Westminster Hall
Thursday 12 February 2009
[Sir Nicholas Winterton in the Chair]
Sustainable Railways
[Relevant documents: Tenth Report from the Transport Committee, Session 2007-08, “Delivering a sustainable railway: a 30-year strategy for the railways?”, HC 219, and the Government’s response, HC 1105, Session 2007-08.]
Motion made, and Question proposed, That the sitting be now adjourned.—(Steve McCabe.)
2.30 pm
Mrs. Louise Ellman (Liverpool, Riverside) (Lab/Co-op): The Committee’s report “Delivering a sustainable railway: a 30-year strategy for the railways?” was published on 21 July 2008 and the Government published their response to it on 20 October. The White Paper considered in the report sets out the Government’s general vision for the railways for the next 30 years, as well as their specific strategy for 2009-14, as set out in their high-level output statement. At new year 2008, Network Rail’s overruns at Rugby, London Liverpool Street and Glasgow Shields junction left thousands of passengers stranded and became part of the Committee’s consideration, together with the White Paper.
The Committee took wide-ranging evidence from witnesses, including passenger representatives, transport groups, individuals, professional bodies, trade unions, statutory bodies, Network Rail, regional organisations and the then Under-Secretary of State for Transport, my hon. Friend the Member for Glasgow, South (Mr. Harris). We warmly welcomed the long-term strategy for growth—the first such strategy for many years—which anticipates doubling freight and passenger traffic from today’s figures.
We noted that the strategy did not address structural issues in relation to rail and we were concerned by some aspects of the White Paper, including a lack of vision in relation to the absence of plans for high-speed rail and electrification, and a lack of integration with regional policy and other transport modes. We were concerned, too, about the performance of Network Rail and we did not feel that capacity issues were sufficiently addressed. We made serious comments on the proposals for the future financing of rail and their implications for fares and franchises. Those debates are continuing. It is pleasing to note that, not only since our report, but since the Government response was published, a number of steps have been taken that meet our requests.
I am pleased that the Government announced on 15 January that they were to establish a company, High Speed 2, to develop proposals for new high-speed lines from London to Scotland and to link the west midlands with Heathrow and Crossrail. They also announced plans for electrification. It would be helpful if we were told today what the position is on those two matters. Are we talking about proposals or feasibility studies, or about specific actions that are to be taken—and, if so, when?
We raised serious issues about Network Rail’s governance and its lack of cost control. The Office of Rail Regulation’s report on the 2008 new year overruns concluded that Network Rail had been in breach of condition seven of its network licence and a record £14 million fine was imposed. A range of problems was identified relating to site and supply management, continuity of skills and communications. Public anger about what had happened was compounded when, shortly afterwards, Network Rail chiefs awarded themselves major bonuses, including a bonus of more than £300,000 for its chief executive.
During our inquiry we received further evidence of an efficiency gap. Studies that had been undertaken found that when Network Rail is compared with other European companies, there is an efficiency gap in relation to both maintenance and renewals. The gap on maintenance amounts to £263 million per annum, and on renewals to £846 million per annum. Efficiency is important in cost control and in securing value for money.
We are concerned that the Government rejected our call to look again at Network Rail’s governance. That is strange and at odds with the decision subsequently taken by Network Rail members themselves, who have now commissioned a review of how Network Rail is run. At the time we wrote our report, Network Rail was in dispute with the ORR over its budget for the next control period. That matter has now been settled and the budget has been set at £28.5 billion. It is therefore particularly important that Network Rail secure value for money and that there be effective cost control. We want the Government to take a more active interest in how Network Rail operates.
The report considered capacity in the rail service. We welcomed the increased popularity of rail, but expressed concern that the 40 per cent. increase in patronage over the past decade had led to overcrowding and that, following the proposals in the White Paper, the problem was set to continue. The White Paper set out proposals to deal with capacity problems—1,300 extra carriages, platform lengthening, Thameslink and Crossrail for London and major upgrades at Birmingham New Street and Reading—but we did not feel that they would solve the problem.
We felt that there would not be sufficient new rolling stock and noted with concern that most of the new carriages were destined for London and the south-east, making us wonder what was going to happen to the north. We were worried that feast and famine were set to remain in procurement, and about the absence of a commitment to addressing pinch points in the north, particularly the Manchester hub. We would like to know exactly what is being planned in relation to those areas. The Government subsequently announced that a number of carriages are to be brought forward, but we want to know exactly what is proposed in that regard, where they will go and how they will deal with congestion.
David Lepper (Brighton, Pavilion) (Lab/Co-op):
My hon. Friend has mentioned London and the south-east and the extra capacity coming there, including, for instance, on the London to Brighton line. Does she agree that the train operating companies have a responsibility to ensure that, where they have that extra capacity and are able to make timetable changes, they take into account the needs of the travellers? I have had complaints from residents in my constituency that, although
we now have more trains per hour on the London to Brighton line, regular commuters are disadvantaged because the new timetable adds perhaps half an hour a day to their commuting journey both ways from Brighton to London. There is a question of planning, even where the capacity becomes available.
Mrs. Ellman: I agree with my hon. Friend. It is always important to consider the different needs of the travelling public and to ensure that their needs are met.
Stephen Hammond (Wimbledon) (Con): Does the hon. Lady agree that, although the hon. Member for Brighton, Pavilion (David Lepper) has a point, it is difficult to know whether the extra half an hour added on to the train journey in his area has been caused by the train operating companies or by the timetables dictated to them by either Network Rail or the Government?
Mrs. Ellman: The hon. Gentleman makes important points and underlines the need for better integration of the rail service as a whole.
The report also concentrated on financing, which must be fundamental to the future success of our rail service. The Government propose a subsidy of £15 billion for the period from 2009 to 2014—a reduction on the previous period. The Committee expressed extreme concern that the sharp move away from operational subsidies would result in high fare increases. At the start of the new control period, half the Governmentsubsidy goes to franchise support. By the end of the period, it will be less than 25 per cent. As Greengauge21 told us, a change in the balance
“from roughly 50 per cent. passenger funding up to over 70 per cent.”
over five years would be too radical and too fast.
We were also concerned to see that funding was based on a 34 per cent. growth in passenger revenue, with fares income predicted to rise from £6.9 billion in 2009-10 to £9 billion by 2013-14. The Committee gave a warning and I should like to quote from this section of the report as it is relevant to what is happening today, as well as to our concerns for the future. It states:
“We are deeply concerned that the rapid shift away from taxpayer contributions and towards passengers paying a significantly larger share of the cost...will be detrimental to passengers and the future of the railways alike...if a full-scale economic downturn were to develop, passenger numbers are unlikely to grow as fast as projected...We therefore recommend that the Government review the planned shift between taxpayers’ subsidy and the fare box with a view to pacing this transition over a significantly longer period of time.”
It is now reported that perhaps five franchises are on what the Department calls a red light list. We know from experience over the past month that many fares have risen by up to six or seven times the rate of inflation. Our fears are becoming reality already. Will my hon. Friend the Minister tell us when he replies to the debate whether the Government have assessed the rate of passenger growth compared with the projections? What attitude are the Government adopting towards the train operating companies that are perhaps seeking renegotiation of franchises or abandoning them? Will train services be cut? I raised that issue with my right hon. Friend the Prime Minister at the sitting of the
Liaison Committee this morning and I was very pleased to hear an assurance that services would not be cut, but that raises other issues about what steps the Government will take.
This is not just fantasy and people expressing fears. It has been reported that Dr. Mike Mitchell of the Department for Transport told the Public Accounts Committee that perhaps up to five franchises were on the Department’s red light list. This is a real issue and we need answers to it. All these issues are ongoing. In fact, the Transport Committee is currently conducting an inquiry on fares and franchising. We shall report in due course.
I am very pleased that the Government’s response did not end with their formal reply on 20 October 2008. I welcome the new announcements that have been made since that time, many of which are in line with our recommendations. I certainly welcome today’s announcement about new trains. I congratulate the Government on their growth plan and on their ongoing actions. However, we need to ensure that environmentally friendly rail travel can continue to grow through the recession and beyond. I hope that the Committee’s report, “Delivering a sustainable railway: a 30-year strategy for the railways?”, will be a contribution to securing that end.
2.44 pm
Dr. John Pugh (Southport) (LD): I seem to be in the unenviable position of being the only Back-Bench Member present apart from Government Back Benchers—I am ringed by a series of enthusiastic trainspotters. May I say first what a good report this is and what respect I have for the Chairman of the Committee, the hon. Member for Liverpool, Riverside (Mrs. Ellman)? She understates, in a very self-effacing way, her knowledge and command of the subject of railways. She knows the subject inside out. I served on a Committee with her some time ago and I was very impressed with her grasp of the subject and her ability. She does not resemble the previous Chairman, but she has many additional and important qualities. I share the same network as her, so I see the same problems on a regular basis. I also share her view about the lack of vision for the railway that exists, or has existed, in the Department for Transport.
Fundamentally, the report appears to be about capacity. There are clearly appreciable strains on the capacity of the railway system, with overcrowded trains and an inadequate service. Common sense tells us that we need new trains and new lines. Both relate to the theme of expansion, and expansion is extraordinarily difficult for the railway system. Procurement is a convoluted process. When I was serving on the Standing Committee that considered the Bill that became the Railways Act 2005, we considered umpteen clauses about how to close a railway line, but not a single clause about how to open one. When pressed about why that was so, the Minister dealing with the issue said that it was because everyone knows how to do it; it is fairly straightforward and uncontentious. In fact, it does not happen.
In my area, I suffer all the problems outlined in the report, which is why I was so keen to attend the debate. For example, the company that has the Northern franchise, which I brought to the attention of the Secretary of State in response to his statement earlier today, uses very old, possibly unsafe and certainly overcrowded
carriages. It is absolutely disgraceful that mums and other people who get on at Manchester and are heading to other towns in Lancashire and who have paid good money for a ticket have to stand for long periods in rather dirty and unpleasant trains. When I have discussed that with the TOC—Northern Rail—it has said that it would like to improve matters but that it is handicapped because it requires the consent of various bodies, including the Department for Transport, before it can do so.
When it comes to rail expansion, Lancashire is a strange place. We are probably now subdivided into three or four basic city regions. There is the Preston city region, the Merseyside city region and the Manchester city region. People are now looking at the connections between the city regions; for example, those that might exist between Preston and the surrounding towns and Liverpool. Naturally, they have looked at where the routes intersect and they have found that there are two completely separate rail networks, which funnily enough coincide in a little town called Burscough, where a curve was taken out by the good Dr. Beeching. Restoring that link makes eminent sense from all sorts of strategic points of view, but it has not been done because it is infernally hard to progress; there are different transport authorities, we need the consent of a variety of bodies and we need to construct something mysterious—it is never quite made clear—called a business case.
Progressing rail capacity is an extraordinarily complex business. We need to tick various boxes. We need to line up a series of ducks. We need a high-level output statement on our side. We need regional and sub-regional plans, all co-ordinated and pointing in the same direction. We need funding in place, which is always a bit of a swine, and we need to present something called a business case. However, if we go to the Department and say, “What should a business case look like? Please show me a business case so I can model one for you,” it will say that it does not have many that it can point to, because very few people have made business cases for railways extensions in the past 20, 30, 40 or 50 years.
Political leadership and direction are clearly needed, but we do not always get them, particularly when we have railway schemes that intersect between two politically different conurbations. Furthermore, Network Rail needs to support the proposal, but its line when people talk about expansion is normally, “Well, we will do it if we are asked to do it,” but the organisation does not take a particularly pioneering view, even though it can often see a good case for one. To get the whole thing ready is extraordinarily problematic.
Mr. Eric Martlew (Carlisle) (Lab): I attended a meeting earlier this week at which there was discussion of the reinstatement of a line from Lewes to Uckfield. The hon. Member for Lewes (Norman Baker) was very interested in that. The reality is that Network Rail was asked to draw up the business case, and surely that would be the way forward. It will do the business case for people and then they can present it.
Dr. Pugh:
It would be nice if Network Rail was always so obliging. Merseytravel is helping with the business case for the Burscough curve that I mentioned.
We pursued that option because Network Rail did not seem as enthusiastic about the proposal. It did not suit its strategic objectives to the same extent as for Merseyrail.
The same problems occur when new carriages are wanted. There is an enormously convoluted and complex process. When rolling stock leasing companies were founded, they were management buy-outs. They were soon taken over by the banks simply because that was a safe way of making money. The banks have since found even safer ways of making money. [Laughter.] In the case of Angel Trains, Royal Bank of Scotland has sold out to Santander.
On the journey back to Liverpool that the Committee Chairman and I make on a regular basis, there are Pendolinos in which 75 per cent. of the passengers are squashed into 25 per cent. of the train because half of it is first class. Such a degree of idiocy would not exist in any ordinary well-managed or well-structured business. There is little excess stock. When the Secretary of State was talking about new stock and rail earlier, I used the words of the Committee report to ask what we would get in the north, particularly for the Northern franchise. His answer was that there was a general refreshing of stock. That is the answer I have received for years. It did not console me and will not excite my constituents.
My next comment might divide me from other hon. Members in the Chamber. There is a different frame of reference when anything in London is considered. I say that as a veteran of the Crossrail Committee. For years we listened to objections and to descriptions of the complicated engineering behind constructing a line below the most expensive real estate in the world. Despite that, there seems to be a classic business case for it. The same could be said of the Thames Gateway.
Things seem to happen in London. That can be argued for on two grounds. First, there is demand. Due to the buoyancy of the City, there was a case for getting the bankers from Heathrow to Canary Wharf even quicker—I am sure that is crucial for the economic welfare of society. However, the fundamental reason why we make the case for London so frequently is that so many people go to London; there is demand. But why do they go London? Because it is so damned difficult to get anywhere else. Anybody who goes on a cross-country train in this country has a disastrous, long, convoluted experience that they are not willing to repeat.
Mark Lazarowicz (Edinburgh, North and Leith) (Lab/Co-op): I have a lot of sympathy for the points made by the hon. Gentleman. As the MP in the room with the most northern constituency, I too recognise the importance of improving rail links to London for the entire UK. Does the hon. Gentleman accept that the subject is a good example of the need for the nations of the UK to work together? The Barnett formula does not take account of expenditure on things such as Crossrail. Such things must be taken into account when people talk rather too rapidly about defects in the Barnett formula.
Dr. Pugh:
I agree that we should look at things in the round. Our rail network is set up so that almost all lines go to London. To get to the most peculiar places,
people must go into London and out again. That is not typical of other European countries and it is not at all sane.
Crossrail has £15 billion of funding, including £5 billion guaranteed by the Government. That is in a different league. Just think what constituencies in any other part of the UK could do with the small change from that. The tea money for the builders would accommodate various schemes up and down the country. The Olive Mount chord in Liverpool is a classic case, where the aim was to get freight off the docks quickly. We had to struggle to put that in place. I do not believe that would have happened in Tilbury. It did not require an enormous public subsidy, but it took a long time to do it.
I am sure that the Committee Chairman will agree with my views about some of the Liverpool stations. To be honest, the main nodal station—where I shall be this evening at about 10.30 if I manage to get the train back—is an appalling dump. However, the Office of the Rail Regulator and Network Rail both say that it is not a priority and that there is no funding, even though Liverpool is the capital of culture and that is the main intersection. I do not believe that situation would prevail were the station in London.
I accept that rail is expensive. Under the structure we have, it is more expensive than necessary. Despite large sums of money being paid, some companies are not in profit. I was surprised at the Committee Chairman’s comments on what the train operating companies told the Public Accounts Committee about their financial situation because I sat on that Committee and we were sworn to secrecy on those very data. I did not think that information had seen the light of day, but clearly it has.
There is a hidden subsidy with rail travel. However, there is a hidden subsidy for private transport for things such as roads and lights. Private transport also has environmental costs and congestion brings further financial and commercial costs. If all those factors are added up, there is a case for subsidised, effective railways. There is common ground on that, but I would go further. We will not get the right mix or a result that satisfies many people in this country if a centralised, London-centric view is taken of the transport network. I am aware that some people in the Department for Transport will shake their heads wisely and sadly, thinking that I am naive and wrong. However, there is no evidence from the last 10, 20 or 30 years that people in the Department for Transport have got the railways right at all.
| Next Section | Index | Home Page |