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Westminster Hall

Tuesday 8 February 2005

[Mr. John McWilliam in the Chair]

East Coast Rail Franchise

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Jim Murphy.]

9.30 am

Mr. Mark Lazarowicz (Edinburgh, North and Leith) (Lab/Co-op): I am grateful to have secured this debate. I see that a number of hon. Members who represent various constituencies along the east coast are present; doubtless they wish to speak about their particular interest in the subject. I shall try to be reasonably succinct, so that they have a chance to take part.

I start by declaring my interest in the subject, not in a formal or financial sense, but as a regular user of the rail services on the east coast main line. I share that interest with many of my constituents, who use the line south to London and north to Aberdeen, Inverness and Glasgow. Like many of those constituents who have recently contacted me by e-mail or letter, I am generally impressed by the quality of service offered by GNER, the current franchise operator. That fact certainly forms part of the background to a debate about the future of the franchise for the east coast main line.

Obviously, as with any operator, things can go wrong from time to time, and my experience of the line has not always been of the highest, but I have generally experienced a good service under the present operator. My starting point is therefore to say that I hope that the Strategic Rail Authority and the Department for Transport, in their respective roles in awarding a new franchise, will allow GNER to continue to operate it. I know that that view is shared by the nearly 50 hon. Members who signed the early-day motion on the subject tabled by my hon. Friend the Member for City of York (Hugh Bayley). It is pretty unusual for MPs to support the continuation of a franchise in such a way. We normally see people demanding that franchises are removed. That is a reflection of the quality of the service provided by GNER.

Mr. Iain Luke (Dundee, East) (Lab): My hon. Friend makes a valid point about the SRA's involvement in awarding the franchise for the east coast main line. Does he accept that, with the SRA's involvement in reducing the strategic value of the line from Edinburgh to Aberdeen, the franchise should be framed so as to ensure that the good service that we seek serves all the communities on the east coast, from Aberdeen, through Dundee, to Edinburgh and the south?

Mr. Lazarowicz : I know that my hon. Friend has been a consistent champion of the rail service north of Edinburgh to Dundee, including the long-distance mainline services. He makes a valid point, and I agree with him.

There has been speculation in the press that, in the process leading to the awarding of a new franchise, the Treasury is trying to extract the maximum return to
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the    taxpayer from whatever arrangements are eventually made. It is clearly the Treasury's job to extract the maximum return for the taxpayer; and one would expect such thinking to be going on in government, but I hope that today's debate will make it clear that it would be unacceptable for the Treasury's interests to override the importance of maintaining a high-quality service on the line. The message that must come out of the debate is that we do not want the quality of the service offered to the customer to be reduced; it would certainly be a seriously retrograde step if the current GNER service were replaced by a poorer service offered by another operator or, indeed, if the existing operator were forced to run a poorer service as a result of the eventual franchise arrangements.

Mr. Luke : My hon. Friend makes a valid point about the integrity of the service. I know that he reads The Scotsman intently because it is produced in his home town, and he will have been upset by a report on 8 October—my birthday—that some of the proposed options include the possibility of longer journey times, unregulated non-core fares and replacement bus services. Many people along the line in the north-east of Scotland will see that as a clear threat to their direct services to London. Does he accept that such things should play no part in the final decision on who gets the franchise?

Mr. Lazarowicz : I certainly accept my hon. Friend's point; indeed, I hope to deal in a second with some of the specific service issues to which he referred.

There is also concern about the possible effect of a change in operator on the passengers who use the existing services. Where there has been a change of operator elsewhere, there have sometimes been difficulties in the changeover period, and there is a worry that the service could be disrupted in the transition to a new operator. That in itself would drive passengers away, and they might not return in the long term, whatever services then prevailed.

There is also concern about the position of the staff who currently work for GNER; the issue has a particular constituency interest for me and for other hon. Members with constituencies along the east coast line. Almost 400 staff, many of whom live in my constituency, are employed in various operations in the Edinburgh area, and they are concerned about what a change of operator will mean for the future of their jobs.

I accept that it is in the nature of a franchising process that the Government have to consider all the proposals made by the various bidders. If another operator suggested a wonderful alternative, it would certainly not be right to rule it out, and any such proposal will no doubt be given proper consideration. However, given what we know of the various options unveiled so far, there is no reason to change the operator on the east coast main line.

The right way forward is to build on the strengths of the existing operator, enhance the services offered to the passengers who use the route at the moment and attract more customers from the airlines and the roads. If we are to ensure effective competition, particularly with air travel, there must be a high-quality service, which is another reason why any moves that would result in a poorer service should be resisted.
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I want briefly to highlight the improvements that I would like to see on the agenda, particularly to meet my constituents' interests. First, we need to consider the timings for the duration of journeys from Edinburgh to destinations further south. It is technically possible for trains to make the journey to London in four hours, but those of us who have used the service in recent decades notice that journey times have not been reduced; in fact, with one early morning exception, they have actually increased in recent years. That trend must be reversed if we are to provide an attractive alternative, particularly to air services.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): I am sure that the hon. Gentleman would want his constituents to be able to reach Aberdeen as well. However, in terms of journey times, Edinburgh is almost halfway between London and Aberdeen, so it is important that the operator of the east coast franchise recognises that the line goes all the way to Aberdeen, especially when it tries to improve journey times.

Mr. Lazarowicz : Indeed. The franchising process must see how maximum advantage can be gained from the franchise operator working with the Scottish Executive in the exercise of their responsibility for rail infrastructure north of Edinburgh, following additional powers being given to them recently by the Secretary of State for Transport. Journey times, particularly for trains going south from Edinburgh, certainly need to be shorter, but I fully accept the point about services northwards and westwards.

Secondly, there needs to be greater integration between the mainline services and local rail and bus services. Integration is not as good as it could be, and work needs to be done to make the most of proper integrated transport services so that passengers can transfer from mainline express services to local services and make bus connections.

There also needs to be more imaginative use of the timetable to provide links and direct services, not only along the main line from Aberdeen and Edinburgh southwards to London, but to other cities that can be served by the line. Services to Leeds could certainly be improved, and connections to cities such as Nottingham and Sheffield could be better integrated with the mainline services.

Several constituents raised the issue of smoking carriages on the east coast service, which they do not believe to be conducive to their health. As has been pointed out, presumably the possibility of separate legislation in Scotland on smoking in public places will have to be considered, or there will be difficulties when the trains reach a spot 400 yds north of Berwick.

It is essential that the franchise is for a long period, whichever company wins it. We cannot have the sort of two-year extension of the franchise that we had in the previous round, which would clearly create uncertainty for any operator. I understand that a franchise of up to 10 years is suggested. That is the sort of period that should be covered in the current round.

Certain associated improvements to the infrastructure could be linked to any bid. During the previous franchise round, some major upgrades to the network were
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suggested as part of the bid. Obviously, upgrades to the network or anything else that is done in the right place in the right way would be very attractive to us all, but I would be concerned if part of the price of the final successful bid was to link the franchise to excessively complicated changes to the infrastructure. We have learnt from the experience of the west coast main line, and we should be wary of major improvements to the infrastructure on lines on which services are operating.

It would be far better to return to the agenda the possibility of a north-south high-speed line. That is the way forward for the UK as a whole, and we need to pursue it. We need a 20-year vision for direct high-speed links from London to the north of England and to Scotland—the vision, and the links, that exist elsewhere in Europe. Such a network might make possible a three-hour journey from London to Edinburgh, and needs to be constructed in a way that does not cause disruption to existing services for an extensive period.

I am pleased that the Secretary of State for Transport indicated in a speech last week at a conference that the issue of a north-south high-speed line is back on the agenda. I hope that he will take that idea forward, as such a development is needed if there are to be real alternatives to air travel to Edinburgh and Glasgow, not to mention between Aberdeen, Dundee and London.

If the Treasury is to harvest more return from the new franchise, whichever operator it is granted to, what better way to recycle that extra income in its coffers than to use it to develop the first phases of a north-south high-speed line of the type that I have described?

9.46 am

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): I welcome the debate on this subject, because, as our interventions may have shown, it gives us the chance to get assurances from the Minister that the Government see the east coast main line as one that connects Aberdeen to London, not just Edinburgh to London. There is a long history of concern that the Aberdeen to Edinburgh line is beginning to be seen as a branch line. At times, companies have not helped, especially with their advertising: they have failed to produce correct maps of the services that they provide to the whole of Scotland, and failed to recognise that Inverness services also go to Glasgow. The east coast main line should be seen as one that runs throughout the United Kingdom, not just one that connects Scotland to the rest of the UK.

I echo the comments of the hon. Member for Edinburgh, North and Leith (Mr. Lazarowicz) about the quality of service to date. Obviously, a franchising process is about competitive bidding and recognising who has made the best bid, but I am pleased that a franchisee's record can now be taken into account. Unusually, there has been a write-in campaign in support of GNER by users of the service—I am sure that other Members will have received letters. When users of the service recognise its quality, that should be taken on board. If someone else says that they can provide a better service, that must be recognised as being important for our constituents, but they must also be seen to deliver.
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The east coast main line was a jewel in the crown of British Rail even before privatisation, and the operators had the chance to work with that. As the hon. Gentleman said, when things have gone wrong, there has been support to assist customers with any problems that crop up, and the company has often been able to put things right.

The Campaign for Rail Electrification from Aberdeen to Edinburgh, CREATE, was established by local government and economic development organisations in the north-east of Scotland down to Edinburgh, including Fife and Dundee, because when the electrification of the east coast main line was planned, it was to go only as far as Edinburgh. That rang alarm bells in people's minds about the economy further north, and caused concern that it would create a two-tier service because investment would go into new stock that could use the electrification, and investments in line speed and improvements would go to the electrified route. There was also a practical recognition that it is far easier to carry on electrification with the system up and running than to have a stop-start process. The campaign was established with that in mind.

There has been a lot of professional and technical advice, and history, since the campaign began. Obviously, electrification stopped at Edinburgh. The campaign still exists, and it has stuck to the original issue: preventing Aberdeen from being seen as simply at the end of a branch line from Edinburgh. There are improvements to be made to the line north, so that whoever gets the franchise can provide a better connection from Aberdeen to London. Such improvements will help with people's journeys from north of Edinburgh to London.

Mr. Luke : Does the hon. Gentleman accept that in an earlier debate on the matter—I think it was on 26 June 2002—the Minister who responded made it clear that electrification was no longer an option for the line north of Edinburgh, and that the way forward was for improvements through Fife, north of Dundee and up to Aberdeen, to ensure that the speed that we had hoped for could be reached and that the time of a journey between London and Aberdeen could be cut significantly? Although electrification was a goal of CREATE—I have attended many CREATE meetings—it is no longer on the table.

Sir Robert Smith : As a former member of CREATE, I recognise the transition to a campaign for achievable improvements on the line north of Aberdeen, the point having been established that Aberdeen to London is a mainline service. We want the Minister to say that the Government still recognise that the main line runs all the way to Aberdeen. I hope that that recognition not only exists on a piece of paper, but has practical consequences, so that the line will be managed as a main line north to Aberdeen and the line improvements will be delivered, making it possible for the franchisee to offer an improved service. No matter how good the service is or how much less burdensome the journey, if trains are trundling around on old, inefficient and crowded lines, the competitiveness of the railway will not increase.

The hon. Member for Edinburgh, North and Leith was right, too, to say that we have to be more ambitious in this country if rail is truly to deal with the problems
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caused by unnecessary air travel. Establishing a new north-south route must be the long-term goal. Incremental improvements south of Edinburgh which disrupt journeys will only drive people away from the railways and will not achieve the substantial achievements that we want.

Rail has a lot to offer. I should also like to hear from the Minister that the franchising process will not disrupt other developments on the line. In my constituency, the reopening of Laurencekirk station is closer than it has been for many years, with the Scottish transport appraisal guidance analysis showing that it is a financially practical proposition. I would like to be reassured that the franchise will not in any way disrupt either the reopening of stations on the route or the proposed Crossrail service in Aberdeen to create a commuter rail link from the north and south of Aberdeen, which would make use of existing infrastructure. Can the Minister also assure us that freight will not become a Cinderella service as the franchise is established?

I reiterate the fundamental point, which is that the east coast main line goes north to Aberdeen and should be managed to deliver services north to Aberdeen, meaning improved speeds, times and infrastructure to make that possible. None of the welcome developments, such as the reopening of Laurencekirk station and the establishment of the Crossrail commuter service for Aberdeen, should be undermined.

Pete Wishart (North Tayside) (SNP): Does the hon. Gentleman accept that with the devolution of railway powers there is a challenge for the Scottish Executive to deliver on the projects that he mentions? We are concerned that the Scottish Executive have not been properly resourced to pursue such projects; we have calculated a £70 million shortfall. I do not know whether he has concerns about that.

Sir Robert Smith : Obviously, the Minister must make it clear that in transferring powers to the Scottish Executive the Government should also transfer the resources that make those powers deliverable.

On a practical level, regardless of resources, I should like also to ensure that nothing in the franchising process undermines projects. The franchise regulations could establish standards for the service which, because of technical specifications, disrupt the ability to reopen stations. I would like some recognition that the reopening of Laurencekirk station is being encouraged and that nothing in the franchise will undermine that encouragement or the development of Crossrail.

9.53 am

Hugh Bayley (City of York) (Lab): I start by congratulating my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz) on securing this important debate. I also thank him and many hon. Members in all parts of the House for supporting my early-day motion urging the Government to award the new franchise to GNER.

I should declare an interest. Like other hon. Members who live along the east coast main line, I am provided by GNER with a car parking pass—mine is for use at York station—which saves the House of Commons
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authorities a tidy sum in parking charges that I would otherwise claim. That is of course the same concession that GNER's predecessor British Rail provided to MPs along the line.

The east coast mainline service, run by GNER, is without doubt the best railway in the country, but I want it to be better still. My hon. Friend the Member for Dundee, East (Mr. Luke) and the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) have argued persuasively for improvements to the service north of Edinburgh. I would say to them that GNER has a good track record—the best of any train operating company in the country—for improving services by putting on more trains and improving track layout, not just in Scotland but in England. For instance, it has greatly improved the access and services to Leeds, which is off the main London to Scotland line.

GNER's east coast main line is more than a railway; it is an artery pumping the lifeblood of prosperity into all the regions through which it passes. Yorkshire Forward, my local regional development agency, estimates that the main line contributes some £100 million a year to the region's economy and sustains 11,000 jobs in Yorkshire, mainly in transport and tourism. Of course, a great number of those tourism-related jobs are in my constituency. We receive some 4 million tourists a year, of whom 24 per cent. arrive in York by rail, a number that has been increasing in recent years. However, the economic impact is not just on transport and tourism. The east coast mainline service run by GNER acts as a magnet. It has drawn investment to my constituency from a wide range of businesses—largely high-technology firms in computing and biotechnology—that need quick access to markets and customers in London and the south-east, and at other points on the east coast main line. Next to York station is the York Central site, which is about two thirds of the size of the area within York city walls, York's heart. It is ripe for redevelopment, and it will be developed only because of business brought into the city by the railway line.

Jobs in York, in Yorkshire and elsewhere along the line depend not on the mere existence of the railway but on the provision of a good railway service. I was not in favour of rail privatisation, as the right hon. Member for East Yorkshire (Mr. Knight) will recall, but I am firmly in favour of GNER. It has won me over for a number of reasons. First, it has improved the quality of the service on the east coast main line: it has increased the number of staff on trains and in stations; it has improved on-board catering and train information for passengers; and it has trained its staff, which has contributed to the quality of service. I believe that it is the only railway company in the country that has won Investors in People recognition for the whole of its business not just once but twice.

I back GNER, secondly, because of the reliability of the service and, thirdly, because it has increased the frequency of trains, the number of services that it runs and the number of passengers that it carries. As my hon. Friend the Member for Edinburgh, North and Leith points out, there are important environmental advantages to drawing traffic off the roads and on to the railways.
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Fourthly, GNER has controlled ticket costs better than have some other rail companies; some of the fares that it offers now are lower than those charged by British Rail before privatisation. Its fares have risen overall, but not as fast as those of its key competitors. According to an article in The Independent yesterday, the cost of standard-class single fares on GNER services has risen by 48 per cent. in the past nine years. During the same period, the cost of standard-class single fares has increased by 70 per cent. on First Great Western and by 80 per cent. on Virgin Trains, so GNER has a better record on controlling the costs that face its customers than have its main competitors in this franchise competition.

Fifthly, GNER's industrial relations record is good. It has established partnership agreements with the trade unions that represent its staff. I believe that that is important because it enables GNER to continue to modernise and improve the service to its customers and its working practices to keep the service competitive and profitable. The single most attractive thing about GNER is that it has delivered what it has promised. One cannot say that for all its competitors.

There have been reports in the press in the past week or so that one of the bidders for the franchise, Danish state railways, intends to buy new Japanese trains. Investment in rolling stock is always attractive, but I should remind the Minister that GNER is in the middle of rebuilding its entire fleet of trains. If she has not already ridden on one of the new Mallard trains, I advise her to do so. They provide an absolutely splendid service. The difficulty with the offer to build entirely new trains is that if that were actually fulfilled it would not come into effect for six years at the earliest, and the new Mallard rebuild, which GNER is in the middle of, would stop dead. The new Japanese trains would be shorter and would carry fewer passengers than the Intercity 225 trains. The GNER rebuild is taking place in this country, supporting our rail engineering industry, but the building of Japanese trains would not.

The importance of GNER to my constituency ought to be underlined. When rail privatisation happened, York lost thousands of railway jobs. Since then, we have been clawing our way back. We now have about 3,000 railway jobs in the city, in engineering, design, track maintenance and renewals, as well as train operations. However, the magnet for all those jobs has been GNER's decision to base the headquarters of its operations in York. No competitor for the franchise offers to have its headquarters in York. If any of them were to win the franchise, the 409 GNER headquarters jobs in York would be at risk. Other jobs in the supplier industries, such as in Corus Rail Consultancy, which must employ 300 or 400 civil and mechanical engineers, could also move elsewhere.

If one reads the trade press or talks to businesses or chambers of commerce up and down the line, to the Institute of Directors, which wrote to me recently, or to budget travellers, pensioners or students, one finds that they are all backing GNER. As the hon. Member for West Aberdeenshire and Kincardine said, some 20,000 pledges of support to GNER have come from its passengers. Many Members of Parliament from all parties have supported my early-day motion backing GNER's bid.
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I accept that GNER has to win the franchise on merit and has to offer the taxpayer value for money. However, the Government must also take into account its track record in providing an improving service. It would be quite perverse if the train operating company that by common consent has performed the best since privatisation were to lose its franchise. It would send entirely the wrong message to other train operating companies; it would say that quality and reliability are not valued and rewarded. It would create a hiatus and economic uncertainty in the regions through which GNER services pass, when continuity and certainty are required. I urge the Government to make an early decision on the franchise and to award a new franchise to GNER.

10.4 am

Dr. Ashok Kumar (Middlesbrough, South and Cleveland, East) (Lab): I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mr.   Lazarowicz) on securing this debate. It is an important one and has been very informative so far.

I, too, declare an interest in that I regularly travel with GNER on the east coast main line. Like my hon. Friend the Member for City of York (Hugh Bayley), I have a car parking pass card given to me by GNER. I want to say something about my experience of travelling on GNER before focusing on two or three issues relating to the high-return option bid that all potential tenderers have been asked to include in their submission. I also want to discuss the issue mentioned by my hon. Friend the Member for Edinburgh, North and Leith, of how returns to the Treasury from the successful franchisee should be invested, as well as talking about direct services between London and Teesside.

My experience has been similar to that of my hon. Friend the Member for City of York. GNER provides an excellent service and generally I have found its staff very helpful and supportive. I hope that the franchise will go back to GNER; I feel strongly about that. I recognise that the case should be based on merit: the company's service to me and my constituents is outstanding and a credit to those who provide it.

Sometimes I have experienced delays or cancellations for one reason or another, but I do not blame GNER. Problems have been more to do with the track, signalling or power supply, so I lay the blame at the doorstep of Railtrack, now Network Rail. That, historically, is the real culprit, not GNER. The rail company is led by an excellent chief executive, and it has gone from strength to strength in all the years that I have been travelling on it.

On the matter of bidding, I want to focus on the high-return option, which is a device to test how a financial return from a franchisee to the Treasury can be maximised. I appreciate that that is seen as a way of securing a rail network with the least possible call on the taxpayer, but there is a danger that the duty will produce bid options that slash costs, and, in doing so, devalue standards. I should be concerned if potential franchisees presented bids that would mean fare rises, or cuts either in train crew or in staff at the stations that they control, such as those in my area of Darlington.

I hope that the franchise will be approached in the spirit of ensuring that we have a high-quality railway, rather than one that is run just to be cheap and cheerful.
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I agree that my right hon. Friend the Secretary of State and the Strategic Rail Authority have a duty to examine the high-return option, but I argue that they also have a duty to consider the quality and level of services as well.

As to investment in service, the Minister will recall that the east coast main line is unique in this country, as other hon. Members have said, in that it is the only one not to need a subsidy from the taxpayer. In those circumstances a crucial factor in the franchise process will be the amount of return to the SRA. That raises the issue of where the return will be invested.

The east coast main line has several feeder branch lines such as the one in my constituency, which runs from Saltburn, through Redcar and Middlesbrough, and connects with the main line at Darlington. Unlike the main line, it needs investment and subsidy from the SRA and the taxpayer, but it is a vital link to the main line for the communities that it serves. In that sense it also directly underwrites the profitability of the east coast main line. A logical approach would be to invest the cash returns to the SRA and the Treasury in that line and, indeed, the other, similar, lines that serve the east coast mainline stations and services.

I want to mention services between London and Teesside. Teesside is unique in being probably the biggest conurbation in the UK with no direct rail link to London. There is a population of nearly 500,000 in the area covered by the boroughs of Stockton, Middlesbrough, Hartlepool—I notice that my hon. Friend the Member for Hartlepool (Iain Wright) is in the Chamber—Redcar and Cleveland. For decades, those people have had to travel to Darlington to connect with a London service. I do not know what is in the detailed plan submitted to the SRA by the prospective franchisees. However, given the shape of the demands made on them by the bid, I should be very surprised if there were any mention of new links from London to Teesside. Given that, the Minister should examine closely the forthcoming bid for approval from the rail regulator from a new rail company, Grand Central Railway.

Iain Wright (Hartlepool) (Lab): I am grateful to my hon. Friend and fellow Teesside MP for giving way, and I fully support his comments. As the newest Member of the House, my experience is that the rail service from King's Cross to Darlington is extremely effective; the journey can be done in two and a half hours. My only problem is that if I use the rail network, it can take another two and a half hours to go from Darlington to Hartlepool, as I am sure my hon. Friend is aware. I fully endorse his comments. We should be investing in Teesside to ensure that there is a vibrant and effective link between the Tees valley and London. That would enable the commercial potential of the area to be realised.

Dr. Kumar : I hope that the Minister has noted the comments made.

As I was saying, Grand Central Railway has put forward a proposal to run a service from Sunderland to King's Cross. That service would call at Hartlepool, Stockton and Eaglescliffe, which are all in Teesside. I understand that there is also the potential for a further service from Middlesbrough. It is envisaged that the
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journeys would be made by completely refurbished high-speed diesel trains with a high degree of passenger comfort. The company would also offer remarkably cheap fares, with an option of a Teesside-London return ticket of £50. If approval is given, the company will seek to start operations this December.

Grand Central Railway will probably be what is called an open access operator in that it will make no demand for subsidy from the SRA or payments to it. The financial arrangements would be similar to those that underpin the operations of Hull Trains. As the Minister will be aware, that company has been very successful in providing fast and convenient services to a similarly large conurbation, which, until the company's arrival, had found itself largely isolated from the east coast mainline network.

Since the inception of the service, passenger numbers travelling to London from Hull and its surrounding areas have grown hugely. Crucially, those passengers were not stolen from GNER. The success of Hull Trains shows graphically that the same approach could work for my area in Teesside. It is clear that Grand Central's prospectus offers the easiest opportunity for Teesside to have a dedicated London rail link. The provision of such a link would aid tremendously the regeneration efforts going on in Teesside.

Mr. Lazarowicz : Some Members from north of Edinburgh pointed out that the line runs northwards as well as southwards from that city. Does my hon. Friend agree that the franchise should also address the issue of how better links can be provided for all passengers, from whatever point on the east coast main line they travel, so that they have good connections to important towns and cities near the line?

Given that people read debates such as these for references to car parking passes, I should like to make it clear that, as I am fortunate enough to live within walking distance of my station, I do not have a GNER car parking pass.

Dr. Kumar : I agree with my hon. Friend that links are very important. We have all had bitter experiences. If those concerns could be better addressed, we would all be in favour of that.

I hope that I have put into focus the importance of the Teesside-London railway link. We have thriving universities, university teaching hospitals and emerging state-of-the-art teaching hospitals. Tremendous regeneration programmes are going on in Middlesbrough and Stockton as a result of the Government's efforts. I hope that the Minister takes note of all those things when she makes a decision.

Mr. Deputy Speaker : If the hon. Member for Dundee, East (Mr. Luke) wants to speak and promises to be very brief, I will call him.

10.15 am

Mr. Iain Luke (Dundee, East) (Lab): Thank you, Mr. Deputy Speaker. I will be very brief.

I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz) on securing the debate. He will know that I am passionate about this issue.
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Many people have said that the options on offer are rail, car or air. Travelling from my constituency to London by car is a horrendous journey, and although we have an air service, which we value, it is not as frequent as we would like, so obviously rail still forms a major connection to the east coast of Scotland.

I secured two earlier debates on this subject. On 26 June 2002 there was a debate on the electrification of the line north of Edinburgh. On 16 September 2003 we had an Adjournment debate on investment in the east coast line. The awarding of the franchise is a vital issue in the service delivery that all constituents on the east coast deserve and want.

My hon. Friend the Member for City of York (Hugh Bayley), who is very knowledgeable on the issue, made a vital comment about the current deliverer, which has kept its promise. That is reassuring. The touchstone for the successful franchisee must be a commitment to ensuring that the service is not reduced; indeed, I hope that it will be improved.

Some comments have been made about the bidders for the east coast line and the determinants of the franchise; applicants have to put forward what they would call a high-return option. Many people believe that that would include fare rises and the replacement of poorly used services from stations up and down that line by buses. That is a prospect that fills many people, myself included, with horror.

The hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) properly outlined the rail travel problems faced by communities in the north-east of Scotland. They can be resolved only by significant investment in the line north of Edinburgh. He, I, and others have pursued that through the Scottish Executive and Ministers here in Westminster. Since the SRA decided for investment purposes to downgrade the line north of Edinburgh, it has been a major battle. However, it is one of the vital issues that must be addressed by the Government and the franchisee to ensure the provision of the services that should exist to serve the north-east of Scotland.

I hope that the Government take on board the need to keep services to the east coast of Scotland at their highest level. Hopefully, the successful bidder will also be committed to that.

Thank you, Mr. Deputy Speaker, for allowing me to say those few words. I hope that there will be a successful conclusion to the franchise bid which will serve the people up and down the main line well and give them the service that they deserve.

10.18 am

John Thurso (Caithness, Sutherland and Easter Ross) (LD): I congratulate the hon. Member for Edinburgh, North and Leith (Mr. Lazarowicz) on securing the debate. It is evident from the many contributions that there is unanimous support for the existing franchise holder.

My hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) made the case for ensuring that in considering the franchise we do not forget, as often happens, that Scotland does not end at Edinburgh but goes on to Aberdeen, Inverness and north to the top of Scotland. I read with great interest the comments made by the hon. Member for Dundee, East (Mr. Luke) in an earlier Westminster Hall debate.
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My right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) would very much like to have been here today, but, unfortunately he is a member of the Liaison Committee, which is meeting this morning, and is therefore unable to be with us.

Mr. Deputy Speaker : Order. I, too, am a member of that Committee.

John Thurso : I hope that you will have a moment to get there before too long, Mr. Deputy Speaker.

My right hon. Friend is a regular user of the service from his constituency, and he has impressed on me the massive local support for GNER. That is rare; it is hard to think of a rail franchise or service that has enjoyed such support from its users. Exceptions might include Chiltern Railways or the Gatwick Express. It is an important point, and it must be taken into consideration. The early-day motion tabled by the hon. Member for City of York (Hugh Bayley) is evidence that it has support not only from the public and passengers but from Members. I am unsure whether there has ever been an early-day motion in support of a franchise holder before, so that is rather special.

My right hon. Friend the Member for Berwick-upon-Tweed has intimated to me the considerable concern, particularly in the north-east but also in other areas served by the line, that the result of the current franchise letting will be a downgrading of the service, an increase in fares and a much worse service for the passengers. There are two key issues. The first is the franchise system and how it is applied with regard to this franchise. The second, customer satisfaction and the need to ensure that the product delivered to the customer is of value and quality, too often gets forgotten when we debate the railways.

Let me start by setting out some of the things that GNER has achieved, because it might be considered a role model for other franchisees. Its first achievement is financial. It began with a Government subsidy of £62 million a year. Not only has that been reduced to zero, but I understand that over the last three years it has paid some £78 million back to the Government, and last year that sum was about £22.5 million or £25 million. The SRA's own survey reports that 85 per cent. of passengers are happy with the service, which is the highest satisfaction rate for any long-distance operator.

One of the things that impressed me most was that GNER has made investments of £100 million in rebuilding trains, improving car parks, modernising stations and improving information for passengers. Too often the money that the passengers pay becomes profit or goes in rebates to the Government, and not much comes back in investment. A company that has invested is to be commended. That, possibly allied to the fact that there are some 22 per cent. more services, is why the passenger numbers have increased by 32 per cent.

Another fact struck me. Many people say that GNER has a wonderful restaurant car, but it is simply a service for business men at the front end and takes no account of the ordinary traveller. However, GNER has standard-class tickets available that are cheaper than the standard off-peak fares that used to be offered by the BR Apex ticket. This is a provider that understands that a high-class service can be operated at one end of a vehicle and a cost-efficient or cheaper option at the other end.
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All in all, a great deal to do with this franchise is to be commended. If GNER can persuade the hon. Member for City of York to move from being against privatisation in principle to being a supporter of its securing the franchise, that is evidence of the good work that it has done. That is recognised by the petition and the early-day motion.

I turn to the franchising system. We have just finished our consideration of the Railways Bill. In Committee, my hon. Friend the Member for Southport (Dr. Pugh) and I tabled an amendment nicknamed "the GNER amendment". That was slightly unkind because it was designed specifically not to help GNER, but to place an obligation on the new franchise system whereby passenger satisfaction and the quality of service delivered by an existing franchise holder must be taken into account when awarding a new franchise. Surprisingly and sadly, the Government chose not to accept the amendment, but I hope that, when they consider how the new system will work, such an important ingredient will be taken into account.

Part of our problem is that, at the moment, the franchising system is in limbo because we are in the dog days of the SRA. It knows that it will go soon, but the new system is not yet set up and running in the Department, so we are betwixt and between. A franchising system must clearly be about competition; otherwise there is no point in it. If all we had to do to achieve a new franchise was to deliver a good service, and that was automatically achieved, the system would not be working. It must be about competition not only for a particular franchise, but between different franchises.

We then come to the matter of determining value, not cost. It is important to make known the difference between the cost of something and its value. As someone who has spent his life in the hospitality industry, I know that it is always easy to cut costs. We can slash the marketing budget or, the most common method, cut the training budget. Services can be reduced. In the case under discussion, a few people could be removed from stations and from the trains themselves. There comes a moment when however low the costs and however high the corresponding possibility of reducing fares or, as is more likely, giving more money to the Treasury, we will have destroyed the product that delivered the revenue in the first place. The Government or the SRA must therefore be careful; they must understand the difference between cost and value. They should not give in to the short-term desire to receive the maximum return, but know that nursing a customer base is about value and the long term.

One of the hon. Gentleman who spoke mentioned the wider value not only to the travelling public, but to the economy itself, especially tourism. I declare an interest in that I am still the president of the Tourism Society. When there are good transport links, the value of tourism increases considerably; academic data support that. I do not know whether other hon. Members with regular involvement in transport matters received the same e-mail as I did from a gentleman in America a few days ago. He said that he had tried everything to find out how our railways worked and how he could book a train ticket. He said that the telephones were not answered and the website was down, and if someone somewhere did not answer his call he would go to France. I sent him
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an e-mail to ask what trains he wanted and say that I would do my best for him, but I have not received an answer.

Mr. Luke : He is in Paris.

John Thurso : Probably.

The franchising system must acknowledge value and customer satisfaction. As for competition, one of the other bidders runs the west coast franchise. If one company runs both the west coast and the east cost lines, competition will clearly be reduced. The customer service that GNER produces comes from its Investors in People qualification. It is the only rail company in such a position and surely it must be congratulated on that.

At our conference last year, my party committed itself in principle to the north-south high-speed rail link. That will mean that many of the options that are currently open for a six-track railway or a bypass will conflict with that, an important point that the Secretary of State has now come round to understanding and which should be taken into account.

A powerful case has been made for GNER, not simply because it is the existing franchisee, but because of all that it has delivered for the customer. It is time that the customer was put front and centre in dealing with the railways, and I hope that the Minister and her team will respond to that.

10.30 am

Mr. Greg Knight (East Yorkshire) (Con): Some hon.   Members have declared an interest in this debate and they were right to do so, but I am certain that none of them would say anything other than what they truly believed in just because of a train pass. I am not sure whether I need to join those hon. Members; I think that I was issued with a GNER parking pass and I am also fairly certain that I have lost it, so I declare an unknown-whereabouts interest.

Mr. Deputy Speaker : Order. On that basis, I suppose that I had better declare an interest as well, but I do not use my pass very much.

Mr. Knight : Thank you, Mr. Deputy Speaker.

I join other hon. Members in congratulating the hon. Member for Edinburgh, North and Leith (Mr.   Lazarowicz) on securing this important debate, and I congratulate all hon. Members who have taken part or intervened.

The east coast rail franchise has been one of the biggest success stories of railway privatisation, and I join all hon. Members who have taken part in the debate in paying tribute to the way that GNER has operated the route. Even some of its critics have conceded that it provides a pretty good service. Today we are witnessing a unique occasion, because I cannot remember any other debate either here or in the main Chamber in which Members of all parties with little or nothing in common have spoken with one voice in praising a rail operating company.
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GNER has proved that the railways can operate successfully. It has combined the provision of a customer-focused, reliable and efficient service with profitability, as the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) said. In the past three years it has contributed £78.2 million in revenue to the Government and turned a £61.6 million subsidy in its first year into £22.5 million of premium payments back to the Government in 2003–04, which, as the GNER press office is only too happy to tell us, represents the largest swing from subsidy to premium payments of any UK train operator since the railways were privatised. The fact that nearly 50 Members of the House from all parties signed early-day motion 536, which has been referred to, speaks for itself.

Many people feel that there is a case for saying that in some circumstances there should be automatic franchise renewal for the most successful train operating companies. The Government should reflect on that, particularly where there is overwhelming public support and the train operator concerned has exceeded all expectations.

A number of hon. Members referred to the SRA. The east coast main line is, perhaps, one of the last franchises to be re-awarded by the SRA. The abolition of the SRA is one of the few parts of the Railways Bill with which my party agrees, because over the four or so years that it has existed it has demonstrated itself to be rather a waste of time and money. When the SRA took over, the Office of Passenger Rail Franchising cost £13 million and employed 187 people. The SRA costs £102 million and employs 454 people. The cost and the number of people that it uses have grown and it has become less and less effective, so we are delighted to see it go.

I am also delighted to see the SRA go because it has not, in the main, improved services. It has failed to give the railways adequate leadership and direction. Indeed, the reason the Government have given for getting rid of it is that they want to see more strategic leadership in someone else's hands. We welcome the fact that they have at last come round to the official Opposition's way of thinking on this issue.

One difficulty for our railways is that franchisees lack the confidence to invest. How will the confidence of operating companies be improved, however, if power is merely passed upwards to the Secretary of State?

The refranchising process is certainly causing concern among passenger groups and communities served by the route. The leader of Edinburgh city council, Councillor Donald Anderson, has raised concerns that the new franchise may lead to a reduction in services. He said recently:

I hope that the Minister will be able to reassure the people of Edinburgh, and indeed Aberdeen and the other communities served by the east coast main line, that their services will not be reduced, but actually improved.
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I also have concerns about journey times, a point touched on by the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith). If the Government are serious about wanting people to travel to places in the north by rail, rather than by air or road, journey times must be as short as possible. Before the Hatfield disaster, the fastest service from King's Cross to Edinburgh was, I think, three hours and 50 minutes. Under the new franchise, it appears that the average journey time will be significantly longer, at four hours and 42 minutes. For those who travel on business, that makes a big difference, and I hope that the Minister can tell us what the Government intend to do to bring journey times back down to pre-Hatfield levels.

For the railways to be successful, the train operating companies need to be encouraged to invest more in their routes. It is common business sense that they will do that only if they are confident that their investment is commercially justified. The best way to ensure that is to offer longer franchises. Graham Morton of the CBI agrees. Recently, he said:

He has expressed concern that when the SRA's powers are transferred to the Department for Transport, the Government may not give companies enough freedom. He rightly questions whether the Department possesses the skills to design and deliver future franchises.

The hon. Member for Edinburgh, North and Leith expressed his support for longer franchises, and I am pleased that he is joining the ranks of the Conservative party, if only on this narrow issue. Longer franchises will mean that the best train operating companies receive steady and predictable revenues.

It is important to rid the network of political interference so that it can run itself without facing constant changes, as it has done since 1997; for example, the train operating companies should be given greater freedom over timetabling so that they can run extra services if they believe that there is demand. The network also needs investment directed at driving passenger growth where it is most needed, with an industry structure that is most able to respond to customer demand.

Hon. Members may be aware of the submission that the Rail Passengers Council made to the SRA when the authority published the invitation to tender for the   franchise. Chief among the council's concerns was the poor quality of the stations on the line. The Conservative party has recently made a commitment to improve and develop railway stations so that more of them meet customer expectations. I hope that the Minister will respond on this issue, because passengers are increasingly concerned about the poor facilities, particularly at some stations. Will passengers' concerns in that regard be taken into consideration when franchises are awarded? What extra effort will the Government make to ensure that our railway stations are improved?

It will not have escaped the Minister's attention that the east coast main line passes through the constituencies of some of the most influential Labour Members. I know that some very influential Members
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are here today, but the line passes also through the constituencies of the right hon. Members for Sedgefield (Mr. Blair), for Darlington (Mr. Milburn) and for Tyneside, North (Mr. Byers). I hope that they are not going to exert a sub rosa influence on the awarding of the franchise. It should be completely free of any behind-the-scenes party political interference. It would be wrong for the franchise to be awarded to a company because the head of that company liked to be seen hob-nobbing with new Labour Ministers. If the voice of the public carries any weight, as it should, the firm view, as expressed throughout this debate, is that GNER should be re-awarded the franchise.

This is an important debate. The line is vital to the economy, not only for much of the north of England but for Scotland. Whichever bidder takes over the franchise—I am not aware of any reason why the   present incumbent should not continue—I hope that the line continues to provide a high standard of service for passengers and to show others that our railways can operate in a way that is financially successful. We all look forward to hearing what the Minister has to say.

Mr. Deputy Speaker : Order. I suppose that I should point out that the east coast line goes through my constituency.

10.41 am

The Parliamentary Under-Secretary of State for Transport (Charlotte Atkins) : I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz) on securing this debate and for providing us with the opportunity to discuss the east coast rail franchise. It has been an excellent debate, with hon. Members drawing on their own experiences of GNER and the east coast main line, as well as those of their constituents.

I start with a quick word on the north-south high-speed line. The Government want to draw on the useful work already done by the Strategic Rail Authority, and particularly to consider international experience. We are looking at the case for investing in high-speed lines, as compared with upgrading existing lines. That is something important for the future.

The east coast franchise provides fast, high-quality services that link London with Yorkshire, the north-east of England and Scotland. The competition for the new franchise is progressing well, and the SRA will announce the future operator in the spring. Hon. Members will appreciate that I cannot comment on the content of individual bids, but I can outline the objectives of the refranchising process and the specification on which bids for the east coast franchise were based.

First, however, I must comment on the tremendous support that has been expressed for the incumbent operator retaining the franchise—by hon. Members today and by the many passengers who have lobbied the Department for Transport and the SRA. It is appreciated that, in the main, passengers are satisfied with the present standard of service on the east coast route. However, the competition to refranchise the services will not jeopardise standards. On the contrary, by its nature it should spur improvements.

Sir Robert Smith : The Minister must recognise that passengers are satisfied with the standards of the
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operator which are within its control, but they are quite concerned about the infrastructure that the operator has to use, and about the importance of improving it.

Charlotte Atkins : I appreciate that, which is why the Government have invested hugely in the infrastructure, and why we are investing in the rail industry to the tune of about £73 million a week.

I am delighted that hon. Members expressed not only their confidence in GNER but their real ambitions for future improvements to the east coast main line. It is essential that the franchise is operated by the company offering the very best service to the public, within the parameters of the franchise. We therefore have a duty to put the inter-city east coast franchise out to tender. To do otherwise would remove the competitive pressure that helps to determine which company is best suited to providing services on the east coast main line. Competitive tendering is also necessary to ensure best value for taxpayers' money in the operation of the franchise.

Four parties have submitted bids for the east coast franchise. They are GNER; DSB, a consortium of Danish railways and EWS Railway; First London, Scottish and North-East Railways; and a consortium of Stagecoach Group plc and Virgin Group Investments Ltd. These parties have been chosen having pre-qualified under the SRA's set procedure. Bids for the operation of the franchise will be judged not only on price, but on commitments to performance, improving train and crew reliability, and operational viability. Contracts will also include clearly defined penalties should operators fail to fulfil their commitments. Each company's bid will be evaluated on its merits, and we will award the franchise to the bidder whom we feel best meets the criteria.

I should add that the new franchising system will take into account the relevant past performance of the company. That is part of the pre-qualification process. The franchise is being let in line with the franchising policy announced by the SRA in November 2002. That aims to deliver four broad objectives: to provide a safe and more reliable service of consistently high quality for the benefit of the passengers; to provide clarity of service specification so that the industry partners work together for passengers; to deliver a value-for-money service for passengers and taxpayers; and to secure accountable, viable operators who are passionate about delivering their service. I assure hon. Members that the franchising process will not disrupt other developments on the line.

The model has passenger interests at its heart. The selection process is far more robust than in the past. We will focus in particular on how bidders deliver against their promises. Costs will be scrutinised, and franchise agreements will not be entered into unless the SRA is certain that the bid is viable.

The specification for the east coast franchise has been drawn up following consultation with statutory and non-statutory consultees. It protects services to Aberdeen and provides for a term of seven years, with a three-year extension if performance is consistent with contractual commitments. I hope that my hon. Friend the Member for Edinburgh, North and Leith is
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reassured by that potential 10-year term, which he mentioned earlier. It provides a clear specification, including timetables, against which the bidders have been asked to base their proposals. To this end, base specification for the franchise sets out some clearly defined goals: to ensure that services continue to be operated safely; to demonstrate passion about the delivery of commitments; and to improve significantly the punctuality and reliability of services over the whole route. On journey times, the franchise includes a base case timetable, but the operator can add extra services and stops, so the journey time will largely be down to the successful bidder. Other goals are to provide services that are significantly more affordable to taxpayers and passengers alike by improving productivity and efficiency, or through innovation in operational or managerial practices; to improve integration with other modes of transport and other services; and to ensure the quality of the station and on-train environment, including improved accessibility.

The high–return option is designed to obtain ideas from experienced train operators about ways of improving returns from the franchise. It is not simply about cutting standards, but includes other options that would generate increased income by attracting more passengers to what will be a better service.

John Thurso : Does the Minister accept that one of the great successes of GNER has been the very high-class business class that it provides, with its restaurant car? That has had the effect of taking passengers, particularly from Newcastle, away from air travel and on to the railways, a modal shift that is to be welcomed. Will that continue to be taken into account?

Charlotte Atkins : Certainly, competition with air is a vital part of the whole process. Shifting passengers from air to rail will tap into a completely new market and improve take-up of the service.

The Strategic Rail Authority will pay particular attention to proposals aimed at the affordable improvement of station, rolling stock and customer service standards. The successful bidder will have to possess the financial strength and innovative capability to improve existing operations and to make the route one of Europe's leading railways. In developing their proposals, the bidders have been encouraged to consult local stakeholders directly and to provide a summary of the consultation and a statement of how stakeholders' opinions have been taken into account.

Improving the punctuality and reliability of services will be a key feature of the new franchise. The SRA intends overall performance to reach 90 per cent. by the end of 2009. Furthermore, the franchise should be performing consistently in excess of 90 per cent. by the end of 2012. The bidders for the franchise are required to include a performance model that indicates how those targets will be achieved.

A base service specification will also be incorporated in the new franchise. The franchisee will be required to operate the existing timetable from the commencement of the franchise until the timetable change date in December 2005.
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Mr. Lazarowicz : The Minister has rightly pointed out that the specification includes a base service, but if an operator suggests improvements to the base service, will that be taken into account in the franchising process?

Charlotte Atkins : Certainly, it is important to consider what the bidder can bring to the overall service when deciding whether that operator will be successful. After a bid succeeds, several timetable alterations are assumed, which are aimed at enhancing performance and improving the match of capacity and demand.

Bidders were free to suggest enhancements to the base timetable which they believed deliverable and desirable. They were also asked to set out how they will plan services and resources to minimise overcrowding on platforms and on trains. A strong emphasis has been placed on service quality. The successful franchisee is expected to provide a service quality appropriate for long-distance rail travel. The franchise will include a series of key performance indicators that will incentivise the delivery of consistent standards for information provision, ticket retailing and customer service.

The successful franchisee is expected to provide stations with an accessible, welcoming and comfortable environment that offers passenger information and amenities appropriate for long-distance passengers, including luggage assistance. As hon. Members have said, stations should also facilitate easy interchange with the services of other train operators and other modes of transport. The bidders were also required to provide proposals for rolling stock which set new standards of performance, liability and presentation. As a minimum, the rolling stock fleet must be able to provide seating capacity equivalent to, or in excess of, that of the current fleet. It must also operate at up to 125 mph and have a better reliability rate.
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Infrastructure enhancements are being made outside the scope of the franchise. To date, no business case has been made for electrification beyond Edinburgh, but the franchise operator is required to consider improvements to the entire route.

Mr. Luke : The Minister makes the point that, as yet, no business case has been made for electrification north of Edinburgh. Will the successor to the SRA undertake to ensure that we can have a proper debate about whether the service will be worth while?

Charlotte Atkins : Electrification is continually being considered, but its advantages over other innovations are not as great as they were. That issue is, however, constantly kept under review.

The SRA is sponsoring the delivery of the new double track chord at Allington, scheduled for completion by the end of the year, which will help to improve the performance of the line. Other infrastructure enhancements are being considered through the east coast strategy that is being developed by the SRA. The strategy is currently under review, awaiting the outcomes of the rail White Paper. The document will also have to be reviewed following the selection of the successful applicant for the new inter-city east coast franchise to ensure that it is consistent with the detail of the successful bid.

In conclusion, I hope that I have provided some assurance that the refranchising process is a positive one aimed at building on and improving the current service. The east coast main line is a vital route for the millions of passengers that it carries each year. Those passengers can look forward to a reliable and high-quality service for many years to come.

10.58 am

Sitting suspended.
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