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Sir George Young: What I really regret is that, at the time, the Labour party did not say that it would do what it actually did—leave the structure virtually as it found it. It would have been a much easier policy to implement if the Labour party had been realistic and not made threats, including the threat to renationalise Railtrack. As a result of franchising, we now have train operators that look outwards to the market and passengers, whereas previously we had just British Rail, which looked inwards to the Secretary of State, who provided the subsidy to keep it going. Many good people stayed on from British Rail and entered the new companies. To counterbalance what the hon. Gentleman just said, many people who had been in British Rail regarded themselves as liberated, under the new arrangements, to innovate and to use the resources that they simply could not get out of the Treasury to provide a much better service.

Kelvin Hopkins: It is interesting that the right hon. Gentleman’s experience of former BR employees is different from mine. In many cases some of the companies do not like the old BR employees, because they are too fussy and like to get things right. They do not want to cut corners, as so many of the private companies do.

Sir George Young: I think, for example, that Christopher Green, who was at British Rail, has been an outstanding example of a good manager transferring across and making a success of the new regime, so I find myself in respectful disagreement with the hon. Gentleman, but also with the Select Committee on Transport, whose conclusion on franchising was, in paragraph 124:

I think that the concept—the model—is all right. If the Committee is saying, as I suspect, that the way in which it has been applied is not perfect and is capable of improvement, I would agree.

I agree with what has been said about long franchises. In the previous Parliament we had some two-year extensions, which were a disaster. If we want to maximise investment in the railways, as I hope all those present this afternoon do, the train operators need a long franchise to have the incentive to invest. The Select Committee suggests 15 years; the South West Trains franchise is for 10 years, as the hon. Member for Twickenham said, with the last three dependent on performance. I want to spend a moment on something that the Committee did not touch on—what I call end-of-franchise blight. As the end of a franchise nears, the franchisee becomes reluctant to invest, understandably, because its investment may end up in someone else’s pocket. There is provision in the legislation to get around that, but it does not appear that it is being used. If memory serves, it provides that the regulator—possibly now the Department—can underwrite the investment at the end of the franchise if it believes that to be sensible; that carries through to whoever wins the franchise. I should like more of that, to avoid the cyclical effect that can come with franchising.

For many people in North-West Hampshire the constraint on using the train is not the fares or concern about congestion or safety; it is station car parking. The
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Government and the operators want people to use trains in the middle of the day, when they are empty, but by the time trains are empty the station car parks are full. I have four South West Trains stations in my constituency—Grateley, Andover, Whitchurch and Overton—and there is a serious problem at all of them. Last week I got to Andover at a quarter to 8 in the morning, and there were only six places left. That puts people off the railways and upsets people who live near the station, who find commuter cars blocking their streets.

The local authorities—the town and parish councils—want progress to be made on that front much faster. The Department’s press release about the South West Trains franchise mentions smart tickets, gated stations and new radio equipment, but says nothing about the major constraint on rail usage in my constituency: parking. I am not sure that I want a taskforce to put that right, but I want a focused effort to expand capacity. Otherwise, people will simply get back in their cars and drive all the way on the M3.

The Select Committee also says with respect to train operators that we need new entrants—a recommendation that may not find favour with the hon. Member for Luton, North. One of the Government’s policies seems to militate against that. They are trying to reduce the number of franchise operators at a number of mainline stations. No one in this country is trying to reduce the number of bus operators or airline operators, and I am not quite sure why the Government are trying to reduce the number of franchises and, thereby, train operators.

I agree with the Select Committee that the specifications in the franchise documents are now far too tight. They leave little incentive to innovate, and the Department virtually dictates the timetable. It may be more difficult for the Department to arbitrate if the bids come in on different levels, but I should prefer the encouragement of innovation and investment, and allowing differential bids, to the straitjacket that we have at the moment. I have seen some comment in the press to the effect that South West Trains may have “overbid” for the franchise. I think that it is unlikely that an experienced company that has been operating in the market for 10 years would have done anything uncommercial. I think that it knew exactly what it was doing when it bid the £1.2 billion premium.

The hon. Member for Twickenham mentioned Airtrack. I hope that the Government will try to make progress with that project. Someone who wants to get to Heathrow by public transport from my part of the country catches a train to Woking, and then catches a bus. It would be much easier if one could go all the way by train from Woking to Heathrow. There are plans. I think, contrary to what the hon. Gentleman said, that South West Trains would get extra business from the south-west if there were a through service to Heathrow through Airtrack, which might counterbalance any possible loss of traffic from the east. If the Minister has time to explain where we are in relation to Airtrack, it will be enormously helpful.

John McDonnell: I cannot resist a plug for Hayes station. People coming from the west can now get off at Hayes station and transfer to a Heathrow train that will take them directly to Heathrow. I think that from Woking it may be possible to get there via Reading.

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Sir George Young: Passengers can if they are on First Great Western, but they cannot if they are on South West Trains, because those do not go to Hayes and Harlington. I should like my constituents to have the facility that the hon. Gentleman’s constituents have to go by train to Heathrow.

The key issue for Network Rail, for the Department for Transport and for those who run the railways is how to get the increased infrastructure that we need to cater for growth. If we consider the South West Trains franchise, there is only one scheme of any significance in the 10-year plan. That is double tracking some eight miles of the west of England line near Axminster. The route utilisation strategies for most Network Rail routes are long on words but short on specific action. The argument is always that there is no business case. The problem with the railways, as we all know, is that quite often there is not a business case for projects, but they are for the benefit of UK plc, and are desperately needed for a balanced and sustainable transport strategy. At the moment, a lot of the key schemes to expand the network simply are not getting carried out. The present arrangements for franchising are freezing out those crucial expansion plans, and that aspect needs revising.

I want to say a final word on fares. Those are regulated by the Government, with no freedom for the train operators to charge what they want. In the first franchise period, regulated fares could go up by only the retail prices index minus 1 per cent. That gave a clear signal that rail fares would fall in real terms, and provided an incentive for people planning their lives and the way they would get to work to use public transport. Now there has been a move to RPI plus 1 per cent. I understand all the pressures that led the Department to do that, but it is absolutely the wrong direction in which to go if we are to have the balanced and sustainable transport strategy that I hope everyone present today wants. The Treasury has won that battle with my old Department, but I hope that the Minister will fight back in future years and get a fares structure that is better balanced and provides the right incentives for people to choose a public sector mode of transport.

3.18 pm

Paul Rowen (Rochdale) (LD): I congratulate my hon. Friend the Member for Twickenham (Dr. Cable) on initiating the debate. He has made several points about South West Trains and the new franchise that will be echoed across the country as the new franchises elsewhere are set out. I want to consider some of those and set out what I believe should be the vision for the railway industry in the future. Interesting though the debate was between the hon. Member for Luton, North (Kelvin Hopkins) and the right hon. Member for North-West Hampshire (Sir George Young), it is a debate for the past, and it does not deal with the present and future needs of the railway industry and passenger commuters.

Whatever else we might say, the railways are in a period of unparalleled growth. Passenger numbers and investment are up, and no doubt the Minister will tell us about the £88 million a week that the Government are investing, which is welcome, and the £1.1 billion subsidy that is given to the network each year. My concern is that the management of the railways addresses neither the continued growth of the railway industry nor passenger
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demand for decent services. As my hon. Friend said, the predicted growth on South West Trains and one person saying that it will introduce new rolling stock, is contradicted by the reality of seat removal and my information from Angel Trains, whereby South West Trains has been told that it cannot purchase new rolling stock or expand the service.

If one considers the Government’s plans for growth in new house building in the south-east and the south-west, one sees an immediate contradiction between the Government’s transport policy and the reality of other policies. Last night I met business representatives from Colchester. They were concerned at the amount of house building planned in their area, and the fact that there are no plans within the franchise to expand the service. There is a contradiction between Government policies on house building and growth, and the letting of franchises.

Mr. Brazier: I thoroughly agree with the hon. Gentleman, but his argument applies not only to transport, but to water supply, to sewerage arrangements, even to the national health service, and to almost every other area. There is no co-ordination with the plans for house building.

Paul Rowen: I totally agree with the hon. Gentleman. The Transport Committee’s recent report summed up rail franchising as

There is growth, and we have improved the service, but if we look to the future, there are many concerns. I hope that the Minister will address them through the long-term vision in next year’s White Paper. We have reached phase three of the franchise letting process, and we have reduced the number of operating companies from 25 to 19, which may be a good thing; but at the same time, fewer and fewer rail companies are bidding for projects. Part of the reason why is the cost of tendering: franchises are set so tight as to discourage innovation even where it is wanted.

The specification of several lines, such as the Great Western main line earlier this year, has resulted in reduced local services and inconvenienced commuters. At the same time, companies have to bear a much greater risk on the revenues that they are asked to deliver during their contracts. That is fine if the economic trajectory continues upwards, but if there is a downturn, as my hon. Friend said, the Government will have to bear the risk. For example, Great North Eastern Railway will have to provide £1.3 billion over the course of its franchise, and First Great Western will have to provide £1.1 billion. Those are huge sums of money, and my criticism is that although they reduce public expenditure, it is at the expense of service development.

The northern franchise, which I know something about, illustrates the lack of long-term planning. It is the largest franchise in the country in terms of area, covering five passenger transport authorities, and the company running it is an excellent rail operation. The punctuality of its service is a considerable improvement on that of the two franchisees it replaced. However, its franchise does not allow for any innovation, expansion, new lines or rolling stock. New rolling stock will be provided through First Group, but they will be the only
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new trains that the franchise has. The company wants to innovate, and the passenger transport authorities have plans to improve the service, but under the Railways Act 2005, they no longer have to be statutory co-signatories to the franchise. As a result, we have plans that were made before the Act and a company that wants to innovate and develop, and it will not be allowed to do so.

The rail utilisation strategy for Manchester has just been published. It identifies overcrowding on the network and explains what needs to be done. I should have thought that when creating a franchise, one should conduct the network utilisation strategy first, discuss with the passenger transport authorities their long-term plans, talk to the regional development association about their plans, and then come up with a franchise that reflects those needs. However, in reality, in franchise after franchise, that is not happening. The Department for Transport prescribes the timetable, stifles growth, and does not consider the long-term growth implications. As a result, there will be a saturation point.

John McDonnell: The hon. Gentleman makes a valid point about the franchising process, but is not part of the process its pure opacity when trying to find out what the franchise comprises when the bidding starts and whether the factors that he has mentioned have been taken into account in the construction of the franchise document?

Paul Rowen: I agree. The removal of passenger transport authorities as statutory co-signatories to those franchises breaks an important link. The 2005 Act gives them the right to add services at their own expense or to remove them to make a saving, but it cannot replace genuine partnership. The Government say that they will provide the authorities with that sort of involvement in bus services. Such co-ordination is crucial to the planning of services locally, regionally and nationally, but the link has been broken.

My hon. Friend mentioned Waterloo station, which is the case in point. Waterloo will be saturated by 2012. The Eurostar platforms will be released, but we have not seen any concrete plans. The contract for South West Trains has been let, but when re-franchising took place, would it not have made sense to include in the contract the use and cost of those platforms?

Kelvin Hopkins: I am most interested in what the hon. Gentleman says, and I agree with much of it, but is not the whole tenor of his speech about the need to plan and integrate, and is not that impossible when the service is privatised and fragmented? Does he not agree that if one could integrate planned train operations with regulated and planned bus and underground services within a coherent and planned transport system not only for London, but for the entire country, the service would work better?

Paul Rowen: “Regulated” and “planned” does not equal “public owned”. That is an important point. I am a great believer in partnership. Partnerships work between private enterprise and government, and between public services and private enterprise. The Department for Transport’s control of those services is stifling long-term growth and development. If the Government are genuinely
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serious about wanting to engage the regions and the local authorities and give them more say in and responsibility for their services, a role in transport planning is vital.

The Crossrail franchise is another case in point that illustrates what is happening. We are seeing a break in the cross-country routes of through trains from Glasgow to the south coast. That break will happen at Birmingham New Street. Anybody who knows Birmingham New Street knows that it is the most disabled-unfriendly station one could possibly think of. We know that it has capacity problems, but they will not be addressed. The franchise is being let. It should all be planned. It needs to happen at the same time.

We see the same contradiction in the Government’s response to open-access rail companies, no matter whether whole trains or Grand Central Railway are involved. They have let a contract to GNER, which is told that it must raise so much money—£1.3 billion—yet a contract is let to Grand Central, which is allowed to run up to three trains a day from Sunderland to London. But—this is another example of the contradiction within the Department for Transport—the train services should have started in December. They will not, because Grand Central Railway does not have the railway sets. East Midlands has railway sets that it is happy to return to the rail operating company so that Grand Central Railway can use them to start the services running down to London, but the Department for Transport has seemingly told the train operating companies, “You cannot do that.” That is an example of the micro-management of the rail industry by the Department for Transport that the Select Committee says is stifling innovation and not allowing the service to grow and develop as it needs to.

That is the sort of problem that we face. We have a successful rail industry—there is no doubt about that—but unless we address the fundamental issues of how to plan and develop it, we will not see further growth. We will see stifled growth, further road congestion and people who are very unhappy with the way that the railways are running. We need a clear long-term vision, and that must involve working in partnership, getting the process right for setting the franchise and involving local and regional partners.

3.32 pm

Mr. Julian Brazier (Canterbury) (Con): I congratulate the hon. Member for Twickenham (Dr. Cable) on securing this debate and introducing it in a characteristically thoughtful way. We have had a high-quality debate, including a particularly good contribution from my right hon. Friend the Member for North-West Hampshire (Sir George Young), who brings a great deal of experience to it from both sides of the discussion—the ministerial side and the Treasury side.

No one who suffered this morning on London’s train and tube network, as did all my staff—I am fortunate in being able to walk to work—can be in any doubt that a considerable increase in capacity is needed and that the role of franchising is a key issue.

Kelvin Hopkins: To make the point I made earlier, one of the problems with the tube system is Metronet Rail. Metronet has not exactly covered itself in glory. I myself was delayed slightly by problems ascribed to Metronet.

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Mr. Brazier: Indeed, but we are here to discuss franchising. I shall make a number of points on the relationship between franchisees and the track.

The Opposition transport team has been taking part in a large number of discussions on the future of the railways. My hon. Friend the Member for Wimbledon (Stephen Hammond) has engaged during the past 12 months with the directors of every single franchisee company. It is because he is at a conference that a shadow Minister with responsibility for shipping and aviation rather than he is replying from the Opposition Front Bench.

I make no apologies for privatisation. Not only did it deliver the first new trains to my constituency in 40 years, it resulted in a 30 per cent. growth in passenger numbers during the past decade. The Conservative party is firmly committed to trains, not just because of the collective need to tackle CO2 emissions but because of the reduction in congestion that it offers for road users. The view that we have come to, as has been mentioned several times, is that the current structure of the railway network and franchising system is not fit to meet the capacity challenge.

There are a number of reasons for that. The relationship between franchisees and Network Rail, although it has improved, has tended to be dominated by disputes as each apportions blame for delays to the other. Endless man-hours are wasted deciding who is responsible for lost passenger-minutes and how large a fine one party owes the other. The greatest irony is that because of the huge subsidy that the railways receive, the money passed back and forth comes from the public anyway. That is one of the reasons why ticket prices have just seen a fourth annual inflation-busting rise, as my right hon. Friend said.

My hon. Friend recently visited the new joint control centre at Swindon, where he saw a little cameo of the situation. The centre was supposed to herald a new, constructive relationship between Network Rail and the train operating companies. It should come as no surprise to hear that a significant portion of the building’s floor space has been assigned to—wait for it—the delay attribution team. A similar experience was described to me by a commuter who, after bricks fell off a bridge and as they sat for an hour and a half waiting for the muddle to be cleared, heard a conversation back and forth between the train driver and someone on the other end who was clearly trying to gather data to ensure that Railtrack and not the operator took the blame. That illustrates that the relationship is not working at the moment.

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