West Coast Main Line
Lord McLoughlin Excerpts(11 years, 7 months ago)
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The Secretary of State for Transport (Mr Patrick McLoughlin)
With permission, I would like to make a statement on the west coast main line. On Wednesday 3 October, I announced the cancellation of the inter-city west coast franchise procurement. This decision was taken as the result of significant flaws found within the procurement process undertaken by my Department. These made the continuation of the competition and the award of the franchise untenable.
I know how important the west coast main line is to the economy of this country and to the constituents of Members. This franchise operates more than 300 train services a day, carries more than 26 million passengers a year and employs more than 3,000 staff. This is a regrettable outcome caused by unacceptable mistakes made in my Department during a complex procurement process. It has also meant that I have paused the ongoing franchising programme, including live competitions on Essex Thameside, Great Western, and Thameslink.
I would like to reiterate that there is no suggestion that FirstGroup or any of the other bidders, including Virgin Trains, acted in anything other than good faith during the bidding process. FirstGroup is a great British company and a leading transport operator both here and in the United States. It provides jobs for 13,000 people across the UK and operates four railway franchises, which together carry more than 300 million passengers a year. I want to make it clear today that the cancellation of the west coast competition should not be seen as a comment on FirstGroup, its bid, or its approach to running rail franchises now or in the future. Furthermore, as I have said to the Select Committee on Transport, Virgin has also made a fantastic contribution to both the railways and aviation in this country.
It would be premature at this stage to speculate on where and how the errors in the process emerged. That is why, when I announced the cancellation of the procurement, I also asked for two urgent investigations to be carried out. Both reviews are now well under way. The first of these is an inquiry led by Sam Laidlaw, the chief executive of Centrica. He is the lead non-executive director on procurement across Government and the lead non-executive director of the departmental board. His review is examining what happened during the west coast procurement and why. It will establish the lessons to be learned. I have asked for the initial findings of the review by the end of October and expect the full report by the end of November.
The second review is looking at the implications of the flaws on the west coast procurement for the rest of the franchising programme. This review is being led by Richard Brown, a highly respected industry figure and the chairman of Eurostar. My expectation is that the Brown review will report no later than the end of the year on lessons for the future franchising programme, so that it can be resumed as soon as possible.
I am today publishing the terms of reference for both reviews, and these have already been laid in the Library of the House. Before these reviews have been completed, and particularly before the findings of the Laidlaw review have been published, any speculation as to the nature of the flaws is just that—speculation. I will of course report to the House on the findings of these reviews at the earliest opportunity.
I would like to take this opportunity, however, to restate the Government’s commitment to ensuring that we continue to have private sector innovation and investment in the railways. Since privatisation, the number of passenger miles travelled has nearly doubled. This growth brings significant benefits to the country’s economy and to the environment, relieving congestion and improving connectivity for businesses, commuters and leisure travellers. Passenger satisfaction is up, and so is punctuality. I want to see these benefits continue, which is why I want this pause, while the reviews are carried out, to be as short as possible. We will restart our refranchising programme, including the competitions on Essex Thameside, Great Western, and Thameslink, as soon as possible.
I now turn to the future operation of the west coast main line. I am committed to ensuring that passengers will see no impact as a result of these mistakes. Passengers will be able to make the journeys they have planned, with the tickets that they have bought. Clearly, we will need to learn lessons from the two reviews, and we will need to run a new competition for the west coast franchise. I want this to happen as quickly as possible, but we want to get it right, which will take time. It is also important that in the intervening period we secure a deal that secures best value for taxpayers, including the continual improvement of service quality.
For that reason, I am today announcing that we are commencing negotiations with Virgin Rail Group with a view to it remaining as operator of passenger services on the west coast main line. Subject to ensuring value for money for the taxpayer, I expect this to last for a short period of about nine to 13 months. In this period, we will run a competition for an interim agreement. This interim agreement, which will be open to any bidders, will then run until the new long-term west coast franchise is ready to commence. I will keep this approach under review so that it can be informed by the Brown findings and recommendations and so that it will ensure value for money.
I am grateful to the team at Directly Operated Railways for all their preparations so far. DOR will continue to stand ready should it be required. Britain’s railways are a great success, and I am determined that this incident will not get in the way of the Government’s record. We have launched the biggest programme of investment since the Victorian era and have just announced reductions in regulated fare rises over the next two years, recognising the importance of access to the railways for millions of commuters. I commend this statement to the House.
Maria Eagle (Garston and Halewood) (Lab)
I thank the right hon. Gentleman for advanced view of the statement. I well understand why, when he announced this embarrassing debacle earlier this month, he did so at one minute past midnight, when he hoped everybody would be asleep, because this is yet another staggering example of the monumental incompetence of this shambles of a Government. It is a failure of policy, a failure of process, a failure of ministerial oversight and a failure of ministerial leadership.
The Government’s new franchising policy, which requires risks to be calculated 15 years into the future, was designed by the current Secretary of State for Northern Ireland, announced by the current Secretary of State for Defence and implemented by the current Secretary of State for International Development; and it has shamefully been left to the former Chief Whip to try and deflect the blame for it on to three officials in the Department for Transport. It is just as well it has not been left to the current Chief Whip to deal with, or he would probably have blamed it on the police at the gates of Downing street.
The reality is that Ministers are responsible. It was Ministers who redesigned franchising policy to make it much more difficult to calculate which bidder should win. It was Ministers who slashed faster than any other Department the expertise and staffing available to carry out the task, including apparently making the director of procurement, the director of rail strategy and the director of rail contracts’ posts redundant along with those of senior finance staff; and it was Ministers who reportedly cancelled an external audit that was routinely done in other competitions to check the outcome of the franchise award ahead of its announcement.
It is incredible that Minsters continue to maintain that these problems only came to light late in the day, just before they made that midnight announcement less than two weeks ago. We know that Ministers were sent a report warning of precisely the problems that led to the competition being cancelled five days before the contract was awarded. Today was the opportunity for the new Secretary of State to begin to put things right, yet he has failed his first test and announced a way forward that adds to the chaos and confusion and risks even greater costs to taxpayers, replacing one franchise competition with three, opening up the prospect of three owners in three years, increasing the risk of further legal action and further costs to taxpayers, and adding to the uncertainty for passengers and staff.
Can the Secretary of State update the House on the likely final cost to taxpayers of the Government’s failure on franchising? If reimbursing bidders for the west coast will cost £40 million, what will be the costs of the stalled Great Western, Essex Thameside and Thameslink franchises? What legal advice did he receive on his decision to extend Virgin’s contract? Specifically, what advice has he received on EU competition law, procurement law and the impact on the fairness of future competitions for the franchise? In the light of this debacle, does he agree that it makes sense to maintain a public sector rail company that is equipped to step in at short notice in future, as well as providing a useful comparator? Will he therefore abandon the planned privatisation of the east coast service, which is delivering nearly £200 million back to taxpayers every year, which is profit that in future will be shared with shareholders?
Can the Secretary of State not see that it is completely inappropriate for a member of his own Department’s board, no matter what his other qualities are, to carry out an investigation that has to look at the decisions taken or approved by other members of that board, including Ministers? Will the Secretary of State think again and make his review truly independent? What impact has the 37% turnover of senior civil servants in the restructuring of the Department in the last two years had on its capability to conduct competitions such as this? As the Secretary of State mentioned his fares U-turn, will he now agree to make the train companies apply the cap to every route, so that passengers do not find, as they did last year, that fares may still rise by up to 5% above the cap?
This was a franchise fiasco made by Ministers—a policy scribbled on the back of an envelope in opposition; cuts that go too far, too fast, implemented in government. The result is chaos across the rail industry and tens of millions of pounds of taxpayers’ money down the drain—the direct consequence of decisions taken by Ministers. Now we have a proposal for an independent review that is not independent at all, while the Secretary of State’s solution to the west coast franchise fiasco is a decision to do it all over again—that is, twice in just two years. What an appalling waste of taxpayers’ money! What a shambles from this incompetent Government!
Mr McLoughlin
I thank the hon. Lady for her reasoned response to my statement.
The last Labour Secretary of State for Transport was not a Member of this House, but he said some very interesting things. Lord Adonis said:
“Ten year franchises, with the possibility of longer contracts should bidders make sensible and affordable proposals, will allow operators to invest and suggest new innovations.”
At that point the Labour party increased the minimum for franchises to run to 10 years, with an option of 22 years. There is therefore a long-standing position that longer franchises can work, including to the benefit of passengers, which it is important they should do.
The hon. Lady mentioned a number of points. One of the things that I was keen to do, on hearing of the problems we were facing in the Department, was to get to the answers as quickly as possible. That is why I set up the inquiries as quickly as I possibly could. I believe that Mr Laidlaw is perfectly capable of bringing his expertise to bear and showing us—[Interruption.] The hon. Lady ought to wait until he has done the inquiry before prejudging it, because at least we have taken the action to get the inquiry under way. I think that is the right way to go.
The hon. Lady talks about the reduction in members of staff in the Department. There has indeed been a reduction. Bearing in mind the economic climate in which we found ourselves, that was absolutely necessary and I make no apologies whatever for that. I am determined to see that the provision of services to the customers who use the west coast main line—of which there are many, with many constituencies involved—is carried out continuously, and that is why I believe Virgin are the best people to carry that forward.
Sir George Young (North West Hampshire) (Con)
The House is grateful to my right hon. Friend for coming here at the earliest opportunity to explain what has gone wrong and to describe the action that he proposes to take. I welcome that. Does he recall that, at the beginning, franchising was done not by his Department but by an independent, arm’s-length body? Twenty-four franchises were issued in some 18 months, none of which was subject to a legal challenge, and this led to the major investment in the railways to which he has referred. Franchising was subsequently brought in-house to the Department. Can he confirm that the Brown review will consider whether franchising should continue to be the job of his Department or whether we should revert to the initial model?
Mr McLoughlin
Given that my right hon. Friend was closely involved in setting up the original model, I should naturally defer to his great expertise in this matter. I do not want to prejudge the findings of any of the reviews that I have set up, but I am sure that Mr Brown will have heard my right hon. Friend’s comments and that he may well want to investigate that solution further.
Frank Dobson (Holborn and St Pancras) (Lab)
May I express my sympathy for the new Secretary of State’s having to deal with this mess? However, in view of the fact that the Department could not come up with figures that would be valid 10 years hence, how can he believe that the same Department, the same officials and the same advisers can come up with accurate predictions on passenger levels, and on inflation generally, in relation to High Speed 2, which does not exist and for which there is no evidence to draw on? I think he needs to look at that matter again. I will not say that he needs to go back to the drawing board; in the case of HS2, it is more a matter of going back to the ouija board.
Mr McLoughlin
I am interested to hear what the right hon. Gentleman says. A number of points have been raised since I made the announcement. The HS2 business case has undergone an extensive quality assurance process, and we are confident that it is accurate. The August 2012 update on the economic case was supported by a 400-person day of independent quality assurance, and HS2 Ltd has appointed independent auditors to undertake a line-by-line check of the analysis being prepared for the deposit of the hybrid Bill. This is all in addition to the existing quality assurance arrangements. I am glad to say that there was a commitment to these proposals in the right hon. Gentleman’s party manifesto to the country as well as in our own.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
My right hon. Friend has come into the Department for Transport like a breath of fresh air. However, like the right hon. Member for Holborn and St Pancras (Frank Dobson), he must know that the failure of the west coast main line franchise process has really shaken people’s faith in the facts and figures that are being used by the Department. Notwithstanding the answer that he gave to the right hon. Gentleman, while he is in the mood for ordering investigations, will he now order a full review of the facts and figures that were used to justify HS2, in order to prevent the Department from making a serious mistake?
Mr McLoughlin
As I do not want to incur your wrath, Mr Speaker, perhaps I should refer my right hon. Friend to the answer that I gave to the right hon. Member for Holborn and St Pancras (Frank Dobson) a few moments ago. I also addressed this issue in one of my first major speeches, in which I outlined the importance of this particular piece of infrastructure to the United Kingdom.
Mr Speaker
I am always very interested to hear what the Secretary of State has to say on this subject, as he will readily appreciate.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
The Secretary of State emphasised in his statement that he would seek “best value for taxpayers” in the interim arrangements. He will understand that there is a degree of scepticism in the House about his ability to deliver that. Will he please tell us how he intends to achieve that best value and what comparators he will use? How can he believe that a short-term, nine-to-13-month deal followed by an interim arrangement before the tendering process begins can possibly deliver best value for the taxpayer?
Mr McLoughlin
When we conduct negotiations with Virgin, that will obviously be one of the things that we will want to discuss. The right hon. Gentleman will have plenty of time to check whether we have done that.
Tim Farron (Westmorland and Lonsdale) (LD)
The short-term fix of asking Virgin to continue operating the west coast service will come as some relief and will provide some certainty in the short term, but how will the Secretary of State convince this House and, more importantly, passengers using the west coast main line, that the two-year interim franchise deal will not lead to a complete lack of investment, given that the new franchise holder will not have the confidence of a long-term deal?
Mr McLoughlin
I would say that the position in which we find ourselves is not the position I would have wanted to be in. What I am trying to do is to move forward with some certainty so that when we learn the lessons from the Brown review, they can be implemented and acted on. There is considerable interest in this particular line—it is very important—and I think we will see the sort of developments we want, with companies putting forward proposals, with respect to both the two-year contract that we are proposing to let and the longer-term one in due course.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
I welcome the Secretary of State to his position. I listened intently to what he said in his statement, but he made no mention of any contingency funding that will need to be put in place as a result of this debacle. Is it proper to suggest that it is possible for this amount to be as much as half a billion pounds—half a billion pounds that taxpayers will have to pay?
Mr McLoughlin
I have read many figures, but I have not previously read that one. No doubt I am going to read a lot more in due course. I have already said that the estimated cost of refunding the franchises, which is the right thing to do, will be in the region of £40 million.
David Mowat (Warrington South) (Con)
This decision was one of the two or three major pieces of work done in the Department for Transport this year. If the permanent secretary will not hold himself accountable for this, what is he accountable for?
Mr McLoughlin
As I have said, I have announced two major inquiries. The permanent secretary took a decision to suspend certain members of staff. This is a suspension—not any prejudging—while these inquiries continue.
Derek Twigg (Halton) (Lab)
I would like to quote what the Under-Secretary of State for Transport, the hon. Member for Wimbledon (Stephen Hammond) said on behalf of the Government in a debate on 17 September, just a few weeks ago. He said:
“The Department is confident that we have taken the right decision in the interests of taxpayers and passengers. We expect to sign the contract soon, but we intend to defend the judicial process robustly.”—[Official Report, 17 September 2012; Vol. 550, c. 236WH.]
Given that the Secretary of State has been in the job for only a few weeks, is he confident that the financial information that he is getting throughout the Department for any major projects—including the Mersey gateway project—is robust and can stand up to scrutiny in the future?
Bill Wiggin (North Herefordshire) (Con)
I congratulate my right hon. Friend on his decision and on his statement. In it, he said that he has paused the ongoing franchise programme. Will he use that pause to ensure higher minimum standards and that the Great Western franchise is not given to FirstGroup as a sop?
Mr McLoughlin
I can assure my hon. Friend that the pause is while we wait to see what the Richard Brown inquiry says and whether there are things that we need to put right in these live competitions. Obviously, there will be no sops to any organisations. These are very competitive bids and a lot of work and effort goes into them. Overall, we are seeing far better services for this country’s passengers as a result of franchising and of the very brave decisions taken by my right hon. Friend the Member for North West Hampshire (Sir George Young) some years ago.
Albert Owen (Ynys Môn) (Lab)
I genuinely welcome the Secretary of State to his position. The performance of his two predecessors has not set a very high bar when it comes to competence in this matter. [Interruption.] The Minister of State, the right hon. Member for Chelmsford (Mr Burns) is growling at me from a sedentary position, but it was his colleague who said that this was robust. The Secretary of State said that Directly Operated Railways is on standby. What does that mean, and will it be used for the three other franchises that he has suspended?
Mr McLoughlin
I have not suspended the three other franchises; I have put them on hold, which is quite an important differential. I thank the hon. Gentleman for his compliments. I am always cautious about compliments coming from the Opposition Benches, but who knows?
As I have said, the three franchises have not been stopped. They have been put on hold, and I hope very much that we can return to operate and lease them once we have learnt the lessons of the Brown report. I do not think that there is any need to contemplate using DOR on those services.
James Duddridge (Rochford and Southend East) (Con)
When the Essex Thameside franchise comes off hold, will the Secretary of State look again at the possibility of mandating the quality of the rolling stock that will be used to ensure that it is as good as the quality of the rolling stock that is used now, or, indeed, even better?
Mr McLoughlin
I well understand my hon. Friend’s wish to procure better services for his constituents, and I know that a number of other Members will be pushing me for the same thing. I will of course consider his suggestions and see whether we can adopt some of them.
Sir Gerald Kaufman (Manchester, Gorton) (Lab)
Now that the right hon. Gentleman has rightly put an end to the shambles that he inherited, will he bear in mind the watchword “If you are in a hole, stop digging”? Rather than engaging in an interim process that prolongs uncertainty, will he be fair to the marvellous train crews of Virgin Trains, who give extraordinarily good service, and tell them that their future is assured? Will he simply award the franchise to Virgin, which has carried it out brilliantly?
Mr McLoughlin
I am very pleased to hear the right hon. Gentleman give such a strong endorsement of the service that he already receives. However, what we are trying to do with franchising is improve that service, not just for his constituents in Manchester but throughout the line, and I do not think that it would be appropriate—in fact, it would not be possible—for me to do as he wishes. I think that what I have set out today is the best course for the next three years on that particular line.
Andrea Leadsom (South Northamptonshire) (Con)
I do not want to give my right hon. Friend cause to roll his eyes, so I shall not mention HS2. He can clap if he wants to.
I congratulate my right hon. Friend thoroughly on his decision to call a halt to the west coast main line franchise problem, but does he agree that now is the right time to start looking creatively at how to get fares right down and capacity right up? Perhaps he could consider introducing “standing room only” tickets for short journeys. That would both increase capacity and make journeys far cheaper for passengers who need to travel on a low budget.
Mr McLoughlin
I am not sure how popular that would be, but, as I have said in the House on other occasions, I am looking at the whole issue of fares and the way in which they are calculated.
Mr Dennis Skinner (Bolsover) (Lab)
What a way to run a railway! Now that we have seen this shambles, why do we not take the opportunity to stop the practice of lining the pockets of the railway bosses, and use the money to lower fares? We could do it through a “one nation” system of public ownership. Let’s start that: we have had enough of this business.
Mr McLoughlin
The hon. Gentleman obviously speaks from a past era when nationalisation was the apple of his eye. We have seen substantial changes and improvements in the whole railway system since we introduced the private sector to it. The right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) has just told us that he gets a fantastic service from a privatised railway, and I think that most people feel that they get a fantastic service too.
Andrew Stunell (Hazel Grove) (LD)
I thank the Secretary of State for his statement. May I remind him that when that train gets to Manchester, many people transfer to Northern Rail trains, and that the Northern Rail franchise will come up in 2014? There are some innovative proposals for work to be done on that with Greater Manchester and others. Can the Secretary of State assure us that the delay, the pause, or whatever the word is will not interfere with the development of those innovative and constructive ideas for the Northern Rail franchise?
Mr McLoughlin
One of the interesting things that I have seen since franchising began, and in how these franchises are being worked on, is the engagement with local stakeholders in local communities. They have all come forward with suggestions and ideas, a number of which can be incorporated in the franchise agreements.
David Wright (Telford) (Lab)
There is real concern in Shropshire that the interim arrangements that the Secretary of State has put in place will mean that we will not get back a direct service to London. Will he confirm that when he looks again at the franchise process at the end of his interim arrangement—however long that may last—he will write in services to Shropshire?
Mr McLoughlin
I will certainly listen to representations. I know that I will get many.
Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)
I welcome my right hon. Friend’s statement, and the candid and honest way in which he has handled this whole issue. I also welcome his comments about Virgin and FirstGroup. Will he confirm that Virgin, FirstGroup and the other bidders all acted with total propriety during the bidding process?
Mr McLoughlin
I can certainly confirm that, and I am grateful to my hon. Friend for asking me the question. That is wholly the case, and the mistakes we found were mistakes made in the Department.
Mr Iain McKenzie (Inverclyde) (Lab)
We have now witnessed two procurement fiascos from this Government in quick succession. We have seen that contracts are not being monitored and we are seeing tendering processes that are clearly flawed. One would think that the Minister would be well aware of these and that if he had been alerted to them, he would not have awarded this contract. The question therefore arises: why did he award this contract when he knew that it was flawed?
John Stevenson (Carlisle) (Con)
May I extend my support to the Secretary of State for taking prompt action once he was aware of the problems with the west coast rail franchise? My concern now is about the length of the term of any new franchise, once it is finally in place, as that can affect the investment decisions of a rail company, particularly as regards stations such as Carlisle. Will the length of the new franchise be the same as that initially proposed?
Mr McLoughlin
I understand my hon. Friend’s point. What I do not want to do at this stage is prejudge what the Brown report may eventually say, but I will say that it was commonly accepted that longer franchises would lead to more investment and a better return for the taxpayer. We will need to look at this properly and to investigate what went wrong with this particular process before we come to long-term decisions. A number of people in the industry, including the former Secretary of State who sat in another place and not in the House of Commons, have also made that point.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
I want HS2 to happen, because it would be good for Birmingham, but I also want to ensure that it is based on accurate and reliable figures. Will the Secretary of State ensure that his review will identify any errors and miscalculations, and whether or not they relate to HS2, and will he ensure that this is a sound calculation?
Mr McLoughlin
I am grateful for the hon. Lady’s support for HS2. As I said a few moments ago, that is a separate process and a lot of work is going into the preparation for the HS2 Bill that will come before the House. There will be a lot of opportunities to debate that over the coming months.
Michael Fabricant (Lichfield) (Con)
Can my right hon. Friend, who is sorely missed as Chief Whip, assure my constituents that services will not be damaged by these changes and that stations such as Lichfield Trent Valley, which are badly in need of improvements for disabled access, will not have new works delayed as a consequence?
Mr McLoughlin
I hope we see no delays in investments as a result, and I am always grateful to my hon. Friend, who is always trying to be helpful.
Paul Farrelly (Newcastle-under-Lyme) (Lab)
FirstGroup’s bid included a £190 million guarantee, which would in no way have been large enough to compensate the Government if its optimistic bid had failed to deliver the goods—in fact, it gave a strong financial incentive to walk away. Has the Secretary of State yet understood why that basic feature did not set alarm bells ringing before the bid was announced? Will he ensure that future contracts contain no financial incentives for bidders to walk away?
Mr McLoughlin
The time that bidders walked away was under the previous Government, when the operators on the east coast main line did so. There are lessons to be learned. I shall not prejudge what the inquiries might tell us, but I am looking forward to their results and hope that we can then move on based on a safer footing.
Charlotte Leslie (Bristol North West) (Con)
I welcome the Secretary of State’s announcement about the Brown review. Will he assure me that this pause will be an opportunity to ensure that on other franchises, such as the Great Western franchise, we seize opportunities when they exist? In my area, that would include a full Bristol metro with a full Henbury loop line to complete the circle line around Bristol.
Mr McLoughlin
I am not sure whether the second part of my hon. Friend’s question was a bid, but on the first part I can assure her that the reviews will inform us and that we will take note of them. I would not have set them up if we were not going to do so.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
I came here today on the west coast main line; the train was late. May I ask the Secretary of State—[Interruption.] May I be the first to ask him to resign?
Let me say what I would like the Secretary of State to do. We will have the short period negotiation, the interim agreement and the long-term franchise. To ensure value for money, will he guarantee a public sector comparator for each of them?
Mr McLoughlin
I heard one colleague shout out, “Not late enough.” Obviously, we have set up the two reviews and we will look at what they produce. When we have put such things out to franchise, we have seen huge competition and interest, and it is a matter of getting the best deal for the taxpayer in the longer term.
David Tredinnick (Bosworth) (Con)
I congratulate my right hon. Friend on his common-sense decision to keep Virgin running the west coast main line, particularly in the run-up to Christmas. There are concerns, however, about an interim agreement, which will surely prolong the process. Would it not be better to go to a final agreement and not make things more complicated?
Mr McLoughlin
I can understand my hon. Friend’s frustration, but there has been a huge amount of investment in the west coast main line and it is right and proper that after the initial nine months, during which we will set up the two-year interim contract, we should seek to get the best return for the taxpayer. I think that an open competition is the best way to do that.
Gloria De Piero (Ashfield) (Lab)
The Campaign for Better Transport has been quoted today as saying that operational changes in the Department have not been focused on passengers but have been all about the bottom line. Does it not have a point?
Alun Cairns (Vale of Glamorgan) (Con)
I pay tribute to the Secretary of State for the way in which he has handled a very difficult situation, not only accepting responsibility for an error made by an officer in his Department but moving forward swiftly with the review. Will he reassure me that renationalisation is off the cards for a range of reasons, including financial ones?
Mr McLoughlin
I thank my hon. Friend for his kind words. The truth is that both parties have agreed in the past that franchising is the proper way to go and gets better returns for the taxpayer. This particular episode is not acceptable and we need to learn the lessons from it. I am determined to do that.
Tony Lloyd (Manchester Central) (Lab)
Does the Secretary of State not agree with the many people who use the line that a public sector interim arrangement would have been preferable as it would have given him control over pricing and quality? Will he explain how he will guarantee those things in the interim period?
Mr McLoughlin
Obviously, there is a difference in view between the hon. Gentleman and the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman), who praised the current operators of the west coast main line. Indeed, a number of people have praised the operators so I am rather surprised that when I have made a decision to keep the service with them, some people have found a way to attack that decision. The short period involved means that the best way to ensure continuity of service is to do a deal with Virgin, and we are about to embark on that.
Jeremy Lefroy (Stafford) (Con)
Those bidding for the franchise offered a number of improvements that were welcome to my Stafford constituents, including fare reductions. Will my right hon. Friend see whether it is possible to introduce some of those improvements in the interim period, along with his welcome cap on rail fares?
Mr McLoughlin
I thank my hon. Friend. As I have pointed out, there will be a two-year franchise that will be negotiated some time next year, and I hope that some of the benefits that were initially to come from a longer-term franchise agreement can be replicated in it.
Mr Jim Cunningham (Coventry South) (Lab)
In an age of high food prices, high oil prices and high fares, will the Secretary of State, when he negotiates the west coast main line franchise both in the interim and in the longer term, put a special emphasis on fares, because they are far too high?
Mr McLoughlin
I am glad that we have been able to reduce the proposed increases from RPI plus 3 to RPI plus 1. I hear what the hon. Gentleman says about fares. Of course, some pre-booked fares can cost a reasonable amount, but others are very high, and that is something I think we should all look at.
Jason McCartney (Colne Valley) (Con)
What time scale implications will this all have for the east coast main line franchise? Will my right hon. Friend take note of the fiasco that occurred under the previous Government when two train operating companies on the east coast main line collapsed in only two and a half years?
Mr McLoughlin
I thought that it was a utopia under the previous Government and that nothing ever went wrong, but my hon. Friend is right to say that the only time a rail franchise collapsed was under the previous Government. The Opposition seem to have forgotten that today in their attacks on me. I hope that we can learn the lessons and move on and that this will not lead to too long a delay in any of the other franchises.
Richard Burden (Birmingham, Northfield) (Lab)
The west coast main line is obviously important to my constituents in Birmingham, but I am worried about the knock-on effects of this fiasco on other franchises coming up for renewal. I draw the Secretary of State’s attention to London Midland and the countless delays there have already been in the west midlands because of driver shortages. There is no long-term thinking on planning for new stations and ticket office hours are being cut, and that is because it is not looking at the long term. What impact will this fiasco have on trying to give passengers in the west midlands the kind of service they deserve?
Mr McLoughlin
I want all taxpayers and passengers to get the kind of service they deserve. There have been some specific cases of cancellations on the line, as the hon. Gentleman has just mentioned. I hope that the company will put that right and train more drivers, which I think it is in the process of doing.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
I echo what the hon. Member for Telford (David Wright) said. Shrewsbury is the only county town in England without a direct rail service. All the Shropshire MPs have campaigned very hard over the past year to ensure that that comes about, and both Virgin and FirstGroup have committed to it. Will the Secretary of State do everything possible to ensure that that vital service for our constituents is not delayed more than it needs to be?
Mr William Bain (Glasgow North East) (Lab)
The west coast main line matters hugely to the Glasgow and Scottish economies, but so does value for money for the taxpayer. Can the Secretary of State identify any previous franchising process that was not subject to external audit, and is it not the case that a decision made by his Department to save hundreds of thousands of pounds has ended up costing the taxpayer tens of millions of pounds?
Mr McLoughlin
The hon. Gentleman is seeking to prejudge the two inquiries I have set up, which is something I am not prepared to do.
Rehman Chishti (Gillingham and Rainham) (Con)
On train franchising, will the Secretary of State clarify when Southeastern’s franchise is likely to be concluded, because it is currently undergoing a process of renewal?
Mr McLoughlin
I have announced a pause on three franchises, and there are others that have not yet been concluded in the final bidding process. We will obviously learn lessons from the Brown inquiry and the Laidlaw inquiry, but I hope that this will not have a long-term impact that will delay any of the other franchises that are going to be negotiated.
Joan Walley (Stoke-on-Trent North) (Lab)
Is not the most shocking part of this the fact that had Richard Branson not made the legal challenge, we would not even have known about this fiasco? Given the importance of the train services through Stoke-on-Trent, the lifeblood of our local economy rests on the future of the west coast main line. Will the Secretary of State give an assurance that he will give Parliament the true costs of the fiasco, because it is likely to be far more than the £40 million he talks about? We need to ensure that those funds are safeguarded for transport.
Mr McLoughlin
The hon. Lady should just wait and see, because some of the things the reviews might lead to could provide a greater return for the taxpayer in the longer term. I am not for one moment dismissing the fact that this has been very expensive and unacceptable—it is and it has been—but the most important thing is that we learn the lessons in the longer term.
Sir Tony Baldry (Banbury) (Con)
Most of my constituents just want to ensure that the trains run on time and are affordable. Will the Secretary of State confirm that he has managed to cap rail fares for the next two years? I am not sure that that point has been fully understood.
Mr McLoughlin
I am grateful to my hon. Friend for that question. I can confirm that the Prime Minister announced a cap of RPI plus 1 for not only this year, but next year and the year after.
Mr David Anderson (Blaydon) (Lab)
In this House, we have become used to the Government’s incompetence. They could not privatise the forests properly and they made a mess of the NHS; with this, they have shown that they cannot even privatise what is already out there. The job is too big for them. Why do they not just give up—and give up now?
Mr Brian Binley (Northampton South) (Con)
Will the Secretary of State give a firm undertaking that none of the costs involved in this incident will be passed on to hard-pressed consumers on the west coast main line? Furthermore, will he reassure the siren voices calling for the scrapping of HS2 that that line is absolutely necessary because the west coast main line is under such pressure that it reaches capacity in a very short period?
Emma Reynolds (Wolverhampton North East) (Lab)
The Secretary of State is right to make this decision on the west coast main line, but it is unclear to me why his predecessor—who, after all, is an accountant by trade—did not hear the alarm bells ringing for quite some time. Will he reassure me that the review that he has announced today will consider that significant and unacceptable risks were being taken by allowing one of the bidders to backload most of the premium to the end of the franchise? Will he put in place measures to ensure that franchisees cannot simply walk away from a franchise before they make substantial payments?
Mr McLoughlin
My predecessor, like me, was given firm assurances at the Department that the competition was sound. That proved not to be the case. Once I knew and had the full facts, I made the statement that I made.
Paul Maynard (Blackpool North and Cleveleys) (Con)
I used the west coast main line today and my train was early, for which I thank the Secretary of State. Can he assure me that when making decisions about the new franchises, he will take every opportunity to incorporate both quality metrics and performance satisfaction ratings from customers?
Mr McLoughlin
I am grateful to my hon. Friend, who is also a user of the west coast main line. The answer to his question is “definitely”.
Graeme Morrice (Livingston) (Lab)
In view of this fiasco and other potential franchise debacles, will the Government now realise that the game is up and take the west coast main line back fully into public ownership, as is the case with the east coast service?
Mr Robert Buckland (South Swindon) (Con)
In respect of the review of the process relating to the Great Western franchise, will my right hon. Friend ensure that the fundamental mistakes about capacity in the previous franchising round under the last Government will not be repeated?
Mr McLoughlin
I hope that the two inquiries that I have set up will help us through the unfortunate position in which we find ourselves and, in the longer term, lead to a much more robust franchising system.
Rosie Cooper (West Lancashire) (Lab)
I appreciate that assurances from the Transport Secretary, and Ministers previously, that the process was rigorous, detailed and fair were given in good faith. However, serious concerns remain that the incident was not isolated.
Bearing in mind some of the comments made about loading and how the contract was done, anyone with common sense knew that something was wrong. Will the Secretary of State categorically confirm that mistakes were not made by the Department when awarding franchises on the other routes, before the west coast main line franchise process? When did that analysis take place?
Mr McLoughlin
I am not sure that I am responsible for the franchising that took place under the previous Government, and this franchise was the first that would have taken place under the new system.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
I thank my right hon. Friend for coming to the House to make this statement. What impact will the reviews have on the Great Western railway? Is he willing to meet me and my fellow Plymouth Members of Parliament to discuss how we can improve connectivity to make sure that we have more three-hour train journeys coming into Plymouth and trains that get there before 11.17 am, as is the case at the moment?
Mr McLoughlin
Franchising gives hon. Members from all constituencies an ideal opportunity to feed into the process to say how they want services to improve; and where that can be done, it should be done. I am certainly willing to meet a delegation led by my hon. Friend.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Does the Secretary of State agree that the inquiry we really want is to have, say, the Public Accounts Committee look at all this, because it is far more important than just the chaos surrounding this particular contract? Right across Government, we see this incompetence in procurement time and again. Whether it is about the churn of Ministers or the churn of civil servants that we are all familiar with, there is something deeply rotten in the way that we run government in this country.
Mr McLoughlin
I think I need to pause before I respond to that question. The hon. Gentleman talks about the churn of Ministers under this Government, but he should look at the churn of Ministers in this Department under the previous Government, which was fairly substantial; I think that the former right hon. Member for Ashfield lasted eight months. As for what the Public Accounts Committee might look into, I have been in this House long enough to know not to tell any Select Committee what it might or might not look into.
Neil Carmichael (Stroud) (Con)
I welcome the Secretary of State’s obvious commitment to investing in infrastructure —whether new, like HS2, or old, like the Stroud and Swindon line. May I turn his attention back to tickets and urge that we have a ticketing system that is characterised by simplicity and transparency and produces more competition within it?
Mr McLoughlin
We are currently undertaking a ticketing review which I hope will address some of the points that my hon. Friend has made.
Mr David Hanson (Delyn) (Lab)
My constituents in Flintshire who use the west coast main line daily will be horrified by the potential £40 million-plus cost resulting from mistakes by the Secretary of State’s Department. This is now what is called in the civil service an unfunded pressure. Will he tell the House how he plans to fund it?
Stephen Mosley (City of Chester) (Con)
Those of us who use the west coast main line will appreciate that massive improvements have occurred since privatisation and welcome the improvements that were promised in the new franchise, including lower fares and more frequent services to Chester. Will my right hon. Friend ensure in the interim that those promised improvements are still delivered and not forgotten about?
Mr McLoughlin
My hon. Friend, like many colleagues, is calling for better services for his constituents, and I cannot think of a finer place than Chester that people want to go—
Mr McLoughlin
I had better be a bit careful, or we might get into a bidding auction. There are a number of places to which people want extra services. That shows that the railways are now held in high esteem by all, and it is very much my intention to try to provide the services that people wish for.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
It will be some years before we know the identity of the long-term operator of the west coast main line. How can anyone have any confidence in the bids for the east coast main line franchise when we have no idea of the long-term plans of the long-term operator of its main competitor on the west coast? Is not that why we should keep the east coast main line directly operated for a good few years—preferably indefinitely?
Mr McLoughlin
That is not what the last Secretary of State who sat in the Cabinet for the Labour party said, and it is not what I want to happen.
Ben Gummer (Ipswich) (Con)
May I say how pleased I am by the candour and assured manner with which the Secretary of State has dealt with this matter? He will be aware of the enormous importance that travellers, commuters and businesses in the eastern region attach to the letting of the new 15-year franchise. He received a delegation from me and my hon. Friends the Member for Norwich North (Miss Smith) and for Witham (Priti Patel) with great enthusiasm. Can he give any assurances that the programme and timetable for that franchise will not slip as a result of the decision that he has notified to the House?
Mr McLoughlin
It certainly should not slip. I can say to my hon. Friend that the recommendations that he and a number of colleagues have made to me have been fed into the process, and will I hope be reflected in the franchise when it is finally awarded.
Helen Jones (Warrington North) (Lab)
My constituents will be horrified at the shambles that this Secretary of State has presided over. Warrington relies on its transport links to promote economic development. What action was taken by his Department on the Europa Partners report, which highlighted flaws in the franchise process five days before the announcement? Was that drawn to the attention of any Minister in the Department?
Mr McLoughlin
What I can say is that the flaws were found as a result of the Department preparing for a judicial review. When they were found and I saw the report and other information, I took the decisions that I announced on 3 October.
David Rutley (Macclesfield) (Con)
Like many other Government Members, I welcome the decisive action taken by my right hon. Friend in the face of unacceptable mistakes in the Department for Transport. Will he confirm that, during the interim period and the intervening period before that, passengers in Macclesfield will continue to experience the same high levels of service that they have come to expect in recent years?
Mr McLoughlin
I realise how very important the service on the west coast main line is to my hon. Friend’s constituency. That is why I am keen that, for the sake of continuity, we carry on with the present service operators until such time that we can re-tender for a short, interim franchise. I know he will insist that the service that his constituents get now will continue.
Ian Lucas (Wrexham) (Lab)
Will the Secretary of State ask his independent inquiries to consider a mutual model for the railways? Welsh Water in Wales has delivered a 6% reduction in charges since 2001, billions of pounds’ worth of investment, and stability for business. That is what we want on our railways. Why is he so wedded to a broken system?
Mr McLoughlin
I am not wedded to a broken system; I just look at the reassurances that previous Ministers gave on improvements to the railways since the present franchise system came into operation.
Ann Coffey (Stockport) (Lab)
I am very concerned that there will now be a long hiatus in investment in the west coast main line. Will the Secretary of State talk to Virgin about making some money available for long overdue improvements to Stockport station, which were offered by FirstGroup? Alternatively, perhaps he could find some cash from his departmental budget? It seems unlikely that those improvements will happen any time soon.
Mr McLoughlin
I understand that the hon. Lady wants improvements made to her station and I will consider carefully what she has said, but I am not sure that there is any spare money in the Department.
Sheila Gilmore (Edinburgh East) (Lab)
Will the Secretary of State ensure that the Brown inquiry does not just tinker with franchising but considers other options? We have heard about the recent option on the east coast main line, but another is the concession process that was used for London Overground. Will the inquiry be able to consider that?
Mr McLoughlin
I will not tell the inquiry what to do. I have published the terms of reference and put them in the Library earlier today. They are comprehensive.
West Coast Main Line
Lord McLoughlin Excerpts(11 years, 7 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Transport (Mr Patrick McLoughlin)
On Wednesday 3 October 2012, I announced the cancellation of the inter-city west coast franchise procurement following the discovery of significant technical flaws in the way the franchise process was conducted by the Department for Transport.
I immediately ordered two independent investigations to be undertaken urgently. The first, led by Sam Laidlaw, who is the chief executive of Centrica, lead non-executive on procurement across the Government, and lead non-executive member of the departmental board is examining what happened during the west coast procurement and why, with the aim of establishing the lessons to be learned. The second review, led by Richard Brown, chairman of Eurostar, is focusing on any lessons to be learned for the upcoming franchising programme.
I also announced, that the ongoing franchising programme should be paused, pending the outcome of the two investigations. This included pausing the live competitions on Essex Thameside, Great Western and Thameslink.
This morning at 7 am, I have made a further announcement to the London stock exchange, that the Department for Transport is commencing negotiations with Virgin Rail Group with a view to them remaining as operator of passenger services for the west coast main line for a short period, of around nine to 13 months while we run a competition for an interim franchise agreement. This interim agreement, which would be open to any bidders, will then run until a new long-term west coast franchise is ready to commence.
I shall update the House further, later today.
Aviation
Lord McLoughlin Excerpts(11 years, 8 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Transport (Mr Patrick McLoughlin)
International connectivity is vital to support economic growth. This Government have made it clear that their priority is returning this country to sustainable economic growth and our aviation networks and infrastructure have an important role to play.
The UK is an island nation dependent upon its transport links to the rest of the world for its prosperity. The aviation industry in the UK is extremely successful. It is a significant economic sector employing 220,000 directly and supporting many more indirectly and it contributes more than £16 billion of economic output. Some 35% of UK non-EU trade by value enters or leaves the country by aeroplane. Importantly, the industry also provides this country with the global connections which our businesses need to sell their products abroad and which inward investors to the UK demand.
The Government recognise the importance of aviation to the UK. We are taking forward the Civil Aviation Bill to reform the economic regulation of airports, to further the interests of passengers and to create a better environment for investment. We are implementing the recommendations of the South East Airports Taskforce, including a trial of operational freedoms at Heathrow airport to improve reliability and reduce delay. In July the Government published a draft aviation policy framework (APF) for consultation; a framework which will set the high-level policy parameters within which any new proposals for airport development may be considered. The final APF will be adopted by the end of March 2013. Alongside the draft APF the Government announced a number of short-term measures to deliver operational improvements and boost economic growth within existing airport capacity constraints including £500 million towards a western rail link to Heathrow, a review of the UK’s visa regime and the recruitment of 70 additional border staff at Heathrow.
Today the UK is among the best-connected countries in the world. Our airports, particularly those in the south-east, deliver direct flights to over 360 destinations, including those of greatest economic importance. London has more flights to more destinations than any other city in Europe. More flights to the important trading centres like New York, Hong Kong, and Singapore. The Government are determined to deliver a solution which will continue to provide that connectivity in the short, medium and longer term.
This is a very difficult debate, but the reality is that since the 1960s Britain has failed to keep pace with our international competitors in addressing long-term aviation capacity and connectivity needs. Germany, France and the Netherlands have all grown their capacity more extensively than the UK over the years, and so are better equipped, now and in the future, to connect with the fast-growing markets of emerging economies. The consequences are clear. Our largest airport and our only hub airport—Heathrow—is already operating at capacity. Gatwick, the world’s busiest single-runway airport, will be full early in the next decade, while spare capacity at Stansted airport is forecast to run out in the early 2030s.
The Government believe that maintaining the UK’s status as a leading global aviation hub is fundamental to our long-term international competitiveness. But the Government are also mindful of the need to take full account of the social, environmental and other impacts of any expansion in airport capacity.
Successive Governments have sought to develop a credible long-term aviation policy to meet the international connectivity needs of the UK. In each case the policy has failed for want of trust in the process, consensus on the evidence upon which the policy was based and the difficulty of sustaining a challenging long-term policy through a change of Government. The country cannot afford for this failure to continue.
The Government have asked Sir Howard Davies to chair an independent commission tasked with identifying and recommending to Government options for maintaining this country’s status as an international hub for aviation.
The commission will:
examine the scale and timing of any requirement for additional capacity to maintain the UK’s position as Europe’s most important aviation hub; and
identify and evaluate how any need for additional capacity should be met in the short, medium and long term.
In doing so, the commission will provide an interim report to the Government no later than the end of 2013 setting out:
its assessment of the evidence on the nature, scale and timing of the steps needed to maintain the UK’s global hub status; and
its recommendation(s) for immediate actions to improve the use of existing runway capacity in the next five years—consistent with credible long-term options.
The commission will then publish by the summer of 2015 a final report, for consideration by the Government and Opposition parties, containing:
its assessment of the options for meeting the UK’s international connectivity needs, including their economic, social and environmental impact;
its recommendation(s) for the optimum approach to meeting any need;
its recommendation(s) for ensuring that the need is met as expeditiously as practicable within the required timescale; and
materials to support the Government in preparing a national policy statement to accelerate the resolution of any future planning application(s).
A decision on whether to support any of the recommendations contained in the final report will be taken by the next Government.
The Government intend this independent commission to be part of a process that is fair and open and that takes account of the views of passengers and residents as well as the aviation industry, business, local and devolved government and environmental groups. We would like, if possible, to involve the Opposition as part of our work alongside Sir Howard to finalise the arrangements for the commission. I will provide Parliament with further details on the full membership of the commission and the terms of reference for its work shortly.
Rail Fares
Lord McLoughlin Excerpts(11 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Transport (Mr Patrick McLoughlin)
Before I address the motion, I would just like to tell the House what a great honour and privilege it is to return to the Dispatch Box in a proper speaking role after some 18 years, although I have to say to the hon. Member for Garston and Halewood (Maria Eagle) that I had not expected to be making my first speech as Transport Secretary quite so soon. When the Opposition Chief Whip informed me on Monday evening that there was to be a transport debate today, I thought that this would be either an opportunity or a great problem. I shall not decide which until I have sat down. I thank the hon. Lady for her warm welcome. I shall certainly consider some of the points that she raised in her speech, but I might need to take a little more time to do that, rather than responding to them all immediately this afternoon.
Chris Bryant
I, too, congratulate the right hon. Gentleman on his new post. As he knows, I have always thought of him as the General von Klinkerhoffen of the Government—but only in that he is much nicer than his party allegiance. May I add one thing to the list of things he should worry about? It is that we often think of commuters as wealthy people going from the commuter districts outside London to their jobs in banks, yet many in my constituency are people who are on the minimum wage. For them, the £5.10 or £5.20 a day that it would cost them to go to work can sometimes be prohibitive. Will he work closely with the Department for Work and Pensions to ensure that such people have a real opportunity to work?
Mr McLoughlin
I thank the hon. Gentleman for his intervention. I well accept that a lot of people who commute are on very low wages, and that their transport costs account for a very large part of their income. We do need to bear that in mind. The hon. Gentleman is, however, supporting a motion today that would remove the flexibility of the rail companies to adjust rail fares, which is something that the Welsh Assembly—which his own party runs—is not prepared to do.
Sir Tony Baldry
May I too congratulate my right hon. Friend and welcome him to his new post? He was a much-respected Chief Whip, and I am sure that he will perform this task very well. Was he not surprised that the hon. Member for Garston and Halewood (Maria Eagle) managed to get through her whole speech without making a single reference to Sir Roy McNulty’s report? It was as though his review had never taken place. An important part of the equation is surely the cost of the railway system, and Sir Roy’s independent report found that the system that we inherited from the last Government was so inefficient and expensive that we would have to reduce its costs by 40% to run a service comparable to those in France, Germany and Holland that the hon. Lady seemed to be disparaging.
Mr McLoughlin
I am grateful to my hon. Friend. I intend to come to that point later in my speech, as he can well imagine.
It is a great privilege to serve as a Secretary of State in this Government, and it is a task that I am incredibly proud to perform. I should like to take this opportunity to pay tribute to the diligence and skill of my predecessor, my right hon. Friend the Member for Putney (Justine Greening). She gave the go-ahead for the high-speed rail link—a new national rail network that will be crucial for keeping Britain moving and vital for growing our economy.
As a regular rail user myself, I know how concerned people are about rail fares. That is a fact that I fully understand and take seriously, but to do justice to this debate, it is vital to grasp the wider challenges that the Government face if we are to make our railways more efficient, more effective and more affordable. From day one in office, our priority has been to tackle the fiscal deficit that we inherited, and to put in place measures to rebalance our economy, get people back to work and boost growth.
The railways have, and will continue to have, a crucial role to play in that process. Not only do they provide the arteries through which the lifeblood of commerce flows, connecting key cities and markets, and linking communities with jobs but they receive a significant amount of funding from the state—more than £3 billion a year. It was absolutely clear when the coalition came to power in 2010 that the level of taxpayer and fare payer support for the railways had soared under the last Government, yet passengers had seen little reward for that investment. In short, the railways were providing poor value for money. We did not inherit just a budget deficit; we also inherited an infrastructure deficit—one that, left unaddressed, would mean a long-term drag on our economy. This infrastructure deficit was particularly acute on the railways.
Mark Lazarowicz
The Secretary of State mentioned that he was a regular rail user—I presume on the west coast main line, with which he will be familiar in any event. He said that the money invested by the last Labour Government did not lead to any obvious benefits for passengers. How does he think the investment in the west coast main line was paid for?
Mr McLoughlin
I am talking about the overall structure. My train service is East Midlands Trains, not the west coast main line. I look forward to gaining more knowledge of many more railway lines in due course.
Mr McLoughlin
I shall come on to some of the things we are going to do to improve the railway line that I use, which were announced before I became Secretary of State. I am very pleased about them, one of which is electrification. The last Government had a particularly poor record on that. There was a change in the franchise owners during the period of the last Government and certain changes were made to the service on that line.
Soaring demand meant that our ageing rail network was struggling to cope. There are now many more people travelling on the railways than at any time since 1929, but on a much smaller system. What does that mean? It means more overcrowding, more standing on trains, and rail consumers demanding a better service. We had to find a way to invest in the railway to support the economic recovery and to deliver the quality of service that passengers have the right to expect. That was the reality we faced, and we are meeting it head on by investing in the biggest rail modernisation programme since the Victorian era, while at the same time reforming the railways and reducing costs.
Maria Eagle
Does the right hon. Gentleman accept that during this Parliament and this spending review period, his Government have cut investment in the rail industry? Yes, they have announced a lot of investment for the next Parliament, in control period 5, which will go ahead some time in the future, but in this Parliament investment and infrastructure have been cut.
Mr McLoughlin
I was just coming on to say that this July, we announced £16 billion of public support for the existing rail network between 2014 and 2019—I expect 2014 to be during this particular Parliament—which will support over £9 billion of enhancements, meaning more services, more seats and more capacity, especially for commuters to our largest cities. The tap cannot simply be turned on as far as the rail industry is concerned. Passengers will also benefit from the completion of the northern hub in Manchester, £240 million of investment in capacity and connection improvements on the east coast main line, and a further £300 million for high-value, small-scale schemes in other parts of the country.
We are delivering a rolling programme of rail electrification on the Great Western main line to Swansea, on the valley lines into Cardiff and on the trans-Pennine route connecting Liverpool, Manchester, Leeds and York. We are creating a new “electric spine” for freight and passenger services stretching from the south coast to the east and west midlands and south Yorkshire.
Dr Huppert
I congratulate the Secretary of State on his new post. How confident is he that during this Parliament this Government will be able to electrify more of the railways than the nine miles that were managed in three previous Parliaments?
Mr McLoughlin
The hon. Gentleman must not underestimate the achievements of the last Government. He said that they electrified nine miles, but he is wrong; they electrified 13 miles, and I shall come to that a little later in my speech. I shall also come on to announce the electrification that we intend to carry out.
Mrs Main
I offer many congratulations to my right hon. Friend on his new and challenging post. Does he share my amazement that Labour Members ignore the fact that Thameslink 2000, which serves my constituency, was kept on the buffers for seven years while they dithered, thereby denying the infrastructure improvements of extended platforms and longer trains, which would have made a huge difference to commuters yet have gone ahead only recently?
Mr McLoughlin
My hon. Friend is a tremendous advocate for the many commuters in her constituency who rely on this service. I hope they have already seen some improvements and will see further improvements as time goes on.
Electrification will not only deliver new fleets of cleaner and more environmentally friendly trains but will reduce the long-term costs of running the railways. The hon. Member for Cambridge (Dr Huppert) was just a little ahead in the timing of his question; the next part of my speech will put the record straight. I always try to be accurate. While in 13 years the previous Government electrified just 10 miles of railway—I got the figure wrong, too!—between Crewe and Kidsgrove, which is an important part of the railway network but not too widespread, we have set out plans for over 850 miles of electrification and investment of over £1 billion. It does not stop there, as we have approved a £4.5 billion contract to build a new generation of inter-city trains at a purpose-built factory in County Durham, creating 730 skilled jobs and a further 200 during construction. We are procuring around 1,200 new railway carriages for the Thameslink line and, with Transport for London, we are working on the procurement of new trains for Crossrail.
There is a lot more to do, but let me be clear. We are able to fund this massive programme to build a railway fit for the 21st century only because we have taken tough but correct decisions to cut spending elsewhere, redirecting our resources to boost growth and to get our economy moving. Of course, when it comes to resources, when we invest in our rail network, fare revenues are crucial in helping to fund the massive upgrade programme we are delivering. In fact, the previous Government set out plans to increase the share of rail funding paid by passengers. The alternative for us in 2010 would have been to slash investment. This would have been the wrong answer for the long-term economic future of this country and, indeed, for rail users themselves.
Julie Hilling (Bolton West) (Lab)
I join others in welcoming the right hon. Gentleman to his post. He talks about the passenger paying, but I could have a week in Benidorm with £80 spending money for the cost of my return travel between Wigan and Euston. One of the right hon. Gentleman’s predecessors, the right hon. Member for Runnymede and Weybridge (Mr Hammond), said he thought that the railways were already a rich man’s toy. Does the Secretary of State agree with that? If not, how is he going to enable ordinary people to use the railways—or should they just go to Benidorm instead?
Mr McLoughlin
It sounds as if the hon. Lady knows more about Benidorm than I do. I think there are a number of anomalies in ticket fares. I see them on the train service I use, in that it can cost £170 to use one train, but a train 20 minutes later is a lot cheaper. We need seriously to try to address a number of these problems and to look at how the fares and fare structures used by the rail industry are implemented. I do not accept that everything is fine and fair. In certain areas, consumers have strong cases to make; we should look at them, and I will do so.
Iain Stewart (Milton Keynes South) (Con)
Will my right hon. Friend give way?
Iain Stewart
I, too, congratulate my right hon. Friend. He makes an important point about reviewing the whole ticketing strategy. His predecessor announced a consultation on reviewing ticketing, and one proposal that will directly benefit my constituents is a plan to introduce a discounted ticket for passengers who travel frequently but not often enough to warrant a season ticket. There are proposals like this that will cut the cost of using the railways for many of our constituents.
Mr McLoughlin
I look forward to working closely with my hon. Friend and to discussing that issue with him.
Tracey Crouch (Chatham and Aylesford) (Con)
I am sure that I shall like my right hon. Friend better in his new role than in his last.
The shadow Secretary of State was kind enough to quote accurately comments that I made to my local newspaper reflecting my constituents’ concern about rail fare increases. I said that I would continue to make representations on the matter. Rather than succumbing to the political opportunism displayed by the Opposition, who imposed RPI plus 3% uniquely on Southeastern commuters, will my right hon. Friend meet me, and fellow Kent Members, to engage in a substantive conversation about rail fares and services for our constituents?
Mr McLoughlin
I should be delighted to meet my hon. Friend and the colleagues whom she wishes to bring to see me. As I have said, a huge number of people rely on commuting, particularly in areas such as Kent, and that is very expensive for them. I shall be more than happy to arrange a meeting in the not-too-distant future.
Mr McLoughlin
There is a first time for everything. In fact, I think the hon. Gentleman has already apologised, but perhaps he now wants to say something else.
Mr Sheerman
I wanted to apologise for suggesting earlier that the Secretary of State was a Yorkshireman, but may I also make a serious point? People in my constituency of Huddersfield, and in west Yorkshire generally, are finding it increasingly difficult to afford the fares for journeys to this city, where much of their business lies.
Mr Sheerman
Business people in Yorkshire have to come here to do business, but the rate at which the fares are increasing is making it very difficult for them to afford to do so.
Mr McLoughlin
I think I have already acknowledged that several times in my speech, but I do want to look into it, although the amount that we are investing in the railways should also be borne in mind. We need to address people’s concerns, but there is no easy answer. If we had inherited the economic scenario that the last Government inherited, many of the changes and difficult decisions that we are having to make in trying to rebalance the economy would not have been necessary. What the hon. Gentleman has said comes ill from a member of the party that spent all the money, when the present Government are trying to restore the economy to its previous state and balance the books.
Mr Russell Brown (Dumfries and Galloway) (Lab)
Will the Secretary of State give way?
Mr Brown
I congratulate the Secretary of State on his appointment. Some passengers undoubtedly enjoy the benefits of a railcard, but what does he think about train operating companies that are seeking to tighten the restrictions, thereby preventing people from travelling early in the day or late in the afternoon?
Mr McLoughlin
We are considering that whole question in our fares and ticketing review. When there are announcements to be made, we will make them in the House, and we will be answerable for them in the House if they are our responsibility. However, I think that the situation in Scotland has quite a bit to do with the Scottish Government.
Jim McGovern (Dundee West) (Lab)
I welcome the Secretary of State to his new position. He said that he would try to iron out some of the anomalies, and I hope that he will deal with this one. If I want to travel from my constituency in Dundee to Glasgow, it is cheaper for me to buy a ticket from Dundee to Perth and another from Perth to Glasgow than to buy one from Dundee to Glasgow, and I do not need to get off the train at any point.
Mr McLoughlin
I do not think that we have changed the position in the last few years, and I do not know what the last Government did in 13 years. Again, I think that the issue raised by the hon. Gentleman has more to do with the Scottish Government than with us, but we will look at it nevertheless.
As previous Governments have shown, simply spending more on the railways does not necessarily bring value for money. For far too long the railways have relied on ever-increasing public subsidy and ever-rising rail fares. Enough is enough. If we are to invest in rail, we must ensure that we are getting value for money. That echoes the point made earlier by my hon. Friend the Member for Banbury (Sir Tony Baldry).
We have set out a comprehensive programme of rail reform to tackle costs and waste. That principle was at the heart of the Command Paper that my predecessor published last March, in which we explained how we wanted the industry to tackle the £3.5 billion annual efficiency gap identified by Sir Roy McNulty in his study of value for money on the railways.
Mr McLoughlin
I should like to make a bit of progress first.
The best way of securing long-term value for money is to ensure that the rail industry plays its part in delivering lower costs and sustainable railways. That will require all those who are responsible for track and trains to work more closely together. It will require a more responsible approach to pay and modern ways of working among all who are employed in the industry, from the platform to the boardroom. It will require longer franchises, providing greater flexibility, longer contracts and a sharper focus on cost, and it will require smart technology to reduce the cost of selling tickets. We are challenging the industry to deliver efficiencies that will put our railways on a par with the best in the world, and we will pursue the delivery of those savings with the Rail Delivery Group, train operators and others. Let me address the main point made in the motion by saying that our relentless focus on efficiency will help us to put an end to above-inflation increases at the earliest opportunity.
Caroline Lucas
I congratulate the Secretary of State on his new post. I wonder what he would say to one of my constituents who told me a few days ago that he had had to give up his job in London because he could no longer afford the rail fare. How is the Government’s policy of encouraging people to look further afield for jobs consistent with pricing them off the railways that could enable them to do so?
Mr McLoughlin
More people are using the railways now than at any time since 1929, on a lesser network. However, the hon. Lady is right to express concern. I too am concerned about people who are having to spend such a large proportion of their income on transport. I hope that we shall be able to look at that, and that in due course we shall see improvements in some areas.
Mrs Main
One thing that has not been mentioned so far is the cost of parking. Many people feel that the cost of their rail journeys has been rising in a reasonable fashion, in the sense that the increases are predictable, but the cost of car parking at railway stations has leapt, and the time for off-peak parking has been pushed back to as late as four or five o’clock. The fact that the cost of parking at stations has not been addressed constitutes a flaw in the debate.
Mr McLoughlin
I am told that that is a matter for the rail companies, but I understand the concern about car parking, which, I believe, can be extremely expensive in certain areas.
The hon. Member for Garston and Halewood has asked specifically for an opportunity to address the cap on regulated fares, and the way in which train operators use what are known as flex fares, which the motion describes as “that strict limit”. As I said earlier, I do not believe that the current fares structure—which we inherited—is perfect, and that is why we are conducting a fares and ticketing review. The key issue today is the “flex” policy, which was introduced by the last Labour Government. The cap on regulated fares is implemented by train operators as an average across a “basket” of different fares. That flexibility allows some fares to be increased by up to 5% more than the average, provided that other price increases are kept below the average. It means that operators can manage demand more effectively and efficiently, which should achieve better value for money for fare payers and taxpayers overall. It also allows operators to keep fares in a logical structure and to address anomalies over time.
Let me stress again that when operators increase some fares by the maximum permitted, other fares must increase by much less or even be held flat to comply with the regulated average. As I have said, the system was introduced by the last Government.
Heidi Alexander (Lewisham East) (Lab)
Will the Secretary of State give way?
Heidi Alexander
I congratulate the Secretary of State on his new post. One of the anomalies to which he has referred is the fact that fares in my constituency in south-east London are not fully integrated with the Transport for London price structure, and people pay more for a journey on the rail network than they would pay for a comparable journey on the TfL network. What are his views on that issue, and how does he plan to resolve it?
Mr McLoughlin
I look forward to reading the letter that I shall no doubt receive from the hon. Lady, and I will give a considered response then, as I will have had an opportunity to examine the background of these matters.
Alison McGovern (Wirral South) (Lab)
I welcome the new Secretary of State to his position. When he is familiarising himself with his new brief, may I ask him to take a look at the Wrexham to Bidston line? I raised that project with his predecessor on a number of occasions, and I think he will find it a fascinating subject.
Mr McLoughlin
Members will have plenty of opportunities to question me over the coming months, and after the hon. Lady has no doubt written to me about this line, I will perhaps have a little more to say about it—and I refer her to the very good line between Derby and Matlock.
We are building a modern railway network in Britain —one that plays its full part in connecting our communities, supporting our economy and safeguarding our environment. We are delivering this crucial work against the backdrop of an inherited debt and the most testing economic times for a generation. But investment by investment, upgrade by upgrade, project by project, we are making real and lasting progress. As we do, at the forefront of our thinking and the centre of our plans are the people and businesses that use, depend on and fund this country’s railways.
I am acutely aware of the concerns that passengers have about fares. That is why we are committed to ending above-inflation increases as soon as we can—once savings are achieved and the wider fiscal situation improves. It is also why we continue to keep the regulated caps under review. Every choice we make and every decision we take is about giving passengers the best railways and getting passengers the best deal. That is what the Government intend to do, and we are undertaking that task.