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I, too, am unconvinced about the need for structural reorganisation, as has been put forward by Mr Grayling in another place and in the pamphlet to which the noble Lord, Lord Faulkner, referred. However, I vigorously support the inclusion in a self-contained franchise—the Merseyrail franchise—of responsibility for the track. The reason why I agree with that is that I believe that Network Rail must have a comparator organisation. Merseyrail may appear to the Minister to be a very small undertaking, but it has behind it the whole technical expertise of Netherlands Railways, and it would provide good evidence to the department of what it really costs to maintain the railway on Merseyside. I am afraid that Network Rail is using average costs that probably greatly exceed what they spend in Merseyside. Of course, we do not know, because the figures are so opaque. The Minister should lean on Network Rail to set up that independent comparator.
Evaluating a franchise on other than financial criteria is difficult. I know that it gives great comfort to civil servants if everything can be reduced to a simple financial sum, but that does not enable you to evaluate quality, and quality is what the customer wants, what the passenger wants. I do not believe that it is beyond the wit of man to set down an evaluation procedure that brings in the other quality features as
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The franchising process is extremely expensive and very bureaucratic. It takes up a huge amount of management time, as the noble Lord, Lord Snape, said, and I would ask that the Government look carefully at what Transport for London are doing in letting its franchises. It is apparently a much simpler, much cheaper process, and I am sure that there must be better examples to be had in the rest of the world.
Before I sit down, let me say that I have enjoyed over the years many debates with the noble Lord, Lord Davies of Oldham. I am very sorry that he is moving. I wish him, as did the noble Lord, Lord Faulkner, the very best of fortune wherever he is going, but I promise him that it will not be as interesting as transport.
4.16 pm
Baroness Hanham: My Lords, I, too, thank the noble Lord, Lord Chidgey, for generating this debate. Sitting rather solitarily on these Benches, I have been conscious that we have been in the conspiracy of experts. Most of today’s speakers seem to have more than a touching relationship with the railways, either through life experiences or the life-enhancing experiences of travelling regularly on them.
Gordon Brown, in speaking to the 2002 spending review which supported the Government’s 2001 10-year plan for transport, affirmed that to correct the underinvestment in transport was vital to both the economic prosperity of our country and our quality of life. I think we would all agree with that and we would have been better off if all that had come about. We are now over halfway through the planned execution phase with the state of play a bit more shambolic, as has been demonstrated today. Targets appear to have been conspicuously dropped.
What has happened to the promised infrastructural improvements—Crossrail, Thameslink, longer trains with longer platforms? Instead, seats and lavatories are being removed from trains so as to squeeze passengers into the space and they can only stand up because there will not be room for anything else. They are paying a rapidly increasing price for the privilege of travelling on such an unappealing system.
As we have heard, it is clear that the current structure of the railway network and franchising system is under considerable pressure. It is predicted that there will be an increased demand for rail transport, and not solely because of climate change, though that is certainly going to be a very relevant aspect. People are going to require to travel by train more and more, so if we do not address the problem, it is going to be compounded over future years.
A number of reasons for the widespread problems across the railway network can be identified, ranging from the content of the franchises—and we have heard quite a lot about that this afternoon—to the manner of their allocation, the relationships within the sector, a reluctance to accept accountability and
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The squabbles influence companies to devote resources to deflecting blame, and therefore fines, at the expense of productive activity. That is a pretty pointless exercise, as it ultimately simply results in the flow of public money from one pot to another at greater expense to the taxpayer. I understand that in the new joint control centre in Swindon—a facility that has been heralded as the embodiment of future working, demonstrating a constructive relationship between Network Rail and the train operating companies—a significant part of the building has been allocated to the “delay attribution team”.
That point should not be considered in isolation. There are other examples of processes that are deeply, and indeed expensively, flawed. Take, for example, the bidding process for franchises. Of course we on these Benches support the notion of competition and enterprise in driving up standards; it was one of the fundamental reasons why the original rail reforms were introduced. But the current franchising system is clearly not able to deliver what it was intended to do, which was, in the words of Sir Alastair Morton, the first Rail Regulator, to provide “high-level performance for passengers”.
The current franchising system involves companies bidding on train reliability, defined timetables, commitments to improve train and crew reliability, and their operational viability, as well as past performance. But there has been widespread criticism of the Government’s policy of auctioning off franchises, as that encourages companies to overbid. Indeed, you have the bizarre situation where a train operating company—First Great Western, which has been referred to a lot today—is actually cutting services and capacity on already overcrowded lines in order to save money so that it can meet the terms of its new franchise.
Christopher Garnett, the former chief executive of GNER, is said to have commented that overbidding for a new franchise is preferable to underbidding and losing out. But his company has lost out; it had to surrender its £1.3 billion franchise on the main London to Edinburgh route, as it could not meet the terms of the 10-year franchise, which required revenue growth of 10 per cent last year.
The Government’s acceptance of these exaggerated bids is pointless when it is clear that they can and will not be met. This causes mistrust between companies, tarnishes the industry’s already poor reputation and drives the cost hikes in fares that we have all read about of late. Inevitably, it results in massive subsidies, such as the one of £1.4 billion that the Government have had to make to Virgin’s London to Glasgow service. An end to this ongoing charade appears to be out of the reach of the current Government. An obvious point to make is that contracts should be awarded not necessarily to the highest bidder but to the company that can demonstrate a feasible, robust plan for enhancing the service that it seeks to operate.
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Recently re-awarded franchises have been stifled by tight specification and regulation from the Government, which impedes companies’ opportunities to innovate. The Government’s interference extends to government involvement in operations to the extent that officials are writing timetables—indeed, we have Douglas Alexander and his predecessor acting almost like modern-day Fat Controllers. In 2006, the House of Commons Transport Select Committee published conclusions supporting this contention. It said that,
- “there is little innovation because franchise contracts are so tight that there has been no room for flexibility”.
The poorly defined and intrusive role of the Government is undoubtedly a root cause of the problems of the railways. What is required is a strategic framework of the railways, but it is the rail professionals who should run them. Misplaced micromanagement is directly responsible for the flaws and conflicts with the objective of allowing private enterprise to deliver the high-quality services that we all want.
Reference has been made to the vertical integration of the Mersey trains—a number of us must have had a briefing on it. The Minister may want to comment on why that policy did not come about. As I understand it, Network Rail did not produce the necessary information and was not willing to hand over responsibility to Merseyside, but perhaps the Government know a bit more about that.
The entire rail network excludes the needs and rights of disabled people, as has already been mentioned, due to the lack of accessibility at stations and on trains. Regulations do not obligate Network Rail to improve this situation at train stations. The investment in improving access for disabled people is woefully underfunded, and will take decades to restore even basic provision at many stations.
We might all be inclined to support the recommendation of the Disability Rights Commission, which suggests that such improvements should be incorporated into the franchising arrangements, as noble Lords have already said. That would in all likelihood reduce government revenues, but it would provide realistic, fundamentally important service improvements that would end the current discriminatory policy.
A great deal has been said about the capacity of the network—so what about it? As it stands, the current franchising system does not allow for capacity increases to cater for increased demand. That is already a major problem, but it is set to worsen, as passenger numbers are forecast to grow by 28 per cent during the next seven years, according to the Office of Rail Regulation. Meanwhile, capacity is set to grow by only 2 per cent. Already commuters are often unable to fit on trains, as the noble Earl, Lord Glasgow, and the noble Lord, Lord Cotter, said, and have to wait for a later service. Furthermore, that overcrowding is another significant problem for disabled citizens, as many of them are unable to stand for long periods of time, and wheelchair users are often precluded from boarding trains that offer insufficient space for them.
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Examples show that some franchisees make no serious attempt to increase capacity. First Capital Connect removed trains from its routes to meet government-imposed franchise specifications, again reducing capacity. South West Trains is ripping seats and lavatories out of its carriages to provide more room—standing room only. Most trains travelling into London suffer from excessive demand and overuse. Overcrowding on morning commuter trains into London has doubled since 1996. As the noble Lord, Lord Rosser, said, if the house-building in the south-east increases, there will be even more demand because that is the only way those people will be able to access London. Meanwhile, fares continue to increase. How does this costly, uncomfortable and congested network offer a viable and attractive alternative to travelling by car? I fear it does not.
These problems are more than a matter of discomfort or inconvenience—they may prove to be fatally damaging to our economic competitiveness. It has been said that a buoyant economy requires free-flowing labour. Privatisation has achieved that goal, delivering 30 per cent growth in passenger numbers and consistently increasing distance of passenger journeys over the past decade. That was our party’s success. However, the structure of the railway as it currently stands cannot continue. It offers an unsustainable service that, in the current jargon, is really not fit for purpose. The aforementioned House of Commons Transport Select Committee concluded in a similar vein, suggesting that the structure of the franchising system was a “policy muddle”.
If we do not take immediate steps to overcome this problem, our workforce will become disillusioned and move elsewhere and our international competitiveness will be lost. That might solve the problem of overcapacity, but it is fair to say that it would be absurd to end years of economic growth and prosperity for the sake of such a futile and bureaucratic regime. Furthermore, a reliable and attractive rail network provides a credible alternative to travelling by car and taking short domestic flights. It can play a hugely significant role in tackling climate change. As it stands, travelling by rail is highly uncomfortable, obscenely congested and often vastly more expensive than alternative travel.
In conclusion, I shall say that I am also sorry to be concluding our debates with the noble Lord, Lord Davies. He has always managed in this portfolio—and will, I am sure, in his next—to be urbane, equable, knowledgeable and good-humoured. We wish him well in his next portfolio, and look forward to hearing him all over again on a different subject.
4.29 pm
Lord Davies of Oldham: My Lords, I am grateful for the good wishes from various parts of the House, but this debate has been as painful for me as usual in the challenge it has laid down. I did not notice any kindly let-up just because this is the last time I will be speaking on rail, at least for a while, from this Dispatch Box.
I thank the noble Lord, Lord Chidgey, for introducing this important debate. It is at the centre of the issue with regard to rail, which is a very
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The exercise with regard to franchises is almost bound to create opportunities for members of the public, their representatives in the other place and noble Lords to focus on the worst performances and then to damn the whole system because of weaknesses in certain areas. That is not entirely fair. The noble Lord, Lord Chidgey, introduced the central point of the debate and that was followed by many other noble Lords. I refer to the length of the franchise. I have heard the representations; not for the first time has it been mooted that everything in the garden would be so much better if only train companies had much longer franchises and were therefore able to invest at the requisite level. We are not convinced of that. It would be a very odd perspective if one did not see that there may be an incentive to greater investment if one knows that one is holding a franchise for 15 to 20 years. I can see the attraction of that proposal.
It is also the case, as every noble Lord who has spoken has emphasised, that passengers have rather shorter-term demands than the state of the service in 15 to 20 years. Passengers, rightly, are concerned with what is going on in the here and now. The recurrent themes throughout the debate have been, “Why don’t you take the longer-term view and extend the franchise?” and, “Why don’t you hold these people to account today for what they failed to do yesterday?”. We cannot have it both ways.
The Government think it is important, through the duration of the franchise, that structures are in place to hold the operating companies to account. But I do not think that would be aided by the extension of the franchise to 15 or 20 years, as has been suggested. My noble friend Lord Snape pointed out that it is easy to say that one company does pretty well out of this: Chiltern Railways is a model railway which has a 15-year franchise—therefore, case proven. As my noble friend pointed out, there are particularly felicitous aspects with regard to Chiltern and its franchise which do not obtain across the far more difficult and complex franchises elsewhere in the United Kingdom to make that a particularly good illustration of how we solve the problems.
I maintain that the current franchise system is delivering. I shall come on to the weaknesses in the system and will erect a defence even for the less than defensible, in so far as it is within my power to do so. I will therefore talk about First Great Western in a moment.
The system is delivering. More than 1 billion passenger journeys were made last year, 40 per cent more than 10 years ago. That is a rail system which is responsive. Is it delivering all these passengers to their
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The noble Lord, Lord Cotter, gave us a diatribe on the ills of First Great Western—and I will be the first to recognise that First Great Western’s recent performance, as I said earlier this week, is far from satisfactory, to put it mildly. Therefore, I am not surprised that passengers are demonstrating their frustration at the quality of the service. But the noble Lord said that its punctuality over a month or two was as low as 75 per cent. He is absolutely right, but in all fairness to the rail company, one must take a slightly longer view. First Great Western's performance on punctuality for the past year is 85 per cent—only just at the bottom of the achievements of the rail industry, but it is there. First, that is a good deal better than 10 years ago; and, secondly, it would not be right to say that what is happening on that line and the surrounding area in Bristol is utterly and totally calamitous. I recognise the significant points about its weaknesses, but those problems are not resolvable by the broad point that has come through from noble Lords who are seeking to be constructive in this debate—namely, that the issue revolves around the length of the franchise.
The noble Lord, Lord Snape, entertained us all—on buses one day and rail the next. I am trying to wean him on to aircraft because none of us has recently found anything particularly entertaining about aircraft. He must make a contribution to that debate. The 50 mile an hour restrictions are not universal in the UK. They are applied on Met Office advice according to reports from the Met Office and apply only in those areas where very high winds are present, not across the network as a whole. The noble Lord may as well say that the Swiss are much better at clearing snow than we are. Of course they are, because they have weather systems where they have to provide for their rail system against such extremities. On the whole in Britain, we do not often get 50 mile an hour restrictions on our railway system as a result of winds. However, I hear what the noble Lord says and it will not hurt the railway authorities to hear his diatribe and to consider whether the gantries and structures that sustain our overhead lines are sufficiently robust for us to sustain our trains even in the worst of the weather, which we hope is a short-lived problem.
He also raised the question of the Brighton mainline route. I hear what he ways about not interfering with the Gatwick Express. However, if he brings to my attention the threat that Richard Branson will move his passengers by road via the M25 as his solution during the Olympic Games, all I can say is that his appreciation of our transport system is rather less than I think it is. It sounds an idle threat, but I respect the fact that the noble Lord is saying that we should cherish and recognise the value of a very good service from Gatwick to Victoria. It is a good service and we want to see it sustained. We are trying to see whether the Brighton mainline route can incorporate aspects of that service and provide a better service for commuters who travel from further
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The noble Lord, Lord Teverson, also concentrated overwhelmingly on the franchise arrangements. Those arrangements, of which we have had experience over a considerable time, are sophisticated operations. The noble Lord, Lord Bradshaw, emphasised the fact that franchises must include aspects such as punctuality, must look at the investment demands required and must put train operating companies on the spot when they sign up to the specifications. Well, they do—and they do not only put them on the spot when the companies win the franchise. My noble friend Lord Snape said how extraordinarily complex the submissions were; that is because the demands are so great. But there is not just that—there is regular monitoring, too. The train companies are subject to monitoring. As the Minister responsible for rail in the other place said the other day, he has regular meetings with train operating companies to ensure they recognise that we are keeping the closest possible eye on performance. So I do not think there is much more to be said about monitoring the franchises than what we are committed to doing and are doing at present.
My noble friend Lord Rosser always speaks with great authority from his long interest and work with the railways. He referred to the technological dimension, which needs to be taken on board. One worry must be that with the fragmentation of the industry, which is obviously a part of having separate train operating companies, fundamental research into trains could be lost. We have certainly put a great emphasis in our recent franchise competitions on innovative solutions from bidders. We have focused on aspects such as regenerative braking, for example, and made that a specification. We are therefore expecting to introduce necessary technological change into the remit that the rail companies should consider.
My noble friend Lord Faulkner, as always, got to the heart of the significant debate by emphasising the achievements of rail and where it is also necessary for improvements to be made. I would dispute one point, however: air policy is important in transport policy; we can see benefits in weaning people off internal air flights on to the railway, as the railway becomes more competitive and effective. It will not do to suggest that our air policy is formed on the basis that we build, construct and provide where people want to fly. Even under the expansion at Stansted and Heathrow that is contemplated, we will still be two runways short of the likely demand for people flying in 2015. That is not an automatic response to people’s demands but a measured response to meet people’s needs as best we can while recognising that there are other necessary constraints.
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