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Before privatisation, the Department of Transport, as it was then, published a booklet entitled Problems with Franchising. The reservations expressed then still hold good today. For example, it said that franchises are difficult to specify, that franchisee behaviour is difficult and expensive to monitor, and that franchises encourage a short-term approach to investment and a tendency to profit-maximise. It is difficult to prevent what I call “end of franchise behaviour syndrome”. As a result, there is little incentive to invest in training or equipment as the franchise draws towards its end.
Rail franchises are costly to re-let in terms of time, money and human resources. They are even more costly when government objectives are not clear. In circumstances where the performance of the franchise holder is so unsatisfactory that there is no option but to re-let the franchise, it is the passengers who bear the brunt; where a franchise is being re-let in those circumstances, passengers invariably have to suffer long periods of very poor service.
It should be said at the outset that the situation was not of the present Government’s choosing. They were not the authors of the privatisation model adopted for our railways. They were bequeathed a failed and broken system by the Conservative
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Neither are the current Government proposing another structural reorganisation where train operating companies would take over the management of the track and signalling from Network Rail. The long-term maintenance of long-life engineering assets, such as railway track signalling equipment and the infrastructure that provides the permanent way, is not well adapted to the shorter time horizons of franchising.
However, despite having been bequeathed an unsatisfactory organisation by the Conservatives in the past, it still behoves the present Government to ensure that a franchising system delivers for the public now and for the future. It should be a system that delivers a network of services that have adequate rolling stock; sets fares that do not rise faster than inflation; provides car parks that are readily accessible, adequate and reasonably priced; sets high and rising standards of train punctuality and reliability; and is managed and operated in a manner that ensures that passengers invariably feel safe and secure.
The detailed specification of services should be left to train operating companies, provided they are quite clear that the prices they charge and the quality of services that they achieve are non-negotiable. They must be non-negotiable, as those standards should be a sine qua non of the system. Unless they are achieved, not only will the franchisee lose the franchise, but such failings would ensure that they did not obtain another one.
Unlike the ubiquitous standard phrase in more or less every investment brochure we have ever seen about “past performance being no guide to the future”, in the case of the railways past performance is a very strong guide to future performance. In fact, it is probably the very best guide there is. The Government's previous attempts to specify train services in detail are now widely accepted to have led to some serious failures, the most obvious being the debacle of GNER relinquishing the east coast main line franchise as it is unable to meet the financial conditions.
Another example is Great Western trains, which launched a major shake-up of its timetable after winning the Greater Western franchise and having to combine its services with those previously run by Wessex Trains. According to Transport 2000, FGW then proceeded to cut its number of carriages from 133 to 104—a cut of nearly one-quarter, a massive short-changing of passengers.
The Government’s cull of train services in the south-west, taking away some 2,000 rail seats a day in the greater Bristol area alone, has caused chaos on the region’s trains: chaos for commuters heading for work, turned away because there is no room on their train; chaos for staff unable to move through carriages to collect revenue and carry out their on-train duties; chaos and indeed risk to health for less robust passengers, with reports of people fainting on overcrowded trains.
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Julia Thomas of Transport 2000 said last month:
“People are being crammed onto trains like sardines—it’s completely unacceptable. The timetable for the region and length of trains has been set by DFT rail ‘experts’ in London but it is clearly unworkable. First Great Western has their hands tied on this”.
South West Trains has adopted a series of options for tackling capacity shortfall, including reducing the number of seats and increasing standing area on trains serving inner suburban routes, treating them as high-capacity “Tube-style” journeys. In addition, reconfigured carriages on commuter peak services are expected to provide some 4,000 extra seats, albeit smaller and less comfortable airline-style seats.
According to the Disability Rights Commission, one of the effects of the Government’s policy has been both to drive up prices and cut the quality of service. Disabled people needing assistance are the most vulnerable to cuts in staffing levels. They already face particular problems travelling on overcrowded trains by being unable to stand for anything other than short periods. Wheelchair users are at risk of being unable to even board their train, because wheelchair spaces are too often filled with standing passengers. Access to rail transport is part of the full and independent participation in society for disabled people, a generally accepted core policy objective.
The Government carry the responsibility for improving access, and they have a 10-year investment plan in their strategy, “Railways for All”. But the Disability Rights Commission believes that at the current rate of investment it will take some 34 years simply to make accessible those stations that do not currently have step-free access. Surely here is an opportunity to build a duty to make access improvements into the franchise system. Franchise bids should set out access investment plans, which could and should be part of the assessment of the tenders.
The challenge for train operators has been to find extra capacity within the existing network. Every bidder has been required to put forward plans to increase capacity. The one rule that has had to be followed was not to base plans on major infrastructure investment; increased capacity had to be found from within the existing network. In many cases, there are no more peak pathways to be had, and running more trains is not an option. Most peak trains are already running at the maximum length permitted by station platforms. Opening carriage sliding doors selectively can help, but that adds to journey times as passengers slowly move through the trains to find exits from those carriages adjacent to the platform.
There is no doubt that increasing capacity is the biggest issue facing the rail industry. The present franchise system requires train operators to bid according to a contract, with future investment in infrastructure an issue for Network Rail and the Department for Transport. It is both unacceptable to passengers now—and, frankly, short-sighted folly for the future—to place the onus on travellers to be less demanding for the availability of seating and a reduction of overcrowding. Most people will reject the view expressed by the Department for Transport
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In the United Kingdom, passenger journeys by rail represent merely some 6 per cent of all travel by all modes, yet we are already experiencing severe restrictions on capacity in the network for lengthening periods of the day. There is a growing view that, as a response to road traffic congestion and gridlock, together with selective punitive transport taxation to offset global warming, the demand for passenger rail travel could increase as much as five to ten-fold within a decade. It would be, to paraphrase the Evening Standard, absurd, unrealistic and arrogant to think that demand could be met by anything other than a major overhaul of our rail network infrastructure and the design and configuration of rolling stock.
Having said that, it must fall to the Government to offer operating franchises that set a series of non-negotiable standards, backed by an easily understandable series of quality measures. Within those standards fares would not rise and trains would run on time, with very few exceptions accepted. And “on time” would mean what it said, not allowing trains to arrive 10 or 15 minutes late and still be counted as “on time”.
The present taste of the Government for short-termism in what is a long-term engineering-based industry has to change. Aligning long-term perspectives with short franchises is impossible. The only solution, if franchising is to stay, is long-term franchises with long initial periods. There can be break points at which the terms can be renegotiated, but franchisees should be aware that they are in a long-term business—as, for example, is Chiltern Railways.
There should also be a rollover mechanism where the franchise would continue to roll forward, provided all the performance targets are exceeded. It should be clear for franchisees that good performance equals continuity in their business. It should be clear, however, that poor performance not only means termination of a franchise but also exiting from the whole franchising process, because past performance will, and must, be a major factor in determining continued access to the process. I beg to move for Papers.
2.59 pm
Lord Snape: My Lords, it is always a pleasure to follow the noble Lord, Lord Chidgey. I have done so in the other place, and I thought he was as fluent in this House as he was there. There was only one item in his speech I would disagree with, and I will come to it in a moment. It is to do with commuters in the southern area of the United Kingdom.
I fear that my noble friend on the Front Bench will not be embarrassed in this debate by an overabundance of praise about the franchising of British Rail and its impact on railway journeys and passengers throughout the United Kingdom.
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The noble Lord, Lord Chidgey, rightly said that the most outstanding and successful franchise was Chiltern Railways. Those of us who have worked in the railway industry can say, without being disparaging, that it is an easier railway to work than some. The noble Lord put his finger on the reason behind the success of Chiltern Railways when he spoke about the length of the franchise. With a 20-year franchise, Chiltern Railways has been able to spend a considerable amount of money on improving the infrastructure of the railway on which it operates. Shortening the franchises in the way the Government have done has not been helpful for the future of railway travel in the United Kingdom.
I should have started my speech by referring to my entry in the Register of Members’ Interests; it is not 100 per cent correct, as I said yesterday. I have retired from my position with the National Express Group, although I still hold a declarable shareholding in that company.
There was one aspect of the noble Lord’s speech with which I take issue. I know the difficulties behind this, but it is about time that Governments of any political hue started telling commuters in the south of England that there is no alternative to standing for short journeys in the morning and evening rush hour. The days when it was possible to add a few carriages behind a steam locomotive are long gone. The trains that are used almost exclusively in the south of England, whether diesel or electric-powered, are multiple units. They carry their own power generation or they receive power from the overhead electric lines. They are far too expensive to be left in a railway siding for 20 out of 24 hours or to run with not many people on board for the bulk of the working day.
For that reason, we have to tell commuters in the south of England that season ticket holders in particular are subsidised, by and large, by travellers on the railway system in the rest of the United Kingdom. They might not agree with that—many of them might not accept it—but it is a fact and should occasionally be put on the record. Perhaps it will be easier to put it on the record in your Lordships' House than it is down the Corridor, where it might be necessary to seek the approval of those same commuters at a future election. However, it needs to be said.
Will my noble friend explain the situation regarding the east coast main line from King’s Cross vis-Ã -vis the west coast main line from Euston? I put the two together because, coincidentally, at around the same time, the east coast main line is to be refranchised while Virgin wins back control of the west coast franchise after a period of running the west coast as a management contract. What is the difference between the two lines and the way in which they have been treated? My reasoning behind that question is this: under the headline,
RailwayMagazine points out that Virgin won the original 15-year franchise in 1997, but what the magazine calls,
- “appalling project management under Railtrack, cost over-runs and the fact that £350m was wasted in an abortive bid to develop the signalling”,
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led to Virgin being unable to fulfil its franchise obligations, so it is permissible for the franchise to be temporarily suspended.
Over on the east coast main line, the argument that GNER put forward 18 months or so after winning the franchise was that following an unexpected drop in revenue as a result of the July 2005 terror attacks, a steep rise in fuel and electricity costs and financial problems with its parent company Sea Containers, as well as the open access row that is still rumbling through our courts, GNER was unable to fulfil the terms of the original franchise and wished it to be renegotiated. That was refused. Why should those extraneous factors weigh so heavily in favour of Virgin Trains and be swept aside for GNER? I am not a regular traveller on GNER but on the few occasions I have used it, I have had great admiration for the quality of the service, and I would hate to see that quality of service diluted under the present circumstances. I travel regularly on Virgin and I cannot sing its praises quite as often as I would GNER’s—I put it no higher or lower than that.
It is bizarre, to say the least, that the Government’s decision means in effect that those of us who wish to travel to Glasgow, for example, by Virgin Trains will, under its new franchise, receive between £6 and £7 each in subsidy because of the payments made to Virgin, whereas those of us who travel to Glasgow on the Great North Eastern Railway will pay about the same amount to the Department for Transport because of the contract that supersedes the original franchise for GNER. I am no accountant—this may all make perfect sense and my noble friend may explain it in simple terms for a simpleton like me. However, I am struck by what I can only describe as the late Enoch Powell thing—perhaps this is all to do with money supply and, to use that terrible cliché of modern life, “what goes around comes around”. It seems a bizarre way to run a system to subsidise a trip to Glasgow by one line and penalise a trip to the same city by another. No doubt there is a simple explanation and I will be delighted to hear from my noble friend what it is.
It is also bizarre that on a day like today, with high winds, we should be debating franchises when there is virtually a blanket 50 mph speed restriction on much of our railway system. Although this is not, strictly speaking, a matter for this debate, I hope that my noble friend could persuade those in Network Rail responsible for the maintenance, care and upkeep of our overhead lines to take a trip to Switzerland to see how the Swiss manage to string wires up the sides of mountains; their wires do not blow down in anything other than a gentle summer breeze. There seems to be some structural problem in the United Kingdom that leads to these heavy speed restrictions on a day like today.
I hate to bore noble Lords with stories of my railway career, but I should like to digress for a moment. Fifty years or so ago, when I started in a railway signal box, the wind blew then, the signals were lit by oil lamps and the trains were drawn by steam locomotives, but I do not ever remember a 50 mph speed restriction because the wind was blowing.
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My noble friend and I clashed—very mildly—recently about the award of the franchise to First Great Western. I asked, not unreasonably, I thought, why the train operating company with the worst punctuality record should beat the train operating company with the best—it happened to be the one I worked for, but no matter—in the new franchise bidding. I had nothing to do with the bid and my salary was in no way dependent on its success or otherwise. I was slapped down by my noble friend as a bad loser. I might be a bad loser, but he chose a particularly bad winner. I do not know anybody who travels on First Great Western who is particularly happy about the standard of service that they receive.
There was a letter in yesterday’s Times from the managing director of First Great Western, a lady called Alison Forster. She said that the company is due to return carriages to the train-leasing companies. When people are standing on each other’s heads, as we have already heard, it seems bizarre, to say the least, even to think of returning carriages to the train-leasing companies, but no doubt there is a simple explanation for that as well, which we will hear this afternoon. The letter continues,
- “but we will not do so until local performance and seating capacity issues have been resolved ... We are currently investing more than £200 million to improve our trains and stations. The refresh programme for our high-speed train fleet is well under way and this will provide a dramatically improved interior for customers as well as many extra seats”.
If I decided to put new seats and a stereo system in my motor car even though the wheels had fallen off you would think that my financial priorities were distorted, yet that seems to be the financial view of First Great Western—put some leather seats in first class, pack a considerable number of extra passengers into standard class, paint the carriages in bright colours and everyone will be happy. The fact that the trains are doing only 50 miles an hour—when they go anywhere at all—apparently does not worry the current management of First Great Western, although one of its regular passengers told me that 50 miles an hour would be a slight improvement on its day-to-day performance. Perhaps my noble friend was right in the first place to give the franchise to First Great Western and I was wrong.
Looking round the country at the franchise procedure, it gets more and more odd. The franchise with the best punctuality record—this causes me embarrassment but I will say it anyway—is Midland Mainline, operated by the National Express Group, by coincidence. Instead of praise for the new franchising agreement, Midland Mainline is to be virtually abolished. Bits will be festooned upon it like some strangely growing Christmas tree and it will be called the East Midlands franchise. One of the cities that it serves, and serves rather well, which is why it is at the top of the punctuality table, is Nottingham, but under the Government's present franchising proposals, the number of trains between Nottingham and London St Pancras will be reduced. What is the thinking behind that decision? Perhaps I am missing something obvious about government transport policy.
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Gatwick Express is a similar story. Again, I am reminded of National Express, but are we seriously going to take away a dedicated service to the second London airport to cater for extra commuters from along the Brighton line and similar areas? Sir Richard Branson has already made it quite plain that, if we do so, he will ensure that passengers on his airline flying in for the London Olympics will be bussed from Gatwick Airport to the Olympic site. We surely must be alone in the whole world in proposing to withdraw a dedicated airport service, particularly one such as Midland Mainline, which pays a premium to the Government. By and large, the Treasury watches money that is spent, particularly within the railway industry, like a hawk, but it is apparently dedicated to abolishing the franchises that pay money to the Treasury and draping extra trains and responsibilities on those franchises that do not.
Finally, in the context of this debate on franchising, why is there never any specification for electrification when franchise applications are sent out? We heard from the noble Lord, Lord Chidgey, how expensive it is to complete franchise applications. Up and down the country, thousands of hours of valuable management time are spent completing these extremely complex applications, yet there is never any mention of further electrification. Indeed, Mr Tom Harris, the Minister responsible for railways in the other place, promised some suggestions later this year about further electrification in the United Kingdom, but was not speaking too optimistically about the prospect. However, in the current edition of Modern Railways I noticed a paragraph headed:
Scotsmen in Scotland are in favour of electrification, but Scotsmen holding ministerial posts in England are not. Perhaps only the Scots deserve electrification and I have missed something else, but I hope that my noble friend can provide—
Baroness Crawley: My Lords, will my noble friend draw his remarks to a close?
Lord Snape: My Lords, I will indeed apologise; I thought that I had 16 minutes instead of 14.
We are drifting towards some sort of easyJet railway where you pay in advance if you want a seat. That is not the right way forward and I hope that my noble friend will come up with some suggestions this afternoon that will alleviate the obvious inconvenience being caused to thousands of railway passengers in the United Kingdom.
3.14 pm
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