Railways: South-eastern Franchise

Thursday 4th July 2019 Lords Chamber

Question

11:24

Asked by

[Lord Berkeley]

To ask Her Majesty's Government what estimate they have made of the cost to the new South Eastern franchise arising from any increase in track access charges proposed by HS1 to the Office of Rail and Road.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Vere of Norbiton) (Con)]

My Lords, the periodic review process that will determine the new track access charges for HS1 from April 2020 is ongoing and is the responsibility of the independent rail regulator, the Office of Rail and Road. In line with the published draft franchise agreement, the operator of the new south-eastern franchise will be held harmless to any regulated track access charges proposed by HS1 and agreed by the ORR, following regulatory scrutiny.

[Lord Berkeley (Lab)]

I am grateful to the Minister for that Answer, but she will be aware that HS1 has applied for increases in track access charges of 25% for domestic south-eastern trains, of 40% for Eurostar services and of 75% for the freight that has to use that line. Will the Minister remind the ORR of its duties under the 1993 Railways Act and subsequent legislation, and I quote,

“to promote the use of the railway network in Great Britain for the carriage of passengers and goods”,

and,

“to protect the interests of users”?

I suggest to her that for the regulator to allow such increases will dramatically harm passengers in the south-east by increasing fares. Is it not better to protect the passengers, rather than to line the pockets of the pension funds, including the Korean pension fund, which now owns that piece of track?

[Baroness Vere of Norbiton]

I thank the noble Lord for his observations. As he well knows, this process is ongoing, so any increases are not yet confirmed. But my department expects the independent regulator, the Office of Rail and Road, to provide a robust and rigorous challenge to HS1’s proposals, as part of the review process. I am aware that this process has been going on for 18 months and is continuing.

[Baroness Randerson (LD)]

My Lords, Eurostar operates in a multimodal travel market that includes airlines, and HS1 is already the most expensive railway in Europe by a big margin. If the Government are serious about reaching zero carbon by 2050, this is just the kind of cost that needs to be kept firmly under control. It is not acceptable for the Government to hide behind the regulator. Can the Minister give me an assurance that the Government will make it clear to the regulator that costs like this must be well controlled?

[Baroness Vere of Norbiton]

I assure the noble Baroness that the Government are making it clear to the regulator that we expect a robust and rigorous challenge. It is of course independent, but we recognise the importance of Eurostar, both for environmental reasons and for providing extra capacity on a different mode of transport. We support high-speed passenger services to Europe.

[Lord Haselhurst (Con)]

My Lords, is it not of great concern that cross-channel operators, whether of freight or passengers, would be severely affected by the proposals as they currently stand? Is it not a bit bizarre that the long-awaited new trains for the Anglia region, which will make a once-in-a-lifetime journey there, will have to be carted on freight trains, as they are not allowed to go under their own steam, incurring extra cost? Are these not reasons why my noble friend should keep a close eye on the current discussions to ensure that a fair solution is found?

[Baroness Vere of Norbiton]

I reassure my noble friend that we are keeping a very close eye. Obviously, the new trains are freight like everything else when they are being transported, but we are concerned by the proposed significant increases. As I have said, we will be looking to the ORR to provide that robust challenge.

[Lord Snape (Lab)]

Does the Minister agree that it was perhaps an unfortunate business for the coalition Government—which I recollect included the Liberal party—to vote to sell Britain’s first high-speed line to a foreign-based consortium? Does she agree with my noble friend that such consortia will be more concerned about their return to Canadian teachers, as well as South Korean pensioners, than the plight of passengers travelling between St Pancras International and Ashford? Whether she agrees or not, what is she going to do about it?

[Baroness Vere of Norbiton]

I thank the noble Lord for that comment. I do not agree—surprisingly enough—that the sale of this asset to investors, foreign or otherwise, was a bad idea. Long-term infrastructure investors can provide a useful source of capital to assets precisely like this. This is why the ORR is involved in this process: it will determine if the concession agreement is being met and the outputs that HS1 must deliver in the next control period. It will look at the asset management plan, the regulatory framework, the structure of the charges and the charges themselves.

[Lord Beith (LD)]

My Lords, will the Minister clarify the press reports about franchising that have appeared today, indicating that the Government may give the state-owned LNER a five-year extension of its franchise?

[Baroness Vere of Norbiton]

I am afraid that the noble Lord has me stumped on that one, because I have not seen those press reports. I will certainly write to him if I can find out any more information.

[Lord Lea of Crondall (Lab)]

My Lords, does not this debate reveal that there is still a contradiction in the Government’s own transport policy on the benefits of freight traffic being on rail? This extraordinary increase in charges from HS1 should be investigated. The Government have not answered the question from the noble Baroness on the Liberal Democrat Benches about whether this is compatible with the Government’s transport policy.

[Baroness Vere of Norbiton]

The Government absolutely support the movement of freight on rail. We were interested to read the report on freight by the National Infrastructure Commission. It is a very good study, and we will be taking forward further work in this area. I remind the noble Lord that we have invested £500 million through the strategic freight network fund and made very important investments at some of our ports and elsewhere. We also provide rail freight subsidy through the mode shift revenue support grants for national rail track of £15.6 million, which takes 800,000 lorries off the road.