Network Rail

Brian Binley Excerpts

Thursday 2nd February 2012 Westminster Hall

[Kelvin Hopkins]

My hon. Friend is absolutely right, and of course that includes paying for the bloated, self-interested mass of people at the heart of Network Rail.

I like to think that David Higgins is possibly the right man for the job in the appalling organisation we have, but he has a difficult job at the moment. During the time in question there have been the accidents at Grayrigg, Potters Bar and Hatfield. There has been pressure for prosecutions, but Network Rail has constantly said “Not our fault.” It has tried to escape and avoid blame. As to the recent accidents on level crossings, it is interesting that just in the past couple of weeks David Higgins personally apologised to the parents of the two girls who were killed. That is a different attitude from that of previous Network Rail management.

[Mr Brian Binley (Northampton South) (Con)]

I do not quite have the same memories as the hon. Gentleman of British Rail, but I shall let that go and take up a more positive point, about the role of the regulator. We have got that totally wrong. It is ineffective. Is not that where we need action to help David Higgins?

[Kelvin Hopkins]

That is another point I was going to make: regulation. At the time when Tom Winsor left the Office of the Rail Regulator, there was talk in Government circles, which leaked out, that the Government—the Treasury and, indeed, the Department for Transport—wanted light-touch regulation. They did not want the ORR to regulate too hard, because that might damage profits. It might make privatisation less popular. If a regulator of any kind is told “Light-touch regulation”, they will either go along with it and take the money, or say “I am not going to be blamed for things that go wrong,” and stand down and do something else. I suspect that that might have been the case with Tom Winsor, but there we are.

The Government must take hold of the matter. The speech today by the hon. Member for St Albans has started, I hope, to move the tectonic plates. Governments and Network Rail management have refused for years to face the problems, and the costs have been massive. If the Government want to save money, one way to do it would be by sorting out Network Rail. I suggest that they should first make it a proper public corporation again: one that is transparent and accountable—ultimately to Parliament through the Secretary of State—and subject to freedom of information inspection. There are inherent problems of cost, but those are caused by the contracting culture. Track maintenance was taken in-house when it became incredibly costly. Time and again I raised with the Secretary of State, under the previous Government, the question why track maintenance costs are four or five times higher than they were in British Rail’s day. The simple answer was that it was about contracting. There was contracting, subcontracting and sub-subcontracting. There were costs at every level whenever the work was contracted out, and of course there were project managers and lawyers negotiating contracts at every level. People were filling their pockets with public money.

British Rail directly employed its own staff at every level, from the engineers who designed and controlled the work to the track layers at the grassroots level. They were all employed in particular areas, so that they had possession and ownership of their own area of track. If things went wrong, it was the engineer’s fault. He was permanently employed and he was accountable. He knew that his life was in the railway industry being employed by British Rail and he had to get it right. In the case of subcontracted staff, perhaps from overseas—they might have signed on as subcontracted staff or contract staff from elsewhere—they disappear after the work is done. Nobody knows who has done the work, and of course there is no sense of accountability and no sense of loyalty. They are just doing a job for the money. That is quite different from the type of attitude that British Rail engineers had. They believed in railways and they were passionate about their work.

There are still many of those BR engineers about today, but they are being abused and rubbished by this appalling organisation called Network Rail, where they are employed as consultants. Network Rail has to depend on them, because they are the only people who know how to do the job, but Network Rail does not inspire loyalty and commitment to the industry. People love railways—I love railways—and when they work inside the industry, they devote their lives to it. It is like loving a work of art. They have those attitudes, which is exactly what we want. We want people back in the industry who are permanently employed, who are responsible for sections of track—their track, and if it goes wrong, it is their fault and they feel totally responsible.

We have an expensive operation. Some years ago, the Department of Transport held an internal seminar on project management and its costs. It invited Don Heath, the manager who had been the guiding light and chief engineer in charge of the east coast main line modernisation and electrification, and it called in the west coast main line privateers. Don Heath was asked how much of his total budget was spent on project management, and he said 1%. The privateers were asked how much of their budget was spent on project management, and they said 50%. It was 50 times more. Direct employment by a dedicated engineer working for BR compared with a mass of private companies and subcontractors speaks for itself.

We want the direct employment of engineers; engineers in charge; engineers who care about the railways; and engineers who are permanently employed and have a life in the railway industry and believe in it. We want committed and responsible people in charge, not fly-by-night subcontractors.

I must not take too long, but I want to raise a few more issues before I finish. I put down an early-day motion a year ago to register my opposition to the use of agency and subcontracted labour. My EDM is quoted in our debate papers. It stated:

“further notes research undertaken by the RMT union and academics demonstrating that the complex network of contractors and subcontractors means there are tens of thousands of rail workers employed by a multitude of companies undertaking renewals and that substantial savings could be achieved if renewals were instead carried out in-house as was the case before railway privatisation”.

I made that point a year ago, and it is still true today.

The Office of Rail Regulation has recently found that Network Rail is in breach of its licence and that

“major asset failures, congested routes and poor management of track condition”

contributed to poor performance of the rail network in 2011.

Standardisation has collapsed as a result of the fragmentation of the railway industry. We have chaotic technical standards imposing massive costs and building up problems for the future. We have trackside land reserves being sold off—asset-stripped for profit—so track is no longer accessible for essential repair work, because the land alongside the track has been sold off. We have blue-sky contracts being issued whereby contractors are paid according to emerging costs. In other words, they can charge what they like; we will just pay the bill at the end of the day. All this needs fundamental change. With the right people at every level in the industry, we can do that, but it depends on Ministers, on Government and on the Department for Transport taking hold of Network Rail and transforming it into something that is fit for purpose.

--- Later in debate ---

[Mr Brian Binley (Northampton South) (Con)]

It is a pleasure to serve under your chairmanship, Mr Rosindell, newly come as you are. I congratulate my hon. Friend the Member for St Albans (Mrs Main) on obtaining the debate and on her speech. As many contributors have said, this is a vital debate. I hope that many of her comments will be recognised by the Minister and acted upon, because action is needed.

I pay tribute to those hon. Members who have contributed to the debate. By the nature of their contributions, I know that they take the subject seriously. I want especially to congratulate the hon. Member for Luton North (Kelvin Hopkins), who has a long interest, massive enthusiasm and great knowledge of the subject. It is always a pleasure to listen to him, because he always speaks in such a friendly and good manner, which is a lesson to us all. I welcome this opportunity to discuss Network Rail, which is vital to the nation’s economy and well-being. That underlines the importance of the debate.

I declare an interest as chairman of the Northampton rail users group. Consequently, I will contain my remarks to issues specifically affecting my constituency. On that basis, I wish to explore three themes: the factors that make rail travel from Northampton increasingly unbearable, the urgency with which the rail industry must get a grip on its cost base—a matter that has been mentioned on a number of occasions—and the pressing issue of capacity and the need to face up to what must be done to relieve that pressure, especially for my constituents in Northampton South.

That leads me to the west coast main line, which is the nation’s most important rail artery and has the ability, given supplementation, to add enormously to our economic well-being, especially in Manchester, Leeds and the areas north of Birmingham. The current daily capacity crunch is intolerable for the west coast main line’s users and will become increasingly so as the months and years go by. Network Rail’s most recent assessment is that the line will be full to capacity by 2024. Some expert railwaymen—a number of whom sit on my rail users group, I am pleased to say—would argue that that capacity might be reached quite a bit earlier. So we are talking about an important matter.

[Kelvin Hopkins]

The hon. Gentleman is again making a very effective speech. Two possibilities could alleviate the problem of capacity on the west coast main line fairly quickly: we could develop and improve the line from Paddington to Birmingham Snow Hill to make it an express route, and we could develop a dedicated freight line to free up the west coast main line for more passenger traffic.

[Mr Binley]

I thank the hon. Gentleman for that contribution, which I am sure the Minister has noted. My particular favourite is to ensure that High Speed 2 comes into being and is taken further, to Manchester and Leeds, because there is no doubt that transport systems cannot operate efficiently under the current pressures. That is one reason why we have the problems that we do, and it is one reason why the track is constantly in need of maintenance and repair, which makes the hold-ups even worse. We simply have to relieve that pressure. That is why I am a major supporter of High Speed 2. I argue that we should do our best to bring it forward as quickly as possible. I do not want to see High Speed 2 up and operating in 2030; I would much rather hear the Minister say, “We can make a target of 2024.” If the Chinese can put up a hotel in 14 days, we can do a little better than 2030.

I pay tribute to London Midland, because it has achieved a modicum of success, but that needs to be seen alongside the pressure. I feel for London Midland. I think it has many faults, but it is battling against a difficult situation. I make the point again that Rugby has been a problem in recent months. Rail travellers hate to get off at Northampton to circumvent Rugby by bus or, equally, to circumvent Milton Keynes going the other way.

[Mark Pawsey (Rugby) (Con)]

I am distressed to hear my hon. Friend describe Rugby in such terms. We have a brilliant rail service and a fast-growing town, so I hope that he would look a little more kindly upon my constituency.

[Mr Binley]

We are on the other end of your line, mate, and I can tell you that the service is not as good as you argue. Otherwise, all my constituents would not be as up in arms and as dissatisfied as they are. My hon. Friend knows very well that we use quite a bit of the same line, and I do not believe that two towns so close together can have such differing views on the quality of rail transport in their area.

I turn to the problems specific to Northampton. The Government wish Northampton to be a growth area and have said that they want Northampton to build 56,000 extra houses by 2026, which will mean a population increase of 120,000—a 50% growth—yet where those people will work is a major question. Many of them will come from the south-east, especially London, thus alleviating the housing problems of that area. Consequently, commuting will become even more important. My guess is that there will be at least another 12,000 to 14,000 regular commuters on the link from Northampton through Milton Keynes down to Euston.

Commuting is becoming prohibitively expensive for the people of Northampton. As I have said, we will have 120,000 additional residents, at least 12,000 of whom will commute to London for work, yet the cost of an annual season ticket from Northampton to London is now £4,756, and a staggering £5,628 for those who need to go further on the underground. That does not take into account £815 in parking charges. All that is more than a quarter of the disposable income of a person on a £30,000 salary.

Many people will ask whether they can really afford to look to London to continue to provide them with employment. Many of them might even decide that it is not worth being employed at all, given the cost of commuting to a job in London. The major reason why people are moving to Northampton to fill the houses that I have talked about is that they cannot afford houses in London and the south-east. These people are the service workers of our great city. They provide vital services, but they are not highly paid. They do not work in the City, making millions on small money transactions—by small, I do not refer to volume, but to the difference between buying and selling. They are not those sort of people; they work in our restaurants, retail outlets and offices. Although £30,000 is a reasonably good salary in Northampton, if people have to pay a quarter of that to travel to their job, that is a pretty bad deal that needs to be looked at seriously.

Let me turn to the problem of the McNulty review. It seems that the Government for ever think that rail increases are a battle between the taxpayer and the consumer, but there is a third element: the service provider. McNulty was open about his concerns about the cost base of the rail providers and talked about prices being 30% more expensive per passenger kilometre than other rail systems in a comparative group. They ought to be out of business, for God’s sake! No business can operate effectively at a 30% higher cost base and expect its consumers to continue to support it. Usually, they would simply go to another supplier, but therein lies the problem.

[Mrs Main]

Does my hon. Friend agree that that is the real conundrum? How can it be regarded as a private company when no private company could possibly operate in such circumstances?

[Mr Binley]

Of course, that is right, but because Network Rail is a monopoly in some respects, it needs the Government and the regulator to be its friend and ensure that it operates competitively, but we know from McNulty that it does not. McNulty has also said that there is a subsidy of 31p per passenger kilometre at present, so there is 30% more cost and 31% subsidy. What would happen if those costs were reduced? In addition to the taxpayer and the consumer, there is a third factor in cost setting and cost payment—the train operators. Let a message go out loud and clear that they have a duty and a responsibility to care for their customers in a much more efficient way than at present.

I am concerned about Network Rail’s supply chains and the way in which it bids for jobs. When I was a managing director and wanted to get work done for my business, I would talk to a number of suppliers and ask, “What’s the best way of doing this? How do I achieve the most efficient answer for this job at the most efficient cost?” Are Members aware that Network Rail does not do that? It decides internally what it wants done and then goes to people to tender on the basis of its own decisions about how best to undertake the job. We have talked about the quality of middle management in Network Rail. No wonder that costs are so high when middle management is poor and does not even look for ways to be more efficient by talking to suppliers who know what they are doing in relation to a given task.

[Kelvin Hopkins]

The hon. Gentleman is making yet another strong point. One of the problems in Network Rail is that contractors are required to work rigidly to specifications, even when those specifications are wrong. In British Rail’s day, the engineers locally would find out whether things were wrong and correct them as they went along.

[Mr Binley]

The hon. Gentleman talks some truth. I have never known a business man say that he wants an end product, only to ignore the supplier and say, “I’m not bothered about what you tell me is the efficient way to do it. This is how we are going to do it, because we know best.” But we do not know best—that is the reason why I would get a supplier in the first place.

[Mike Weatherley (Hove) (Con)]

Does my hon. Friend agree that part of the problem is the blame culture that has developed at various points in Network Rail’s history?

[Mr Binley]

I do not know about that, but I have been interested in running efficient businesses all my life and I know that this is not efficient. That is what I am bothered about, and that is why I say to the Government that it is their job to make sure that it is efficient. If there are bad practices of this kind, it is the Government’s job to change things. The Minister represents all the consumers. They look to him as a kindly father who looks after their interests, and I am sure that he will do so.

I restate my full and enthusiastic support for high-speed rail. It is not about speed, and the nonsense about getting to Birmingham 20 minutes sooner is not the reason why it is important either. Of course, if we are to build a new railway, it must be the best that it can possibly be. Therefore, it must be the quickest and most efficient that it can possibly be. The real reason why high-speed rail is important, however, is capacity. My good friend the hon. Member for Luton North will tell us that we can only get so many trains on a line in a given hour. High-speed rail is about slots on the line and capacity. Rail will be oversubscribed by 2024—some people believe sooner—which is why high-speed rail is so vital.

Let us not have facile arguments about whether it is worth paying more to get to Birmingham sooner. That is not the point. The point is whether we get to Birmingham at all. Let that be a lesson to those who oppose High Speed 2. I know people who live in Manchester, Leeds and other such areas who know that there is a blockage in Birmingham. They know that it is increasingly difficult to go by rail through Birmingham and down to London and the south-east and then to the continent. They are looking to this Government to ensure that their part of HS2 is completed. I repeat that it is a massively important investment for the country in economic and social terms, and in ensuring that our children and grandchildren are employed on a good salary. I recommend that the Minister bring it forward to 2024. That is a target to set and, if he accomplishes that task, he will deserve a knighthood.

[Mark Pawsey (Rugby) (Con)]

I add my congratulations to my hon. Friend the Member for St Albans (Mrs Main) on securing the debate, because, following on from my hon. Friend the Member for Northampton South (Mr Binley), the activities of whichever body is responsible for the management of our railway network have a significant impact on many of my constituents in Rugby, not only those who are commuters, travellers and users of the network, but those who live close to the railway. I shall talk about issues affecting that latter group in a moment.

The railway is important to the town of Rugby and its surrounding villages. The west coast main line runs through it. Our 50-minute service to Euston is operated by Virgin, and other trains, which take slightly longer and stop more regularly, are operated by London Midland. I do not have as much experience in the House as many other Members present, so I cannot outline history in the same way, but I intend to address three matters that affect the railway in Rugby that have been drawn to my attention in the 18 or so months since I became a Member of Parliament, two of which relate to the upgrade of the west coast main line that started in 2003 and was completed in 2008. Many of my constituents have told me about the massive disruption that they have experienced throughout that period.

I want to talk first about one of the major projects that Network Rail ran: the improvements at Rugby station that took place between 2006 and 2008. After listening to the account of my hon. Friend the Member for Reading East (Mr Wilson), it seems that his constituents are going through much of the disruption and uncertainty that my constituents went through over a period of two years. The improvements that have taken place are highly welcome. Notwithstanding the remarks of my hon. Friend the Member for Northampton South, the first impressions of Rugby have been transformed. It no longer seems to be an ugly, unattractive town where arrivals have to pass down a dark and dingy tunnel. People now arrive at a modern and vibrant building that exemplifies all that is good about the town of Rugby as a go-ahead and positive location for business.

[Mr Binley]

May I confirm that Northampton is on a loop line? Although the main line from Rugby works very well indeed, the loop line from Rugby through Northampton and down to Milton Keynes does not. If my hon. Friend could pay a little heed to that, I would be very grateful.

[Mark Pawsey]

Absolutely. My hon. Friend will expect me to stand up for my constituents who receive a good service. It is very important that we maintain that service, whether or not high-speed eventually takes place.

My hon. Friend the Member for St Albans referred to the accountability of Network Rail in the costing and management of its projects. Although we have a great new station at Rugby, there are very serious questions about how much it cost to deliver. Some of those questions were aired on the BBC “Panorama” programme on 16 January, when reporters were advised by the Office of Rail Regulation that soaring costs were an oversight, but that it was not possible to determine by how much the project had overspent. Our local newspaper, the Rugby and Lutterworth Observer, spoke to a member of the Rugby rail users group who talked about setbacks in the construction process leading to train services being stopped simply because Network Rail was unable to complete its work on time. The hon. Member for Hayes and Harlington (John McDonnell) drew attention to that issue.

We have got a new station, but the second matter regarding the changes at Rugby is the noise nuisance from the new track that has arisen since the works upgrade on the west coast main line. I have met Network Rail staff and approximately 25 residents to try to resolve that matter. In most cases, we are talking about residents who have lived in the area for many years. They had got used to living with the railway before the upgrade and were familiar and comfortable with the noise.

Many of the works that took place in Rugby were intended to enable trains to pass faster through Rugby station. Of course, the faster that trains travel—the higher the speed that they run at—the more noise is generated. In the district of Hillmorton, there are two separate noises: first, the absolute noise that the trains make; and secondly, a distinctive one-off thud is heard each time a train passes. I will come to that in a moment.

On major noise levels, my constituent Peter Bayliss invited me into his garden to listen to the noise. He showed me hand-held sound meter readings of between 89 and 90 dB for trains passing through at great speed. That was not previously a problem because, under the old alignment, trains slowed down to pass through the station. There appears to be no resolution to the issues faced by Mr Bayliss and his neighbours.

--- Later in debate ---

[John Woodcock]

I will be brief. We want a railway that provides value for money for and is accountable to the taxpayer and the travelling public, a railway where passengers and freight customers can rely on the timetables and a railway that can plan strategically for the long term. That is why we are listening, as part of our policy review, to a wide range of ideas for improving the accountability of Network Rail, such as the Co-operative party’s proposals for mutualisation of the company. I therefore hope that the Minister will tell us where his plans to review the ownership and accountability structures of Network Rail to make it better able to serve the public have got to and whether they will include improvements to transparency.

Finally, I come to the issue of bonuses. Network Rail’s accountability has been brought into focus today by the news that Network Rail’s senior management will next week seek to award themselves a new bonus and incentive scheme. We understand that that will include an annual bonus of 60% of salary and, in addition, a five-year reward scheme worth up to 500% of salary. The public will be staggered by such proposals. Network Rail is currently in breach of its licence. It must recognise that times have changed and that bonuses on top of salaries need to be for exceptional performance and not the rule.

There is a responsibility for Ministers here, too. Network Rail’s articles of association make it plain that the Secretary of State has a clear remit over pay and bonuses. She has a right to attend the remuneration committee and the board meeting that decides these schemes, or to appoint a special member to represent her. Despite the coalition’s pledge to make Network Rail more accountable, the Secretary of State has failed to take up that right. She still has the opportunity to do so. The Minister will be keen to know that Downing street seems to take a relaxed view on this matter judging by the lobby briefing this afternoon. The Prime Minister’s official spokesman agreed that there was a vote, but said that the decision rested with the Secretary of State. In his winding up, will the Minister say if his boss or he will attend the board meeting on 10 February to make it clear that such a package is unacceptable? Warm words about accountability are not enough—

[Mr Binley]

On a point of order, Mr Rosindell. I want to hear the Minister speak and time is very limited.

[John Woodcock]

The hon. Gentleman is quite right to raise his point of order, but I am in my last paragraph.

The Government need to get a grip on the organisation and its future, and they must start with this unacceptable bonus culture.