would be no justification?

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

I am not privy to the contractual details in relation to the trains. From memory, First would be obliged to continue with the existing Pendolino fleet, which is the mainstay of the route. The trains in question are additional ones, to meet the capacity. Things could easily go the other way. The trains that are being bought are six-car ones; if, suddenly, passenger numbers go up beyond expectations, it might be feasible to lengthen them, in the same way that the Pendolinos have been lengthened from nine to 11 cars.

Photo of Dave Watts Dave Watts Labour, St Helens North

The hon. Gentleman is being generous with his time. If what he said is the case, the commitment to long-term investment may never materialise. It is one of the main planks of the argument for First, but First may not build the capacity because there might not be a justification for it. Does the hon. Gentleman agree that that is why it is important that we have more transparency, and can all see the details of the contract?

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

Perhaps it is a case of whether we see the glass as half-full or half-empty. I see an attractive proposition for growth in use. Why would FirstGroup, an experienced rail operator, want to tarnish its reputation by not delivering on what it promises? I will come on to one difficulty that I anticipate—or on which, at least, I would like reassurance. However, I think First’s ambition is genuine. As I have tried to explain, I think that there is underlying growth in the market, and that First will be able to innovate with new products to attract people on to the railways.

I do not want to continue much longer, because other hon. Members want to contribute. I have a concern about one aspect of the matter, and the hon. Member for West Lancashire touched on it. There will be considerable work on the west coast main line over the franchise period, particularly in the Euston area, if it is decided that that will be the High Speed 2 terminus. That may have an impact on the ability of the line to deliver the extra capacity. I should be grateful for a comment from the Minister, whom I welcome him to his post. He has long taken an interest in rail, and richly deserves his position. Perhaps he could say a little about how the upgrade work at Euston and elsewhere on the line will be accommodated, along with growing passenger numbers, over the period in question. I believe that there are solutions. For example, it might be possible to divert some commuter traffic on the London midland line into the Crossrail terminus while Euston is being upgraded, and for extra capacity to be created there. If the Minister would say a few words about that, I should be grateful.

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

I will give way one last time, but then I must conclude.

Photo of David Mowat David Mowat Conservative, Warrington South

The thrust of my hon. Friend’s remarks is that if there is an issue with Euston or the revenue projections, that is a problem for the Government, but it must be a problem for FirstGroup, and the contractual basis must make that clear. Such points, although interesting, do not mitigate FirstGroup’s liability. That must be a principle.

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

That is a fair point. I genuinely do not believe that FirstGroup would be making the bid if it did not believe that it could deliver. However, we do not have the full details, and I do not think that we can. I believe that the process has been rigorous. The bids were anonymised; the Government could not have displayed any commercial bias for or against any operator.

In conclusion, it is healthy that we have such a high level of ambition and competition. It is to the benefit of all who use the railway that different companies want to develop the line in innovative ways. I hope that my constituents and those of other hon. Members will see an improvement in their rail services over the life of the franchise.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

It might help Members to know that the winding-up speeches will begin no later than 6.55 pm, and that I intend to call first those who have given notice to Mr Speaker.

Photo of Derek Twigg Derek Twigg Labour, Halton 5:21 pm, 17th September 2012

I congratulate my hon. Friend Rosie Cooper on securing this unique debate and for the interest that she has taken for many years in transport issues, rail and the west coast line.

I was a bit worried earlier when my hon. Friend Mr Watts was criticising the Department for Transport for getting decisions wrong all the time. He mentioned rail. As a former rail Minister, I thought, “Does he mean me?” He has since popped over and said that he did not.

I was rail Minister for 18 months, and it was a fascinating period. We discussed franchising; I am certainly sceptical about it. I had to appear before the Transport Committee, then chaired by Gwyneth Dunwoody, the former Member for Crewe and Nantwich, a formidable individual who is, sadly, no longer with us. We always used to look forward to appearing before her in Committee to answer her questions. It was an experience. I remember asking the officials what franchising adds and what it brought to the party to improve things. I found it difficult to get an answer. The best that they could come up with was that it improves customer service, is more innovative and has brought improvements in service, but their answer was not overwhelming.

We had various problems with franchises. Southern was one that was sort of operated by the Department; now we have East Coast as well. There are alternatives to be considered. Franchising creates many problems, some of which we have heard outlined during this debate.

I welcome the Minister to his new job. I am sure that he will be helpful in answering our questions, and I am sure that he is finding out that the matter is not at all straightforward and has many difficulties and pressures.

I wanted to speak in this debate primarily because I believe that all politics is local. My constituents have contacted me asking me to put forward their views, both on behalf of passengers and because Runcorn station, one of the best-used stations on the west coast main line, is in my constituency, and numerous staff there are my constituents. I worry about their employment and their future. Surprisingly, a lot of people who have contacted me have said that they are disappointed that Virgin lost, because they think Virgin made a difference. Even one long-standing critic of Virgin has come to accept that in the circumstances of franchising Virgin has made a difference, but I will come to that shortly.

David Mowat has kept intervening to say that the risk to shareholders and taxpayers is crucial. That has not been made clear at all. Maybe the Minister will make it clear. It is a key issue, because the arrangements must be a good deal for both the fare payer and the taxpayer. We have no idea at the moment whether they are. I am sure that he will want to explore that.

The franchise decision was announced during the summer recess, denying Members of Parliament, many of whom have a close interest in the matter, recourse to questions to the Minister about the ramifications, the process and how the franchise award was arrived at. The decision to award the franchise to FirstGroup has created a lot of concern—I cannot recall a recent franchise award that has been so much criticised—so it is clear that this debate is important.

We are all well aware of the findings of the Transport Committee, chaired by my hon. Friend Mrs Ellman, on previous franchise fiscal failures. To dwell on Virgin for a bit, I will not pretend that things have been trouble-free under Virgin—there were certainly a lot of difficulties in the early days—but it had and continues to have fantastic staff, whether at my station at Runcorn, which has won award after award for customer care and service, or on the trains. If I have any criticisms of Virgin, one is that it changed a good thing. Passengers travelling on a line got to know the train crews, and Virgin decided to change them and swap them around the country. A lot of people thought that that added to the drop in service. It was not popular, and it led to a drop in morale.

The prices that Virgin charges for walk-on fares are frankly scandalous; I think that we all know what sort of prices I am talking about. However, it had many innovative ideas about advanced ticketing. Gating along the line could have been done better, as has been discussed in relation to the franchise. Parking charges have been a problem. If I had not stepped in to confront Virgin about parking charges at Runcorn, they would be much higher than they are now, adding to the massive parking problems around the station faced by my constituents.

To return to the franchise, the Department for Transport still has questions to be answered regarding its failure on the relative bid risk assessment; FirstGroup’s bid posed a risk not properly mitigated through adequate risk insurance. My hon. Friend the Member for West Lancashire has asked many questions that are in the public domain, so I will not repeat them. The Minister has heard them, and I hope that he will answer them.

Photo of John Leech John Leech Liberal Democrat, Manchester, Withington

Does the hon. Gentleman agree that as part of that risk, FirstGroup should have to risk losing all its other franchises if it is unable to deliver this one?

Photo of Derek Twigg Derek Twigg Labour, Halton

We would have to explore the consequences to the rest of the rail users on the system, but it should certainly be explored.

I return to a key issue that several hon. Members have pointed out. A cloud of controversy has surrounded the back-loading of the premium payments to the Government in the final few years of the franchise, whereas Virgin pledged more cumulative premiums to the Government for the first nine years of the franchise. I know the west coast line well, not just from travelling it but from my experiences as the rail Minister, and there were major problems on the west coast line during the early 2000s, for various reasons. At one stage, it was almost in a state of collapse, and the train services provided were pretty awful. Income dropped massively during those early years, for obvious reasons: people were not using the service. Because of the problems, they were using alternative transport such as cars, planes and so on. Income jumped in 2004 or 2005, and the timetable came out and so on. As the Minister will be aware, in 2009, a new timetable was introduced with weekend running and faster trains, which I mentioned. Did the bid take account of, or did Ministers ask questions about, that unusual situation at the beginning at the 2000s and its impact on longer-term predictions of income?

I assume that High Speed 2 will have a major impact on Euston, unless the Minister can tell me something different. Has any care been taken about that and the possible impact on the west coast?

The other question for the Minister relates to the GDP forecast on which the bids were based. Will the Minister confirm whether the bidders went along with the Government’s forecasts—a major failing in recent years—or a lower forecast? That will have an important impact on the bids. Projections are guess work, but I am not sure—we have not seen all the details, because we keep being told that they are confidential—whether the details actually add up. There is no doubt that the line has the potential for a great amount of growth. A point was made earlier about capacity and future investment. I am slightly sceptical about High Speed 2, because it has the potential have an impact on necessary investment in the west coast main line.

Photo of Dave Watts Dave Watts Labour, St Helens North

Does my hon. Friend agree that it seems that the First bid will deliver premium payments at the end of the contract, which will mean that the Government will have less money to invest in the west coast main line in the early years? Is there not an argument for doing the opposite, so that we can invest to deal with the congestion problems we will face while waiting for High Speed 2? Given the fact that no one knows whether HS2 will go ahead, is it not crucial to invest early rather than later?

Photo of Derek Twigg Derek Twigg Labour, Halton

As ever, my hon. Friend makes an important point. One key failure of the system—I hold my hands up as a former rail Minister—is in being unable to get investment into certain franchises to improve rolling stock, passenger experience, gating and so on. Some companies that have won franchises have decided not to invest, for various reasons that we do not have time to go into.

As I said, all politics is local. Runcorn, in my constituency, has benefited significantly from improvements put in place in the past 10 years or so. I am concerned that we will not build on those improvements and, because of problems with the franchise, take a step backwards. What has happened in recent years is remarkable. Virgin has achieved a good partnership with Halton borough council, which has been crucial in the reconstruction of Halton’s economy. The previous Government’s massive £8 billion investment in the west coast main line, after decades of underinvestment by other Governments, was crucial in achieving the improvements we now see, and Virgin became part of that achievement because it ran the franchise. We have seen massive improvements. From Runcorn, it now takes just under two hours to get to London, with the fastest train taking 1 hour 50 minutes.

Photo of Marcus Jones Marcus Jones Conservative, Nuneaton

Some things that happened under the last Labour Government and during Virgin’s franchise were not actually that positive for people on the west coast main line. Through his

Government’s actions, my constituents in Nuneaton were severely disadvantaged in 2008, when all their fast off-peak services were taken away, something that hopefully the new franchise will rectify.

Photo of Derek Twigg Derek Twigg Labour, Halton

I understand the hon. Gentleman making an important point about his constituency, but faster trains to London were part of the attractiveness of the changes that were made. Where most passengers got on was important in making those decisions, and I am sorry that that disappointed the hon. Gentleman. I was very pleased for my constituency. I have not seen the details of the new franchise, but I hope there will be no attempt by the winning bidder to reduce the number of trains that stop at Runcorn. Merseytravel has pushed strongly for trains to stop at Liverpool Parkway, but we do not want any reduction in the number of trains stopping at Runcorn because of the economic impact the excellent service has on my constituency.

There have been massive station improvements. Mick Noone, the transportation strategic director at Halton borough council, has said the line is

“extremely attractive and well used”.

He went on to say:

“The quality, frequency and reliability of the services have undoubtedly encouraged more people to use the train”.

After years of persistent lobbying by me and Halton borough council, we were able to secure investment for a £650,000 refurbishment programme in Runcorn station. Its tired old 1960s appearance has been upgraded with new cladding, improving the experience for passengers and for my constituents who work there and provide such brilliant service.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

The hon. Gentleman’s experience as a former Minister is valuable, and on many occasions he has referred to the substantial public investment in the west coast main line. Is it not that investment itself that makes it important for the Government to go for the bid that gives the maximum return?

Photo of Derek Twigg Derek Twigg Labour, Halton

If the Government go for a bid that says it will give the maximum return but it does not stack up, that is a problem. I am glad that the hon. Gentleman made the point about the massive amount of public investment that took place under a Labour Government; it has made a massive improvement.

Photo of Derek Twigg Derek Twigg Labour, Halton

Most of the problems with the west coast main line were due to the lack of investment during the 18 years of the previous Conservative Government, so if the hon. Gentleman wants to get into a political argument I am happy to do so.

Photo of Ann McKechin Ann McKechin Labour, Glasgow North

My hon. Friend is making some excellent points. Does he agree that there are a lack of effective penalties in this contract? If the return to the taxpayer is back-loaded, there is no guarantee that the investment required on this vital line will take place in the way envisaged by the Government. I have to yet to hear where the effective penalties will apply.

Photo of Derek Twigg Derek Twigg Labour, Halton

My hon. Friend is absolutely right and we need to know. The Minister is probably getting the answer as we speak, which I hope he will be able to give us later.

I am concentrating on what this issue means to the passenger and the taxpayer. For the passengers in my constituency, the experience has been superb. We want it to continue and do not want it to be put at risk. From 2010-11, there was a total of 619,882 entries-exits at Runcorn station, up almost 16% on the previous year according to data from the Office of Rail Regulation—a significant improvement.

I have asked the Minister some specific questions that fold in nicely with those asked by my hon. Friend the Member for West Lancashire. I do not want to put the improvements that have benefited my constituents in the past 10 years or so, particularly in the past five years, at risk. We want to continue to see improvements. The west coast main line is vital to the economy of Merseyside, Cheshire and my constituency of Halton in particular. I hope the Minister will take into account the points raised when he makes the final decision, and that he answers them as openly and as transparently as possible.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby 5:37 pm, 17th September 2012

It is a pleasure to serve under your chairmanship, Mr Bone.

I would like to speak about the importance of the rail connection to my constituency of Rugby. I am pleased to see the Minister in his place. He will recall, in his former role, standing on a drafty Rugby station platform months before the 2010 general election. The rail connection is of massive importance. We are in the centre of the UK and we benefit from the crossroads of the motorway network. We also benefit from the 50-minute journey time on the existing Virgin service from London Euston. That service has enabled us to attract businesses to our town, where we offer lower wages and lower premises costs than businesses based in the capital. It has also led to a large increase in the number of people who commute on a daily basis from Rugby to London. The quality of the service they receive is fundamental.

The recent history of the line has been one of substantial improvements in service from Virgin. I put on record my thanks, and that of my constituents, and congratulate it on the way it has improved. My predecessors as MP for Rugby would have had a far busier time dealing with constituents on rail issues than I have had. In fact, one of my predecessors, Andy King, the MP from 1997 to 2005, was instrumental in setting up the Rugby rail users group, a campaign body set up to deal with service problems. I often attend that group, but I am not told of significant problems or failures on the line. In fact, in the immediate aftermath of this decision being announced, I went on local radio and advised that there had been no complaints about the service provided by Virgin in the time that I had been Rugby’s Member of Parliament. Somebody got in touch with me to remind me that there was an issue, but it was a ticketing issue rather than a service issue.

We have gone through a very public tender process. We knew that the tender was coming up at around this time; it had been shadowed for a great deal of time, there had been lots of publicity and the requirement was known. When assessing this tender, the Department for Transport would have known that this decision would come under massive scrutiny. I am confident that such scrutiny will have led to the utmost probity in respect of its decision.

As hon. Members have mentioned, the Government have a duty to secure the best deal. They have invested £9 billion in the west coast main line. There is no use trumpeting big numbers if we do not get some benefit from that investment. It is important that we get the return not only to fare payers, as users of the line, but to the taxpayer more broadly.

Photo of Dave Watts Dave Watts Labour, St Helens North

It is also the duty and responsibility of the Ministry of Defence to get value for money for contracts, but as we know that often does not occur. So what people want to achieve and what is actually achieved can be two different things. Does the hon. Gentleman agree that the GDP factor is crucial? If the GDP figure is halved, will First’s bid still be deliverable? If it is not, surely that may put at risk the whole analysis of this contract.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

I will come on to the First bid, including questions that other hon. Members and I have put to it about the accuracy of its bid and where its bid stands. I am not sure that making comparisons with other Departments in this debate is helpful, Mr Bone. We need to ensure that the Government get the maximum value for money for every item of expenditure.

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley

As a Birmingham MP I use that train, although, to make a declaration of interest, I came down on the Chiltern line. Does my hon. Friend agree that consideration should be given to whether closing down one competitor may reduce the competitive nature of tendering in future and increase aggregate costs?

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

I am about to talk about my own business experience in tendering. Clearly, the more tenderers available in the tender process, the greater the competition and the better chance of getting the best deal.

The First bid is worth more. I have run a business and, on occasions, have missed out on a contract, so I understand Virgin’s concern. In my business, from time to time we lost contracts, which was particularly frustrating when we were confident in a bid and had given exceptional customer service in recent years. It is appropriate and shrewd business for Virgin to encourage their satisfied customers to make representation through the petition. That activity has stimulated this debate.

It is estimated that 2,000 service users from my constituency are among those who signed the petition. I have received many letters and e-mails from constituents asking me to participate in this debate and drawing attention to the substantial improvements in service that they have experienced over the years. I am happy to do that. There are, of course, those who have not had such a good experience and I have in front of me an e-mail from one of those.

In addition to the increase in revenue to the Government, FirstGroup’s offer contains other positives. My hon. Friend Iain Stewart drew hon. Members’ attention to the additional seats and services that would be made available. I can, perhaps, support my hon. Friend Mr Jones, because I met the managing director of FirstGroup only last week and he told me that he hoped that additional services might be available between Rugby and London early in the morning, and that access from Rugby to the north-west might be improved through Nuneaton, using Nuneaton as a hub station for the north-west. Innovation and proposals are coming from FirstGroup that were not available through Virgin.

The issue distils down to whether First has got its sums wrong. Did it get something about the maths wrong when preparing its bid—something that it did not take into account? I put that to First’s managing director last week and suggested that, if there were anything about his tender that in the clear light of day—in light of discussions or ideas coming from Virgin and Opposition Members—he is not sure about, right now, before the new contract is awarded, First has the opportunity to withdraw. It might choose to say, “Yes, there are some points that people have drawn to our attention. We did not quite get our maths right. Our projections in the back end are just a little bit ambitious.” There is a window of opportunity for it to say, “Yes, we got it wrong,” and to leave. It does not wish to take that opportunity.

I have looked the managing director of First in the eye and asked “Are you able to deliver what’s proposed?”, and I am confident that he understands the significance of what he has done. Ultimately, he is part of a management team responsible to shareholders within FirstGroup. If First has got anything about the tender wrong, it needs to be called to account through the courts and be held to the commitment that it has made. It happens in plenty of other businesses; I do not see why that should not happen in this instance.

The delays in the process are unfortunate. Certainly, there is no benefit to anybody, whether the companies, the staff or rail users, if there is a short-term nationalisation, such as has been suggested if First is not able to receive its contract before the judicial process is concluded.

I advise the Minister to please get on with the process. I call on Virgin to withdraw its application for a judicial review. A decision has been taken. Let us get on with it and ensure that we get the right service for rail users in our constituencies.

Photo of Albert Owen Albert Owen Labour, Ynys Môn 5:47 pm, 17th September 2012

I congratulate my hon. Friend Rosie Cooper on securing this important debate. As a number of hon. Members have said in interventions, we have not had the opportunity to discuss this matter since the announcement was made. That is regrettable. I pay tribute to Labour Front Benchers, including my hon. Friend Maria Eagle, for raising this point over the summer, and the 170,000 people who bothered to sign the petition. The discussion has been too one-sided in respect of one company, although the details are not known. I mention that because the purpose of this debate is to find out the details so that we can know for sure.

I met a number of the bidders prior to the process. I was concerned about the process and put my concerns to them, including my concern about the record of some of them. I mentioned to First, which was preparing its bid, my concerns regarding its franchise in the south of Wales. First said that it would learn the lessons, would not back-load as much in future and would look at the whole period. That is why I am raising this issue. Of course, First could not talk about the detail of the bid, but I was concerned that it had handed back the franchise on the south Wales route at great expense to the taxpayer.

Photo of Marcus Jones Marcus Jones Conservative, Nuneaton

Did the hon. Gentleman raise his concerns directly with the Government when the draft invitation to tender was published, or did he wait until after that process was complete?

Photo of Albert Owen Albert Owen Labour, Ynys Môn

Just to help the hon. Gentleman, I have been raising rail issues for many years. I am the son of a railway man. Yes, I have raised it with Conservative/Liberal Democrat and Labour Ministers.

As for the process, what was clear from my meetings with the potential bidders was that they could not speak about the detail, so we were not that concerned. Now that we have heard the outcome, we have concerns—genuine concerns—on behalf of the taxpayer and the fare payer. That is why it is important to have this debate and why I congratulate my hon. Friend the Member for West Lancashire.

The west coast line is important to my constituency. It is an historical link with north Wales, but it also linked the capital of England with the capital of Ireland. Many of the trains that went from Euston to Holyhead carried the Royal Mail—the great Irish Mail trains—but another reason why the link was so important was that it brought Members of Parliament from Ireland to this place for important votes. In those days, Members of Parliament from different parts of the country had real influence over train services—less so today—and one of the reasons for the service was to get all those Irish MPs over.

I have taken a great interest in the line for many years, and I represent a railway town that was and still is a major employer in the area. Today, after many years of investment, in particular over the past decade, we have fast and frequent trains. Now the Super Voyagers or Class 221 trains can do the run from Holyhead to Euston in three hours and 40 minutes. On top of that, there has been an increase in the number of trains to Chester, which has helped my constituents going along the north Wales coast or those going to Anglesey on other occasions. Although having to change at Chester is not always nice, it is better than standing in Euston for hours, which we had to do in the 1980s and early ’90s when trains were less frequent.

Photo of Susan Elan Jones Susan Elan Jones Opposition Whip (Commons)

I take on board my hon. Friend’s point about Chester, but does he agree that still more needs to be done with the direct link to Wrexham, Gobowen and so forth? That was not put in the tender, but the current situation is unacceptable and, when we consider the Wrexham and Shropshire line, all the more urgent. Whether Virgin or FirstGroup, it needs to be addressed properly.

Photo of Albert Owen Albert Owen Labour, Ynys Môn

My hon. Friend is absolutely right, and my hon. Friend Derek Twigg also made the point that we want continued improvement on the west coast line. People in all parts of the House want to improve the line, but many people including the petitioners have real concerns. It is absolutely right that we want the best deal for our areas, but we also want the best deal for the taxpayer and the fare payer.

I can recall a modernisation programme for the west coast in the early ’90s, which was hampered slightly by privatisation, with things put on hold. Many people, including Conservative supporters, thought that rail privatisation was a privatisation too far. There was a lot of under-investment and the programme was put back slightly, and there was also the Railtrack debacle, with Network Rail having to take over. There were therefore massive issues, but that huge investment of £9 billion—mentioned by Mark Pawsey—still went ahead and made significant improvements, bringing business from the regions of north-west England, Scotland and north Wales closer to London. Many business people, some of whom I travelled down with today from Bangor station, now come to London and can do business in a day. That is how important the west coast line is to many people and why the debate is so important. We need to get things right for the future.

In the early days, there were issues with the operator—Virgin—which hampered the service, for example on safety, with many line speeds and signalling having to be improved. Stations such as Nuneaton, Rugby and Stafford, represented by Members here, had huge investment simply to improve the safety of the lines, because a lot of work needed to be done. Now we can see the results of that investment—faster, cleaner and safer trains travelling on the west coast.

Virgin is a popular brand. I have been contacted by many constituents—not natural Labour supporters—who are concerned about the franchise and how it will run. They want safeguards, and answers to questions, which is what we want from this debate. I understand about franchising, the judicial review and the difficulties for the Minister—whom I welcome to his post, because he has a great interest in the railways—but I hope that he will be able to answer some of the questions asked by my hon. Friends and Government Members today. We are not asking about the details of the franchise, but about some of the principles.

The Minister and the Secretary of State mentioned that if we do not get the matter resolved by 9 December, the franchise might have to be taken into state ownership of some sort and to be renationalised—I think that was the word he allegedly used—temporarily. If that happens, however, it is important for the Department for Transport to have a contingency plan, which I hope that the Minister can tell us about. We understand that there is a responsibility for that to happen under the franchise agreement, but we need to get that plan. The staff and the travelling public need to know, and ticketing for the future has to be set up and run. State ownership might be an attractive proposition to many people, but it was brought into the debate by the Secretary of State, and we need some answers. The Minister should clarify whether that contingency is being planned for, so that we do not have a period when people do not know where to get their tickets if the judicial review is not complete and the new owner not in place.

Photo of Rob Flello Rob Flello Shadow Minister (Justice)

I have been listening carefully to my hon. Friend’s speech. Does he want to comment a little further on the effect that all the uncertainty and confusion might have on staffing levels, and therefore on service? If staff are, understandably, concerned about their future, they might decide to go elsewhere, if such opportunities are available, and that might affect the service that the travelling public can expect.

Photo of Albert Owen Albert Owen Labour, Ynys Môn

That is absolutely right. There is huge anxiety, and morale has been sapped, so it is important to get clarification on where we are going. Yes, the judicial review is out of Minister’s hands, but if the Secretary of State makes announcements about temporary renationalisation, he needs to reassure people that he has the plans in place so that any such period is dealt with as smoothly and efficiently as possible.

I speak to rail staff regularly, and did so only a few hours ago on the train journey down, and they are very anxious. To be fair, they have been given assurances about their future by both Virgin and FirstGroup, but the hiatus because of the judicial review is causing greater anxiety. It is incumbent on the Government, who award the franchises, to make it clear, if they are to take temporary measures, what those measures are.

Many issues have been raised, but some are important and need repeating. We need to know whether all the bids were treated exactly the same and whether the risk of all the bids was assessed, not just for the leading or highest bid. We are not talking about a casino, but about running our transport system—the process is hugely important and needs to be done properly. I hope that the Minister can answer some of the questions and confirm whether he has had a list of questions from Virgin and explain why he has refused to answer some of those questions. Some of them may be commercially sensitive, which I understand, but the ones that I have seen and that I was supplied with by Virgin were general. We want the answers to some of them, in the interest of the 170,000-plus petitioners. I hope that we will deal with the issues of renationalisation over that short period and whether the risk for all bids was assessed equally. A tendering system has to be done in that way—robustly over the 15-year period and not only on the basis of the highest money value to the Government.

A lot of questions have been asked by Members in all parts of the House. I know the sensitivity of the judicial review, but it should not be a shield for the Minister to hide behind and to use to avoid answering general questions. The public have a right to know—the rail is in public ownership and a lot of taxpayer money goes into the franchise agreement—and they deserve those answers, which the Minister could give today and help the debate.

I had a quick response from the Minister of State, Department for Transport, Mr Burns, saying robustly that he was happy with what the Government had done. He also said that the contract remains alive, and that he expects it to be signed soon. He has that confidence and information at his fingertips, and I am sure that the Minister present can share some of that information with us today. It is important that the Government are seen to be open and transparent, because we are talking about billions of pounds of investment.

We all want the west coast main line to be improved. I am not interested in the logo on the side of the trains, but I am interested in the quality of service on the west coast. It has improved considerably over the past decade, and I want it to improve further. I want investment in areas such as Anglesey so that we have connectivity with rail services. This debate is about the petitioners and their concerns rightly being aired by Members of Parliament, and being answered efficiently by the Government.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

I see seven hon. Members trying to catch my eye, and we have less then 55 minutes remaining for Back Benchers to speak. Hon. Members can do the arithmetic.

Photo of Eric Ollerenshaw Eric Ollerenshaw Conservative, Lancaster and Fleetwood 6:01 pm, 17th September 2012

It is great to follow Albert Owen. Across the divide, we share many concerns with other hon. Members who represent the regions, as I do. We have come from Liverpool via Milton Keynes, Runcorn, Rugby, and Holyhead to Lancaster, but I am not sure whether there is a through ticket for that; perhaps the two groups might suggest one.