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12.57 pm

Lord Berkeley: My Lords, it gives me great pleasure to participate in a very knowledgeable debate. I declare interests as chairman of the Rail Freight Group and a

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board member of the European Rail Freight Association. I am also secretary of the All-Party Parliamentary Rail Group.

Many noble Lords have spoken about the success and growth of passenger and freight traffic. My figure for the growth of freight is 60 per cent in 10 years. That is because service quality has improved and performance in passenger and freight services is probably the best in Europe, after Switzerland. The noble Lord, Lord Lyell, was very kind about me. It is clear that he knows a lot about Switzerland. They do run a very good train service there.

His and other noble Lords’ comments focused on the problems of capacity. There is a shortage of capacity at the moment, and there will be a much greater shortage in the future. Forecasts that we did with the Freight Transport Association in the summer indicate that, in 20 years, there will be a shortfall of paths on the west coast main line, the east coast main line, the great eastern and many others of somewhere between 100 and 200 freight trains a day, assuming that there is no increase in passenger trains—which is not a very sensible assumption, except for the fact that nobody can say how many extra passenger trains there will be. You can go on making trains longer; you can extend platforms; you can build extra tracks; and you can build new freight lines—as the noble Lord, Lord Lyell suggested. All of those things can help and some of them can be done quite quickly—for example, having four tracks instead of two, although high-speed lines would take longer—but we need to start thinking about it now. I know that the Minister is doing so, and it is very welcome, but we need decisions quite soon because the problem will begin to hurt in the next few years. On the midland main line, for example, I understand that the new service to Corby, which is in all the timetables to start in December, does not have approval for an access right to a path. If it gets approval from a regulator, freight will have to wait and go some other way. The problems have started now.

Freight terminals are equally important. If there are no terminals, there is no freight. I am very pleased by the work that the Minister and my noble friend Lady Andrews have done to include rail freight as well as big railways in the scope of the Planning Bill.

I have just one last reflection on the difference between the UK and our nearest neighbour. Many noble Lords have talked with affection about high speed lines. They are great fun and get you around very fast. They are different here—they would be, because we are a much smaller country and the capacity problem is much greater. But the significance difference that I see between here and somewhere like France is that at the moment our whole network is in a pretty good state, whereas the French railway network, apart from the TGV line, is in a pretty appalling state. I have travelled outside the Paris region by bus because the track was unable to take a train. So we must be careful when we start making comparisons with other countries and hold on to what have been some very good investments by Network Rail in the past few years.

I welcomed my noble friend’s robust statement about how the Government cannot interfere in Network Rail. I declare an interest as one of the 100-odd

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members of the board who are trying to review corporate governance to see whether we can improve it, if it needs improving. I also welcome the work that the Rail Regulator has done in his latest review, to which others have referred. He said that track access charges would come down 35 per cent. That is fantastic, but it would not have happened if the costs had not come down, because there is a direct relationship between the two. I agree with what my noble friend Lord Rosser said—that there are further savings to be made—and I hope that the regulator continues with this.

It is interesting that in Scotland, the new line that Transport Scotland proposes between Edinburgh and the Borders is intended to be operated by an infrastructure manager that is not Network Rail, so that the performance and cost can be benchmarked between them. That is going to be very interesting. It might assist our Rail Regulator in seeing whether efficiencies can come from that. I personally have no appetite for major changes to structure, but small tweaking is necessary, so let us build on the success to date and concentrate on investment and more efficiency.

I have three issues to raise in this debate: on passengers, on rolling stock and on the dear old Channel Tunnel rail link. On passengers, I have an interest in Cornwall, where I am a harbour commissioner in the port of Fowey and have a house. I travel by train as much as I can around there. I add my comments to those of other noble Lords who have referred to the lack of capacity in the rolling stock on some of those services. Devon and Cornwall are seriously important tourist destinations for the UK and a lot of tourists, as well as local people, want to go by rail. However, being squashed into a pacer is a bit like cattle being squashed into a truck on the way to the slaughterhouse, which is not the way to encourage tourists to leave their car wherever they are staying. I urge my noble friend to look at the south-west as well as other parts of the country to see whether, certainly in the summertime, more rolling stock could not be found for local services and for some of the services that come cross-country and from the First Great Western line to that area. I know that the Minister’s department has said that some of the cross-country trains can be increased by turning them into 125s, but some of the other trains have been taken away, so it is only a marginal increase. I hope that he will be able to look at that and do something for the tourist industry in that area.

I turn to something a bit more complicated, called homologation. It is to do with introducing new rolling stock on the railways and is part of the single market in railways—open access and interoperability, which I support vigorously. The problem of getting there, however, is quite serious. It is challenging the private sector industry to spend money on innovation when the costs are really getting quite high. To give your Lordships an example, new wagons have been ordered by Network Rail for its own equipment and have been produced for lower-height and container wagons to get under bridges without gauge enhancement. The cost of compliance with the new standards is looking to be from £50,000 to £100,000, which to a private sector company is quite a lot. We find that they are required to fit spark guards to the wheels, in case the sparks from the brakes set fire to the train above it.

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Sparks can be caused by cast-iron brakes, as noble Lords will know, but it is very difficult to create sparks from composite brakes. I do not think that anybody has ever achieved that, actually—but they still have to fit spark guards. Furthermore, the wheel profiles are different in the UK and the brake blocks have to be different. If you put the new brake blocks on a wagon of a train that otherwise has UK blocks on them, the new brake blocks will stop the whole train, because they have higher friction. That means that they will wear out so quickly that you have to replace them every other week. It is fine if the whole train is like that, but it does not actually help developing new equipment.

The noise has to be tested on all new wagons and coaches, passenger and freight. For some reason, we do not have anywhere to test them in this country, so they have to go by road to the Czech Republic. That probably costs £10,000 in road charges. I mean, don’t we look stupid? I said to Network Rail, “Why don’t you put a microphone beside the track?” Somebody in a government department said to me, “Actually, you can’t do that in this country because the track is so bad that it wouldn’t come up with the right answer”. I am not sure that I believe that—but the fact remains that having these trains going to the Czech Republic on a road vehicle is stupid, and I hope we can get round that.

This is a big transition issue for the industry, which has to compete on the freight side with road. It is a disincentive to modal shift. I give credit to my noble friend’s officials for their commitment to not only this kind of homologation but another thing that is coming in called TAF TSI. That is a requirement that all train operators, passengers and freight, must introduce IT interface systems between train and infrastructure manager and train and other train in the next five years, or they will not be allowed to run on the network. The good old incumbents on the Continent have come up with the lovely idea that they will introduce all this, develop it and give it to themselves for free and everybody else will get charged an unregulated fee for doing it. Most of the companies in this country, passengers and freight, have not joined this.

Again, my noble friend’s officials are doing very well with the regulator in addressing these issues, but could he do even more with his officials? Not only do these things have to be taken extremely seriously, but our success in this country with the new structure, with the competition and the better service quality and everything, is something that our colleagues on the Continent really want to know about, but they are a little bit uncertain about it, and they need our experiences first-hand from my noble friend and his colleagues rather than from other people who want to tell another story.

My last issue is on the dear old Channel Tunnel rail link, which is now called High Speed 1. We had a big debate here on 13 May, on the Third Reading of the Channel Tunnel Rail Link (Supplementary Provisions) Bill. My comments relate to costs and charges for freight to use the link, for which the consultation is out at the moment. The issue with costs started long before my noble friend was in his post—it probably

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started before 1997, in fact. The owners of HS1—effectively the Government—have given the contract to Network Rail to operate HS1 for 80 years on a cost-plus basis. I am not a great fan of cost-plus contracts, because people sit back and watch the money roll in. Where is the incentive to reduce the costs when the contract is for 80 years? I do not think it is a very good idea. On the basis that charges relate to costs, I want to see the costs come down so that the charges come down.

In the debate on 13 May, my noble friend said that he was keen for the Government,

I think that means he wants to break the contract with Network Rail—I hope he does—and come back with a better one. He continued:

“The Government do not see themselves as the first and best regulatory option”.—[Official Report, 13/05/08; col. 932.].

That certainly was not the case at the start. I would say that they were probably the worst regulatory option. I hope my noble friend can now turn that around. I hope that he can inform me of some progress on this, either now or in a letter, because lower costs equal lower charges.

The regulations are quite clear on the principle of charging for freight. Directive 2001/14, Article 8, states:

“The level of charges must not ... exclude the use of infrastructure by market segments which can pay at least the cost that is directly incurred as a result of operating the railway service”.

To me, that means marginal cost plus a mark-up on what the market can bear, if it can. I do not think that the CTRL people are saying that they should have fixed costs added to this. They published a network statement on Monday—about three years late—which said that the infrastructure managers,

In other words, “We are doing that, and to hell with whether it is legal”. That needs to be challenged.

Secondly, the document has no basis for calculating the costs. The managers say that the cost is £9.25 per train-kilometre. There is no justification for that: that is what it is, like it or lump it. The cost is £14.80 per train-mile, compared to Network Rail’s £2.50 a mile, as required by the regulator—it is six times the figure. When road freight is the market leader, you cannot just multiply the access charge by six and say “That’s it”. There would be no traffic at all. I hope my noble friend will look at that and see whether we can get some common sense. I believe that the charges are illegal under Directive 2001/14. I do not think, as my noble friend Lord Bassam said, at col. 929 of Hansard, that this is encouraging greater use of the line. To me it certainly is not. I do not think that it puts the Government in a very good position as a regulator because no freight will use the line as it is. There were plans for freight for the Olympics to come up that line. I believe that it is a barrier to trade.

The Government are about to receive a letter—perhaps my noble friend can confirm whether they have already done so—to say that the European Commission is starting infraction proceedings for non-compliance on

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this network statement. I hope I do not have to do this, but unless my noble friend can give me some answers—I do not expect them today as it is a bit complicated—I shall encourage the Commission in that.

My noble friend spoke warmly of the £200 million strategic freight network for freight, which is really good news and which I welcome. He said that it makes a good connection to hubs and international gateways. The Channel Tunnel is the only international gateway connected by rail, and I do not think that he will see any trains on his strategic freight network going through the tunnel, unless that gets changed.

Enough of that gripe. I apologise to my noble friend for the length of it. What we are all saying in the debate—certainly what I am saying—is that we have had a lot of change but, for me, change never goes fast enough. However, let us look at the significant improvements to passengers and freight and the quality of the network achieved. Service quality and performance have been dramatically improved. Forecasts of growth—I do not know whether they slow down—are a nice challenge. I am sure that my noble friend and his team will meet that challenge and that we will move forward to see the growth and the investment necessary to achieve it.

1.44 pm

Lord Wallace of Saltaire: My Lords, the noble Lord, Lord Lyell, said that he thought that he was the only amateur in this debate. I declare myself also an amateur among all these rail professionals. I am very grateful to my noble friend Lord Bradshaw for providing me with some very helpful briefing. However, I live in the north of England and I very much want to make a number of points in a debate about investment, which tends to be dominated by the demands of the south and south-east England.

We all recognise how much we have damaged public transport infrastructure over the past 30 years and the structural reasons for that. I was talking to the Minister informally the other day about the structural bias of transport economics against rail, which I have experienced as an academic on a number of occasions. I hope we are now at least beginning to move away from the structural bias of the Conservatives, particularly under the prime ministership of Margaret Thatcher, against public transport and in favour of private transport. The whole Anglo-Saxon approach to private and public initiatives, which one sees now in the United States as they become aware of their rail and road infrastructure, is desperately in need of change. I have to say to the Minister that it is wonderful to hear that California is beginning to revive its rail network. In 10 days’ time I shall be taking the train from New York to Boston through several states. I have allowed for it to be half an hour late. The last time I went from New York to Washington by train it was nearly an hour late. When the United States actually starts to deal with its east coast main line, we will know that it has begun to catch up with the shift in assumptions about public and private.

I welcome the Minister’s opening speech. I am only sorry that it has taken the Labour Government 11 years to reach the point that we hope we are at. I note the

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thinness of the Conservative contributions to the debate, and I fear that that also represents the thinness of Conservative policy on public transport. We have seen a whole series of missed Opportunities over the past 20 or 30 years. New road-only bridges have been built over the Humber and the Severn when on the Continent they have been building combined bridges for road and rail. Airports at Manchester and Heathrow have been built without through rail connections in sharp contrast to Schiphol, Charles de Gaulle and Frankfurt. These things are all going to be costly to revise. Privatisation was very badly mishandled with large sums paid to consultants and unnecessarily expensive arrangements for the leasing of rolling stock and for PFI. There was the abandonment of the electrification programme and the odd situation in which we have privatised our railways by allowing state-owned companies of others to buy into them. When I wanted to talk about the Leeds to Skipton railway line I had an interesting conversation with an executive of Netherlands rail the other week—NedRail is a part owner of Northern Rail. The same applies to the state railways of Germany and France.

The revival of rail travel over the past 10 years has been as strong in the north as it has been in the south. There has been a 40 per cent increase in Yorkshire in the past 10 years, and Network Rail is talking about an anticipated rail increase of up to 50 per cent in Yorkshire and across the north of England over the next 10 years. As regards CrossCountry trains, I cannot remember a time, whenever I get on a train from Leeds to Newcastle, York, Sheffield or Birmingham, when people were not standing in the train. As regards the Skipton to Leeds line, which is my local railway line, it is impossible to get on at Saltaire between 8.30 and 9 o’clock in the morning. The Harrogate to Leeds railway line, a marked commuter rail line, still uses Pacers that were cascaded—that lovely term in which stock moves from the south of England to the outer regions of the country. It means that if you try to go from Leeds to Morecambe or Shrewsbury to Aberystwyth, or even Leeds to Harrogate, you still use these funny things, which were disbarred from the south-east many years ago.

Lord Berkeley: My Lords, I remind the noble Lord that we have never had Pacers in the south-east.

Lord Wallace of Saltaire: My Lords, I thank the noble Lord. In that case, no one in the south-east would ever have put up with them.

The revival of freight on the railways is also immensely encouraging, but we are already up against capacity limits. My London-Leeds train the other Friday was held up for some time because there were two freight trains on a double-line section of the east coast main line in front of us. I assure the noble Lord, Lord Lyell, that the Settle-Carlisle line is now heavily used, including at weekends. Now that I have a shared allotment in Saltaire, just alongside the Settle-Carlisle railway line, I see the number of trains that go past us.

The absurdity of privatisation as a basis for higher public investment has been well remarked upon by others in the debate. The case for public investment in

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rail is now strong. There are four rationales: first, to meet this rising public demand; secondly, to reduce carbon emissions as part of the climate change debate; thirdly, now, to revive the UK economy through long-term public investment, in which public infrastructure investment is clearly important; and fourthly, as an aspect of spatial strategy and regional policy, to assist economic development outside the south-east.

Last Friday, we had a debate on a report from the Economic Affairs Committee on immigration, and a number of noble Lords were talking about the threat of a rising population concreting over the south-east. Well, we are doing pretty well at that, with a four-lane M1 and five-lane parts of the M25. If we do not want to concrete over the south-east, we must also think about how to improve communications between the north and the south, and across the north.

I have a number of questions for the Minister. First, have the Government now committed themselves to resuming the rolling electrification scheme? That was not entirely clear from the Minister’s opening speech. Secondly, will the Government also commit to what I suppose one must call a rolling programme of rolling stock and investment in increasing the capacity of carriages on the whole railway network? Thirdly, will the Government ensure that investment in rail improvement benefits the entire United Kingdom, not just the south-east of England?

As the Minister will know, the intensity of rail transport across the north of England—Liverpool to Manchester, to Leeds, to Sheffield, to Newcastle—is an important part of how the north holds itself together. Train times are longer for comparable distances there than in the south-east. The problem of improving city regions around Manchester, Leeds and Liverpool is tied up with improving the quality of regional commuter rail in the Manchester and Leeds regions. It is also an issue for rural rail. The future of Airedale and Wharfedale certainly depends upon what are becoming commuter lines. The Minister will also know of the proposal that Wensleydale be again linked into the national railway system, which depends on the enthusiasm of a number of local rail enthusiasts to keep the line open and investment to link the line up at Northallerton.

The quality of rolling stock is limited and we need more coaches. There are many gaps in electrification across the north that could be filled relatively easily in the early stages of a rolling programme, increasing both freight and passenger capacity. I am told by Network Rail that a number of electrified lines have inadequate loading capacity, so that when National Express wishes to increase the number of direct trains running between London and Skipton, and when Northern Rail wants to increase line frequency, the electricity substations will not bear the load. There are a large number of issues on heavier investment.

I remind the Minister of light rail issues. Manchester and Sheffield both benefit from their existing and developing light rail scheme, but the Treasury blocked Liverpool and Leeds from using light rail schemes to integrate city regions. At the end of September, Network Rail produced a blueprint for investment to improve rail across northern England. It is putting this to the Government and now needs government funding.

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We want investment across the whole of Britain, not just across the south-east. Investment in rail is a matter of regional policy and national spatial strategy. Investment in improving and upgrading the east coast main line is not an alternative to a new high-speed line, which will take many years to plan. It could be undertaken now. Some of the schemes are already approved, but not yet funded, as a means of helping to revive our public economy. I hope that, in winding up, the Minister will be able to reassure us that this is indeed what the Department of Transport is planning, and what the Treasury will begin to respond to.

Lord Adonis: My Lords, I took the noble Lord, Lord Bradshaw, to be saying that his proposals for significantly upgrading the east coast main line were an alternative to creating a new line. Did I mishear the noble Lord?

Lord Bradshaw: My Lords, no. I said that a new high-speed line will inevitably take a long time to come to fruition because of planning troubles and the work. However, we could immediately set about upgrading the east coast main line and have an attractive service. That might undermine the benefits of a high-speed line but one must go for the immediate benefits, which are attainable in the very short term.

Lord Wallace of Saltaire: My Lords, I entirely agree with my noble friend. We support the principle of a high-speed line, but the planning system in this country, even after the Planning Bill has been enacted, means that it will take some time to get under way. The plans are all there, but we need investment in upgrading the east coast main line, which could be well under way within two or three years.

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