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29 Nov 2006 : Column 106WH—continued

2.47 pm

Kelvin Hopkins (Luton, North) (Lab): I am pleased to have an opportunity to speak in this debate, and I congratulate the hon. Member for Twickenham (Dr. Cable) on raising this important issue. I have taken a long and close interest in the railway system, not least because I have been a commuter for 27 years on First Capital Connect, which was Thameslink and, before that, British Rail.

I study the railways with interest and read about the subject, and I have many friends and colleagues in the railway industry who tell me on a daily basis what is actually going on. My comments are based on some background of knowledge and are not just made from a position of prejudice, even though it is probably well known to everyone here that I do not think that privatisation was a good idea and that I strongly believe that the railways should be reintegrated into a publicly owned system.

I have recently heard surprising comments from private enterprise members of the railway industry, who said that they had overheard a Treasury official saying that the reason why we privatised the railway system was “to promote its decline”—those were the words that were used. Before that, apparently, another Treasury official, who was put on the board of BR, said, “I have come on to the board to oversee the decline of the railway industry.”

There was a profound disbelief in the railways among Governments and among politicians in general. We believed collectively—I am not talking about us personally—that the railways were a system of the past and that the future would be the roads. I understand, although this might be apocryphal, that Mrs. Thatcher believed that railways were inherently socialist because
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they were collective and people travelled together, whereas the true freedom-lover, the individual, would always drive by car.

That story might not be true, but apparently it was true that there were plans at one point possibly to close Midland Mainline and the line that goes through my constituency. That was at the extreme of the mania for road travel. I think that the world has realised that a terrible mistake was made and that we can never all get on to the roads. They are now incredibly crowded. Setting aside any concerns about carbon dioxide, we need our railways. The fact that millions more people are travelling on the railways every year demonstrates that the population—our constituents—believe in railways, which will be more important in future as we deal with environmental problems and the population density of this country. It is possible that the population of this country will rise to 70 million and we will need more transport, so the narrow, fast corridors that rail provides will be vital.

The franchise that serves my constituents is First Capital Connect, and before that it was Thameslink. One of the features of privatisation was vertical disintegration: the rolling stock is owned by rolling stock leasing companies or ROSCOs—essentially the banks—who lease them to the train operating companies, who buy time on the track owned initially by Railtrack and now by Network Rail. Even Conservative Members realise that that vertical disintegration was a terrible mistake and that vertical integration is the way forward. If we have vertical integration, the franchises will disappear and will be integrated into another sort of railway organisation, be it public or private. Over time, it might even start to look a little like British Rail. At a meeting at Westminster, the former regulator, Tom Winsor, said that British Rail handed over the railway network to Railtrack “in good order” but that the problem was that there was desperate under-investment. The network had been starved of investment for decades.

If one compares the level of investment in railways in Britain with that in railways on the continent, one can see the difference. We are now trying to make up lost ground. Unfortunately, we are doing that in the private sector instead of the public sector and that costs a lot more. My friends in the railway industry suggest that, for example, the cost of laying a mile of railway track is now between four and five times what it was under British Rail when costs were held down by cash limits and work was carried out by directly employed staff who did a superb job and, as Tom Winsor said,

Had we had more foresight, we would not be in our present position. We would have a much better, modern railway system with better investment and the work would be done much more cheaply.

The franchises are relatively short term, so there is not much incentive to invest, and we are going to integrate them and make them longer term. If all the risk is held by the Government, who pay the bill and are responsible to the electorate, what is the point of having the system in the private sector if it is inherently subsidised and non-profit-making? The system is not sensible and we shall look back on this as a period of political madness.

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John McDonnell (Hayes and Harlington) (Lab): I draw attention to my entry in the Register of Members’ Interests and my relationship with the National Union of Rail, Maritime and Transport Workers.

I draw my hon. Friend’s attention to parliamentary questions that I and others put down about the rationality of the process by which the franchises operated, particularly the bidding process. The Government confirmed that more than £60 million was spent on franchising passenger services just in terms of the bidding processes and the assessment of the franchises alone.

Kelvin Hopkins: The bidding process and all the contracting across the former public sector, now the private sector, are expensive, as I know from managers in my local hospitals. The bidding process and subsequent management costs money. My hon. Friend is absolutely right.

Let us look at how the franchisees operate. First, they must lease their rolling stock from the ROSCOs and the charges have been horrendous. I know that the Government have focused on that and no doubt my hon. Friend the Minister had some influence is bringing down those charges, but they were sometimes of the order of 30 per cent. and more for rolling stock that might last 20 years. It was a rip-off, and the banks were coining public money and pocketing it by charging vast amounts for leasing rolling stock.

Turning to the relationship with Railtrack and now Network Rail, I travel on trains on a daily basis and every now and again there is a rash of what are called “wheel flats”. When wheels skid, particularly at this time of year, they form a flat and bang the rails as they go round. That happens daily at the moment and almost every carriage that I have been in during the past week has had wheel flats. One of the problems with that is that stock must be taken out of action for the wheels to be taken off and the profiles to be reground, but I understand that Network Rail still owns the wheel-grinding machines, so wheels must be taken to another organisation to have that done by the ROSCOs. The ROSCOs are not too bothered because, as long as the rent is paid, they are not concerned about when the wheels are repaired. The problem is that the wheel flats hit the track and damage it. They do not do much good to the trains and certainly make an uncomfortable ride, but there is not much incentive to deal with wheel flats because that is always someone else’s responsibility.

Another problem is that if track is not maintained, trains must operate slowly. That happens frequently and sometimes the cause is not dealt with for weeks. The complexities of the way in which fines are paid between one group and another in the industry does not seem to work because, time and again, there is slow running for several weeks as, for example, near the Elstree tunnel recently. There seems to be nothing in the system to deal with that in the short term.

I am not necessarily blaming Network Rail, but for some reason, especially under Railtrack, drainage was not dealt with, so there was a problem but no incentive to deal with it. In the end, two groups of people pay and they are the same people. First, passengers pay with high fares—they are much higher in Britain than in Italy and other countries that still have an integrated, nationalised system. We pay some of the highest
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railway fares in the world. The other great payer into the system is the Treasury. God knows why the Treasury is so interested in maintaining a system that soaks up so much of its money every year when it could do things much more cheaply in the public sector, thereby saving public money and making it easier to balance the Chancellor’s Budget.

Tim Farron (Westmorland and Lonsdale) (LD): It is in the Treasury’s interest and that of all rail operators to have more bums on seats—more passengers paying their way on the trains. Is the hon. Gentleman aware that Passenger Focus’s recent research shows that the aspirations of the Cross Country franchise would lead to 2.8 million fewer passenger journeys a year, predominantly because everyone travelling to the south coast or the south-west from north of Crewe—and from Oxenholme in my constituency—would have to change at Birmingham New Street station? Will he acknowledge that research and say whether it is a matter for concern?

Kelvin Hopkins: I have not seen that research, but I thank the hon. Gentleman for the information. My view is that if the system were integrated, we could have much better integration of cross-country routes. A couple of years ago, I travelled to my party conference from my constituency and used three different train operators to get there. One problem was the fares. I was initially told that the return fare was a vast sum of around £190. I asked the person behind the desk whether they were sure about that and they said that they would make a few phone calls. Apparently, certain phone calls can be made to find out about integration of fares so that they come right down. Instead of paying £190 return, I got it down to £120 after a bit of questioning, but ordinary people, such as pensioners, might not be as assertive as an over-confident MP so they might not have challenged the fare and might have paid the higher amount.

John McDonnell: They have introduced bartering into the system.

Kelvin Hopkins: Indeed.

Mr. Julian Brazier (Canterbury) (Con): The hon. Gentleman is making a strong case for integration, and rightly said that those on the Conservative Front Bench are very much in favour of integration. However, will he think again about what he just said about the overwhelming merits of the public sector? My constituency did not see a single new train in 40 years under the old system.

Kelvin Hopkins: I accept entirely what the hon. Gentleman said. Indeed, I made the point earlier that the railway system was under-invested in for decades by successive Governments of both parties. As Tom Winsor said, BR

We did not have the investment then, and one has only to go to foreign countries to see what such investment can achieve. I recently went from Cologne to Frankfurt on a fantastic high-speed line, 30 per cent. of which was in tunnels. Those involved had spent a very large
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sum on it, but we are nervous about spending money. The private sector, however, spends three or four times what we need to spend, because it is so inefficient at building. However, I understand, Mr. Weir, that we are talking about franchises and train operators, rather than the track.

John McDonnell: On the principle, however, as my hon. Friend acknowledged, the Government are slowly recreating British Rail—that is what the Network Rail operation is all about. The figures for the past two years show that delays have dropped by 28 per cent. since Network Rail took control of the track. That has to be an indication of the trajectory that the Government must pursue in bringing back rail into public ownership.

Kelvin Hopkins: Indeed. That is absolutely right. I went to yesterday’s briefing by Network Rail’s chief executive, who said how much improvement there had been. One great advantage of the franchise system, of course, is that when the franchises come to an end, they can simply be handed over to the national railway operator, which might be Network Rail as operators. There is no problem about buying the franchises, because they are just handed over when they come to an end. If we bought them in beforehand, of course, things would be more difficult.

My hon. Friend is right that we are moving progressively towards the reintegration of our rail industry and something like a modern version of British Rail, although it would, I hope, have a lot more investment. It would be easy to move in that direction and it would not be costly: we could just hand the franchises over to John Armitt and his chums and we would be moving back towards a publicly owned railway.

I should add that if the ROSCOs are going to rip off the public purse in the way that they have in the past, we should say, “Right, we are a monopoly buyer. We will pay this amount for your trains. If you don’t like it, sell them to us at a knock-down price, and we’ll buy them back in.” There would be a cost, but it would not be prohibitive. At the same time, we could possibly do a deal to reduce the leasing charges and lease operations until such time as, bit by bit, they all come back into public ownership.

My hon. Friend is right to suggest that we are moving back towards a publicly owned, integrated national railway system. Unfortunately, Front Benchers on both sides do not want to be seen to be allowing something to be recreated in the public sector, because that goes against the zeitgeist—the spirit of the times—which is all for privatisation, and the slightest step back from that might persuade some people that there is a case for public ownership, not just in the railways, but perhaps elsewhere. However, we are talking about how the franchises could be quickly integrated with the rail network operators to recreate a national railway system.

At present, there are too few incentives in the system to provide a good service, keep trains in good order, make rides comfortable and provide enough stock. Another problem that has resulted on my line as a result of the franchise system is that there is a shortage of stock. Those who know the Thameslink network will know that there has to be a dual-voltage operation,
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because there is AC on the north side and DC on the south side. There have to be special trains with both types of motor, but there is a limited number of them. Some are actually held by another franchisee, but it will not let them be transferred to our franchisee, which needs them.

At peak times, as I have experienced myself, there is four-car operation instead of eight-car operation. We are so short of sets that if one set goes out of operation, it becomes a scrum to get to work. Even I have occasionally had to stand, even though I travel in from as far out as Luton, and people will certainly have to stand by the time that the trains reach St. Albans. That is unacceptable. We need more trains and more stock. Even now, there is stock that could be transferred to Thameslink, but it is not being transferred. The reasons are complicated reasons, and the franchisees cannot agree on the issue. With an integrated national system, however, that stock could simply be transferred, and we could have optimal use of all stock in all regions. That would make for a much better railway and much more comfort for my constituents and for all those who travel on lines such as mine.

I think that I have made my point. I did not expect to have quite this much time and I am surprised that many more Members do not wish to speak on this subject. My speech has therefore been rather longer than I thought that it would be, but my basic point is that the franchise system is nonsense. It should be wound up quickly by integrating the train operating companies with Network Rail and by beginning to recreate a sensible national integrated railway system.

3.5 pm

Sir George Young (North-West Hampshire) (Con): I congratulate the hon. Member for Twickenham (Dr. Cable) on his highly topical choice of subject for debate: we had the Network Rail annual report on Monday and the announcement on regulated fares yesterday. I agree with what he said about pressing the Minister on what happens to the Eurostar platforms at Waterloo when they are released.

The hon. Member for Luton, North (Kelvin Hopkins) will not be surprised to hear that I approach the issue from a different philosophical perspective from him. I should like to disabuse him of his notions about the prevailing culture in the Treasury in the run-up to privatisation. Between 1994 and 1997, I was either at the Treasury or the Department for Transport, and it is a travesty of the truth to portray the policy towards the railways as a sinister conspiracy to run them down. What one wanted to do was to release them from the constraints of public sector funding and the Treasury and to unlock their potential to allow them to expand. In my time at the Department for Transport or the Treasury, I certainly met no officials who held the views that the hon. Gentleman describes.

Kelvin Hopkins: I do not doubt the right hon. Gentleman’s good intent and his good wishes for the railways, but Treasury officials apparently made those comments to senior executives in the railway industry. Those executives are now in the private sector and repeated those comments to me.

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Sir George Young: I hope that the hon. Gentleman will accept that the leadership coming from the top of both Departments was heavily tilted the other way and that the policy he describes was certainly not the Government’s policy.

Closer to home—to revert to the speech by the hon. Member for Twickenham—my constituents are also talking about the railways, because work by Network Rail has overrun on two successive weekends, as a result of which my journey from Andover on Monday took two hours instead of one. Network Rail says that it has a grip on the contracts, but the contractor has overrun on two successive weekends, causing considerable disruption on the network. Such problems are not assisted by Network Rail’s reported inability to spend all the money that it has been allocated, because of some byzantine investment processes.

The hon. Member for Twickenham may not know that the first franchise train to run in this country left Twickenham station at about 5 o’clock in the morning one February in, I think, 1996. Somewhere in my archives, I have the first ticket to be sold by a franchised operator, and I was escorted on that historic first journey by Toby Jessell, who was the Member for Twickenham at the time.

As the hon. Member for Luton, North implied, the previous Administration’s policies on the railways was among their more controversial, but I would argue that the concept of franchising was sound and successful. We have created an industry that did not exist before—a train operating industry. Before that, all we had was British Rail, the monopoly that operated the railways. If it did not perform, we could not sack it and we could not get anybody else in—we were stuck with it. Franchising has enabled successful operators of other modes of transport—airways, buses and ferries—to apply their skills to the railways. We would not have been able to take that approach had we not privatised the railways and restructured them in the way that we did.

Franchising has also enabled the taxpayer and the passenger to benefit from the constant re-bidding for the franchises and to capture the extra value, which one simply could not do when British Rail was the provider. Coupled with privatisation, franchising has led to additional investment in the railways, which we would not have had before, when we were wholly dependent on what we could get out of the Treasury. If anybody fails, as has happened, others are willing to take over and to do a better job. We could not have had that before.

John McDonnell rose—

Sir George Young: I thought that I might provoke the hon. Gentleman.

John McDonnell: The right hon. Gentleman is having his Edith Piaf moment. Does he have any regrets about the management of the railway system and the system that we now have as a result of the policies that he introduced? If not, that would seem to be somewhat contrary to the policy of the new leadership of his party, which is to plead for forgiveness from the electorate.

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