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The other significant development over the past year, referred to by the noble Earl, was the report from Rod Eddington. I think it would be fair to say that reaction to the Eddington report has been mixed. The Association of Train Operating Companies put on a brave face and welcomed it because it confirmed the link between transport infrastructure and economic growth. Transport 2000 liked its support for road pricing but, like me, was deeply disappointed with much of the rest. First, the Eddington report said virtually nothing about creating new rail capacity by building new lines, particularly a north-south route from Scotland to the south of England, referred to by the noble Earl, Lord Glasgow. Secondly, it did not put forward a coherent plan to reduce the growth in demand for air travel, which in my view is an absolutely essential prerequisite if we are to be serious about climate change control; instead, it supported continued airport expansion in the south-east.
“Carry on flying regardless” is not a credible transport policy, and I hope we hear no more of that from Ministers or, indeed, from anyone else with influence in this area. The one area where there is a growing measure of support and consensus is on the subject of road pricing. I certainly commend the Transport Secretary, Douglas Alexander, for what he said about that and for pinning his colours so firmly to this mast. This is one of those issues where the Government have to be prepared to stand up to the motoring lobby.
I should mention one other significant political development over the past year—the change of policy on the part of the Conservative Party towards the railway system and its structure. It published a paper snappily entitled, Getting Around—Britain's Great Frustration. It contains this sentence:
“We think that an important part of the problem lies in the structure of the industry that exists today. We think, with hindsight, that the complete separation of track and train into separate businesses at the time of privatisation was not right for our railways”.
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Words fail me. Those of us who were working in the industry at the time of privatisation—I should declare an interest as a former adviser to the British Railways Board for about 20 years—will remember that the creation of Railtrack was not some casual by-product of a plan for the railways as a whole. It was absolutely central to the Conservative Government’s thinking that because railway managers were so useless at controlling costs, there were huge savings to be made in railway infrastructure, such as cutting down on maintenance, regarding railway stations as shopping arcades—the noble Lord, Lord Chidgey, referred to the fraudulent prospectus on which Railtrack was floated—and so on. That legacy bedevilled the industry for years and only began to be got right by the abolition of Railtrack and the creation of Network Rail.
Before Mr Grayling and his colleagues go too far down this track, I urge him to read the book, written by the late Gerald Fiennes in 1964, I Tried to Run a Railway. It contained the sentence:
It is not helpful for there to be endless press speculation about radical change in the railway structure. It is destabilising for the people working in the industry because they have seen endless reorganisations over the past 25 years, and it bedevils management thinking and investment decisions at a time when the focus should be on delivering a service to passengers rather than on what the next restructuring might be.
Vertical integration could possibly work if we went back to a wholly publicly owned railway, operated by Network Rail, if you like—you might in those circumstances call it British Rail. But I do not think that that is what the Conservative Party is proposing. Maybe the noble Baroness will share her party’s thoughts with us.
Some local train operators could perhaps take responsibility for the tracks they run over. My noble friend Lord Rosser referred to the case that Merseytravel has been putting forward for what it calls full local decision-making for rail services in Liverpool and the surrounding area. How on earth could that work on routes that have many operators, such as the west coast main line or much of the network served by Central Trains? Where would that leave the freight operators?
One thing is certain: you cannot expect train operators to invest in their track, signalling and stations if the length of their franchise is as short as six or seven years. One of the lessons we have learnt from the franchising arrangements so far is that if we are to expect a real improvement in passenger facilities, such as new trains, new ticketing technology, more stations, station refurbishment, experiments on re-opened lines, and so on, the franchises must be longer than we have been used to up to now.
A further advantage of granting longer franchises is that it would encourage the TOCs to own rather than lease their rolling stock. That would be a way of tackling the problem of the excess profits now being made by the rolling stock leasing companies.
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I understand that the Department for Transport reckons that the ROSCOs are making excess profits of £100 million a year. The Office of Rail Regulation puts the figure at £175 million—equivalent to, according to a Department for Transport spokesman quoted by the estimable Roger Ford in January's Modern Railways,
There is a strong possibility that the ORR will refer the leasing of rolling stock for franchised passenger services to the Competition Commission for an investigation under Section 131 of the Enterprise Act 2002. If that goes ahead it will produce some very interesting answers. Rather less comfortable for the Government is the way in which the ORR is questioning the entire franchising structure, as this will throw up some difficult issues for them.
At the heart of this debate is the question of whether it matters more for the franchisees to be able to keep up their premium payments to the Government rather than provide the best possible improvements in passenger service. Over the 10 years of franchise services, the government and PTE grants to the TOCs have fallen by 39 per cent to £1.3 billion. The number of franchises paying a premium has increased from four to seven, while the number receiving a subsidy has fallen from 21 to 14. For the Government and the Treasury that is presumably good news. They are conscious that, despite the move towards premium payments by train operators, the railways as a whole are costing four times as much as they did under British Rail, so anything to get that cost down is worth while. If they can recover money from the TOCs—which effectively means the fare-paying passengers—the policy is working in those terms.
However, it is not as simple as that. We have already heard that some TOCs are in difficulty. The problems at GNER have been widely publicised. Those running First Great Western will have found their ears burning with some of the criticisms they have heard today and in the exchanges on the Question of my noble friend Lord Berkeley in the House on Monday. To cancel services on branch lines through a shortage of rolling stock, as they did a couple of weeks ago, is certainly not acceptable. Nor is it acceptable to run trains so short that they are severely overcrowded.
On overcrowding, there is one point to be made in First Great Western’s defence. There is something crazy about a situation where hiring an extra coach for a local service cannot pay for itself, because even 100 passengers would not produce enough revenue to pay the leasing charges. I am told that even the most modest diesel railcar—the class 153—costs £105,000 a year to lease, and you need a lot of passengers a lot of the time to earn that amount. It makes no sense for First Great Western to send back all its Adelante express diesel trains, or for South West Trains to give up using its popular class 442 electric stock, on the grounds that the leasing charges are too high. This is
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These are legitimate concerns which the Office of Rail Regulation and the department must address. Against that gloomy picture, however, it is worth drawing attention to some positives about Britain’s railways. We run nearly 20,000 trains every day; 20 per cent more than 10 years ago, and more than any other European country except Germany. Last year, 1.1 billion passengers were carried, more than at any time since 1957 when the network was almost twice as large as it is today. That is also 37.5 per cent higher than 10 years ago.
I hear what noble Lords say about the recent increase in fares, but there is no reason to believe that demand is falling off. Increasing numbers of people prefer to travel by train, because the alternatives are congested roads and parking restrictions for car users, or security nightmares and flight delays at our airports. It was interesting that Virgin claimed that delays on the west coast main line are now significantly less than delays experienced by airline passengers to Edinburgh or Glasgow.
I conclude by paying tribute to my noble friend Lord Davies. A whisper has reached me that he may not be speaking on transport issues in this House for much longer, as he is moving on to—I hope—better things. It has been a privilege to have the opportunity of debating railways and other transport issues with him over the time he has been responsible for them. I certainly wish him well in what he is going to do next.
3.54 pm
Lord Cotter: My Lords, I thank the noble Lord, Lord Chidgey, for providing us with the opportunity for a debate on a subject of great concern to many of us this afternoon. I declare an interest, not as an expert like the two previous speakers and others but simply as a user of the rail service.
In particular, I shall address the First Great Western Franchise, which I use regularly. Many concerns have been expressed about it, and some of them bear repeating. I shall start with the issue of punctuality. I note that, during Questions on Monday, the Minister, referring to First Great Western, said that,
- “punctuality even in the south-west was at 85 per cent, which is the norm across the network”.—[Official Report, 15/1/07; col. 437.]
When was it at 85 per cent? The Office of Rail Regulation gave different figures, which show that First Great Western is the worst performing long-distance train operating company and that only 73 per cent of its trains arrived on time between July and September 2006. I can attest that, on the last five trips that I have made, four of the trains were cancelled or late.
We are seeing a much reduced service at the same time as fares are going up. That is a matter of concern, and it raises the question “Why?”. As a user, I do not understand all the intricacies, but it seems clear that higher prices should produce a better service. I am not alone; I understand that there will be
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Going back to the issues that I am concerned with, in the Bristol area, we have seen a reduction in services, which has concerned me and other people in the area. The service that I use goes from Bristol on the Weston-super-Mare route. I usually use Yatton, which is en route. The timetable introduced in December has resulted in a number of through trains that picked up passengers at Weston and Yatton being abandoned, with the result that more people have to change at Bristol. It is dismaying to change and find that the train is made up of only one or, if you are lucky, two carriages. I say “if you are lucky” because I have even been on a two-carriage train where I was one of the lucky ones to get on at Bristol Temple Meads when other people were unable to do so and people were not able to get on at the next station and so missed the service. As my noble friend Lord Chidgey and other noble Lords said, the result of such services is that many people have to stand or cannot get on.
It is easy to say that people should expect to have to stand for so-called short trips, and that has been said recently, but that does not go beneath the surface. Many people who have to stand are elderly and infirm, and it is virtually impossible for them to cope. Why is the foolish use of one or two-carriage trains allowed? Who calculates how many people will travel at a particular time? In this day and age, with all the resources that we have, including computers and records, it is not rocket science to make a reasonably accurate estimate, based on previous figures, of how many people are going to travel at a particular time and to provide accordingly.
As a rail user and not a rail expert, I am confused about who is responsible. The Government say that it is the rail companies, and the rail companies say that it is the Government. Are they both right? Is it true that charges in this country are two to three times higher than those on the European mainland? I do not know, but it is often said. Is it true that subsidies are higher than ever in this country? No doubt, those who know about these matters can explain.
I am not alone in being surprised by the statement that people should be expected to stand. Just to re-emphasise that point, the Disability Rights Commission says that,
“Access to rail transport is fundamental to full and independent participation in society for disabled people and people with long-term health conditions”.
On the peripheral matter of catering, which is a point of some importance, I was very impressed a few months ago when First Great Western came out with a highly glossy, well produced leaflet praising their catering. They were slapping themselves on the back for the standards that they offered and so on in their catering services. Then, shortly before Christmas I read a report saying that the company was talking about doing away with buffet cars and substituting a trolley service only. A railway official said that that
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A short while ago, the noble Lord, Lord Snape, rightly spoke of picking a loser in choosing First Great Western; well, passengers are certainly losing. When First Great Western’s accounts come out, in due course, I will be interested to see whether they are losing on it or in fact making a profit at our expense. The noble Lord mentioned travelling at 50 miles per hour, and I can offer a further advantage in that, if you are trying to consume a cup of tea or coffee, it is much easier to do so at 50 miles per hour than at 120, when you are bumping around. Still, that is not the real issue. I am sorry to come down so strong on First Great Western, but it is our duty to highlight the issues on the Floor of the House. So, as my noble friend Lord Teverson said, it seems that once First Great Western had it in the bag, things have gone wrong.
I thank the noble Lord, Lord Chidgey, again for the debate and the noble Lords who have participated. I look forward to hearing good news when the Minister responds.
4.02 pm
Lord Bradshaw: My Lords, my noble friend Lord Chidgey has raised the issue of the conduct of rail franchising at what turns out to be an opportune time. Use of the railways is increasing and will increase, as many noble Lords have said, and, while it is true that only 6 per cent of all journeys are made by rail, a much greater and rising proportion of journeys over 25 miles is made by rail. In fact, in the central London area the figure—including the Underground—is something like 69 per cent. So, rail is hugely important.
There is general agreement among most people who know anything about the subject that rail travel will and must increase if we are to get to grips with the problems of global warming in our congested country. However, as my noble friend Lord Glasgow asked, where is the vision, the flair or the passion that guided the great rail pioneers of the past? I experienced that as a railway manager from working with Gerald Fiennes—to whom the noble Lord, Lord Faulkner of Worcester, referred—Peter Parker, Bob Reid and Chris Green. The present rail Minister at least enjoys his job, and we wish him well. Yet we need advocates who will lead the industry to where we ought to be and where it would have been but for the calamity—I use the word advisedly—of privatisation.
The notion that a new generation of high-speed trains can be designed by a committee led by consultants, rather than railway engineers, really promises us new equipment too late, unsuitable for purpose and over budget. Is it too late to put the rolling stock companies and the train operating companies in the driving seat—possibly two driving seats—to begin with, so that there is a competition in ideas? The high-speed train, which was acclaimed throughout the world as a leader, was designed at Derby by the people in the research centre to which the noble Lord, Lord Rosser, referred. It was designed from start to delivery in five years because another
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The railway needs to be available at all times—“24/7” in common parlance—and I know that the transport Minister shares my ambition in that respect. Network Rail must make substantial further economies in the next control period. I acknowledge that this is the responsibility of the Rail Regulator in the next periodic review, but I suggest that its objectives and bonus incentives need to be adjusted to make the railway much more available, as it is on the continent. People want a railway all the time, and passenger use would grow by leaps and bounds if it were so available.
We accept that the franchises must deliver value for money, but value cannot be measured by a single measure of either the highest or the lowest bid, depending on whether it is intended to deliver a premium or be supported by subsidy. John Ruskin said:
“There is hardly anything in the world that some person cannot make a little worse and sell a little cheaper and people who consider price alone are this person’s lawful prey”.
I ask noble Lords to think on those words and to read them in Hansard. I am sorry, but the prey are up there in the Box and the people who employ them. A franchise bid should offer quality; it should recognise the need to expand and invest. It should recognise punctuality, reliability, safety, security, the ability to park a car, user-friendly stations and information services, and fares that do not rise faster than inflation. This does not happen.
The recent problems with the Greater Western franchise, which were touched on by my noble friends Lord Cotter and Lord Teverson and by noble Lords opposite, are nothing compared with the storm that is about to break around the head of the Department for Transport over the new cross-country franchise. Officials will think that the Greater Western problem is a picnic compared with having to tell people who want to travel from the south towards Glasgow that they must all get out and change at Birmingham New Street in the middle of the period when that station is being reconstructed. It is clear madness to go along that road. The cross-country franchise is already bulging at the seams with people, and yet the department has allowed for only a 30 per cent increase over what was carried last year for the 10 following years.
There are also the appalling prospects around Lincoln. The noble Lord, Lord Snape, mentioned the East Midlands franchise. One may look at the services from Nottingham to London, but the passenger service from Lincoln has been cut to shreds. I remind the Minister that another Minister with responsibility
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Franchises contain little opportunity to bid for growth or to show enterprise or imagination. It should be crystal clear to operators that all the quality features and past performance in the franchise area will be judged as well as the money in the bid. Growth in the market and ways of dealing with all aspects of that growth, such as growing passenger aspirations, all need to be evaluated.
I turn to my greatest challenge both to the Government and to franchisees: I would offer a further extension, up to 15 years, subject to the company exceeding all performance criteria at five-year break points in return for substantial extra investment. I do not believe that the Government have the money; I believe that the franchise companies have the money, and I would challenge them, saying, “We will give you extensions, but only if you come forward with real policies to invest in the railways, to invest in rolling stock and to make the system better”.
The Minister should use his powers under Section 54 of the Transport Act to give undertakings that additional rolling stock will continue in use at the end of the franchise period. That would encourage franchisees to get some more rolling stock because they would remain confident that it would continue to be used, even if they lost the franchise at the end. That works in the Netherlands, and, because it works there, I am confident that it would work here.
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