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Over Christmas and the new year period, there were serious, unacceptable delays on key sections of the rail network, including at Rugby and at Liverpool Street station. I regret the impact that they had on thousands of passengers. The chief executive of Network Rail has
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rightly apologised. He told me that he intends to learn all the lessons from the engineering works delays, to minimise the risk of unforeseen overruns in future.

Andrew Miller: I tried this question with the hon. Member for Chipping Barnet (Mrs. Villiers), but she said that it was my right hon. Friend’s job to answer it. The project was huge, and there were unacceptable overruns, but will my right hon. Friend try to put the matter in perspective? I travelled down the west coast main line on Monday and saw the massive changes that have occurred. How many people-hours were put into the project over the weekend? If the scale of the work is made clear, it will help the debate.

Ruth Kelly: I thank my hon. Friend for his question. I travelled on the west coast main line only a few days ago and I, too, experienced a comfortable, reliable journey, which took two and a quarter hours from London to Manchester. The performance of the rail network has improved so considerably that I am delighted to tell the House that I can now use that route regularly, whereas after the Hatfield incident, when it was clear how chaotic a state the railways were in, some of us, including me, had to switch to the air for a period. My hon. Friend rightly says that the scale of the works was enormous. I can tell the House that in any 24-hour period, the equivalent of 5,000 people were working full-time to upgrade and renew our railways.

Mrs. Villiers: If Network Rail could not cope with the scale of that work, how will it cope with all the other projects that are proposed for the rail industry in the next few years?

Ruth Kelly: The point I am making is that it is important that the full lessons are learned from the episode. The failures call into question whether the processes put in place by Network Rail to manage engineering works over the Christmas and new year period were adequate. I can tell the House today that the rail regulator has announced that he is extending his investigation in view of the concerns expressed by Network Rail’s customers and funders.

Mr. Donohoe: Is my right hon. Friend aware of problems north of the border? I am sure that her colleague the Under-Secretary of State for Transport, the hon. Member for Glasgow, South (Mr. Harris), who has responsibility for railways, is. I am thinking particularly of the problems on the line between Glasgow and Paisley. Although that section of the railway is not her responsibility, does the problem not show that the idea of further fragmentation in the railway network is nonsense and should not be supported?

Ruth Kelly: I entirely agree. As I intend to amplify later in my speech, the idea that accountability or lack of accountability for the rail structure is a cause or potential cause of the engineering overruns is ludicrous. Those are separate questions that need to be addressed separately.

It is right that I set out to the House the scope of the investigation. The rail regulator’s investigation will focus on the engineering overrun at Rugby, the engineering overrun at Liverpool Street, the impact that those have had on passengers, train operators and freight operators, and the robustness of Network Rail’s plans for the
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remaining work to enhance the west coast main line. In particular, the regulator will examine whether there are any systemic failings underlying these events. The interim report, which will be published, should be produced by the end of February. I hope that all Members of the House will agree that we should not pre-empt its findings.

Sir Nicholas Winterton: Will the right hon. Lady deal with the question that I put to the Opposition spokesman, my hon. Friend the Member for Chipping Barnet (Mrs. Villiers)? It seems ridiculous that, by way of a fine for the incompetence of management, we should deprive Network Rail of money that would be spent on the infrastructure. Everyone admits that the problem is the incompetence of the management. Is it not better to penalise the top management by refusing them bonuses for the next three years to ensure that they produce the efficient management that is so necessary for Network Rail?

Ruth Kelly: I understand the genuine concerns expressed by the hon. Gentleman, and I, like him, sympathise with all the passengers who suffered disruption on the network over the Christmas and new year period. It is easy to say in the House that fines are no incentive for Network Rail. It is incumbent on any Member who suggests that fines do not provide the necessary incentive to say how any other model would provide an improved incentive for Network Rail.

Mrs. Villiers: So does the Secretary of State think that the senior management of Network Rail should be paid their full bonuses or not?

Ruth Kelly: Certainly, if the results of the investigation by the Office of Rail Regulation suggest that Network Rail is in breach of its licence, has been in breach of its licence or is likely to be in breach of its licence in future, that would need to be taken into account in setting bonus payments, as the contractual management incentive plan, as I understand it, sets out clearly.

Those matters are not for Ministers, however; they are for the remuneration committee of Network Rail. That management incentive plan is clearly in force and recognises those issues. It is not right for Ministers or for the hon. Lady to pre-empt the findings of the Office of Rail Regulation’s report, which will focus on determining whether there were genuinely unforeseeable reasons that led to the delays or whether there was a failure of management. We should await its conclusion.

Mrs. Villiers: I am grateful to the Secretary of State; she is generous in giving way. When her colleague the Secretary of State for Justice boasts about bringing Network Rail into public ownership, the right hon. Lady cannot evade responsibility for the way in which Network Rail is run.

Ruth Kelly: I am astounded by the fact that the hon. Lady is claiming that we have a public ownership structure for Network Rail, when she is not aware, as my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) set out to the House, what the accountability of Network Rail is. She should know that it is a private not-for-profit company which is responsible to its board.

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Mr. Jim Cunningham (Coventry, South) (Lab): I welcome the investigation, particularly into what happened at Rugby. What angers the public is the arbitrary way that that was handled by Network Rail—for example, people being bussed from Coventry or Birmingham to Northampton. That caused a great deal of public anger and it is important that we find the causes of the problems. It is worth while remembering that the previous Government broke up the railways. There were 100 different companies and it was a total mess. The system was a mess in 2000—we remember some of the accidents and disasters. Something had to be done. We should bear that in mind when the Opposition criticise us.

Ruth Kelly: I completely agree. The hon. Member for Chipping Barnet should not be proud of the record of her party when it was in government.

Mr. Redwood rose—

Joan Walley (Stoke-on-Trent, North) (Lab) rose—

Ruth Kelly: I shall give way to my hon. Friend and then to the right hon. Gentleman.

Joan Walley: Our problems stem from the fragmentation that happened during all the years of Tory privatisation— [Interruption.] I am glad to see that the Liberal Democrats agree.

The announcement that the Office of Rail Regulation will investigate the issue is important and welcome. Will my right hon. Friend give a little more detail of the extent to which the rail regulator will specifically consider what happened in respect of the west coast main line, and how much the remit of the regulator’s inquiry will cover the wider issues—

Mr. Speaker: Order. Please have a seat. Interventions should be brief and consideration should be given to Back Benchers who have put their names down to speak. Speeches should not be made during interventions.

Ruth Kelly: My hon. Friend is correct to raise those issues. This morning, I asked the rail regulator about his inquiry’s terms of reference. He made it clear that he would broaden his investigation to consider not only upgrading and engineering work on the west coast main line, but whether there was proven evidence of a systemic problem that needed to be addressed in the management of engineering works. It will also address the point, made by the hon. Member for Chipping Barnet, whether full lessons have been learned from previous episodes, including that at Portsmouth.

Mr. Redwood rose—

Mr. Prisk rose—

Ruth Kelly: I said that I would give way to the right hon. Member for Wokingham (Mr. Redwood).

Mr. Redwood: Is the Secretary of State not aware that last year the taxpayer gave the company 90 per cent. of its total operating costs? It is entirely a creature of the Government. It is her duty to discipline the management and make it efficient.

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Ruth Kelly: I think I might know what the right hon. Gentleman’s solution is: to revert to a situation in which, rather than being accountable to a membership board, Network Rail is more concerned with paying dividends to private shareholders, and [Official Report, 23 January 2008; Vol. 470, c. 15MC.] in which Government investment, far from increasing—as it is, by £10 billion over the next five-year period—returns to a level of chronic under-investment. I would not agree with that solution, and nor would many members of the public.

It is important that we put the episodes of Christmas and the new year into context. Today, we have the fastest-growing railway in Europe.

Ms Katy Clark: While we are still on the issue of the investigations, I should say that my hon. Friend the Member for Central Ayrshire (Mr. Donohoe) has already raised the delays between Glasgow and Paisley at Shields Junction. I understand that the delays involve a number of private companies and raise issues, again, about the fragmentation of the railways. Can that matter also be looked into?

Ruth Kelly: I can confirm that the rail regulator has told me that he will also take into consideration the engineering overruns at Shields Junction.

Mr. Prisk: Will the Secretary of State give way on that point?

Ruth Kelly: Yes, but I must then make progress.

Mr. Prisk: The Secretary of State is very generous. She rightly links the issue of management performance with bonuses. As I said earlier, Mr. Coucher, the chief executive, said:

He accepts that he made a mistake. Given those circumstances, does the Secretary of State think that he should receive his bonus? Yes or no?

Ruth Kelly: I have made two points absolutely clear. First, bonus setting is not for the Government; it is not my role as Secretary of State for Transport to set the bonuses of Network Rail’s management. However, I sympathise with those who, understandably, feel angry about the delays and overruns in the Christmas and new year period.

Secondly, bonuses are set by Network Rail’s remuneration committee, which is chaired by an independent non-executive director and acts according to a management incentive plan that takes into account whether a licence has been breached or is likely to be breached in future. The rail regulator is examining that issue and his interim findings will be published at the end of February. I hope that, at that point, everyone will be clear about whether there was a breach of the Network Rail licence.

As I was saying, today we have the fastest-growing railway in Europe. When the Conservatives were in power, the railways were faced with the problem of managing decline; now, for the first time since the war, we are planning for growth. Why? First, the stability of our economy has enabled this Government to double spending on our railways over the past 10 years; and secondly, we took the tough decisions required to clear
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up the mess left after privatisation, when the state of the track had deteriorated dramatically, confidence was shattered, and costs had spiralled out of control. The Railways Act 2005 put in place a new structure that has, for once, got a grip on costs and is delivering significant improvements in performance. For the first time in 50 years, we have a stable structure for our railways on a secure financial footing, with firm, costed plans that should enable us to double the size of the railways over the next 30 years.

Norman Baker (Lewes) (LD): I wonder whether the Secretary of State agrees with her colleague, the Minister with responsibility for railways, who said:

How does she square that with the massive growth that she is predicting?

Ruth Kelly: I would be surprised if the hon. Gentleman were not aware that we have firm, costed plans that are delivering within the 2009 to 2014 period. In those costed plans, we have said that there will be no line closures and that we will monitor the growth in passenger numbers over that period; if passenger numbers grow faster than expected, we will, in the following period, think about whether additional railway capacity is needed, including whether to open new lines. When we come to the second control period, from 2014 onwards, I retain an open mind on whether we need, for example, to reopen a disused rail line between London and Birmingham, whether we should have a high-speed rail link that links London to Birmingham, or even beyond to Manchester and so forth, or indeed whether other modes of transport, such as roads, should be encouraged. It is right that we take a fundamental look at these issues in the light of what is happening with the growth in passenger numbers and of a proper diagnosis of the problems. We are going through that process at the moment to prepare ourselves early for decisions that will be taken in several years’ time.

Under Railtrack, the cost of the west coast main line modernisation programme had soared from £2.4 billion to £14 billion, with no end of the work in sight. Network Rail was able to get a grip on costs, no longer underwritten by blank cheques from the Government. Its work was endorsed not only by the Public Accounts Committee, with which the hon. Member for Chipping Barnet should be familiar, but by the National Audit Office. We are seeing steady improvements in overall performance, reliability and safety. We have delivered the channel tunnel rail link on time and on budget. It is precisely because we have regained control of spending that I was, in July, able to set out the resources that we intend to devote to the railways over the next seven years and the further improvements that we expect the industry to deliver.

The hon. Member for Chipping Barnet questioned whether Network Rail was indeed making efficiency gains. I can tell her that in this current five-year control period, Network Rail is on track to deliver efficiency gains of more than 30 per cent.—a record that Railtrack was never able to match. I would be interested to know whether she would commit to match the £10 billion investment that we intend to make between 2009 and 2014.

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Dr. Ladyman: We have heard Opposition Members suggest that the fare payer should not have to put any more into the railways, whereas previously they have suggested that taxpayers should not pay more. Does my right hon. Friend, who is an economist of some renown, know where the third source of money that they propose to get is to be found?

Ruth Kelly: My hon. Friend makes an excellent point. Indeed, I am still not clear about the fares policy of the hon. Member for Chipping Barnet. If she disagrees with what passengers are being asked to pay, would she and her party expect the taxpayer to pay more instead, or would they rather cut services and investment? If so, which of the projects that we have announced would they like to cut? I remind the hon. Lady that rather than people being priced off the railways, passenger numbers are at record levels, with 370 million more passenger journeys every year than in 1997—a figure that is increasing year by year.

Mr. Angus MacNeil (Na h-Eileanan an Iar) (SNP): As we are talking of passengers, is the Minister confident that the public were given the right transport alternatives between Christmas and new year, and indeed after new year, by the rail travel companies?

Ruth Kelly: That is one of the issues we need to consider. Indeed, the Office of Rail Regulation will examine the impact that that disruption had on passengers. There are clear arrangements in place under which compensation can be paid to train operating companies and, under the passenger’s charter, to passengers, if they have been incorrectly sold tickets or subjected to severe disruption. I would expect those measures to be enforced.

The hon. Member for Chipping Barnet quoted the price of a season ticket to Birmingham. I must say that I have not checked the price of such a season ticket, but the hon. Lady’s contribution on fares would have slightly more credibility if she were able to get some of her sums right. I had the opportunity to read an article that she wrote recently in the Yorkshire Post. In it she bemoaned the fact that a walk-on-and-go saver return from Leeds to London would go up from £149.60 to about £156.78, and that a walk-on-and-go open return for the same journey was going to rise from £370 to about £400. I am afraid that the hon. Lady may need some remedial maths lessons because she arbitrarily doubled the cost of the actual fare. It is no wonder she was removed from her job shadowing the Treasury, and no wonder that she is labouring under the false impression that people are being priced off the railways.

Mrs. Villiers: The Secretary of State may think fare rises are a laughing matter, but many families do not. Fare rises under this Government are putting real pressure on many family budgets. The Opposition are seriously concerned about that; I would hope that she is as well.

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