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The Government always make the argument that lessons will be learnt, changes will be made in the future and that things will be better at some stage. However, under the current Government, we have been constantly required to wait for that to happen. When does my hon. Friend think that the Government will learn the lessons?

Mrs. Villiers: I do not think that the Government will ever learn the lessons. Not only have they asked us to wait, they have asked the taxpayer to pay more and they have asked the fare payer to pay more for substandard services.

Passenger groups were not consulted by Network Rail in advance of the Liverpool Street fiasco either. Brian Cooke of London TravelWatch said:

Many passengers have voiced their frustration and some are even threatening strike action. Natalie Evans of the British Chambers of Commerce said:

Tony Collins of Virgin Trains said that

Passenger Focus said that the approach taken by Network Rail broke

Anthony Smith of Passenger Focus said:

for 2008—

Sir Nicholas Winterton (Macclesfield) (Con): Is it not likely that the outcome of the whole sad saga will be that the regulator will fine Network Rail? Is that not nonsense, because Network Rail will merely pay with taxpayers’ money? Would it not be far better to say that Network Rail should not make any bonus payments to its management, who have shown gross incompetence?
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Mrs. Villiers: My hon. Friend anticipates what I was about to say. We must remember that the problems were not caused by storms, snowfalls or sudden natural disasters, but simply by poor planning and project management at Network Rail and, indirectly, by the Government’s failure to put adequate systems in place to ensure that Network Rail is properly accountable for its performance.

Mr. David Drew (Stroud) (Lab/Co-op): Will the hon. Lady give way?

Mrs. Villiers: No. I want to make some progress.

It is no answer for Network Rail to blame its contractors, as my hon. Friend the Member for North-West Norfolk (Mr. Bellingham) remarked. The regulator recently concluded that Network Rail had breached its licence by failing

Network Rail

The regulator was talking not about Rugby in January 2008 but about Portsmouth in early 2007 after signalling work overruns caused huge disruption to passengers over several months. At the time, the Office of Rail Regulation made it plain:

It seems that few lessons have been learnt from Portsmouth.

Dr. Stephen Ladyman (South Thanet) (Lab): There is a word that the hon. Lady is studiously avoiding using: Railtrack. I agree that what Network Rail did over the new year was unacceptable and that lessons need to be learnt. However, is she seriously suggesting that that railway disruption compares in any way with the financial and personal tragedies that Railtrack, which was set up by a Conservative Government, visited on the railways?

Mrs. Villiers: I am saying that there was major disruption that should not have happened. We should be debating this Government’s performance in running our rail network.

Even if Network Rail can heap some of the blame for Rugby on Bechtel, what is its excuse for Liverpool Street? If Bechtel is at fault, will the Minister tell us what penalties the contract will impose? If the contract does not provide for penalties, why does it not? Is that not a basic element of good procurement practice, particularly when timely completion of the works is so crucial in getting the railway back up and running and allowing people to get to work in the morning?

Mr. Mark Francois (Rayleigh) (Con): I thank my hon. Friend for her courtesy in giving way again. What happened at Liverpool Street was clearly unacceptable, but unfortunately it was by no means a one-off. I have had meetings with Network Rail officials about the propensity that engineering works at weekends have to
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overrun so that when the track is handed back on Monday delays back up in the system. That is highly inconvenient for my constituents. Does my hon. Friend agree that maintaining the track is a core part of what Network Rail exists to do? It has to do better or the public will lose all confidence in its ability.

Mrs. Villiers: My hon. Friend is absolutely right, as ever. Network Rail needs to get a grip and seriously raise its game. Its performance is not acceptable.

Another key error committed by Network Rail was its failure to tackle the situation effectively when things started to go wrong. The problems did not come out of the blue. Possessions are planned 18 months in advance. As early as 6 December there were clear warning signs that serious problems were occurring at Rugby when there was surely still time to remedy the situation. One question that the Secretary of State has to answer today has to do with when she was first warned about the potential overrun, and when she started to take action to sort the problem out.

As my hon. Friend the Member for Macclesfield (Sir Nicholas Winterton) noted earlier, merely imposing fines on Network Rail would not be an adequate response, as the taxpayer would pick up the bill for them anyway. As former rail regulator Tom Winsor has pointed out, the Government have removed

While taxpayers and passengers pay the price of failure at Network Rail, its managers still receive their high salaries and bonuses. It was confirmed in November that the £286,000 in bonuses suspended after the Grayrigg accident had been paid out to Network Rail’s four senior managers, despite the serious failures that the accident revealed. Network Rail’s annual report disclosed a further £362,000 of longer-term performance incentives. Last year, the pay of Network Rail’s non-executive directors rose by 18 per cent. It looks as though the pay restraint that the Prime Minister has been grandstanding about does not apply to some of Labour’s friends at Network Rail.

It was, of course, a matter of huge irony that, on the very day that Virgin took out advertisements in the national press to warn passengers about the expected disruption, those same national newspapers carried news of the knighthood that the Government had awarded to the chairman of Network Rail for his services to transport.

The fundamental problem that the House must address is that Network Rail’s management is not accountable to anyone. We believe that that must change. The people who in theory are supposed to hold Network Rail to account are its members, but the Network Rail board decides who most of them are. It is therefore no wonder that that check has been derided as toothless and ineffectual.

Reform is needed to put in place a more effective way to penalise failure by Network Rail’s management, and to ensure that they are forced to listen to the regulator and their customers. Getting that right is of critical importance if we are to have the high-quality rail network that our economy needs. There are many reasons for that, but I shall outline just three.

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First, the Grayrigg accident shows that failures at Network Rail can have tragic consequences. The report into the crash revealed a catalogue of errors.

Ian Lucas (Wrexham) (Lab): I have been listening to the hon. Lady carefully. The motion refers to the accountability of Network Rail, but I am struggling to understand what her party would do with the organisation. Would it abolish Network Rail? If not, what steps would it take to render Network Rail more accountable? She has said nothing about that so far.

Mrs. Villiers: The hon. Gentleman has a treat in store as, in due course, we will publish the results of our rail review. We will explain then how we intend to tackle the problem, but this debate is about what the Government are going to do about it. They are in office, and they must deal with it.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich) (Lab): I am sure that the hon. Lady does not want to mislead the House, but she seemed to suggest that the Network Rail board chooses its members. She will know that anyone working in the rail industry is able to make nominations to the board, and that that includes the freight companies. The Network Rail board does not choose its members—far from it. A perfectly straightforward machinery exists for that, and she must know about it.

Mrs. Villiers: My understanding is that the board has the final say over the public members appointed, but not over the industry members. According to the latest information, industry members make up about 24 per cent. of the board’s membership, with public members accounting for 76 per cent. I certainly meant to say that the board has a veto over the majority of members, and it was an error on my part if I did not make that clear. However, I am willing to be corrected.

Mrs. Dunwoody: The hon. Lady also knows that board members are selected by an independent body. The divide is very clear. I am sure that she does not want to mislead people by suggesting that Network Rail has a veto, as it does not.

Mrs. Villiers: My understanding is that there is an independent element in proposing public members, but that the Network Rail board ultimately can say yes or no to any nomination. However, I shall be happy to check my facts to ensure that I have presented the situation correctly.

The second reason why it is vital to ensure that Network Rail is accountable is that it does not give high enough priority to passenger concerns. That must surely be a key reason why it has been so exasperatingly slow to deliver capacity enhancement—measures such as longer platforms or short rail extensions into ports and industrial estates. As Network Rail’s own business plan confirms, overcrowding is not confined any longer to busy London commuter routes. It is spread across Britain and is a serious problem, even on many off-peak trains. Passenger numbers on commuter services into Birmingham, Bristol, Leeds, Manchester and Glasgow far exceed capacity on many trains. Capacity expansion is vital to tackle growing overcrowding problems, but a recurring complaint from stakeholders is that Network Rail management are simply not concerned enough about growing the railway.

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The third reason why we must tackle the problem of lack of accountability is that Network Rail’s management are insufficiently focused on keeping costs under control. This is a body that has directly received £10.3 billion of taxpayers’ money at today’s prices since 2002 and will get another £3.05 billion this financial year. That does not even include the further taxpayer subsidy that it receives indirectly via payments from the train operating companies. At present the reality is that neither the taxpayer nor the fare payer is getting value for money.

Bob Russell: The hon. Lady is very successfully setting out a case against Network Rail. Where is the evidence that the separation of Network Rail from the operating companies is to the benefit of rail passengers? If we had an integrated rail service, surely the problems that she is outlining would not happen.

Mrs. Villiers: Things would certainly be more positive if there were more co-operation between the management of track and train. As I have stated, that is one of the weaknesses displayed by Network Rail senior management.

The disruption around Birmingham coincided with the day that the cost of an annual season ticket to Euston rose from £7,260 to £7,608. It is no wonder London TravelWatch described new year fare rises as a bitter pill. Passengers are being asked to pay more and more, often for grossly overcrowded trains and disrupted services. The reality is that fare payers are picking up the bill for Network Rail’s failure to get a grip on costs.

So this afternoon the Secretary of State has many questions to answer, not least of which is what is the total cost of this fiasco to the taxpayer. How much have the extra engineers who were needed for the overrun works cost? Will the money paid in fines—we surely expect some of those—be recycled and spent on rail or is it lost to the rail network? What discussions has the Secretary of State had with the Office of Rail Regulation on how to improve the performance of Network Rail? What did she do to respond to the problems revealed at Portsmouth, so many of which were repeated on this latest occasion? What discussions has she had with passenger groups and train companies about getting better performance from Network Rail? Above all, what guarantees can she give us that lessons will be learnt from the current fiasco and that steps will be taken to prevent its being repeated?

With major projects planned for Reading, Birmingham New Street, Thameslink, and the east coast main line, not to mention the remaining stages of the west coast main line upgrade, and with work scheduled for more or less every bank holiday up to December, I am afraid that there could be a great deal more disruption in store for passengers. Some projects, such as signalling work at the Glasgow Shields junction, are still overrunning from the new year break. Is the Secretary of State confident that the upgrade of the west coast main line will be completed on schedule in December this year?

Mr. Drew: Will the hon. Lady give way?

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Mrs. Villiers: No. I shall conclude. The hon. Gentleman will get his chance in a minute.

The disruption over the new year was a monumental foul-up. What a contrast with the hope and excitement at the launch of High Speed 1 last month. The incident illustrates how vital the railways are for our economy, our quality of life and our country. The underlying problem is that when they created Network Rail the Government failed to put in place effective means to ensure that it was answerable for its actions. When it provides poor services, too often it gets away with it with impunity. The taxpayer deserves better from Network Rail; its staff deserve better; but, above all, passengers deserve better.

4.9 pm

The Secretary of State for Transport (Ruth Kelly): I beg to move, To leave out from “House” to the end of the Question, and to add instead thereof:

I start by commending the hon. Member for Chipping Barnet (Mrs. Villiers) for her bravery in raising the issue of the performance of our railways in the first Opposition day debate of the year. I say “bravery” because, first, although she spoke for just over 20 minutes, she failed to make a single concrete proposal on how to improve rail services. Also, there was yet another abject failure to commit to matching Labour’s investment plans for the next seven years. Secondly, it was bravery given her party’s track record on rail, which was defined by years of under-investment, declining passenger numbers, closure of lines, and of course a botched privatisation. I recognise the compliment that she paid the Government when she accepted that performance had improved on the railways in the past 10 years. However, people will be incredulous that she puts the improvement down to the privatisation that took place under the Tory Government. Sometimes I think that she lives on another planet.

Mrs. Villiers: Is the Secretary of State saying that she will re-nationalise the rest of the rail industry?

Ruth Kelly: Indeed not, and I beg the hon. Lady to wait for the rest of my speech. Before I tackle head-on the issues that she raised, I, too, welcome the hon. Member for Lewes (Norman Baker) to his place on the Front Bench. I look forward to his contribution, both to today’s debate and to other transport debates in the coming months. I know what a keen interest he has taken in rail, and in championing the concerns of his constituents.

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