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Like the passenger railway, rail freight is now growing after a long period of decline, a point made by a number of noble Lords, in particular by my noble friends Lord Berkeley and Lord Faulkner. The amount of freight moved has increased by 66 per cent since 1995 and we expect it to grow by another 30 per cent in the next 10 years. Noble Lords will appreciate that that growth, coupled with rising passenger numbers, will substantially increase the competition for space on the network. To cope with those ever-increasing numbers, we are taking steps to increase capacity. Over the next two years Network Rail plans to more than double its average annual investment in enhancement schemes to expand network capacity. Platforms will be lengthened, new platforms added, new tracks laid and line speeds raised.

The rail White Paper that was published in July, much praised during the debate, is a vote of confidence in rail travel. It is the most positive statement about the growth and development of Britain’s railways in 50 years. It sets out the funds we intend to make available for the railways in the medium term, together with the improvements we expect the rail industry to deliver in return. It covers the period from 2009 to 2014. The aim is to develop a modern, sustainable system that is accessible and easy for passengers to use. In addition, it sets out our plans in the context of a long-term strategy covering the next 30 years. The White Paper is unique in delivering the single biggest programme of investment for a generation. More than £10 billion will be invested in enhancing capacity between 2009 and 2014. Overall government support for the railway will total some £15 billion.

Much has been said during the debate about the 1,300 extra carriages that are to come into service between now and 2014 and will go to the routes and services with the worst overcrowding problems. That will provide nearly 100,000 new seats for passengers on intercity commuter trains to our major cities. It will increase that capacity and will help us cope with the 30 per cent increase we currently project for the decade ahead. Roughly 900 of those new additional carriages are expected to go to London and the

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south-east, with the remainder being allocated to regional cities and inter-urban areas. Precise details have still to be finalised.

The next step in the process is for Network Rail and the industry to consider in more detail how best to deliver the Government’s targets on capacity, safety and reliability through the introduction of more rolling stock. The department will publish a rolling stock plan in January 2008 setting out its proposals in more detail. The noble Lord, Lord Bradshaw, was particularly keen to learn about that. We hope to see the introduction of new rolling stock following on swiftly from that plan.

We are aiming for a network that can handle—

Lord Faulkner of Worcester: My Lords, before my noble friend leaves rolling stock, will he confirm that the review in January will cover the issue of the Virgin request for two extra coaches for its Pendolino service? That is crucial for matching the supply of seats to the demand that is likely to exist in 2012.

Lord Bassam of Brighton: My Lords, I do not have that detail but I will write, as I will have to on a number of the issues today. I appreciate the point the noble Lord has made. I had already made a careful note of it in my notes, and we will try to come to that in correspondence.

The Secretary of State has also specified an increase in reliability, which has been one of the hallmarks of our recent success, from 88 per cent to 92.6 per cent in 2014, and a further 25 per cent reduction in delays of more than 30 minutes. It is important to tackle both those issues.

The new InterCity Express programme vehicles will be introduced in addition to the 1,300 new carriages identified in the White Paper. The IEP will create a new design of train that will be lighter and more environmentally friendly than current long-distance trains. They will also be longer and capable of carrying significantly more passengers than current stock. This is a flexible train that can be deployed on different lines in different lengths and with different sources of power. We aim to award the contract to the successful bidder in the winter of 2008-09.

In planning future passenger services we need to ensure that the needs of freight are properly taken into account. We are investing £200 million in a strategic freight network that will help to reduce congestion on our roads. The Government see the productivity element of the transport innovation fund as a potential funding stream to enhance the network. It also represents the first steps towards the development of a strategic freight network.

Some passengers are concerned about possible fare increases—we have heard comments on that in today’s debate. Now that industry costs are under better control, our aim is to return the balance of taxpayer funding to historic levels. In the past six years, the amount invested in rail has risen. However, nearly all of that increase has been met by taxpayers. Our objective is to restore the balance.

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Under the franchise system, nearly 300 million more passengers a year use the trains. The revenue earned by franchise operators is paying for the capacity to accommodate the 180 million more passengers a year that we are expecting by 2014. We are delivering record numbers of new passengers and delivering the investment necessary to accommodate them. Our emphasis on increasing capacity means that we can make a start on tackling some of the worst overcrowding.

More than half of all rail journeys are on regulated fares, which we are continuing to protect at RPI plus 1 per cent up to 2014. Regulated fares are still on average 2 per cent lower in real terms than they were in 1996. They compare well with the cost of using a car if all motoring costs, and not just the cost of fuel, are taken fully into account.

Other fares, as noble Lords will know, are unregulated and can be set at operators’ discretion. That does not mean that operators can simply increase fares as they wish, because they have to compete with cars, coaches and airlines. We want to see operators pricing people back on to trains and making train travel more affordable. In this way, we will maximise the benefit of the rail network to passengers, as well as reducing road congestion and helping the environment. If fares rise, it is because they are helping to pay for new carriages, more frequent trains, improved stations and refurbished tracks.

Lord Dykes: My Lords, I hope that the Minister will forgive me for interrupting at this stage. He spoke about making trains more comfortable and affordable, and more attractive for other non-fare reasons as well. Will the Government put their full weight behind a move to have more quiet coaches, where mobile phones are not used, with people using their phones in between rather than in the carriages?

Lord Bassam of Brighton: My Lords, that is an aspect of passenger comfort. Like the noble Lord, I suffer from the excessive noise of people sitting beside me and the overuse of mobile phones. It is an issue that we continue to raise with the train operators.

To make it easier for passengers to identify and buy the ticket they need, we are bringing greater transparency to the fares structure. We are radically simplifying the fares structure by creating four simple categories across the whole network. They will be: anytime, off-peak, super off-peak and advance. The rail industry needs more efficient ways to sell tickets if it is to cope with the predicted growth in demand. The noble Earl, Lord Attlee, referred to the success of the Oyster card. We certainly support those developments, and other developments such as using a mobile phone to buy tickets. Increasingly, people want to be able to access services on their own terms, at a time and place of their convenience. As noble Lords will I am sure appreciate—I certainly do—they do not want to queue. That is why we will roll out ITSO smartcards across the rail system, supported where appropriate by ticket-to-mobile and print-at-home facilities. Additional internet-only fares will be allowed where they bring real value, responding to the recent growth in the trend for buying tickets over the internet. For the more traditionally minded among us, tickets will be available

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to purchase at stations. The National Rail Enquiry Service will provide a single source of comprehensive information through its website and over the telephone. Details about timetables, service disruption, real-time train running, fares and facilities will be available. Passengers will be able to find information about any fare available on the network and will be able more easily to plan their route.

A number of noble Lords mentioned standards of physical access and facilities at stations, which vary across the network. The noble Lord, Lord Methuen, raised the sad case of Derby station, which he thought was badly in need of attention. That is one of the 150 mid-size stations for whose refurbishment and modernisation the Government have set aside £150 million. Of course, that money has been set aside on top of the £370 million of accessibility funding that we have announced at an earlier time. Precise costed plans for the near future include approval for the £5.5 billion Thameslink project, a £120 million grant for the major redevelopment of Birmingham New Street to improve passenger capacity and station environment and works at Reading station to eliminate a major bottleneck on that particular part of the network.

A number of noble Lords referred to the Crossrail project. Of course, much is known about that—it is a new east-west railway, linking Maidenhead and Heathrow with Shenfield and Abbey Wood through new tunnels under the centre of London. It is to be funded by the Government, Transport for London and businesses that will directly benefit from that link. Work on this massive £16 billion project will begin in 2010 and the first trains are expected to run in 2017. It will carry nearly 200 million passengers a year, significantly increasing capacity on the network into and across London. That will be achieved by increasing peak east-west capacity by some 40 per cent, adding 21 per cent to total rail capacity to the City and 54 per cent to Canary Wharf. Its contribution towards relieving congestion and overcrowding on the existing national rail and underground networks should not be underestimated. Ultimately, Crossrail will help to meet the substantial growth in demand for travel in the capital expected over the coming decades and continue the important regeneration and growth in London's economy.

Crossrail is and should be recognised not just as a project for London but as a project for the nation, as it will benefit not only London but the country as a whole, providing strategic interchanges for local, national and international rail passengers.

Lord Methuen: My Lords, does the Minister agree that Crossrail would be much more effective if it was extended as I suggested?

Lord Bassam of Brighton: My Lords, the noble Lord makes a fair and reasonable point. No doubt that is one of the issues that will be reviewed over time.

It is estimated that Crossrail will add some £200 billion to the UK’s GDP and attract an additional 80,000 jobs to regeneration areas.

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In their positive contributions noble Lords made important points and raised important issues. One of those was the air versus rail substitution issue. We of course support the use of rail when it can provide a reasonable alternative to short-haul air services. Studies suggest that rail competes well with air on point-to-point journeys of two to three hours. For longer journeys, air travel is a mode of choice and investments to improve our inter-urban rail network will over time increase the attractiveness of rail as an alternative, as will more attractive pricing packages offered by the rail companies.

It is not up to the Government to dictate how and when people travel, as that is obviously a matter for personal choice, but we are keen to get more people on to the rail network and it is true that as a percentage or proportion fewer people travel by plane and more by train. To give an example, over the past five years passenger numbers on the rail network have increased by some 15 per cent. Rail’s share of travel between London and Manchester has switched, for example, and now two-thirds of passengers travel by train rather than plane, up from one-third in 2004. There have been similar improvements on the main links between London and Scotland. So we can see and look forward to continuing improvements in that regard.

The noble Lord, Lord Berkeley, made one interesting point—of special interest to me, as I share an interest in planning issues. He praised the Government for introducing the Planning Reform Bill—and I welcome that support—because of its potential for ensuring that strategic rail freight interchanges benefit from the careful consideration that will no doubt be given to them through the new Infrastructure Planning Commission, which means that they will be subject to statutory timetables and that the potential for delay will be much reduced. In that context, we may well see that Birmingham New Street, Reading and the other smaller upgrades announced in the rail White Paper could be considered by the Infrastructure Planning Commission. That would helpfully speed considerations.

Several noble Lords referred to the European Rail Traffic Management System. The noble Lords, Lord Berkeley and Lord Methuen, made some important points about that. It is an important advanced signalling system, which will eventually replace line-side signals with in-cab signals with all the benefits that that might bring, potentially offering the ability to run trains closer together and increase capacity on the network. However, the technology is still being developed and trials are being set up. I think the noble Lord, Lord Methuen, referred to the Cambrian coast line pilot for which money is already allocated. We launched the technical strategy at the same time as the publication of the White Paper and we made it clear that the ERTMS is part of our medium-term to long-term thinking. It has great potential for the future.

Reference was made, particularly by noble Lords on the Liberal Democrat Benches, to the value of introducing high-speed lines. Interest has focused on this with the opening of the Channel Tunnel high-speed link. I understand the argument that noble Lords on the Liberal Democrat Benches made for this and it is

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welcome that they want to enter into this debate, but it should be fairly said that high-speed lines do not address the priorities for the railway system as it is. The danger is that the sort of investment in high-speed lines that those noble Lords are asking for could distort our budgets and absorb large sums of money for gains that are not so apparent. The commitment to a network of that sort could lead to expenditure somewhere in the region of £30 billion. I would be interested to hear from the Liberal Democrats where they see that money coming from.

The Eddington transport study recommended pursuing high-speed rail options only where they have been demonstrated to be the highest value for money option to relieve the congested corridors, which makes good sense. We need to ensure that we increase capacity in order to tackle congestion on the network. Our belief is that the measures in the high-level output statement and strategy will do this in the foreseeable future.

To add to the argument, the economic geography of the United Kingdom is different from that of our European partners with their emphasis on high-speed lines. Our main challenges are congestion and reliability, and rather less so journey times and connections. I understand the force of the argument and I am encouraged by the commitment to debate on the issue, but we will get greater value for investment in the intercity express programme. I have spoken a fair bit about that and the increase in vehicles that we will have to service that commitment.

My noble friend Lord Snape made some telling comments. I was grateful to him for his support for the Government’s programme and his general encouragement. He asked questions about the funding gap. We cannot expect the Network Rail business plan to match the high level output statement and White Paper exactly. After all, it is an iterative process. The so-called funding gap largely relates to items that are optional extras rather than commitments such as the 1,300 new carriages. We are in continued discussions with the Office of Rail Regulation and we will be developing the next version of its business plan which is not finalised until the start of the HLOS period in 2009. There is much discussion to continue, quite properly, and we have to look at issues such as assumed rates of return and put in place some precautionary schemes which may or may not be required to deliver on reliability and improvements.

My noble friend also drew our attention to the importance of electrification. We do not rule out further electrification. We obviously recognise the benefits of electrifying some routes and certainly recognise and understand the environmental arguments for it. We have to measure the priority for electrification in good business terms and in terms of operational need. If we can reduce the cost of electrification, the case for it can be strengthened. The key question is whether the investment will recover its costs within a 10- to 15- year period so that it can pay for itself regardless of what the optimum longer-term carbon choices turn out to be.

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Lord Snape: My Lords, I am sorry to interrupt my noble friend but if we are to have a diesel-hauled railway in financial control period four up to 2014, what is the Government’s estimate of the price of a barrel of oil between now and 2014?

Lord Bassam of Brighton: My Lords, I intend to come to that point because the noble Lord, Lord Bradshaw, asked a similar question about our projected costs. As regards my noble friend’s other point about the heavier goods vehicles, there has been a lot of coverage on this and I think there was an article in the Times on 26 November. There are no plans to allow LHVs in the UK. The Transport Research Laboratory—one noble Lord also referred to the Heriot-Watt study—is undertaking a desk study to assess what the effects might be if LHVs were to be committed. That study was commissioned in response to a growing interest within the rail freight industry. However, I reiterate that we have no plans to allow LHVs in the UK.

I am conscious of the time. I realise that I am running over but I shall comment on oil. The noble Lord, Lord Dykes, gave an interesting historical discourse and made important points about the Channel Tunnel Rail Link and freight. The opening of section two of the CTRL does not threaten its use by freight in any way; in fact it will free up more paths on those parts of the conventional network not currently used by Eurostar. We are in continued consultation on the charging regime for CTRL and that covers passenger and freight operations. There is no doubt that freight operators will continue to let us have their views and that will inform our negotiations and discussions.

The noble Lord, Lord Bradshaw, asked me at Question Time yesterday about the assumptions made on fuel prices that underpin the DfT forecasts. Those assumptions are set out in the UK air passenger demand and CO2 forecast November 2007 report. The forecasts are based on the Department for Business, Enterprise and Regulatory Reform’s central forecasts on oil prices. Its forecast is that oil prices will fall from $65 per barrel in 2006 to some $53 dollars per barrel in 2030, with most of the decline occurring from 2012. That is the basis on which those projections are made. Of course, there will be a wide-ranging debate and continued reflection on that and no doubt there will be considerable disagreement too, but that is the model on which we currently base our view.

I shall stop now as I recognise that I have gone on for far too long. However, this has been a very helpful, enjoyable and positive debate. Noble Lords asked many questions. The noble Earl, Lord Attlee, asked me quite a few detailed questions that I have not dealt with. I shall endeavour to put my answers together in a compendium letter which I shall circulate not just to those who asked the questions but to all other noble Lords who contributed to this very useful and positive discussion on the future of our rail network.

5.04 pm

Lord Berkeley: My Lords, I am most grateful to all noble Lords who have contributed to the debate. It demonstrated the wide-ranging expertise and knowledge

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about railways in your Lordships' House, and has been really good. As my noble friend Lord Snape said, this is the first time that we have had a five-year plan financed for the railways. Most of us have debated where growth should come, which is very positive.

I leave your Lordships with one interesting statistic. The noble Lord, Lord Greaves, mentioned that the reopening of his line from Skipton to Colne was estimated to cost between £43 million and £81 million. I am told that that is the price of delaying the Crossrail project next summer by one month, so that gives us some food for thought as to where the allocation of new investment should go. With that, I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

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