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Westminster Hall

Tuesday 19 October 2010

[Jim Dobbin in the Chair]

Railway Industry

Motion made, and Question proposed, That the sitting be now adjourned.-(Mr Vara.)

9.30 am

Katy Clark (North Ayrshire and Arran) (Lab): It is a pleasure to see you in the Chair, Mr Dobbin, and to have this opportunity to debate the future of the railways.

I want to set this debate in the context of the economic situation that we face and express the concern felt in many quarters that the policies we believe that the Government may pursue could make things worse. I hope that colleagues will join me in welcoming the thousands of trade unionists who are coming to the House today as part of the TUC lobby of Parliament. They include many rail workers. I hope that we will listen to what they say before tomorrow's comprehensive spending review.

I pay tribute to the rail workers who work in all conditions to keep Britain moving. It is important that their voice is heard in this debate; I hope to discuss their concerns and those of service users. I declare an interest as a member of various parliamentary trade union groups organised by the railway trade unions. I have also worked closely on the issues with the National Union of Rail, Maritime and Transport Workers, the Transport Salaried Staffs Association and ASLEF.

It is important to remind ourselves of the three policy areas under consideration that involve the future of the railways. First, the previous Government, after the 2009 pre-Budget report, established a value-for-money review of our railways. According to the Government, the review, headed by Sir Roy McNulty, has no no-go areas; everything is up for grabs. The new Government have asked that the review be expedited. We understand that it will be published in March, but the Secretary of State has already been given the interim findings, which I am told are likely to be published in November. I also understand that Sir Roy told the Secretary of State that his interim report was not at a stage to be used to inform any decisions made in the comprehensive spending review, but will the Minister confirm that?

The second major policy context for this debate is the comprehensive spending review. Like other Departments, the Department for Transport will, we believe, be asked to make big cuts. There are understandable concerns that if we make cuts to our railways, we will damage the infrastructure needed to drive economic recovery and growth as well as to meet the ambitious targets that we set ourselves in the Climate Change Act 2008. There is also concern that the comprehensive spending review will punish UK passengers with even higher fares, although ours are already the highest in Europe.

The third major policy area is the Government's review of rail franchising, which has generated headlines saying that the train operating companies are clubbing together to demand that the Government hand over
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longer franchises. The companies are also demanding more say in-and, we believe, eventual control over-our railways, including track, signals and stations. The suggestion seems to be that we should re-create the big, private, regional rail companies that the Labour Government eliminated in 1945 when we nationalised the railways.

Given those policy areas, I will use this debate to highlight some concerns raised by passengers and rail workers. We have read reports in the press that the protection afforded by regulated fares might be weakened, and that UK fares-already the most expensive in Europe-could rise by 30% or more. Passengers will find that hard to stomach, particularly as they know that senior directors of the big five transport companies that control most of the railways are still paying themselves salaries that most people, frankly, consider obscene. We know that the railways depend almost entirely on annual public subsidies and the revenues generated by fares. In effect, by awarding themselves such large salaries, railway executives are forcing taxpayers and fare payers to subsidise their excess.

The trade union RMT has researched the matter and provided me with some shocking figures. RMT says that Moir Lockhead-recently of FirstGroup, which runs First Capital Connect, First Great Western, Hull Trains, First TransPennine and ScotRail-was paid more than £500,000 last year, as was Ray O'Toole, recently of National Express, which runs c2c Railways. David Martin of Arriva, the highest-paid director, was paid almost £750,000, and Brian Souter of Stagecoach Group is paid more than that for running South West Trains and East Midlands Trains, but top of the tree is Keith Ludeman of Go-Ahead Group, who was paid a salary of £916,000 last year and whose salary has since increased by 35% to £1.2 million.

Will the Minister comment on those salaries and join me in agreeing that passengers, who face big fare increases and are likely to suffer the consequences of cuts in the subsidies provided to our railways, will find such salaries unacceptable? Those salaries are paid, in effect, by the taxpayer and fare payer. I hope that she will agree that transport bosses should be exercising pay restraint, particularly at a time when the Government are asking everybody else to tighten their belts. I also hope that she will agree to write to the transport companies asking them to exercise restraint.

My second point is about the behaviour of the privatised transport companies and the profits that they have made from privatisation. Over the past 10 years, the biggest five transport companies have paid dividends of more than £2 billion to shareholders. Over the past seven years, the three rolling stock leasing companies that own the trains have paid dividends of more than £1 billion. Professor Jean Shaoul of Manchester university estimates that since privatisation, dividends of more than £10 billion have been paid.

As colleagues will know, windfall taxes on utilities have been levied successfully in the past. The Government are also considering a levy on bankers. Will the Minister agree to consider imposing a windfall tax on the profits of the privatised railway system instead of penalising passengers with fare increases? At the very least, does she agree that instead of paying huge dividends, railway companies should be helping protect passengers and
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taxpayers at this time by agreeing to freeze dividend payments and invest all profits back into our railways instead?

Will the Minister consider the work of Richard Murphy of the Tax Justice Network? He undertook a study, a copy of which has been submitted to the value-for- money review, that considered the available sets of accounts for the six railway operating companies and three railway leasing companies operating in the UK between 2002 and 2006. He found that during that period alone, those companies owed £1.3 billion in unpaid tax that the Government had not chased. Will she read a copy of that study and examine its conclusions?

My third point relates to the future of Network Rail. The Minister will be aware from the McNulty review of the railways that the same companies paying their top directors such handsome salaries and making massive profits now hope also to profit by taking over the tracks and signals currently owned and operated by Network Rail. Although Network Rail is a private company, it is a not-for-dividend company. That means the £4 billion or £5 billion annual subsidy does not leak out of the industry in dividend payment; instead, any profits are reinvested in the railways. Whatever faults Network Rail may have, taking railway maintenance back in-house has clearly had the effect of reintegrating much of our railways. Indeed, I believe that that has been responsible for the significant improvements in punctuality since the Hatfield disaster.

Hugh Bayley (York Central) (Lab): I congratulate my hon. Friend on securing this important and timely debate. When the track renewals company Jarvis went belly up earlier this year, some 1,200 employees were made redundant and only about a quarter of them have so far got another job in the railway industry. Does my hon. Friend agree that the Government will need the skills of skilled track-laying workers, if they build the new north-south high-speed railway that will run from London to Birmingham and on to Yorkshire and the north-west? I regret that I must attend another meeting at 10.30 am, but will my hon. Friend press the Minister on what the Government can do to secure jobs for those redundant workers who have not yet got jobs themselves, so that their skills can be retained in the railway industry and used to build new railways?

Katy Clark: My hon. Friend makes some powerful points, to which I will return later in my contribution. The privatised rail companies propose to threaten the progress that has been made in the railways in recent years. They want their companies to take over the infrastructure, perhaps on leases that would coincide with the length of the franchises. There is talk of trialling such arrangements in Merseyside or Scotland. The train operating companies have promised that that will incentivise them to invest in the railways, but they have provided absolutely no evidence to support that submission. Indeed, the evidence of the past and of their tenure with the railway passenger services shows that they simply seek to maximise profit and boardroom pay, as I have already mentioned. In fact, the Government's own consultation document, "Reforming Rail Franchising," states:

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That seems to say that we should extend franchises to the maximum length at which franchise holders have no legal obligation to invest significantly and leave investment completely at the discretion of the franchise holder.

The Minister of State, Department for Transport (Mrs Theresa Villiers): I assure the hon. Lady that, whatever the length of the franchise, we will be pressing for the best deal for the taxpayer, including investment with longer franchises-whether they are for 10, 15 or 22.5 years.

Katy Clark: I am very pleased to hear the Minister say that. However, if we are going for franchises of approximately 12 to 15 years, there will not be that legal obligation, which must have a consequence for the decision that companies make.

Mrs Villiers: I am sure that the hon. Lady will appreciate that franchise documents impose significant legal obligations, and we expect those to include investment in the railways, particularly where a longer franchise is granted.

Katy Clark: I am pleased to hear the Minister say that. If the Government decide to go down the path of franchises of such a length, we will be actively scrutinising the situation to ensure that the contracts in place not only are legally binding but are enforced and deliver for the taxpayer and those who use the railways.

We know that the train operating companies are demanding further fragmentation and privatisation of our national railway structure. The former Network Rail chief executive talked about simply sweating the assets of the railway infrastructure. If franchises were coming to an end and existing operators were either not going to bid again or were not shortlisted for replacement, there is a great deal of concern that there would be little pressure on them to invest.

I also ask the Minister to consider carefully concerns that breaking up Network Rail would have a negative impact on rail freight. There is a real fear that passenger operators will be tempted to fill any spaces in the timetable with their own revenue-raising services, which would push freight to one side. Freight trains are often heavier than their transport equivalents and can do much damage to the track, which raises the possibility that the private operator could limit free access or leverage high track access charges on the movement of freight. That would force freight from the railway to the road, which would have a series of unhelpful environmental consequences.

Many people in the industry and in the rail trade unions are also concerned about the arguments of those who are making the case for breaking up Network Rail. In particular, they are concerned about the report of the Office of Rail Regulation, which is quoted again and again as stating that, compared with other European railways, Network Rail is up to 40% less efficient. I say to the Minister that hon. Members may make such points today because they have read articles in the press, but many in the industry, the RMT and the other
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railway unions have a great deal of concern about that report's methodology. They believe it is flawed and that it has cherry-picked different aspects of rail infrastructure efficiency from abroad to paint our railways in a more unfavourable light. The report does not seem to take into account factors that determine efficiency, such as adequate investment over long periods, the need for a unified command structure and, most importantly, the continued fragmentation of our infrastructure compared with European railways.

We need to consider the benefits of having an integrated, publicly owned railway. I therefore hope that the Minister will ensure that those conducting the rail review-and the Government themselves-do not just look at the issue on an ideological basis, but consider the comparisons with other European railways. There has been some concern about the ORR's report and I suggest to the Minister that she should be willing to receive more detailed representation from those who are concerned about that issue. It is obviously vital that we make the right choices for our railways.

In June, the Secretary of State said:

I believe that the answer is already there for him to see. For example, the 2009 European Commission report into the rail market made it clear that the structure of UK railways is radically different from that of railways in the rest of Europe. In terms of passenger operation and infrastructure, most of the railways in Europe are publicly owned and accountable, whereas in the UK they are not.

Compared with other railways in Europe, the organisation and structure of our railways is horrifically complex-they are fragmented and have numerous interfaces. We have 24 operating companies, three freight operators, three rolling stock leasing companies, two infrastructure controllers-Network Rail and Eurotunnel -and seven major infrastructure renewal companies. That must lead to huge inefficiencies. There is a duplication of function and a loss of economy of scale. In addition, the fact that there are so many individual companies means that there are increased profit margins and transaction costs-even the legal and consultancy fees are duplicated again and again. Skilled personnel validate and monitor contracts instead of getting on with the job and, perhaps most damaging, there has been a loss of a rail culture that focused on getting the job done, with one company and one stakeholder blaming the other when things go wrong. I understand that the rail review has already indicated that the railways could save hundreds of millions of pounds a year by reducing that fragmentation and the number of different organisations involved with them.

I hope that the Minister will look at what is happening to railways across Europe, which are overwhelmingly publicly owned and far more integrated than those in the UK. I believe that that would provide a better service and cheaper fares for the public, that it would be better for the environment and that it would lead to more high-speed rail and more electrification. Will she give an undertaking that there will be a transparent consideration of an integrated and publicly owned railway and that the methodology used to consider those matters will be made public?

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I pay tribute to those who work on the railways. My hon. Friend the Member for York Central (Hugh Bayley) mentioned the Jarvis workers who have already lost their jobs. Thousands of Network Rail workers have been asked to make efficiency savings and many have already lost their jobs. I hope that we are now moving towards a period of stability and consolidation. We know, as he indicated, that many of the Jarvis workers are still without work and have lost their pensions. Given his comments, I suggest that it would be helpful if the Minister met me, him and other interested colleagues to discuss the plight of those workers and whether the Government can do more to ensure that alternative employment is available for them in these difficult economic times. Thousands of jobs have already been lost on our railways, on both the passenger and freight sides, and we are also seeing a gradual attack on train guards as companies try to introduce driver-only operations, which will reduce staffing levels even further and, I believe, raise significant safety concerns.

In Scotland, the Scottish National party Administration have taken advantage of the clause included in all railway franchises that allows railway companies to ask the Government to make good the loss of revenue caused by strike action. The Labour party in Scotland says that it will remove that clause from ScotRail franchises if it is successful in next year's elections. Does the Minister agree that the current review of railway franchises should look at that matter and remove that provision from all franchises?

Many people who work in ticket offices are losing their jobs, with implications not only for them but for safety. We know that there is some protection for ticket offices, as train operators are required to consult passengers and Passenger Focus if they wish to shut offices or change their opening hours. Does the Minister agree that those protections must remain in place and should not be removed as a result of the review? Thousands of jobs are under threat in London Underground, many in ticket offices, as a result of the Mayor's decision to renege on his election promise on staffing levels. Cuts will also fall elsewhere, including safety-critical railway maintenance jobs. As a result, there has been strike action on the Underground, as the Minister is aware. Indeed, the workers who were hailed as heroes after the London bombings in 2005 are now often vilified in the press as enemies of the state. I hope that there is a negotiated settlement to the dispute, and I pay tribute to those members of the RMT and the Transport Salaried Staffs Association who are taking a stand on behalf of passengers and rail safety.

I have put several questions to the Minister and am most anxious that she respond to them either today or, if she is unable to do so, in writing at a later date. I will mention those questions again, because they can often be lost in Adjournment debates. Will she clarify whether the McNulty review will inform the transport decisions in the comprehensive spending review set out tomorrow? Will she write to the executives of the big transport companies and ask that they practise pay restraint in the boardroom? Will she agree to a levy on the profits of the privatised rail industry or, at the very least, tell the companies to freeze their profits and invest them back into the railways? Will she meet me and other interested parties to discuss the continuing plight of the former Jarvis workers? Will she ensure that the franchising
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review results in the removal of clauses that allow taxpayers' money to be used to indemnify train operating companies against losses incurred during industrial action? Will she ensure that the Government transparently consider the benefits of an integrated and publicly owned railway network and publish the methodology that they will use to consider the matter?

9.55 am

Anne Marie Morris (Newton Abbot) (Con): I am delighted to have the opportunity to speak on this important matter, and I thank the hon. Member for North Ayrshire and Arran (Katy Clark) for securing the debate. Railways are a key part of our infrastructure, and if we are serious about global warming, investment in them is key. Today, however, I would like to focus on the challenge I face in my constituency. We have a delightful coastal railway-it starts in Exeter and terminates in Plymouth-running through Starcross, Dawlish, Teignmouth and Newton Abbot in my constituency. It is probably one of the most beautiful parts of the railway network and has been photographed countless times. More importantly, it is a lifeline for my local community, providing jobs and transport.

The records that I have been able to review show that 2 million people used that part of the network in the past 12 months. The local economy is heavily dependent on tourism. Devon as a whole had 5.3 million visitors in the past year, and those tourists are responsible for 7% of Devon's economy. My constituency is in the district of Teignbridge, where tourism is critically important; it is the second most visited district in Devon. A third of the workers in Teignbridge-16,000 people-depend on tourism for their jobs. I urge the Minister to consider how important that stretch of railway is, not only because it is beautiful, but because it really matters to the economic viability of that part of the country.

Mr Gregory Campbell (East Londonderry) (DUP): The hon. Lady outlines accurately some of the benefits that railway provision can bring, particularly to areas that require tourism infrastructure, such as my constituency and hers. Does she agree that simple investment in railways, such as the passing loop system, which does not exist on single-lane tracks in my constituency and might not in hers, can help to build the tourist infrastructure to which she alluded and make the switch from private cars to railways so much easier?

Anne Marie Morris: I thank the hon. Gentleman for his contribution. I do not claim to be an expert in railway loops, but the most important thing is to ensure that we have viable railway networks at an appropriate and affordable cost, which is something the Minister is best placed to look at.

My concern about the stretch of the railway network in my constituency is that there were suggestions during the last Parliament that it is not worth maintaining it and that we should instead consider an inland route. That proposal was made because the line, which is on the coast, is subject to coastal erosion. Clearly that is a concern, but given the work that was done during the
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last Parliament, I think that we all agree that maintaining the existing line was economically the right answer, despite the coastal erosion.

The House of Commons inquiry came up with the figure of £100 million to put in a new line. By comparison, I have been able to unearth a figure of £200,000 to maintain that stretch of railway. On the concern about erosion, the latest studies show that we are looking at a relatively safe period over the next 50 years. The expectation is that there will be a 0.3 metre rise in sea levels in the next 100 years which, while important, should not detract from the viability of maintaining this piece of track.

I would also draw to the Minister's attention the fact that usage of this railway line is one of the fastest growing in the country; it is anticipated that it will grow by 19% over this and next year. It is obvious that the more we invest in maintaining pieces of railway, the less dependence there will be on cars. In rural parts of the country such as mine, there is already significant dependence on cars, so this line makes an important contribution. I urge the Minister to look carefully at the line and at continuing investment in it. The last conversations that I had with First Great Western and Network Rail indicated that there was no intention of reducing investment, but I would be grateful if the Minister looked into that.

My final question, which is related but of more national import, is about rolling stock. The trains that come down my piece of railway line are very full. I understand that, under the previous Government, obtaining new rolling stock was very much down to the Government, who controlled what rolling stock train operating companies could acquire. That put a straitjacket on the proper commercial operation of those businesses, and I would be grateful if the Minister looked at loosening that stranglehold so that companies can make sensible commercial decisions. Hopefully there will be sensible use of rolling stock down the line.

10.2 am

John McDonnell (Hayes and Harlington) (Lab): I shall make several brief points. I refer to my entry in the Register of Members' Financial Interests: I chair the RMT parliamentary group, as the Minister will know. We are hoping that through the National Union of Rail, Maritime and Transport Workers, the Transport Salaried Staffs Association and ASLEF, we can have a dialogue with the Government during this key period when critical decisions are being made about the future of rail. I would welcome an early ministerial meeting to discuss the interim McNulty report when it is published in November. It is a pity that it was not published before the comprehensive spending review, because it would have been helpful to see whether it influenced some of the decisions that will be announced tomorrow.

The RMT group met with Roy McNulty last week for an informal discussion of some of its concerns about what happened in the past and what seems to be occurring under this Government. We were hoping that there would be a more objective discussion about the future structure of rail in this country, but it appears that any prospect of looking at an integrated railway system under public ownership-even some element of public ownership in the structure which would enable a public sector comparator-has been ignored again.

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I still cannot comprehend why we cannot at least consider using one of the franchises as a public sector comparator. We know from the experience in the south-east that when Connex was brought back into public ownership for a period, it ran more efficiently, more effectively and more profitably than most other franchises across the country. We hoped that the previous Government would at least maintain it in public ownership so that there could be a public sector comparator.

If Members trawl through Hansard, they will see question after question over past years in which Ministers were asked why we cannot have a public sector comparator. They were also asked what calculations and assessments had been made in respect of other systems across Europe that are under integrated public ownership, so that we could at least make some judgment of the private franchising system that has been in operation in this country for the past two decades.

Several lessons have come out of independent comparisons. It has been found that integrated systems under public ownership, without a panoply and multiplicity of various agencies-my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) listed 24 different companies and four or five regulatory bodies or Government decision-making bodies-are more efficient as well as more cost-effective. I am concerned that in Mr Roy McNulty's review there is still a prejudice even against examination of a public sector option or role in any part of our system beyond Network Rail.

Briefly, on investment, the rail industry overall, including management and unions, hopes that commitments will be given by the Government in the comprehensive spending review statement to high-speed rail-we look forward to the consultation starting in January-and to Crossrail. That would at least allow us to see a longer-term future for investment in the infrastructure that we so desperately need.

I compliment the previous Government, who at least committed themselves to Crossrail and to bringing forward high-speed rail, although I was critical of some of the delays in investment. We need this Minister to tell us that that long-term programme is secure.

The hon. Member for Newton Abbot (Anne Marie Morris) discussed rolling stock. Even under this Government, we need a discussion about investment in rolling stock, which would stimulate British industry rather than the import market. With a limited amount of investment and a commitment to the purchase of rolling stock, there is potential to rebuild the rail manufacturing base in Britain. This relates largely to what my hon. Friend the Member for York Central (Hugh Bayley) said about the loss of skills over years if we do not invest in the rolling stock manufacturing base of our country.

Any lifting of the cap on protected fares will fly in the face of everything that the Government, when they were in opposition, said about their commitment to the development of rail as one of the key transport mechanisms that will help us to protect our environment. The threatened increases of anything up to 37% to rail fares on some routes, and now the threat of increased fares on London underground, undermine the Government's green credentials from the outset. I hope that there will be some acknowledgment in the comprehensive spending
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review of the role that rail plays in tackling climate change, and therefore the importance of maintaining fares at a reasonable level.

Passenger numbers have increased dramatically over the past 13 years, largely as a result of the increase in economic activity. As we go into recession, there will inevitably be a reduction of passenger usage, and there will be a temptation to make up the funding gap by increasing fares. That would be completely counter-productive: it would push more people off public transport and, as a result, have a dramatic impact on our policies to tackle climate change and our environmental policies overall.

Finally, let me raise a staffing issue. The treatment of the Jarvis workers was a disgrace. The way in which they were notified of the loss of their jobs was appalling. They have almost been turned into roaming serfs looking for work. We hear stories of people having to move around the country on zero-hour contracts, and even of people putting up camps near to where they can bid for work the following day.

I raised the matter with the previous Government and said that there should have been an intervention by the Government and Network Rail, and that the contracts and staffing levels could have been maintained. Things were badly handled then, and there is a need for this Government to intervene now, because this is not just about how individual staff are treated; it is also about the expertise that we need for the future.

Surely to God we have learned lessons in the past that if we do not maintain expertise, and therefore do not maintain the track effectively, there will inevitably be accidents, loss of life and serious injury. We have had so many inquiries-surely we have learned the lessons. I urge this Government to intervene, to look at what happened in the displacement of ex-Jarvis workers and their expertise, and to see what can be done to secure not just their jobs but also their expertise for the long term.

Julie Hilling (Bolton West) (Lab): I declare an interest in the debate, as I have a constituency development plan with the TSSA.

On the staffing point, does my hon. Friend agree that if we break up Network Rail, we will create not only more insecurity for workers, but a bidding structure for them? When rail was first privatised, the bidding war for drivers made the cost much more expensive because each franchise then bid for certain expertise.

A more important issue is safety. Already there is erosion of track inspection and other safety elements. If we fragment the industry further, especially track control, we will certainly make accidents, such as those at Grayrigg, Hatfield and so on, more likely.

John McDonnell: I could not have said that more eloquently. My hon. Friend makes an extremely valid point. I urge the Government to tread carefully when making decisions on franchising and the integration of track with operations, because we have seen what has happened elsewhere. Mr Armitt said that when companies have gained franchises in other sectors, they seek to "sweat the assets" to maximise their profits. That eventually has an implication for safety. Having a nationally integrated system would overcome those issues.

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My hon. Friend also referred to the transaction costs involved both in that sort of breaking up and in individual franchising. The Government should carefully examine Roy McNulty's work and the transaction costs that will result. On London Underground, I was assured by the previous Government that Metronet was a one-off failure and that Tube Lines would be secure, but we then had the failure of Tube Lines. The estimated cost of those franchises and setting up the public-private partnership was £400 million on consultancies, accountants and lawyers alone. The Government should learn lessons from the past.

On London Underground staffing, despite what people read in newspapers, RMT and TSSA have taken industrial action because 800 jobs will go if London Underground does not reconsider its position. Those 800 staff are based at stations including Hayes and Harlington in my constituency. If we lose those staff, we lose security and safety at those stations in the lead-up to the London Olympics. We are trying to put on a display for the world so that when people come here to enjoy the Olympics, they can travel in comfort and absolute safety. It would be a retrograde, short-sighted step to lay off those 800 staff, particularly at this key time.

I urge London Underground to return to the negotiating table and to seek a settlement with the two unions. Otherwise, there may be a long, bitter and protracted dispute that will affect the travelling public in a way that will jeopardise their safety in the long term. The dispute is a principled one. It is not about wages, but about looking after the safety of the travelling public. That is why I support it and have appeared on picket lines. There may be a role for the Government. If London Underground remains intransigent, the Government should intervene, because the matter is important.

I welcome this important debate engendered by my hon. Friend the Member for North Ayrshire and Arran. I urge the Minister to meet the union groups, to discuss the McNulty report on the long-term future, and perhaps to return to the matter in six months to monitor progress on the Government's initial decisions.

10.14 am

Mr Mike Weir (Angus) (SNP): I welcome this debate, and I congratulate the hon. Member for North Ayrshire and Arran (Katy Clark) on securing it and on making a wide-ranging and knowledgeable speech about the railways, despite her inability to avoid a quick stab at the Scottish Government.

I want to concentrate on two areas that concern my constituency-the future of the east coast rail line and the plan for the high-speed rail network, both of which are vital to our economic future. The east coast line is vital to the north-east of Scotland because it provides the major cities of the north of England direct access to London and, importantly, to the cross-channel network through the Eurostar and Eurotunnel and, I hope, to Germany if the proposed connections to German cities come to pass. The line provides an important link for business and tourism and is a vital economic asset.

I have had serious concerns for some time about the future of services on the line, especially north of Edinburgh. I raised those concerns as far back as July 2009, and
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when the franchise went from National Express to East Coast. The line north of Edinburgh has long been a problem because it is not electrified, so it has been difficult to reduce journey times from Aberdeen to Edinburgh. When the previous Government committed themselves to purchase new dual electric-diesel trains to run the whole length of the line, there was considerable hope that that would lead to a reduction in journey times.

When the franchise was transferred, Lord Adonis, the then Secretary of State for Transport, assured me and others that there was no danger of cutting services north of Edinburgh. Unfortunately, shortly before the general election, he postponed the purchase of the new trains and left the decision until after the election. I thought at the time that that was an ominous sign, and so it has proved to be. The new Government have twice postponed the decision, more recently until the comprehensive spending review, which is due tomorrow. That has the ring of a death knell for the contract to purchase those trains.

I appreciate that the Minister will not tell us today, before the Chancellor's announcement, what will happen, but I remain gloomy about the prospect for those trains. The matter is important, and I asked her a written question about the services north of Edinburgh. She replied:

So far, so good, but unfortunately, she continued:

The Minister may say that I am wrong, but alarm bells rang because she seemed to be specifically linking the services to the rolling stock and, by implication at least, if the rolling stock is not purchased, long-term services are at risk. If I am correct, that is a short-sighted way of looking at the future of this important line because its importance is not only economic.

The coalition Government claim to be the greenest ever, but that seems to be a pretty shaky claim if they do not consider the need to reduce carbon emissions by providing more rail than air transport. Failure to provide regular services from the north-east of Scotland will seriously impact on that. I have used the line many times to travel down to London. I take the train from Montrose in my constituency, and it takes around six and a half hours to get to King's Cross. From Aberdeen, the journey is around seven hours. Clearly, that is a long train journey, and business men coming from Aberdeen, which is Europe's oil capital, are faced with the option of taking a plane from Aberdeen airport, which takes approximately one and a half hours to London. Even taking into account the time taken to check in and to get in from Heathrow, it is clearly quicker to go by air. However, even with the existing service, for someone travelling from Edinburgh the decision to travel by air or train is much more marginal.

The point is that if we are serious about moving travellers, particularly domestic business travellers, from air to rail, the issue that must be addressed is not just price, but time. We must ensure that there is a realistic alternative, and that can be provided only by speeding
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up journey times. I appreciate that the proposed new trains are not a magic bullet for the problem, and that the decrease in journey time provided by the trains alone might not be all that significant. The line has various other problems, not least the physical restraints at Montrose in my constituency, where part of the line is single track and the geography of the area makes it difficult for it to be dualled. However, the proposed dual fuel trains would send a clear signal that the Government are serious about investment in the railways, and in ensuring that we continue with the regular and worthwhile service that links Aberdeen directly with London and through to the continental mainland. Unless we look at such proposals, we will undoubtedly fail to persuade people to switch from air travel to rail, even if the Government use taxation to push up the price of flying.

Julie Hilling: I am interested in the hon. Gentleman's point about trains and the green economy. Does he agree that electrification pushes all the buttons for the green economy? Electrification makes trains greener, it is better for the environment, it increases the speed of the train and reduces the wear on the track. We must continue with electrification, particularly in my constituency where the previous Government were committed to the electrification of the lines between Liverpool and Manchester, and Manchester and Preston. Electrification speeds up journeys; today, a person would be crazy to take an aeroplane from Manchester to London, although that option was frequently used in the past. Electrification is a key part of the argument.

Mr Weir: The hon. Lady makes a good point. Whether electrification is greener than its alternative depends on how the electricity is generated, but that is an associated issue. However, she is right that the faster train journeys can be made, the more likely it is that people will use the train rather than travel by air. That is my point. Flying to London from Manchester or Birmingham no longer makes sense, but it does make sense to travel from Aberdeen by air unless something is done to speed up the train line. I appreciate that that is not easy to do, but the Government must look at the issue seriously.

My other point is about the high-speed rail network. The Government have announced their proposal to go with the Y route, which would run up the centre of England to the north-east and the west coast. It will speed up journey times and, if I understand it correctly, link up with the east coast line and provide a slightly faster journey time at least as far as Edinburgh. As it stands, however, although the proposal will considerably speed up rail travel to the north of England, it does not address the central problem of taking the line further north into Scotland. If the Government are serious about the issue, we must look at an extension of the line to ensure faster travel times from Scotland and encourage people away from the longer domestic flight routes. Unless we do that-and the same argument goes for the east coast-we will not get the green benefits that we hope for. As it stands, if I were to use the high-speed line to get home, I would probably have to change train twice to get to Montrose, and that will not significantly reduce the journey time.

Mrs Villiers: The hon. Gentleman may recall from the coalition's programme for government that we want a genuinely national network. Experience tells us that
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that must be delivered in phases as it takes some time. The ultimate goal, of course, is to take high-speed rail to Scotland. It would be interesting to hear whether the Scottish Government are willing to devote resources to that programme in the future. I have discussed the issue with them, and I hope that in the future they will consider whether they can devote some of their resources to aiding such a project.

Mr Weir: I am sure that the Scottish Government will do that. However, there is not much point in building a high-speed line if it does not link up with the rest of the network. At the moment, the high-speed line will run nowhere near Scotland. I understand that Network Rail had a proposal that would have taken the line into central Scotland. That would have made more sense, it would have linked central Scotland with the main high-speed network running south, and it would have provided the basis for an extension of the network further north. At the moment, as the Minister knows, the high-speed network comes nowhere near Scotland, and it will be many years before it gets as far as Edinburgh. The Government seem to take a London-centric view of the matter. If we were to tip things the other way so that the line ran south, the speed of journeys would increase faster and the green objectives of the Government and the Scottish Government would be met.

The Scottish Government have invested a lot in the railway in Scotland. I accept that that is their responsibility and that some of the work must be done in Scotland-there is no argument about that. For example, the Scottish Government opened a new station at Laurencekirk on the east coast line, although strangely enough the direct mainline services will not stop there, so people still have to get a train to another station to get on those direct services. ScotRail runs a good service to Edinburgh and Glasgow, but again, people have to change trains to get on to the direct line to travel further south. People going on business trips look for a direct service. New lines have been opened from Stirling and Alloa; there is a new line from the border and considerable improvements along the Paisley corridor. All those things have improved rail travel in Scotland, but we still need links to the lines that will take us to continental Europe through the Eurostar network. To do that, unfortunately we need to rely on the Government in this place taking action on the east coast line and the high-speed line.

My main point is to ask the Minister about the rolling stock for the east coast line, which is the responsibility of her Department. As the hon. Members for Newton Abbot (Anne Marie Morris) and for Hayes and Harlington (John McDonnell) pointed out, the new trains are vital to show that the Government are serious about investment in our railways and in the important economic asset of the east coast line. I appreciate that the comprehensive spending review is tomorrow, but I urge the Minister to ensure that the rolling stock is purchased and that a clear signal is given about the future of the line.

10.27 am

Andrew Gwynne (Denton and Reddish) (Lab): I am pleased to contribute to this important debate about the future of the rail industry, particularly as this is my first official outing as a member of the Opposition Front-Bench
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transport team. I also congratulate my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) on securing the debate today.

In recent years, a welcome consensus has developed around the importance of support for the railways, both the conventional and high-speed varieties. All parties recognise the important role that the rail industry must play in reducing the environmental impact of travel, and welcome the growth in passenger numbers that we have seen in recent years, to the point where more people travel by train today than at any point since the 1940s.

We need a system that works effectively and puts the needs of passengers, and indeed freight, at its core. We all want a clean, safe and efficient train network in the future, and one that is fit for purpose. The previous Labour Government were committed to providing that and, as my hon. Friend the Member for Hayes and Harlington (John McDonnell) said, we hope that the current Government recognise the need to continue the investment in the railways that our country so desperately needs. Given the comprehensive spending review tomorrow, we may well soon see how committed the Government are to the future of the railway industry. Like my hon. Friend the Member for North Ayrshire and Arran, I also welcome the lobby today by trade unionists and the TUC. We should remember that everyone is rightly concerned about the cuts that might be announced in the near future.

I would like to look at fares. The coalition's programme for government stated that they were

Will the Minister comment on reports from Channel 4 News over the weekend which speculated that we could face double-digit rises in train fares over each year of the spending review? It was reported that train fares are expected to be more than 30% higher by 2015, and industry sources pointed to a possible 40% hike in prices by 2015.

Media reports also suggested that the cost of a typical commuter season ticket between Brighton and London could increase from £3,104 a year to £4,260 by 2015, and between Swindon and London from £6,640 to £9,130. Does the Minister think that long-suffering train users will be willing to accept that?

Mrs Villiers: I would be grateful if the shadow Minister answered a question. Is he saying that if Labour had been re-elected, it would have cut rail fares?

Andrew Gwynne: I am very grateful to the Transport Minister for that, but of course it is my job to ask her questions. Labour is in opposition and I am asking whether she thinks that those kinds of speculative rail increases are fair on passengers.

Mrs Villiers: The hon. Gentleman should not believe all he reads in the papers. The coalition is committed to fairness on rail fares. The announcement on the fares formula for the next few years will be made on Wednesday in the comprehensive spending review.

Andrew Gwynne: I appreciate that, but it could well mean that some lines end up with a pricing of RPI-the retail prices index-plus 5%. That is particularly ironic, as the hon. Member for Lewes (Norman Baker), who is
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now a Transport Minister, was elected on a pledge in the Liberal Democrat manifesto on train fares for RPI minus 1%; and the Secretary of State, as the Minister has reiterated today, has previously said that he has made a commitment to fair fares.

Passengers will not pay more for less. If they see increasing fares alongside cuts to plans for new capacity and infrastructure, that could mean fewer people travelling by rail. What guarantees do we have that fare rises will be matched by infrastructure and capacity improvements? I appreciate that the Minister will be reluctant-perhaps unable-to add much today and we shall have to wait to see what the Chancellor of the Exchequer says in tomorrow's comprehensive spending review.

Franchising was mentioned. The Government's consultation includes an intention to impose a far more relaxed and flexible specification. Flexibility can be a good thing, but there is a worry that a hands-off approach could allow train companies to become too focused on short-term profit and cost cutting, rather than delivering the best service for passengers and encouraging greater use of the railway. Will the Minister give me assurances that that will not be the case and that sufficient specification to guarantee socially important services will remain?

It is encouraging that there is interest in rail franchise bids from not-for-profit, mutual or co-operative franchise enterprises. Indeed, I note that my hon. Friend the Member for Luton South (Gavin Shuker) has secured a debate on that topic in Westminster Hall tomorrow. However, there are still unfair barriers that prevent such bids from benefiting passengers and taxpayers, as we saw recently with the attempt by the Co-op through its Go! Co-operative initiative, which would have been the UK's first co-operative train operating company.

I shall refer briefly to some recent investments in rail. It is important to acknowledge, as my hon. Friend the Member for Hayes and Harlington and others did, the significant progress that the previous Labour Government made in the past decade in rebuilding the country's transport infrastructure after many decades of under-investment, which happened, to be fair, under Governments of all political persuasions.

We have completed the £9 billion programme to modernise the west coast main line, resulting in massive reductions in journey times, as I thankfully know from experience. It is now less than two hours from Stockport to London and, more importantly for me on a Thursday, from London back to Stockport.

Performance, capacity, reliability and safety levels throughout the rail network have improved significantly. High Speed 1 was up and running ahead of schedule, and the stunning redevelopment of St Pancras station proved to be a fitting terminal for high-speed trains to and from the continent. We delivered Britain's first high-speed rail line and set out plans for a new north-south high-speed rail network-points made by my hon. Friend the Member for Hayes and Harlington and by the hon. Member for Angus (Mr Weir).

We more than doubled investment in local transport from 1997, improving accessibility and helping to tackle social exclusion in local communities. By May 2010, investment in transport had reached its highest level as a proportion of national income for 30 years. In addition, Labour finally achieved what previous Governments had tried but failed to do, in securing a funding deal for
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Crossrail. That is one of the most ambitious transport projects of recent years and will add 30,000 high-value jobs to London in the first 10 years and add an estimated £20 billion to the UK's gross domestic product. We also set in place the £5.5 billion upgrading of Thameslink, which will introduce new cross-London routes and, with longer, more frequent trains, will allow for much-needed capacity, more seats and less crowding on key routes in the capital.

The northern hub made it an ambition over the next 20 years to increase the number of train services in the north, including cities such as Newcastle, Liverpool, Manchester, Leeds and Sheffield, by 40%-700 more trains a day-making it possible for 3.5 million more passengers to travel by train every year. Those innovative and challenging projects were either delivered or planned. We need to continue that long-term focus on infrastructure and service if we are to provide Britain with the transport system that it needs to compete in the new global economy.

I wish to raise some specific issues with the Government. Transport cuts so far have totalled £683 million. That includes £108 million coming from Transport for London and £50 million from the better stations programme. I declare an interest, as that had a particular effect on Stockport station, which affects some of my constituents. The plans for hundreds of extra carriages to ease overcrowding have been put on hold.

In opposition, the Conservatives criticised the Labour Government in their 2009 rail review document, which recognised the need for extra capacity but accused us of not taking the problem seriously. There is a need for more trains, and I ask the Minister to tell us what the Government will do to alleviate that problem.

Can the Minister give me an assurance on electrification-an issue mentioned by my hon. Friend the Member for Bolton West (Julie Hilling)-both of the north-west routes and the great western main line, which are important projects to both regions? Likewise, can the Minister confirm that the Thameslink replacement of rolling stock will go ahead, which would in turn lead to the cascading of trains to the great western main line and the north-west routes?

The Government owe it to London's business community and the travelling public to be open about their plans for Crossrail. Will the Crossrail project be delivered in full, as proposed by the previous Labour Government? Will there be any cost cutting in areas such as engineering, which could lead to shorter platforms and less capacity? Will the number of stations on Crossrail remain unchanged?

May I ask also about the bonfire of the quangos that we saw last week? What plans does the Minister have for Passenger Focus and what will its functions be now? How will disabled passengers be heard effectively now that the present Government have abolished the Disabled Persons Transport Advisory Committee? The input of disabled passengers should be important, and that body provided a unique opportunity for both disabled people and industry to represent their case to Government.

The Government need to look beyond the period of the comprehensive spending review. We need a long-term vision for rail and we need to deliver these projects to build on our ambition for a world-class rail service in this country. The previous Labour Government left the rail network in a far better condition than we found it
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in. Rail passenger numbers increased by 40% in the past 10 years, and punctuality and quality of service improved steadily over that time, too. That is not an inheritance that the current Government should squander.

10.38 am

The Minister of State, Department for Transport (Mrs Theresa Villiers): I congratulate the hon. Member for North Ayrshire and Arran (Katy Clark) on securing the debate, and congratulate the shadow Minister, the hon. Member for Denton and Reddish (Andrew Gwynne), on his recent appointment and his first address from the Front Bench.

I thought that it would be useful to consider the questions that the hon. Lady helpfully repeated at the end of her speech. First, she asked whether Sir Roy McNulty's work is informing the comprehensive spending review. Neither his interim report nor his final report have yet been published or finalised, but I can assure the hon. Lady that Sir Roy has kept my right hon. Friend the Secretary of State and officials at the Department for Transport informed of his work, so that is feeding into the decisions being made on the comprehensive spending review. The early draft work, as it has been going ahead, has helped us to feed into the Treasury process and the CSR.

The hon. Lady also asked whether I would write to the executives of the rail operating companies about remuneration.

John McDonnell: Before the Minister moves on from the McNulty report, I point out that I asked whether she would meet the rail unions to discuss the McNulty report when the interim report is published in November.

Mrs Villiers: I was going to come on to that, but I am happy to answer it now. I have slight qualms about this while the industrial action is continuing on the London underground, because I am concerned about the huge inconvenience that that is causing passengers. As the hon. Gentleman is keen for me to meet the unions, I am happy to do that, but I would still urge them to find an alternative way to resolve their dispute on the London underground.

John McDonnell: The two issues are unconnected. We will make sure that the right hon. Lady can travel on a non-strike day.

Mrs Villiers: I suppose that I am particularly sensitive about the issue because the day on which I was due to meet the Transport Salaried Staffs Association coincided with a strike day so, for all sorts of reasons, it seemed inappropriate to go ahead with the meeting.

Turning to remuneration in the rail industry, the level of pay across the industry clearly needs looking at in the context of the McNulty review. I have discussed remuneration levels with the train operators, and I expect that dialogue to continue.

The hon. Lady's third question was about introducing a windfall levy for the train operators. The Government have no plans to do that. Her fourth question was whether I would meet her and colleagues to discuss those who-tragically for them-were made redundant by Jarvis. Yes, I would be happy to do that.

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On the franchising review, the hon. Lady asked specifically about a clause on ScotRail and she will appreciate that that is a matter for the Scottish Government, but she also asked a wider question about the approach that the UK Government will take in relation to the franchises for which we are responsible. I am not convinced that we should have a blanket withdrawal of that type of indemnity clause; there is a place for such clauses in appropriate circumstances. She then asked whether the McNulty review, and the Government considerations flowing from it, would look at an expanded role for the public sector and additional nationalisation. That is certainly one of the options that Sir Roy will consider.

The hon. Lady also asked about ticket offices and the loss of guards. In many cases those are matters for those operating services, but the overall approach in relation to the franchises is governed by the ticketing settlement agreement. We need to look at reforming that, to ensure that we get it right, but it is obviously important to consult properly with the communities affected by the decisions.

The hon. Lady also talked about the strike action on the London underground and the loss of guards. I am convinced that we need to modernise working practices in the rail industry. I am concerned, as I already said to the hon. Member for Hayes and Harlington (John McDonnell), about the damage to the London economy caused by the strike action that is taking place. We have to recognise that the way in which people buy tickets has changed, and that rightly will impact on London Underground's decisions about the deployment of its staff.

Julie Hilling: Does the Minister consider important the feeling of safety of passengers travelling on the underground, and on the rail network generally? Stations can often be very lonely, scary places for all rail users but particularly for women travelling alone. The fact that we have staff in ticket offices and on platforms increases both the feeling of safety and the actual safety.

Mrs Villiers: Forgive me; I am probably trespassing on devolved matters because the relationship between London Underground and its employees is of course a matter for which the Mayor is politically accountable. I have to say, however, that of course I am concerned about security for women using public transport-I am a woman myself-but there is a real argument for saying that staff deployed on platforms are more valuable to passenger security than those stuck behind ticket office windows. I am not sure, therefore, that the security issue can justify the retention of ticket offices. Security focuses on whether people have access to staff in stations, which is not the same as whether a ticket office is open.

I shall go on to some of the wider issues addressed by the hon. Member for North Ayrshire and Arran. I would like to assure the House that the coalition has put rail at the heart of its strategy for transport, in terms of re-energising our economy, reducing carbon emissions and addressing congestion on our roads. I welcome the support shown today for taking into account the concerns of both passengers and rail freight-a point rightly made by the shadow Minister. Much will depend on the
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announcements made tomorrow in the spending review. It is clear that transport will not escape the pain that is the unfortunate consequence of the deficit that we have inherited from the previous Government, but I emphasise that the Chancellor has made it clear that he recognises the economic benefits of investment in infrastructure to support economic growth, and that he recognises in particular the importance of investment in transport infrastructure.

The shadow Minister asked me about Crossrail. I am sure that he welcomed, as I did, the support expressed by the Chancellor at the weekend for the Crossrail project. We have also expressed clear support for Birmingham New Street, we are taking forward plans on high-speed rail and we are working very hard on Thameslink. Our focus in all those projects is to ensure that we value-engineer costs down to keep the projects affordable and deliverable within the spending envelope that is now available.

John McDonnell: I emphasise that, although there is a commitment to the Crossrail project overall, people are concerned about the paring down of the project and the missed opportunities that might result from that. For example, in my own constituency, Hayes and Harlington station is to be redeveloped. If there is any paring down in the investment of such station projects, we will miss the chance to include modal transfer opportunities and to ensure the integration of our local transport network.

Mrs Villiers: Both the Secretary of State and I have repeatedly talked about our support for delivering the whole project, and it is worth bearing in mind the excellent work done by the team behind Crossrail to find lower-cost ways to deliver the same transport benefits, and to deliver the whole project.

It is true that there has been significant good news on the railways in recent years. Since privatisation there have been some striking successes, with train punctuality now at record levels and a significant increase in the number of passenger journeys. Also, the number of miles travelled on the railways has gone up by 75%. Since privatisation, therefore, a story of managed decline has been transformed into one of significant growth. Although the recession has subdued that trend to a degree, we expect it to resume once the economy recovers.

So, that is some of the good news about the UK's railways. But the downside is that the cost of running the railways did rise dramatically under our Labour predecessors. If we are to deliver the improvements to services and capacity that hon. Members have called for today, and that passengers want, we have to find a way to get costs down. The disastrous deficit left for us by our predecessors makes it essential that we drive out cost inefficiencies on the railways, and we owe it to passengers to do our very best to get costs down.

Andrew Gwynne: Does the Minister not also recognise that it was the investment by the previous Labour Government that led to the very improvements that she has just championed as a cause of privatisation?

Mrs Villiers: I certainly recognise that the previous Government invested in the railways, and we would expect investment to continue under the current Government, given the huge importance of the railways
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to our economy and to our climate change ambitions. I covered the fares issue briefly in response to the shadow Minister, but I shall repeat my comments on it. The coalition is committed to fairness in rail fares, but the reality is that the crisis in the public finances means that we might have to take some difficult decisions on fares, as in other areas. As I have said, I am unable to give further details on the fares formula until it is announced for the coming years in the CSR on Wednesday.

There has been much discussion about the McNulty process, which is focused on trying to understand why the cost of the railways is higher in this country than in other parts of Europe, and I am sure that today's discussion will contribute to and inform that process. It is important that a range of options be considered, and as part of our drive to deliver high-quality rail services at an affordable cost we need to consider how we reform Network Rail. Not even the levels of taxpayer support over recent years have succeeded in turning the company into the customer-oriented organisation that train and freight operators want. That fact was driven home when the rail regulator published the figures, to which the hon. Member for North Ayrshire and Arran referred: the potential 40% efficiency gap between Network Rail and European comparators. I acknowledge that there are always problems comparing Network Rail precisely with different railways in the rest of Europe, but these things should sound a warning bell that there is an issue to be addressed. If we are to be fair to passengers and the taxpayer, we need to find a way to make Network Rail more efficient.

Katy Clark: I think that it is accepted on all sides that there are issues to be addressed; indeed, that was why the previous Government set up the review in the first place. However, the Minister will have listened to what I said about the concern about the methodology used in the ORR report. Is she willing to hear further representations about that from those in the industry who have concerns? Given the publicity that the issue has had in the press, there is clearly a view that the Government will listen to the ORR report rather than taking a more forensic look at how other European railways operate.

Mrs Villiers: Of course I would be happy to accept further representations. One reason why we have continued with the McNulty study, which was set up by our predecessors, is precisely to find the true picture of the cost of Network Rail. The work done by the ORR is valuable, but it is just one point of view. Sir Roy is drawing on views and research from across the rail industry, including internationally, to find out what the facts really are.

Whatever reform we ultimately select, we will need to stress-test it in relation to the interests of freight operators. It is vital that we get the right balance between the interests of the railways' passengers and freight customers.

In looking at the options for reforming Network Rail, it is interesting to look at what has been done north of the border. Network Rail has decentralised its Scottish operations, and accounting separation has been introduced. We need to look carefully at whether such decentralisation might improve Network Rail efficiency in other parts of the UK.

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My officials are working with Merseytravel, the passenger transport executive for Merseyside, to explore whether to devolve the running of the track used by the Merseyrail franchise so that it is wholly governed by local decision making. That project could help to provide an important benchmark against which to measure Network Rail's performance.

Another key issue is whether further contestability could be introduced for some of the work now carried out exclusively by Network Rail. Again, there is a Scottish example that is worth considering. In 2006, for example, Transport Scotland opened up about £20 million of rail funding for smaller-scale enhancements at stations and asked for offers from Network Rail and the train operators. By the end of the bidding process-if I recall correctly, this was under the Labour Administration- £19 million of the £20 million available was allocated directly to the passenger operators because their bids were judged to be better than Network Rail's. A similar approach has been used for the national stations improvement plan in England.

The hon. Member for North Ayrshire and Arran talked at length about franchise reform, which is the second limb of our work to improve the railways' performance for passengers and to get better value for money. The Department for Transport has recently concluded a consultation, and we are considering the responses. As I assured the hon. Lady during her speech, we want to encourage greater private sector investment in return for potentially longer franchises. We would continue to impose legally binding contractual obligations in franchises, including on the scale of the investment promised. We hope and believe that longer franchises will help us to deliver the investment and improvements that passengers want, including better stations. Longer franchises should also make it easier for train operators to invest in long-term relationships with Network Rail and their work force, which are crucial to running the railways efficiently.

We want to move to a system in which franchises are less heavily specified. In response to the shadow Minister's questions, however, I can assure him that we will continue to set demanding outcomes for train operators to achieve in terms of the quality of service that they deliver. We will have demanding and legally binding requirements to protect the interests of the passenger and the taxpayer. The difference is that in setting those outcomes, we propose to give the people running the railway more flexibility over how they deliver them.

Katy Clark: The Minister will recall that, in my initial contribution, I quoted the Government's consultation document, which said that European procurement law referred to 15 years and that that was why a starting point of 12 to 15 years should be the standard length of franchises. Does she not accept that that rings alarm bells? Will she explain why there is a link between European procurement law and her starting point?

Mrs Villiers: Obviously, the UK Government are bound by European procurement law to procure public contracts in a fair and objective way. In the context of rail franchises, it sets a top limit of 22 and a half years for contracts that involve investment. The reference to European procurement law was included in the consultation document because it governs the maximum that we can
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deliver in terms of rail franchises. Throughout the process of negotiating franchises, however, we will look to secure the best deal possible for the taxpayer, and we will ensure that we continue to protect the passenger interest. Train operators that do not comply with the obligations we impose on them will face sanctions, which, in extreme cases, could include removing the franchise.

In the few minutes that I have available, I want to talk a little about the inter-city express programme in response to the hon. Member for Angus (Mr Weir). I can assure him that we have no plans to scrap through services to destinations such as Aberdeen and Inverness, which he mentioned. As he said, the report produced by Sir Andrew Foster referred to one of the alternative strategies for the IEP, which involved ending those through services. As I said, however, we have no plans to do that. We recognise the economic value of such services, and we have certainly received strong representations from the Scottish Government and Scottish colleagues about the importance of retaining them.

Mr Weir: Will the Minister give way?

Mrs Villiers: I am sorry, but I have only two or three minutes, and I want to respond to an awful lot of points.

The hon. Gentleman and others talked about the electrification of the railways. We included our support for electrification in our programme for government and we recognise its benefits. It will support our sustainability objectives and improve services for passengers.
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It will become more and more of a greener option as we decarbonise the electricity-generating network. The pace at which we can deliver electrification will obviously depend on affordability and the priority of tackling the deficit. Much will depend on the comprehensive spending review announcement tomorrow. Of course, these decisions are also linked with the work on the high-level output specification rolling stock programme, Thameslink and the future of the IEP. An announcement will be made on those in due course.

Lastly, in the brief time that I have, I want to reiterate the Government's support for high-speed rail, which is a vital upgrade for our transport network. We recently announced our support for a Y-shaped network, with a line to Manchester and trains running on from there to the west coast main line and Scotland, and another line splitting off at Birmingham and going through the east midlands and South Yorkshire to Leeds, with trains, again, running on to the existing network and destinations further north. We will consult on that shortly. We will also have regard to the communities affected by the line's local impact before taking final decisions on whether to go ahead and what route to take. We appreciate that realistically these lines can be delivered only in phases, but our ultimate goal is to deliver the national network, for which I am sure there will be cross-party support.

Much has been achieved since privatisation, but we need a fresh focus on reducing costs in the railways that we already have. We need a drive to deliver high-speed rail because of the huge benefits that it can provide. The coalition is determined to meet both those challenges, and I welcome the representations that I have received on them today.

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Historic Towns and Cities

11 am

Eric Ollerenshaw (Lancaster and Fleetwood) (Con): I am grateful for the opportunity for this debate on historic towns. I understand from some hon. Members that there is debate about what constitutes an historic town-I see my hon. Friend the Member for Pudsey (Stuart Andrew) is present; but definitions are definitions.

I spoke in a previous Westminster Hall debate about the economic development of seaside towns, and that enabled me to discuss some of the problems of the town of Fleetwood, in my constituency. Today's debate gives me the opportunity to raise the issues that face another large part of my constituency-the city of Lancaster-and especially the issues concerning its economy and future growth prospects. The debate will also give others a chance to talk about the economies of their constituencies, and to raise areas of concern with the Minister.

I want to cover four main themes in my speech: heritage versus development; transport; tourism; and more general support for business and economic regeneration in Lancaster and the surrounding area. I am well aware that some of those issues are not the direct responsibility of the Minister, but they are all cross-cutting subjects that will ultimately affect the future of Lancaster, and I hope that you will give us some latitude, Mr Dobbin.

Lancaster's heritage is what makes it unique. It has an ancient history, which is glaringly obvious in the fabric of its buildings and the layout of its roads. That is an economic strength, because it feeds tourism, but it can also prove a drawback when it comes to developing the city. There is an obvious tension between preserving the ancient and historic elements that give the city its character and soul, and allowing much-needed development to take place, so that residents can have access to 21st-century facilities and business can expand and create jobs. Often, those tensions can be resolved easily, but equally often positive proposals for change can be stymied. I want to focus on one example.

Lancaster lacks a large-scale department store development, which means that local people and outside custom must travel to Preston, Manchester or, increasingly, Kendal, to obtain access to the types of stores that residents of other cities take for granted. That means that we do not have the trade that other cities have. We pride ourselves on the individuality of our small and family-owned shops, which is one of the strengths of the Lancaster shopping experience, but there is a lack of balance in the retail offer that is available to attract outside custom. Accordingly, proposals were put forward, by a company called Centros, to develop land owned by Lancaster city council and Mitchell's brewery, Lancaster's own brewery, for the creation of a new shopping complex. The complex would include a 97,500 square feet Debenhams store, a residential area, improvements to local theatres and an enhancement of the canal-side environment. That represents an investment of £150 million, and the possibility of 1,000 extra jobs for the area.

There has been opposition to the scheme, as will always happen. It is mainly co-ordinated through the campaign group Save Our City, but in general Mr and Mrs Lancaster have the feeling that something needs to happen. The developer took two years to consult extensively
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on the project. I understand that English Heritage was difficult to contact and that it did not engage with the consultation until the end of the process was at hand. However, it submitted its views, and at the end of the developer's consultation the plans were redesigned, to take account of concerns that were raised, including initial concerns that English Heritage had highlighted.

After that redesign stage English Heritage seemed happy, and accordingly decreed that the plans could be dealt with at the local level. The council then set aside two whole days for the planning application to be considered, at the end of which, in October 2008, the plans were passed, with a large majority-15 to four. Lancaster city council has continued to support the project since. I should point out that there is no overall control on the council. In fact, there are six political groups, and five in the cabinet, so it may be imagined how difficult it is to reach any kind of agreement at any time.

Most of the site that is due to be developed is flat already. Almost half the land that is designated for development is currently car parking space. However, part of the Mitchell's brewery site is very old. It has 18th-century buildings, which would, at one point, have been of significance. However, the decision of the Secretary of State, on the initial advice of English Heritage, was not to list any of the buildings. It was considered that Mitchell's brewery was "too altered" and not of sufficient architectural significance

Moreover, the adviser's report continued:

It added:

However, at the last minute-and hon. Members may see where I am going with this-at the end of that drawn-out process, almost five years after the plans were first conceived and after the local council had approved the development, English Heritage performed a U-turn. That seems to have been on the basis of a new concern lodged by a member of the campaign group Save Our City and evidence submitted by regional advisory staff at English Heritage. English Heritage subsequently submitted a new report to the then responsible Minister, who ruled that the plans must be put on hold.

What precisely had changed? The developers have been trying to establish the exact reasons for the U-turn ever since and are seeking a way forward. My predecessor as Member of Parliament for Lancaster, who is now my hon. Friend the Member for Wyre and Preston North (Mr Wallace), sought information from the Department for Culture, Media and Sport through the Freedom of Information Act. However, the Department has been less than forthcoming. The information released, especially the report to the Minister, is heavily redacted, which provides us with little opportunity to understand what actually went on.

To be fair, I understand that English Heritage is now engaging with the developers again, but also that it is undertaking a new analysis of the site, brick by brick, with no end to the process in sight. I sometimes wonder
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whether, if English Heritage had existed in 1945, every bomb site in Britain would have been declared an historic site. Obviously, genuine heritage needs to be protected. It is not in the interest of the city council to do anything to detract significantly from the beauty and history of its built environment. That would only lessen the tourism economy and detract from the character of a beautiful city. However, when a local council and local businesses come up with a sensible scheme that would retain the character of a city but also give residents access to better, modern facilities, and provide regeneration and jobs, surely it goes against the grain of our new localism agenda to allow central Government to veto those plans. Moreover, if English Heritage has the power to interrupt the plans at the last minute, surely it must have a responsibility to be open about why it has made such decisions and to complete whatever other surveys it feels are necessary as quickly as possible, so as not to delay further such an important scheme.

I have one other point to make on the matter before I move on. If English Heritage is to have resources pared back as part of the comprehensive spending review, will the already slow, drawn-out out process of its involvement slow down similar applications in future? This is a time when we need private investment and jobs, not least in the north-west of England and certainly in Lancaster.

I have mentioned the obvious benefit that tourism brings to historic cities. Lancaster is no different. According to the council's website, the visitor economy is worth some £260 million a year to the area within the city council boundary. Many other cities have a focal point for their tourism industry: for Chester, its Roman history and walls; for York, the minster; and for Ludlow, its castle. Lancaster, too, has a castle, which is historically significant and contains the only remaining part of a building that was constructed by Henry IV; it is still owned by the Duke of Lancaster, Her Majesty the Queen.

However, the castle is not as big a tourist attraction as it could be. Large parts of it are still used as part of the oldest functioning prison in the world, leased by the Ministry of Justice from the Duchy of Lancaster. Courts also still operate inside the castle. The Prisons Minister has recently announced his Department's wish to terminate its lease of the castle and it is suggested that the Duchy, together with the local council and other interested parties, can operate it as a more highly specialised tourist attraction. The council is certainly keen that that should happen, having sought such an outcome for several years and having included the possibility in its tourism strategy document of a few years ago.

Once again, we can see the problem of tension between the old and the new, although in this instance both the status quo and a change of use for the building have economic consequences for the city. If the prison is closed, many prison staff will lose their jobs or have to relocate. The Prison Service will lose one of its best performing prisons, despite the ancient nature of the building. At the same time, there is a degree of scepticism about where the funding will come from to remove a prison from an ancient castle and to terminate a lease-a lease from the duchy-and, in the present financial climate, about whether the county or the city council will have the wherewithal then to convert it into a major
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tourist attraction. We await events, but that is why I am trying to talk to the duchy, the Ministry of Justice, the council, prison employees and others to find the best way forward. I hope I am wished some luck.

Transportation, too, affects a lot of historic cities, and has a role to play in economic development. The narrow lay-out of streets in historic towns was often planned centuries ago, with little regard for modern modes of transport. Accordingly, transport links and road congestion are other problems faced by places such as Lancaster.

Often transport patterns have changed. New towns and cities have sprung up in recent decades, and new housing estates or industrial sites have been built, meaning that journeys are being made to places to which there was no need to travel in the past. Lancaster suffers particularly badly from traffic congestion.

One of the main contributors to the problem is the heavy vehicles travelling to Morecambe and the port of Heysham, because there is no link between the port and the M6. Traffic comes off the motorway and through Lancaster city, forcing queues to form as traffic waits to get over the only two bridges linking Lancaster and Morecambe en route to the port of Heysham. Plans for a link road have lain on the drawing board for some 50 years-but there has been no action. Now the plans for the link road are part of the proposals put on hold by the Department for Transport in the run-up to the spending review.

The link road has the support of the vast majority of businesses in the area and is championed by Lancaster chamber of commerce. I support the road, as does my next-door neighbour, my hon. Friend the Member for Morecambe and Lunesdale (David Morris), through whose constituency the road would run. The road is important for future growth in Lancaster and, without it, links to the city are poor and businesses will continue to suffer. Moreover, the port of Heysham is to be improved, with its connections to the Isle of Man and Northern Ireland, and there is the possibility of a new nuclear power station being built at Heysham, so we need the road to help such expansions take place. Those expansions should lead to new jobs for the area. I also hope that in the not-too-distant future the scheme will be approved and we will get our link road, after such a long wait.

However, the link road would not be a panacea for traffic congestion. Local transport movements of smaller vehicles would still mean congestion, especially at the choke points approaching the bridges. Local transport schemes need to be funded to allow better car movements-again, there will be tension between planning and keeping the character of the city centre. We need to encourage a modal shift to buses and other forms of sustainable transport. Once again, reduced congestion can only help local business.

I turn now to specific regeneration and business support measures. I welcome those Government decisions that are likely to help small businesses, such as a further extension to small business rate relief and a tapered drop in corporation tax over the next few years. They are welcome and will encourage growth across the city.

Lancaster has one of the highest proportions of public sector workers in the country, and the announcement on the comprehensive spending review tomorrow will
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lead to a reduction in the public sector work force. So, I am pleased that the Government have established the regional growth fund, which will create a £1 billion pot to help the transition from dependence on public sector jobs to the private sector. The fund will be vital in supporting private enterprise outside London and the south-east. I hope that Lancaster and Fleetwood, and the surrounding area, will get their fair share of the support package.

That leads me to my final point. I am pleased that the Government have stuck to their promise to abolish regional development agencies. Those bodies were bureaucratic and, in the north-west, a great deal of their funds ended up in the big city conurbations of Manchester and Liverpool. With respect to those cities, it too often seems to us in Lancaster that, for many people in London, the north-west seems to end on the outskirts of Manchester and Liverpool.

The new local enterprise partnerships, therefore, should allow smaller, more focused efforts at development, designed around the needs of more homogeneous communities. I know that there are a number of bids in Lancashire at the moment and I hope that we will end up with an LEP model that achieves the aim of bringing adequate, properly targeted investment into our area while providing suitable economies of scale.

In conclusion, Lancaster knows, as does the rest of the country, that it must face up to the deficit legacy of the previous Government. It knows that Government support, in terms of investment, will be tight. So please allow Lancaster, when it believes it has the local wherewithal, to encourage new investment and to protect what is best in its historical heritage. Please do not allow Government agencies and quangos to get in the way.

11.14 am

Hugh Bayley (York Central) (Lab): I congratulate the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) on securing this important debate. I listened with care to what he said.

Striking a balance between preserving heritage and generating jobs for people in the present day is important. However, I do not take the view that heritage is an obstacle to development. If I look at my own constituency, the city of York, I see the valuable built heritage as an enormous economic asset.

York is especially rich in built heritage. The Multangular tower is, I think, the only extant Roman building in Britain that still rises 10 metres above the ground. The minster and city walls were mentioned by the hon. Member for Lancaster and Fleetwood. York has mediaeval streets such as Shambles and Georgian streets such as St Leonard's place, as well as Victorian architecture. Great museums, such as the National Railway museum, the Jorvik Viking centre, the Castle museum and the Yorkshire museum, and the race course all attract visitors to York in their millions. In the last year for which I have figures, 2008, 7.1 million tourists visited York-2009 figures will be out soon-and they spent £450 million in the city, creating thousands of jobs for local people.

Those historic assets, when combined with extremely good schools, two excellent universities and York college, in a brand-new building, have made the city of York a magnet for investment. There are new industries such as those based on bioscience, which have grown out of
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expertise at the university of York campus. Engineering, which still employs thousands of people in York, draws on the city's long railway heritage, and there are, as I mentioned, thousands of jobs in tourism and retail.

The York economy performs particularly well. Almost 80% of the working-age population in York is in employment, compared with less than 75% nationally. Only 6.8% of people in the city of York have no qualifications at all, compared with more than 12% nationally. More than a third of the population in York-36%-have a national vocational qualification of level 4 or above, compared with only 29% nationally. Only 4% of young people in York are not in education, employment or training, compared with some 14% nationally.

In terms of business growth, York again does well. Between 2000 and last year, the number of businesses in York grew from 4,645 to 5,820. No one could possibly say that York's exceptionally rich heritage is an obstacle to economic activity or development. In fact, it is an asset.

There is a citizen-led campaign in York for the city to gain UNESCO world heritage status, which I support. There is no evidence that Edinburgh castle and the Royal Mile have suffered as a result of the city obtaining UNESCO world heritage status. I hope that the York bid will get support from York city council and from the Department for Culture, Media and Sport. It would in no way interfere with development, because York and its planning authorities have to safeguard the heritage whether or not we have UNESCO world heritage status.

When the developers were digging the foundations of the Coppergate site 30 years ago, they uncovered Viking Jorvik. Far from demanding money from the Government to dig the site, the York Archaelogical Trust made the dig a commercial success, in the same way in which the Jorvik museum is now a commercial asset to York as well as an important guardian of the city's rich historical heritage. The site draws visitors to the Coppergate area, which is a shopping centre as well, so it is good for business, too. The same is happening in Hungate. The Archaeological Trust is currently digging the site in a way that is compatible with development.

York's historic assets, such as the minster and the National Railway Museum, are treasures of national and international importance. As such, they need support from national Government. I welcome the decisions that were taken in the Government's quango cull this week not to get rid of the independent status of the National Railway Museum and, particularly, not to merge English Heritage and the Heritage Lottery Fund, which are two bodies with separate roles. English Heritage has a regulatory role and makes grants available from public funds, whereas the Heritage Lottery Fund makes grants available from lottery receipts, and we need both bodies. I warmly welcome confirmation of the Heritage Lottery Fund's grant of £9.7 million towards the restoration of York minster's great east window, which is the largest mediaeval work of art anywhere in the world. It is a Yorkshire icon and has been for centuries. It will cost some £25 million to restore, and our generation must not fail to maintain an international treasure with the status of York minster.

Yorkshire Forward had promised two substantial grants to heritage bodies in York. Some £5 million had been pledged towards the cost of re-displaying the
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exhibition in the National Railway Museum's great hall-which has not been re-displayed since the museum was first built-and £1 million was to go towards restoring the minster's great east window. As a result of the Government's decision to abolish regional development agencies, those grants were withdrawn. Although I do not want to get into an argument now about the benefits of regional development agencies today, I do want to say to the Minister that if a vehicle for distributing resources to generate employment is going to change, which it is, it is important that the new mechanisms recognise the importance of heritage as a generator of employment, and that there are times when grants need to be made to support heritage because of the economic and employment consequences of so doing.

I know that we live in straitened economic times, but there is much that the Government can do to support the valuable heritage of historic towns and cities such as York that does not necessarily cost a fortune. Sir Ron Cooke, a former vice-chancellor of the university of York and a fellow of the Royal Geographical Society, recently wrote the interesting document, "Downtown York: a practical manifesto". Although I do not expect the Minister to read it because I know that mountains of paper go across ministerial desks, I commend it both to his officials and to officials in the Department for Culture, Media and Sport. There are some big ticket items such as major economic developments to which the Government would have to make a contribution. The York central site, for instance, is a large one-it is probably two thirds of the size of the area within York's city walls-behind York station, bounded by railway lines with difficult access. It is a huge development site adjacent to the city walls, which provides enormous opportunities for York's continued economic development. Without some Government funding for access roads, for instance, that development will not take place.

In his paper, Sir Ron Cooke says:

He says that those streets are the stage on which everyone plays. He makes the point that through planning decisions, we sometimes undermine or wreck that very special ambience. In the 1960s for example, some concrete and glass buildings-thankfully, only a few-were built in the centre of York. We recently gave permission for a rail engineering firm to build a block that overshadows the city walls. Those planning mistakes should not be repeated, as they undermine what is special about York and what draws investment to York.

Sir Ron Cooke also mentions signage. We litter everywhere with street signs. Sometimes, a big illuminated concrete or stainless steel monstrosity is erected in the wrong place. There is one such sign at the end of Shambles, which is the prettiest mediaeval street anywhere in Britain. The signs can be taken down; they are not needed. The streets of York were not built for motor cars, and most of them are pedestrianised anyway, so cars do not go up and down them. If a bollard is really
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needed, we could put up something appropriate that is made of cast iron rather than concrete. Such things do not cost a fortune. We could set up a committee to plan in a different way. Given that York and other historic cities are such valuable places for running businesses, developers tend to want erect buildings that are in keeping with the surroundings.

I know that many other hon. Members want to speak, so I will conclude. I am grateful to the hon. Member for Lancaster and Fleetwood for obtaining this debate and giving me the opportunity to say a few words.

11.27 pm

Bob Russell (Colchester) (LD): I congratulate the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) on calling this debate. However, my sentiments and sympathies are more with the hon. Member for York Central (Hugh Bayley), which is perhaps not surprising, given that I represent Britain's oldest recorded town. For the record, it was the first capital of Roman Britain when London was just a few huts on the mud banks of the River Thames.

When we talk about historic towns and cities, we must recognise the need for central Government. They cannot be left to the local council of the day. We are, after all, today's custodians of yesterday for tomorrow. Short-term, quick decisions that are made can have a lasting legacy of the wrong sort. I say thank goodness for English Heritage. None the less, I wish that it had more powers in the decision-making process rather than had its powers weakened. Often, it takes a wider view. Is it right that a local authority should, to all intents and purposes, be lumbered with the financial consequences of maintaining national heritage? Colchester has the largest surviving Roman walls of any town or city in this country. They go back some 2,000 years, and they desperately need £500,000 to maintain them.

Colchester has applied for world heritage site status. It deserves such recognition not only in view of its status as the first capital of Roman Britain but because, in December 2004, the remains of the only Roman chariot-racing circus, or stadium, were discovered. The circus would have been a massive structure, accommodating 16,000 people in an all-seater stadium. We are lucky that the Victorians who designed the Colchester garrison in the mid-1850s left a huge expanse of greenery between the barracks to the east and the barracks to the west without even realising that they were doing so. The barracks have now moved out to the new barracks site and the standing requirement in Colchester for planning is that there must be an archaeological dig. In the dig at that site, the circus was discovered.

Colchester has a pre-Roman history. It was the home of the Trinovantes, the local Celtic tribe. The Romans invaded in 43AD and it was in the ancient British settlement that was located two miles to the south of modern Colchester-if we can call a Roman town "modern"-that eight Celtic kings offered their surrender to the Romans.

In 60AD, Colchester had a visit from Queen Boudicca, ruler of the Iceni tribe in Norfolk, who destroyed the town. In those days, the town, which subsequently became a Roman city, had a population of 10,000, a huge figure for that time. Remarkably, Colchester is the
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only Roman city that today does not have city status. When I queried that at the time of the millennium city appeal and the golden jubilee city appeal, I was advised that the only person who could remove city status once it had been granted was the head of state. The head of state who granted city status to Colchester was the Roman emperor. There is no record from the subsequent 2,000 years of the head of state ever withdrawing the title of "city" from Colchester and I put it to you, Mr Dobbin, that justice demands that we should have that city status reinstated.

We have to be careful with our historic towns and cities. I can show people around my town and show them that the Roman street grid pattern still exists today. The high street is the Roman road-people can see that it is still straight. Unfortunately, in the early 1970s in a street parallel to the high street, the "experts" said that the street pattern ought to be broken up. Consequently, a street that had stood for nearly 2,000 years-or rather the line of that street-has now been obliterated by a new shopping precinct, because that is what the "experts" said should happen in the early 1970s. However, about 10 years ago other "experts" said that that was the worst thing that had ever happened to Colchester, so we have to be careful with "experts".

We are also a Saxon town. In fact, the tower of Holy Trinity church was built by the Saxons before the Normans came and it was built out of Roman remains. Furthermore, the Norman castle, which is vastly superior to any other castle that still remains in Britain and indeed is the largest Norman castle in Europe, was also built largely out of Roman remains.

I mention the Norman castle because it also needs loving and regular care and attention, as do the Roman walls, the Roman circus and Gosbecks archaeological park-or rather, Gosbecks would be an archaeological park if the Heritage Lottery Fund had coughed up the money that was sought in the park's application to achieve such status.

We cannot expect a local authority to fund nationally acclaimed historic tourist attractions. So I am making a special plea that we need to provide national funding for such attractions. However, it is quite interesting that the last Government recognised that tourism had an important role and it provided millions of pounds, through the Arts Council and urban regeneration funding, for the arts. In the case of Colchester, what they thought would make a great tourist attraction was not all that Roman or Norman heritage, nor the fact that Colchester was one of the last major scenes of the English civil war-during the siege of Colchester, Colchester lost more lives within the Roman walls than it did during the two world wars. No, it was decided that what Colchester needed was not something to do with history but rather a visual arts facility to promote contemporary Latin American art. Such art is a subject that the people of Colchester constantly talk about-actually, I think not.

The original project price of that facility was £16 million. Today, the construction of the facility is running approximately four years late and £8.5 million over budget. I recognise that that money came from different pots, but I am criticising the previous Government for channelling it through "culture" when, in the case of Britain's oldest recorded town, it should have been channelled through "history" and gone into the town's
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history. If that £25 million had been spent on the various Roman and Norman sites that I have mentioned, it would have been far better spent.

So that is where we are. I want to conclude by referring to a relatively small part of the history of Britain's oldest recorded town. The world's most popular nursery rhyme was composed in Colchester in 1805. That nursery rhyme is "Twinkle, Twinkle, Little Star". I will not recite all of it. However, the house where the Taylor sisters wrote it, which is in West Stockwell street, is currently on the market. I believe that the purchase of that building and its promotion as the place where the world's most popular nursery rhyme was composed would draw in more visitors than the visual arts facility, which will also require an annual subsidy from the public purse of £600,000. So, on top of the £25 million that it cost to build an arts facility that most people in Colchester did not want but that was dumped on them, taxpayers will have to find £600,000 a year to subsidise the facility. As I have already indicated, if we had national financial support for our national heritage-whether that heritage is Roman settlements or "Twinkle, Twinkle, Little Star"-that money would be better invested and it would bring in the tourists.

11.36 am

Stephen Mosley (City of Chester) (Con): I want to congratulate my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) on securing this debate, which is of the utmost importance to his constituents and mine. Like Lancaster, York and Colchester, Chester is a beautiful historic city that has been economically successful for almost 2,000 years. As with many historic towns and cities, Chester was traditionally a county and market town, and the modern Chester still has a very important sub-regional role, providing jobs, shops and entertainment for a huge area that stretches across north Wales, Cheshire, the Wirral and north Shropshire.

As a result of their history, culture and pleasant surroundings, historic towns have tended to be very popular and desirable residential locations. However, such popularity and desirability bring about their own problems, in terms of high house prices and the difficulty that many local people face in affording housing in towns such as Chester. In the 21st century, we also face a threat to our traditional economy, which is based on being a retail and tourism centre, from increased competition, internet shopping, out-of-town retail parks and cheap foreign travel.

In Chester, we also have a problem that other historic towns and cities have not had to deal with so much. That problem is that we have not always taken advantage of our historic assets; we have not looked after them and we have not maximised their potential for economic advantage. We look to places such as York and see what has been done there, and we in Chester want to follow in the footsteps of the people of York and ensure that we are as successful as York has been.

There are a few challenges and opportunities that I would like to discuss. First, we must ensure that we all make maximum use and take maximum advantage of the assets that we already have. In Chester, we have a thriving shopping centre and we are already a world-renowned visitor destination. We also have the most successful zoo in the UK, the Roman walls and
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amphitheatre, and the Chester Rows, a site that is another applicant for UNESCO world heritage status. Furthermore, Chester Races draws tens of thousands of people to our city.

However, we need to do more to ensure that we continue to prosper in the 21st century. In the future, we need to give the people who come to Chester more. When people go shopping in Chester, we need to ensure that they get more than just the shops. We have to ensure that we entertain them and inform them as well. People have to know that if they come shopping in one of our historic towns there will be things happening-street entertainment, museums, galleries, theatre, a wide range of restaurants, interesting historic sites, and parks and open spaces in which they can relax. The same is true with tourism.

In Chester, we have been successful in getting people to come to our city on day trips, but we are aware that day-trippers do not spend huge amounts of money in the city; they tend to come in on the coach, spend a day there, have a look around and disappear again, without putting their hands in their pockets. We have to ensure that we start selling our historic towns and cities as a package. We want to encourage people to come to Chester and not only come for the day but spend a couple of nights. They could see the zoo one day or go to the races, then spend a day in the city centre going shopping or walking the walls and seeing some of our historic sites, such as the cathedral, and perhaps on a third day they could go to north Wales, into Snowdonia, or to Liverpool for the day. People need to know that if they come to Chester or one of our other historic towns or cities, there will be something going on regardless of the day, week or time of year. We need to start marketing our towns and cities as a package-a mix of history, culture, entertainment and shopping. That total mix is important.

Out-of-town shopping centres may have shops and the cinema, but do they have the culture and the history? A day trip to a theme park may be fun, but does it educate someone or allow them to shop in high-quality high street shops? It is only by maximising, and making the best use of, all our assets that we can work towards delivering our goal, which is to have a vibrant and busy local economy and for our historic towns and cities to thrive, compete and prosper in the 21st century.

Like the constituency of my hon. Friend the Member for Lancaster and Fleetwood, transport and local transport infrastructure is one of the biggest problems we face. Historic towns tend to have been built before the invention of the motor car, and the Romans did not think of the needs of the car when they were building the city and laying out Chester's street network. We also have the problem of being unable to adapt our local transport infrastructure due to our historic heritage. No one would seriously suggest blasting a hole in our city walls these days to build a new road or tramway, and, similarly, no one would consider knocking down a row of listed buildings to widen a narrow road.

Historic towns tend to be restricted by their geography. Chester, like many historic towns and cities, is built on the lowest fording point of the River Dee, and consequently faces huge problems getting people from one side of the city to the other, when the river is running through the
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middle. In Chester, we also have only two bridges crossing the river, so road traffic faces severe difficulties getting from one side of the city into the city and out. That is exacerbated by the fact that, like Lancaster, people have to travel through the city centre to get from one side of Chester to the other. We have to get away from through traffic being funnelled through city centres. Suitable bypasses that allow traffic to avoid the centre are, in many cases, a desperate requirement, and, to that end, like my hon. Friend the Member for Lancaster and Fleetwood, I would like to highlight the long-standing and desperate need for a Chester western relief road, which would not only relieve congestion within the city centre but open up a large area on the English-Welsh border for economic redevelopment in future.

When people get in to the city centre, they still face problems. Car parks are often worth more as development sites than car parks, which leads either to sky-high car parking charges or to a shortage of parking spaces in the city centre. We all want a reduction in unnecessary car travel, but for many historic towns, especially those with a large travel-to-work or travel-to-shop catchment area, car travel is necessary. Over-expensive parking or a lack of parking has only one effect: it discourages people from visiting the city centre and encourages them to travel to out-of-town locations instead. To combat that, local authorities have to ensure that there is adequate low-cost car parking. New and novel pricing structures need to be introduced as well. For instance, Chester has a free-after-three scheme, which allows and encourages local residents into the town in late afternoons and early evenings-traditionally quiet periods for the city centre shops-while ensuring that all-day parkers, who tend to have to go to the city centre to work, are encouraged out of their cars and into the park-and-ride scheme. It is more cost-effective to use the park-and-ride scheme for the day than use the car parks and fill up space needed for shoppers and visitors. Of course, such schemes also reduce rush-hour congestion.

We cannot forget the importance of the railways. Many historic towns and cities were key link points during the expansion of the railways in the 19th century. Typically, historic towns have very good rail links, which provide some strange ties-for instance, Chester has good rail connections with London, but the direct train to London stops at Milton Keynes. Chester has advertised in Milton Keynes, and we have had a huge number of people coming from Milton Keynes to Chester, because it is just as easy to get to Chester as it is to get to London for the day. We are encouraging people from Milton Keynes to come. I did not think that Milton Keynes was in a suitable catchment area for Chester, but it is, due to those rail links. Virgin Trains said that the Chester-London line has been its best performing line over the past year, so more people have been encouraged into the city, encouraging more improvements in our local economy.

We are lucky that our historic towns and cities provide a desirable environment; people want to live in and visit them. Companies want to be based in them and bring their customers to them. Consequently, we are seeing huge demand, even in these straitened times, for high-quality, modern business locations. However, there is a problem in historic towns in that it can be difficult to find room to accommodate that new business growth. We cannot easily clear large sections of an historic city
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centre for redevelopment without destroying our historic heritage. The city centre of Chester, like Colchester, is surrounded by walls, so there is a natural limit on growth in the city centre. Consequently, there are huge pressures to develop outside the town in the neighbouring green belt. Historic towns must be allowed to develop organically, and, sometimes, some green belt development may be necessary, but that should be only when there is no alternative. In the meantime, we must maximise redevelopment opportunities and take maximum advantage of opportunities as they arise.

The current economic situation and the proposed downsizing of all levels of government have a silver lining, in that they provide a once-in-a-lifetime opportunity for historic towns and cities to release land in town centres for new development opportunities. The abolition of Cheshire county council last year led to the sale of the old county hall in Chester to Chester university for the development of a new riverside campus. The gradual downsizing of Lloyds Banking Group, following its creation through the merger of HBOS and Lloyds TSB last year, has led to a huge tract of land becoming available between Chester station and the canal in Boughton, which, I hope, will be redeveloped as a new business district in the heart of the city. Recent school closures have provided land for new retail development, new care facilities and new affordable housing for local residents. Therefore, there is a sliver lining to the reductions in Government expenditure and the release of properties in our historic cities for economic purposes.

Our historic towns and cities have, by nature, tended to be successful and prosperous towns. By selling our historic towns as a package, improving their transport infrastructure and allowing organic growth, we can help them to become even more successful in future.

11.49 am

Mr David Ruffley (Bury St Edmunds) (Con): This has been a good-natured debate, but I am afraid that I am going to introduce an element of controversy: I yield to no one in my belief that Bury St Edmunds, which I have the honour to represent, is the best historic town in these isles. I congratulate my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) on securing this important debate.

My constituency is truly historic. Its famous abbey ruins were central to the initiation of Magna Carta, and St Edmund, the patron saint of England, is buried there. It has a terrific cathedral whose tower was recently finished using millennium money. That is the true ship of the fens; forget about Ely cathedral. The town centre has magnificent Georgian streets and a marvellously restored Georgian theatre, the Theatre Royal. An important and traditional brewing business, Greene King, now one of the biggest brewers in western Europe, is located right in the centre of town, providing jobs and a focal point for community activity.

As many speakers in this debate have said, however, historic towns cannot stand still. If they are imaginative and have intelligent leadership, they must combine the best of the past and the future. For that reason, I wish to draw attention to the biggest retail development that Bury St Edmunds has ever seen: the Arc development, built on the old cattle market in the town centre. I pay tribute to St Edmundsbury borough council, under the
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excellent leadership of Councillor John Griffiths and his deputy, Councillor Sara Mildmay-White, for being an example of localism at its best. Such an important development would not have occurred without their vision and practical ability to drive it through.

Importantly to me and many of my constituents, the development, although modern, is architecturally in tune and in sympathy with the great historic core of my town. It was designed by Sir Michael Hopkins, whom architecture buffs will know as the architect behind Portcullis House and the auditorium at Glyndebourne. Anyone who looks at the design-thousands upon thousands of people from across East Anglia shop there, particularly at weekends-can appreciate what a fine piece of work it is.

The Arc has 370,000 square feet of retail, a 40,000 square foot public building-I will speak more about that in a minute-and 62 residential units. My hon. Friend the Member for City of Chester (Stephen Mosley) drew attention to the importance of car parking. That was a controversial issue during the development, but the Arc has 850 car parking spaces, including a particularly fine and distinguished underground parking facility.

The total cost of the scheme was approximately £136 million. The developers, Centros, assembled much of the finance, but St Edmundsbury borough council ensured that money was stumped up for the public venue, which cost about £16.5 million, including a modest contribution of about £1.5 million from the East of England Development Agency, which will soon be late and lamented, as it did its bit for my town while it existed.

The economic rationale for the development was clear. Several years ago, the town leaders-I played a modest part-understood that a new and more acquisitive society had been created by the boom years. Sadly, the boom years turned to a bust, but they will return under the leadership of my right hon. Friend the Chancellor. People want better retail and more of it. We realised that unless we moved with the times, Bury St Edmunds might keep its history, but it would not keep its retail sector running at the level necessary for the market town to remain vibrant.

We commissioned a study that showed that people in the Bury St Edmunds catchment area were spending about £700 million on what is called in the jargon "comparison goods". The analysis stated that without the new development, the amount spent in the town would be only £263 million. In short, we were competing with the much bigger retail centres of Cambridge, Ipswich, Norwich and Colchester. We are now back in the game. Some of the early benefits and signs of the Arc's importance can be seen in the figures produced by Experian, the financial analysts, for Bury St Edmunds since the opening of the development at the start of 2009.

Bury St Edmunds has moved from 161st in the country's retail rankings to 145th. Some 300 new long-term jobs have been created on the site, and an unquantifiable but significant number of additional jobs have been created as a result of the development. Nine companies based in and around the town were involved in the building, which also boasts a timber-frame aspect and waste disposal facilities, all drawing on local business.

The main indicator of footfall in Bury St Edmunds is car parking. The number of cars parked in the town has
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risen by 8%, while centres in other parts of East Anglia have experienced a typical decrease of about 10% in the past two years. It is estimated that the development generates £500,000 a year in business rates. Not all the units have been let, so we expect that number to grow. The commercial property vacancy rate since the development opened has been about 8.5% , while the average throughout England and Wales at the start of 2010 was 12.4%.

Meanwhile-other hon. Members may have noted this phenomenon with regard to new developments in their constituency-outside businesses have come in to get a bit of the action. Where such businesses see more footfall, they see an opportunity to grow. Existing and long-established shops in Bury St Edmunds, such as Palmers, were initially concerned that they might be crowded out or that the new development might take away their custom. In fact, I am told, Palmers reports increased turnover since the Arc opened.

One significant entry into the town has been a high-quality, brand-new, badly needed Asda superstore west of Bury St Edmunds town centre, where it now serves a huge part of the population that felt disenfranchised in retail terms. That is one development for which the borough council cannot claim credit; it is all down to the doughty campaigners of the Howard estate, their unofficial leader Mr Ernie Broom and the redoubtable men and women, mainly pensioners, of the over-60s club on that fine estate. If I may be party political for a moment, they are an example of the big society in action. They assembled public meetings and persuaded Asda that a shop was needed there. We got the shop, and it has been a huge success. That ties in with the redevelopment of Western Way, where the borough council has moved its offices to a modern site.

I hope my few brief remarks have reflected what other colleagues have also said this morning: that history can, indeed, be combined with the best of the future. If towns have good leadership and individuals who want to participate to build a stronger community-a stronger business community-that will welcome tourists and shoppers from outside the area, there is a way forward. It is not always big Government who can make big developments happen. Like so many other historic towns, Bury St Edmunds does not need a handout; all it needs is a hand up from good leadership at the head of its communities. As I reflect on what has been achieved in the past two years, I am proud to have been the Member of Parliament for somewhere that is very fine and is, dare I say it, the best historic constituency.

[Mr Philip Hollobone in the Chair]

Mr Philip Hollobone (in the Chair): I think I am right in saying that we may be about to have a debut performance from the Member speaking for Her Majesty's loyal Opposition-Mr Gordon Marsden.

12.1 pm

Mr Gordon Marsden (Blackpool South) (Lab): It is a great delight to serve under your chairmanship, Mr Hollobone. I warmly congratulate the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw)-a
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fellow Lancastrian MP-on his presentation and on securing the debate. In that welcome, I embrace all hon. Members who have contributed. If I were a tourist buff visiting from the United States or Japan, I would be absolutely gobsmacked at the cornucopia of opportunities that all hon. Members have talked about-many congratulations to all who have spoken.

I want to highlight what the hon. Gentleman said. In his typically robust and common-sense way, he laid out some of the key issues and challenges not just for Lancaster, but for many of the towns and cities that have been mentioned. Of course, Lancaster is a very fine city. Its distinctiveness reflects that of the county palatine, which was created in the 14th century and is directly linked to the royal family. That is why at dinners in the historical county, which includes Blackpool, we still end our toasts to the Queen with the words, "The Queen, the Duke of Lancaster." In the inclusion of those words, we tend to gloss over the fact that the building up of his power by Richard II did not exactly have the results that Richard II anticipated.

In talking about the issues surrounding the shortage of retail shopping, the hon. Gentleman rightly illuminated challenges and tensions, particularly in relation to Lancaster castle, between current usage and possible future heritage usage. We must also consider the specific issue of transport access-narrow city streets-to which I will return. All those topics are very important, and he presented his case very well indeed.

There was a common theme to all today's presentations. My colleague and hon. Friend the Member for York Central (Hugh Bayley) talked about how strongly heritage has driven economic success and growth. The hon. Member for Colchester (Bob Russell) discussed the very interesting issue-although it is not necessarily one for this debate-of the extent to which local authorities should be held responsible for historic assets. In respect of cathedrals, the Church of England has, of course, argued the toss with English Heritage on that for a number of years with some success.

I entirely agree with what the hon. Member for City of Chester (Stephen Mosley) said about sub-regional roles and the total mix. We cannot keep heritage in aspic or have retail that ignores the historic context in which it is delivered. That total mix is extremely important. The hon. Member for Bury St Edmunds (Mr Ruffley) gave a bravura performance in demonstrating that we can actually have a connection between the past and the future. He also made an important point about the role that local people, groups and associations play in that rich mix of regeneration. It is not just a question of top-down government. As I say, in that respect, it has been a good and enlightened debate.

The Government can play a key role, which does not have to be overbearing, in the economic development of our historic towns and cities. The previous Government had a decent track record on the matter, and many of our historic towns and cities, whether it is Liverpool in the north-west or Hastings in the south-east, have experienced a renaissance in recent years. Much of that was helped by targeted support from the previous Government, which meant that existing buildings were preserved and adapted to become cutting-edge new venues. That has often been linked to the economic renewal of many historic cities and initiatives-none more so than the recent initiatives in Liverpool, when it
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was the city of culture. I want to mention briefly the Bluecoat theatre in Liverpool, which was first built in 1708 as a charity school. It was reopened in March 2008 after a £14 million redevelopment in which Arts Council England, the Heritage Lottery Fund, the regional development agency, the European regional development fund, trusts, foundations and private donors all played a part.

I would like to add a couple of points about that project that are relevant to this morning's discussion. The project involved adapting a traditional building to 21st-century local economy needs to showcase visual art, music, live art and literature. Incidentally, the project built on a tradition that has ranged from showing the post-modernists in 1911 to Yoko Ono in 1967-she came back in 2008 for a reunion. The project was completed with a mixture of private funding and public funding from the Government and other bodies.

Looking around the Chamber, it is interesting to note that the contributions have not come from Members representing major cities; they have come from what I describe-I do not do so in a disparaging way because I include my own town of Blackpool-as second-level towns and cities. Those towns and cities are just as key to economic development and renewal as big cities and rural areas. Many second-level towns and cities are also seaside and coastal towns.

The Sea Change programme was and continues to be delivered through the Department for Culture, Media and Sport. I had a modest role in encouraging the programme when it was set up under the previous Government. It has helped to boost the economic development of a number of historic coastal towns and cities. A series of grants in excess of £38 million have helped to fund regeneration projects in some 32 resorts. In passing, I would like to mention the town of Blackpool in my constituency. Under that funding, Blackpool tower will benefit from a tower headland-a major new space stretching out into the Irish sea. It will be themed according to the rich history of variety in Blackpool, with a so-called comedy carpet and all sorts of pyrotechnic wonders.

It is not just seaside towns that have benefited from the programme. Coastal towns have also benefited. For example, Dover received £4 million, which allowed the restoration and enhancement of the great tower, which has resulted in a surge in visitor numbers. The remainder of the money is helping with Dover's ambitious regeneration plans, including a sea-front development and a cable car project linking the town centre to the castle.

It is not just seaside towns that have an historic aspect to them; historic cities that attract large numbers of tourists are also important. Norwich is good example, as a private charitable trust has been set up to help develop 12 iconic buildings into an integrated group of heritage attractions. The overarching framework means that Norwich's unique assessment of its heritage buildings can function as a catalyst for wider economic regeneration across the area.

The work of non-governmental organisations, such as the Heritage Lottery Fund, must be recognised as helping to develop many of our historic towns and cities. For example, the Townscape Heritage initiative provided £7.5 million of funding, which was matched by the same amount from the European regional development fund, to help redevelop the Ropewalks
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area of Liverpool. The scheme has also provided money for projects in my constituency of Blackpool, including the revitalisation of St John's square.

English Heritage has been mentioned in the debate by hon. Members-although not always with approval for what it has done. Nevertheless, it has done some very good things, particularly in the north-west. The hon. Member for Lancaster and Fleetwood might wish to discuss that at another time and place. In particular, in Blackpool it helped to alert us all to the importance of a major regeneration of the winter gardens and the tower, which was a catalyst for the £40 million package of support that was put together earlier this year and which has enabled Blackpool council to take control and offer direction, along with Merlin Entertainments, in those areas. I pay tribute to all those involved, because it provides a strong business case for us in Blackpool. I could cite many other examples, such as the restoration of the traditional covered market in Stockport, the town I grew up in, which has brought an important part of the town centre back to life.

The balance to be struck between conservation and development and regeneration is a subtle one, and it requires the input of statutory bodies, regional and European funding, heritage bodies such as the National Trust and English Heritage and, often, the initiatives of locally based heritage and environmental development groups. How, then, can heritage create the sort of economic activity to which my hon. Friend the Member for York Central referred? English Heritage's report, "Heritage Counts 2010", which was published last week, demonstrates in part how that works. New research, commissioned by English Heritage and the National Trust, has looked at the economic impact of investments totalling £23 million at five heritage tourist attractions across the country. Interestingly, half of all jobs generated by such attractions were in the wider community, in local bars, restaurants, hotels and shops. In fact, it was found that every pound invested generated an additional £1.70 for the local economy.

Regional development agencies were mentioned in the debate, not always supportively, but as my hon. Friend said, they provided significant funds for the development of our historic towns and cities in recent years. The East of England Development Agency invested more than £86 million in areas such as Great Yarmouth, Lowestoft and Southend, and I have already referred to the key role of the RDA in regeneration in Blackpool. Incidentally, Blackpool is also on the list for a world heritage bid, and English Heritage has been playing a key role in that.

The Opposition are concerned about the impact that the abolition of the RDAs might have on the future economic development of historic towns and cities, given the strong role that they have played in the past 10 years. The regional growth fund, which will total only £1 billion over two years, is not a substitute for the budgets that RDAs had for leading regeneration projects in many of our historic towns and cities. As Members will know, some of the funding we are talking about was dependent on match funding from the European regional development fund. That has been put on ice until the status and role of the new local enterprise partnerships are decided. There are real concerns that if that is not done quickly the money will go out the window. I know that that is not the Minister's direct
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responsibility, but I ask him to urge his colleagues in the Departments for Business, Innovation and Skills and for Communities and Local Government to come to some conclusion on that matter as quickly as possible.

Governments must recognise that there should be no doctrinaire approach on public and private initiatives in that area, and that cuts both ways. I cite the famous words of Deng Xiaoping, who is not necessarily the greatest advocate for regenerating democracy, but who did lay the foundations of China's economic success in the 1980s. He is supposed to have said, "It does not matter whether the cat is black or white, so long as it catches mice." My assertion is that the cat has caught a significant number of mice over recent years, largely because public, private and local groups have worked together.

Transport is of key importance in balancing conservation and development. I ask the Minister gently, where is the strategy for including transport planning in any successor bodies to the RDAs, particularly local enterprise partnerships? We have seen the development of light rail and tram systems in many of our historic towns and cities; Manchester is a particularly good example of where that has enabled the local council to free up, develop and sustain tight historic areas, such as those around the canal and the village, and to link up with towns and areas outside.

The Government are abolishing the Government office network, which will inevitably remove a key repository of knowledge and, to some extent, a co-ordinating body. Will big infrastructure projects, which could be catalysts for economic growth in historic towns and cities, get the same level of support and co-ordination from civil servants based in Whitehall? That is an important matter in areas where the travel-to-work area is larger than the area of the local authority that controls an historic town or city.

In conclusion, although it was inevitable that public sector-led projects for boosting the economic development of our historic places would be squeezed in difficult times, some of the proposed changes and the way in which the Government are pushing ahead with them could make it harder for major projects to get off the ground. Many of the projects that I and other Members have mentioned today have been multi-agency and have needed considerable co-ordination between national and local statutory organisations and third sector and local groups. I urge the Government merely to recognise that as they develop their policies, because the successes in historic renewal and economic regeneration that we have heard about today must not be stymied by that process.

12.16 pm

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