West Coast Main Line

David Mowat Excerpts

Monday 17th September 2012 Westminster Hall

[Rosie Cooper]

The hon. Gentleman raises several of the points that I am about to discuss in more detail, but I absolutely agree with him.

Surely projections about the contract should score highly on the basis of value for money for the taxpayer and the commuter. There is a belief that passenger growth could continue to be 10% per annum. However, such growth figures were achieved at the top of the economy. Even for a non-economist such as me, it does not take a great leap of faith to think that such growth rates are not sustainable in an economy that is in the doldrums and with fears of a double-dip recession not having gone away.

[David Mowat (Warrington South) (Con)]

The hon. Lady is quite right to say that all these projections for the future are estimates and guesses, that they may be too low or too high and that FirstGroup made very aggressive ones. However, is not the key point of a procurement process to ensure that the risk in respect of those projections is with FirstGroup’s shareholders and not with the passengers? The issue is how we manage that risk and not what the estimates were.

--- Later in debate ---

[Rosie Cooper]

Oh, I think there are a lot of Dick Turpin-type figures about.

I would very much like to hear from the Minister on this precise point: has the Department applied its own rules or not? Given the whole handling of the process, a judicial review has been applied for, which has left us in a position where re-nationalising the line is being considered. The new Secretary of State for Transport has stated that he would seek to re-nationalise the west coast main line if there is a failure to reach an agreement before 9 December.

[David Mowat]

The hon. Lady suggests that an operator might walk away from a franchise having made the money in the early years of the contract. Is it not key for the Government to make it clear at this point that if the operator did that—giving the keys back, as she said—it would do no further work with the Government in any other contract? Therefore, for all intents and purposes, they would be barred from any further procurement processes in the future. If the Government made that clear, they would be acting in a much more private sector-type mentality, in a way that Governments often do not do. Does she agree?

[Rosie Cooper]

I would agree that, initially, we need a proper figure to mitigate taxpayer risk, to ensure that taxpayer costs are covered in the eventuality. However, if we have any more shenanigans, those operators should be barred from Government contracts.

--- Later in debate ---

[Iain Stewart]

I apologise to the hon. Gentleman; of course the route also serves Chester and the north Wales coast, and I will refer to that a little later.

We have had a summary of the respective bids, but to assess fully whether the FirstGroup bid is deliverable in preference to the Virgin bid, we would need to see the very detailed evidence that supports the headlines we all know about. My contention is that we cannot expect to see that while the bidding process is ongoing, because the bids contain commercially sensitive information. That would be like a card game in which each player has to reveal their hand before they play.

[David Mowat]

My hon. Friend is right that the bids contain a huge amount of detail that is very hard for anyone here to understand. In his Select Committee role, he might like to investigate—I have heard this several times—the Virgin bid not being evaluated against the other bid because of the £250 million price gap, which has been highlighted by the hon. Member for West Lancashire (Rosie Cooper). That would be worth understanding.

[Iain Stewart]

That is a fair question. I cannot answer, but perhaps the Minister will.

--- Later in debate ---

[Iain Stewart]

Perhaps it is a case of whether we see the glass as half-full or half-empty. I see an attractive proposition for growth in use. Why would FirstGroup, an experienced rail operator, want to tarnish its reputation by not delivering on what it promises? I will come on to one difficulty that I anticipate—or on which, at least, I would like reassurance. However, I think First’s ambition is genuine. As I have tried to explain, I think that there is underlying growth in the market, and that First will be able to innovate with new products to attract people on to the railways.

I do not want to continue much longer, because other hon. Members want to contribute. I have a concern about one aspect of the matter, and the hon. Member for West Lancashire touched on it. There will be considerable work on the west coast main line over the franchise period, particularly in the Euston area, if it is decided that that will be the High Speed 2 terminus. That may have an impact on the ability of the line to deliver the extra capacity. I should be grateful for a comment from the Minister, whom I welcome him to his post. He has long taken an interest in rail, and richly deserves his position. Perhaps he could say a little about how the upgrade work at Euston and elsewhere on the line will be accommodated, along with growing passenger numbers, over the period in question. I believe that there are solutions. For example, it might be possible to divert some commuter traffic on the London midland line into the Crossrail terminus while Euston is being upgraded, and for extra capacity to be created there. If the Minister would say a few words about that, I should be grateful.

[David Mowat]

Will my hon. Friend give way?

[Iain Stewart]

I will give way one last time, but then I must conclude.

[David Mowat]

The thrust of my hon. Friend’s remarks is that if there is an issue with Euston or the revenue projections, that is a problem for the Government, but it must be a problem for FirstGroup, and the contractual basis must make that clear. Such points, although interesting, do not mitigate FirstGroup’s liability. That must be a principle.

[Iain Stewart]

That is a fair point. I genuinely do not believe that FirstGroup would be making the bid if it did not believe that it could deliver. However, we do not have the full details, and I do not think that we can. I believe that the process has been rigorous. The bids were anonymised; the Government could not have displayed any commercial bias for or against any operator.

In conclusion, it is healthy that we have such a high level of ambition and competition. It is to the benefit of all who use the railway that different companies want to develop the line in innovative ways. I hope that my constituents and those of other hon. Members will see an improvement in their rail services over the life of the franchise.