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25 Feb 2010 : Column 159WH—continued

3.48 pm

Norman Baker (Lewes) (LD): I am encouraged by the consensus between the hon. Members for Liverpool, Riverside (Mrs. Ellman), for Wimbledon (Stephen Hammond), for Sheffield, Hillsborough (Ms Smith) and for Selby (Mr. Grogan). On behalf of my party, I hope to demonstrate the same. In parenthesis, may I say that that could be useful in the event of a hung Parliament, as it might give us the opportunity to make progress in areas where parties agree rather than where they disagree? I hope that we can include the Minister in that consensus. I am confident that we can include the Secretary of State, having spoken to him, but the Minister seemed to be inventing his own policies earlier today. I hope that that is not reflected in his response to the debate.

The general view of the franchise regime, which I share, is that by and large the concept is working, but not the detail. We need to make changes to how the franchise system is applied. I am pleased that no one has made a case for hugely destructive changes to the franchise arrangements or for throwing everything up in the air like confetti and seeing where all the pieces land. The latter would be rather like the unfortunate reorganisation of 1994.

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The last thing that the railway industry needs is uncertainty, especially as we need growth. The priority must be to increase the network, get more people on trains, and get more infrastructure in place. Navel gazing will not be useful. Whatever the House collectively comes up with will have to be constructive, and we should not take our eye off that particular ball.

There is no question but that the franchises have been too short, and that they have been moving towards an increased specification. I understand the temptation to do that; all of us as MPs get lobbied. We are often asked, "Why doesn't this train do this?", "Why isn't there a buffet car?" or "Why is the Southampton buffet not open at 10 o'clock tonight?" So there is a temptation to increase the width of the franchise documents to ensure that all those points are covered, including points about Boxing day, with which I happen to agree. That temptation needs to be resisted, otherwise we end up with an unwieldy document that involves a gigantic amount of civil servants' time, stifles any innovation and means that companies cannot respond to changes as they have to. That is one of the reasons why franchises have been brittle in recent years.

Therefore, we need to move towards longer franchises-my party is on an even keel with the Conservatives here-and arrangements that are based on passenger-orientated outputs, or the sorts of things that passenger focus groups measure. We should not specify when the booking office is open or when the buffet is open at Southampton Central, but we should regularly ask passengers, "Are you satisfied with the service you are getting on your line? Here are the criteria we want you to look at." If a rail company has a long franchise, say one of 22 years, then its performance should be measured every five years. If passengers are not satisfied, the franchise should be taken away. If passengers are happy, the franchise should be kept by the company, and that should give an incentive to the company delivering the service to worry about matters such as Boxing day services. It also means that they will be looking to the passenger for approval and not the Treasury. That is a very important shift to make if we are to move the railways further forward in responding to passenger needs. Such a system will deal with the cold carriages and the overpriced tickets, which are matters that regularly and unnecessarily irritate passengers.

I think that we all recognise-certainly my party does-that the longer franchise regime can bring in the opportunity for investment. I agree that the Chiltern model is very helpful, and it will bring in a new link between Oxford and London, which will give not only extra capacity but more opportunities for different journeys to be made. That is a relatively simple infrastructure measure that can be very useful in growing the network. We have not done enough in considering those relatively inexpensive measures that can make a big difference to the infrastructure of the network.

We have all been very busy on high-speed rail, which has a vital role to play in the future. I notice that all three parties are now committed to it to a greater or lesser degree. We must not take our eye off the ball and neglect the lesser improvements that can be important in delivering better services. The Skipton to Colne railway should be reopened. There is no logical or economic argument for not doing so. Improvements such as the Todmorden curve and, dare I say it, the Lewes to
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Uckfield railway line in my own constituency should be delivered. I notice that improvements such as the Stirling to Alloa line and the Ebbw Vale line are under way in Scotland and Wales. The Government's own formula told us that they would not be successful yet, lo and behold, when they opened they were tremendously successful. That leads me to say that the Government's formula needs to be significantly revised if we are to get some sensible idea as to whether rail schemes will be profitable or not.

The downside of long franchises, which the Minister half hinted at in his intervention earlier on, relates to the unpredictability of the economic situation. It is difficult to predict how GDP will be growing, the strength of the economy and what the state of the rail network will be in five, 10 or 15 years-or, to be perfectly honest, even one year. It is quite clear that the present arrangements are brittle and do not allow for that flexibility to enable train companies to respond sensibly. On the one hand we must ensure that train companies do not make excessive profits-the Select Committee mentioned that in its report-and run away with money, which the public quite rightly would not be happy about, and on the other we must ensure that train companies are not put in a position in which they cannot meet their obligations and have to walk away from a franchise. We have to move the cap-and-collar arrangements that are currently in place towards something that is externally validated. Perhaps the answer is to move towards a relationship with GDP, which would enable train companies to be protected in difficult times and the taxpayer and passenger to get the benefit in good times. That may not be an exact fit, but it is a better fit than the cap-and-collar arrangements that we have at the moment.

At a time when the economy is going up and down, we could consider changing the track access charges that train companies have to pay to Network Rail. Why should Network Rail always have the same amount of money and be protected from the chill wind of the economy? Surely it should take some of the risk as well, and we should consider varying the charges at times of economic downturn.

Chris Mole: Will the hon. Gentleman tell us how he would bring investment into the rail infrastructure if Network Rail had that uncertainty about its forward financial income?

Norman Baker: The amount of money Network Rail has is enormous compared with that of a train operating company. When the train company bears the entire risk of the economic downturn, as it does at present under the cap-and-collar arrangements, that is quite a significant risk for it to take. If some of that risk was shared with Network Rail-I am not suggesting that all of it should be shared-the percentage of Network Rail's money affected by such an arrangement would be marginal compared with the percentage of a train company's income. That is why it would be possible to do that without unduly disrupting Network Rail.

Chris Mole: My understanding is that there are fixed and variable components to the track access charges, and that the resourcing that the train operating company receives from the Department is consistent with the fixed component, so there is no variation or impact on
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the train company arising from track access charges. I am not sure whether the hon. Gentleman's argument stands.

Norman Baker: I believe that there is a relationship that needs to be considered. I draw the Minister's attention to the recent publication by ATOC that makes that very point. I will happily send him a copy if he has not seen it.

The Select Committee rightly referred to the issue of special purpose vehicles. I will not repeat what was said, but I agree with the Chairman of the Committee on the matter. There is a question about what the penalty should be if a company wants to walk away from a franchise, and whether that should then be reflected in other franchises that it holds. That is a difficult question. I took the view that if National Express was going to walk away from the East Coast franchise, there was a case for taking away its other two franchises. There was certainly a case for removing the uncertainty from the passengers as to what would happen to those two particular franchises. There is a case for penalising National Express for the current situation, even though it is not all its fault. However, there is another side to the matter. As the hon. Member for Wimbledon said, c2c has achieved some of the best performance on the rail network, and it is difficult to argue that people taking the line to Southend should have a franchise operator taken away when the company is successfully delivering for them, even though the company overall is not delivering to the Government. I do not have an answer to that. I just throw up the question because it is a difficult one to resolve.

Chris Mole: The hon. Gentleman needs to be aware-and I am sure that the Chamber will want to be-that the c2c franchise is being retendered at this point only because it was at the end of its natural life.

Norman Baker: I accept that. There would have been an option for the Government, I think, to end the franchise early. Obviously, they took legal advice on the matter. The franchise had not run for long so they would have been making a political point. Pragmatically, the idea of letting it run to the end was probably the right one in this particular case.

A couple of Members have spoken of the need to involve local bodies in the franchising process, including the integrated transport authorities. The hon. Member for Sheffield, Hillsborough made that point in her contribution. I very much agree. However, I gently remind her that I tabled an amendment to the Local Transport Act 2008 to that effect, to try to ensure that local authorities and ITAs were more involved in their local rail services. I made the case for that change on that occasion, and I will not repeat it now. However, if ITAs and local councils are concentrating on roads and buses, which is what they do, and they are being kept out of the rail process entirely, it is not surprising that, when they put in their bids for money, those bids are road-related and not rail-related. We must ensure that those bodies see local transport more in the round than they do at present.

Of course, the east coast main line has been referred to. I welcome the fact that at least three Members who have spoken in the debate so far, including the
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Chairman of the Transport Committee, the hon. Member for Liverpool, Riverside, believed that there was a case for having a public sector comparator. Having such a comparator has very much been our party's position. We supported that with Southeastern, when it was temporarily in the public sector. We support it with the east coast main line, and I believe that there is a case, even now, for that line to be held in the public sector for an extended period, as a comparator.

If we are now moving collectively across parties towards a more passenger-orientated, target-based franchise arrangement-that seems to be the move-why do we not try that arrangement now on the east coast main line, while it is in the public sector and see what comes of it? Let us try that now; it does not cost anything, particularly. If we cannot do that and the franchise must be retendered, I agree that East Coast should be allowed to bid, if it is possible for it to do so.

Mrs. Ellman: Does the hon. Gentleman agree that, because we now have information that the letting of the franchise has begun, it is a matter of great concern that it appears to preclude the public sector operating a service so that a comparison can be made between the public and private sectors over a longer term?

Norman Baker: The hon. Lady makes a very good point. We need to look at legislation in particular; if it needs to be changed, it needs to be changed. In fact, my reading of the law in my discussions with the Department for Transport suggests that there is a need for a change in legislation if we are going to allow East Coast to bid for the east coast main line. I am afraid that that legislation was written for unnecessary and dogmatic reasons, with the privatisation proposals from the Conservatives at the time that rail was privatised unnecessarily shutting down that avenue. However, the point made earlier by the hon. Member for Sheffield, Hillsborough was that, if East Coast can bid in a way that will produce the best result, let us have East Coast bid. If it does not produce the best bid, it will not win the franchise. I cannot see what will be lost by allowing that process to happen.

If we are going to give train operating companies longer franchises and more freedom, we need to look at the constraints that exist that prevent them from operating in a way that might maximise the benefit for the passengers. One of those constraints is undoubtedly the unnecessarily detailed interference in rolling stock arrangements that, I am afraid, the Government seem to be increasingly indulging in. Indeed, the Government seem to be sidelining the rolling stock companies as far as possible, not least in the preparation of the Intercity Express programme train for the east coast, and they are doing so at vast cost and with dubious benefit.

I will take the example of my own constituency. The rolling stock is such that we have overcrowded two-car diesel trains from Ashford to Brighton. It is not possible to get a third carriage, because there are none in the country, and the company-Southern-is not allowed to procure any. That is a nonsensical position for Southern to be in, and it is also unnecessarily restrictive, in limiting Southern's flexibility to improve the service.

The service is subject to an ongoing timetable consultation. Whether we should have those timetable
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consultations is another matter, but we have got one going on now with that service. The consultation is now about reducing the length of route on which two-car trains operate. So, rather than having more carriages, which is what everybody wants, we will have a reduced route, if that option is chosen.

In my area, we will also have cascaded dustbin trains from the north London line-clapped-out 313s, which are 1976 rolling stock-replacing 2004 377s. That cannot make any sense, and it is deeply unpopular with my constituents, as Members will no doubt appreciate. However, it appears to be Southern's only option. Having looked into the situation, I do not blame Southern for it, given the configuration of the rolling stock and the instructions that the Government have given Southern about what it can and cannot do. I am afraid that that is an example of the Government intervening unhelpfully in such a way that the rail company will get the blame for the problems, when, in fact, the hand of the Government behind the company is causing them.

Southern has also been handed 442 rolling stock, which happens to be quite acceptable. Nevertheless, we are now asking Southern to operate a vast complex of different kinds of rolling stock all on the same section of railway line. That cannot be good for efficiency. The opportunity to mix and match different carriages is limited by the fact that they do not couple. That sort of over-involvement by the Government in rolling stock has not been helpful to Southern, and I suspect that that is mirrored elsewhere in the country.

When the Minister replies to the debate, will he say something about the Government's rolling stock plans? I ask that because we have these mythical carriages that do not always seem to materialise, and we also had the announcement last year of the creation of Diesel Trains Ltd, which was then uncreated very shortly afterwards. Since then, we have had no announcement whatsoever about what is happening with the rolling stock. When will the Government make a statement on rolling stock, so that we are quite clear what is going to happen with both the 1,300 carriages and the plans to replace the diesel trains that were initially announced and then cancelled?

We need to recognise that one of the constraints on the train companies is the control of the timetable, which is with Network Rail. Some train companies have been able to negotiate shorter journey times, particularly when they are in competition with air travel. An example is the Virgin west coast main line service, following the improvements that have been made to that line. Other train companies, particularly those in a captive commuter market, have been less lucky. The hon. Member for Wimbledon will doubtless be aware, as this relates to his own constituency, that the journey time into central London from Wimbledon is now three minutes longer than it was in 1930. That does not seem to be much of an improvement in the 80 years that the railways have operated since then.

Let me turn briefly to the fares issue, which was dealt with in the other part of the Transport Committee report. I think that the hon. Member for Sheffield, Hillsborough referred to the fact that the cost of travelling by train has risen by 50 per cent. since 1977. In fact, that is the relative figure. It has risen by 13 per cent. since Labour came to power in 1997, although that trend has been apparent under successive Governments.
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However, the cost of motoring has fallen by 14 per cent. since 1997, and the cost of aviation, which is far worse than rail in carbon terms, has fallen by 35 per cent. since 1997.

We have the absurdity that the more carbon that someone emits, the cheaper it becomes to travel, and the less carbon that someone emits, the more expensive it becomes to travel. All three major parties have agreed to a target of cutting carbon emissions by 80 per cent. by 2050. If we are seriously committed to tackling climate change transport must play its part, and we must recognise that financial incentives and disincentives will determine what people do. If it is cheaper to get into the car to go from A to B, people will get in the car. That is the logical response of any individual. So what are the Government going to do to try to ensure that there is more of a relationship between the carbon emitted in transport and the cost of travelling? At the moment, the situation is humpty-dumpty and upside-down and creates all sorts of perverse incentives.

What are the Government going to do to get Britain off the bottom of a league table where the distance that someone can go for a tenner on off-peak fares-not on first-class fares, or on anything else-is less in this country than it is in any other country in Europe? Effectively, someone can travel the distance between London and John O'Groats for a tenner if they happen to live in Serbia, but someone in this country can only get from London to Basildon for the same amount of money. I invite Members to decide whether they want to be in John O'Groats or in Basildon, but that comparison between countries is not an edifying one for someone wanting to buy a rail ticket in this country.

There are other unacceptable confusions with rail fares. For example, there are the split-ticket arrangements, whereby if someone wants to go from Bristol Temple Meads station to London direct it can cost £74.50, but if they go from Bristol to Didcot and then from Didcot to London it only costs £53.20. How can that be sensible? There are far too many complications in the fare system that need to be sorted out. ATOC has now rightly begun a consultation, but unless it deals with the complexity of fares, as well as the actuality of fares, it will not be sufficient.

The Chairman of the Transport Committee referred in her contribution to the increasing divergence between regulated and unregulated fares. That divergence is becoming ever wider, which is unhelpful. For example, there is no point in having a walk-on service, as we now have on the west coast main line-that service runs every 20 minutes, which is fantastic-if the fares operate against a walk-on service and passengers have to book in advance. That does not make any sense. It minimises the benefit of the west coast main line upgrade on which the Government spent so much money.

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