South Western Railway Franchise

Ed Davey Excerpts

Wednesday 5th December 2018 Commons Chamber

[Sir Vince Cable]

I thank the hon. Lady for that additional information, which is germane and extremely useful.

There have been a couple of serious and authoritative reports by the Office of Rail and Road. Sir Michael Holden was invited to carry out a study, and he has actually run railways, so we think he can be trusted for technical judgment. The analysis that is now available suggests that the following are the main sources of disruption. The first is that the franchise itself was not properly conducted. The company overbid or, to put it another way, underbid for subsidy and is now financially stretched. It appears to be struggling to maintain payments to its financiers, and the consequence is that passenger welfare is being sacrificed and the promised investment is not materialising. There are serious questions for the Department and the Minister about to how the franchise was allowed to take place and result in a serious deterioration of standards. The Government have plenty of experience of refranchising, and why they were allowed to disrupt what was a perfectly serviceable arrangement with the previous franchisee is unclear.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

My right hon. Friend is right to say that the all-party parliamentary group that I set up is looking at this matter in detail. We have a draft report called “Passengers must come first” which focuses, among many other things, on the fact that South Western Railway does not have the money to do what is right for passengers. It is looking after the investors first, and it is not putting money in to deliver on what it promised in the franchise. Unless the Government act, either by taking the franchise away from SWR or by imposing a new contract, passengers are going to keep suffering under shocking performance.

[Sir Vince Cable]

That is a helpful intervention that anticipates what I am now going to say. Many of the problems do originate with the franchise and the franchisee, but there is some shared responsibility with Network Rail, which of course is a nationalised industry. Network Rail’s failings have been exposed throughout the network, but they are particularly serious here, because the decision was made several years ago to switch the control centre from Waterloo to Basingstoke. As a result, many staff were shed, and a disconnect was established between the running of the trains and the running of the crews, so at least part of the disruption is attributable directly to Network Rail. I think the common consensus is that the nationalised company suffers seriously poor management and many failures, among which is the fact that Network Rail has not updated any of its contingency planning since 2011. It is important to accept that it is not just the franchisee that is responsible for the many failures.

An additional problem is the lack of integration between Network Rail and the franchisee. Under a previous dispensation, the two things were run together. It would probably have been better if the original rail privatisation had properly integrated the franchise and the network, but that was done informally in the south western area under the previous franchise, and it has now completely broken down. There appears to be no integration at all, minimal co-ordination and just an instinct for blaming each other.

The combination of those all factors has led to the serious situation that we have at present, and I would hope that the Government recognise that. To prevent the situation disintegrating to the point at which we have another Southern railway scandal, the Government might intervene now to prevent the situation slipping further. There are several actions they can take, and my right hon. Friend has just summarised them. In relation to the franchise, there are essentially two options, one of which is to take the franchise away and replace the existing company with another—preferably a public service company, but there is a variety of options—and the other is to impose on the franchise a set of performance-related measures so the company is paid only when it delivers on its undertakings.

There are various ways of dealing with this problem. Unlike the Labour party, I do not believe nationalising the franchisee would necessarily help, but we have to find a mechanism by which it can be properly held to account and rewarded for success, rather than rewarded for failure.

The second area of activity that is needed is within Network Rail itself. It is fortunate that Network Rail has just appointed Andrew Haines as its head. I dealt with him extensively when he ran South West Trains, and he is generally thought to be a good manager. Whether he can personally turn this around, I do not know, but it would greatly help if there were proper integration of Network Rail and the franchise in this section of the system. I would be grateful if the Minister could indicate how he can help achieve all of that.

There are clearly questions for the Department to answer, notably on the franchise, how it has allowed this to happen and the options available to it to turn the situation around. Although Network Rail is a free-standing operation, though nationalised, it would be useful to have some indication from the Government on how they can push it in the direction of better management and better attention to the serious problems in this region.

[Sir Edward Davey]

I am grateful to my right hon. Friend for giving way a second time.

The point on Network Rail is crucial. Like my right hon. Friend, I have a lot of time for Andrew Haines given our mutual experience of him. However, Network Rail will not be able to get to grips with the challenges of an extraordinarily high level of emergency speed restrictions and temporary speed restrictions across the network. A decade or so ago, there were zero speed restrictions; now there are 70 or 80, which is because of the lack of essential investment. Unless the Department for Transport supports Network Rail with more cash to solve those restrictions, we will get nowhere near the level of timetable resilience that will prevent cancellations and delays, meaning that people’s trains actually run on time.

[Sir Vince Cable]

My right hon. Friend is absolutely right, and he leads me to my concluding point on the role of the Department itself.

The national rail review is looking at overall performance, and I hope it is able to look at the role of the Department and not just of the rail companies, but there is the additional and crucial point, as my right hon. Friend has just said, that a lot of this depends on available investment. Some of that, of course, has to come from the franchise company, but Network Rail ultimately depends on the willingness of the Treasury and the Department for Transport to make capital spending available in light of what is necessary.

[The Parliamentary Under-Secretary of State for Transport (Andrew Jones)]

I congratulate the right hon. Member for Twickenham (Sir Vince Cable) on securing this debate. He covered a lot of ground and issues in his short speech, and he has brought insight and local knowledge. He is right, as are other hon. and right hon. Members, to speak up for the passengers they represent.

The South Western Railway franchise is enormous, handling more than 400,000 passengers a day who rely on its 1,700 services. Indeed, more than 110,000 passengers pass through Waterloo in the morning peak alone. It is fair to say that service levels have fallen short of expectations, as we all know. That was perhaps most keenly felt on Monday 19 November, when serious disruption was caused on the network by overrunning engineering works, which the right hon. Member for Kingston and Surbiton (Sir Edward Davey) was keen to highlight. Those overrunning works meant that Network Rail was not able to open a number of lines into Waterloo until after 9.30 am.

Colleagues have asked what action is being taken. Since then, Network Rail has taken action to bring more operational experience to its executive team, including with a change of managing director on that route. People are rightly frustrated and angry with the delays and cancellations, but I want to assure the House that bringing performance back to acceptable levels is our highest priority.

[Sir Edward Davey]

I just want to make sure that the Minister and the House understand that although it was a shocking performance on that Monday when the works were not completed on time, the cancellations and delays have been going on for more than 18 months. This has been a long, sustained period of shockingly poor management and shockingly dreadful services, which our constituents are suffering daily. I have 10 train stations in my constituency. Most of my constituents rely on these services, and they have to be put right. We need to hear from the Minister about the actions his Department will take to do that.

[Andrew Jones]

Obviously I am coming on to that, but I wanted to highlight when the problems were at their most acute. I will press on now to make sure that some answers are given in the time available.

A key point is that South Western Railway and Network Rail understand the causes and have put a plan in place to turn performance around. The right hon. Member for Twickenham highlighted the report that was commissioned from Sir Michael Holden and his background as a senior figure in the rail industry. Sir Michael’s report highlighted that no one silver bullet will restore punctuality to previous levels. He cited the main cause for the decline as too little flexibility in the timetable, so that when things do go wrong, they go very wrong and it is difficult for the operator to get back on schedule. I think that is part of the problem that the right hon. Gentleman highlighted when he talked of a “concentration of misery”. It is a very tough thing for the operators to deal with. I visited the train operating centre in south Manchester a few days ago, when I witnessed a nine-minute delay in the Castlefield corridor having a consequential impact of 1,200 lost minutes through delay across the network of the north. We are talking about a network that is stretched taut, and there is little flex.

Sir Michael highlighted other causes: the intensively used, ageing infrastructure, and the ongoing industrial action, which is diverting management attention. Taken together, they have led to an unacceptable level of performance on the South Western Railway network. However, he also points out the potential performance improvement opportunities that a consistent suburban fleet would offer. South Western Railway identified that before the start of the franchise when it ordered a fleet of 90 modern trains. Those trains offer not only performance benefits but a range of features to improve customer journeys. This is an £895 million fleet to cover the entire suburban network, and it is due to enter service from late 2019.

Sir Michael makes 28 recommendations in his report for South Western Railway, Network Rail and the Department to take forward, and I am pleased to say that all have been accepted and are currently being progressed. A number of the recommendations are already complete, and all of his short-term recommendations will be complete by the end of this year.

The right hon. Gentleman highlighted the success of the railways in increasing passenger numbers, which have reached a record high of 1.7 billion. So we are dealing with an industry that is trying to cope with the challenges of growth. In order to deal with that, changes have been made to lengthen platforms on the suburban routes to accommodate 10-car trains. That work is part of the £800 million Wessex capacity enhancement programme, which has also seen major works completed at Waterloo to lengthen the platforms there. I am not sure whether he is aware that starting from Monday 10 December the services from Reading or Windsor & Eton Riverside that call at Twickenham station are scheduled to arrive at one of the four former Waterloo International platforms, which are being brought back into full use. I am sure he will welcome that. It should help relieve some of the issues affecting punctuality, especially in the peaks, because there are periods when trains are waiting outside stations for platforms to become available.

The changes to be introduced through the new franchise by December 2020 will mean an increase in peak capacity of about 30% at Waterloo, so we are talking about more space and less crowding for passengers. However, it is also fair to say that the challenge faced by Network Rail to maintain its assets in a reliable condition gets harder—that was a point made in a number of interventions. I agree entirely that the effect of that has been felt by passengers.

The right hon. Gentleman asked whether we are investing; well, we certainly are. We are seeing one of the biggest investments in our railway’s history, with £48 billion to be spent by Network Rail in the next control period, which starts next year and will run until 2024. That funding will make a real difference to the passenger experience, because it will go far more towards maintaining and renewing the infrastructure—

[Sir Edward Davey]

rose—

[Andrew Jones]

The right hon. Gentleman has had a very good run. Will he let me press on a little further?

In previous control periods, we have had a bias towards enhancements; this time it will be towards the maintenance and renewal of infrastructure and increasing reliability and punctuality. For South Western’s passengers, the Network Rail Wessex route will see funding increased by 20% compared with the past five years. Work will be taking place over Christmas and the new year, when Network Rail will be investing more than £148 million to improve the network throughout the country for a more reliable railway for passengers. Network Rail’s “team orange” will be out on the Wessex tracks replacing switches and crossings in the Waterloo area, strengthening bridges at Vauxhall and Guildford, and replacing track in the Westbury area. Are the Government acting? Yes, they are. Are the Government investing? Yes, they are.

The new franchise was highlighted—

[Sir Edward Davey]

rose—

[Andrew Jones]

This will be the fourth intervention—come on!

--- Later in debate ---

[Sir Edward Davey]

I am extremely grateful to the Minister for giving way; he is being very generous. If he looks at the historical record of investment in the South Western Railway region—the Wessex region—he will see that it is shockingly low compared with the rest of the country. Although there is going to be a small increase, compared with the huge amounts being spent elsewhere the capital investment in the Wessex region is not good enough. Given the problems and the huge numbers of people in the area, will the Minister go away and consider the investment that is going to the region? It is simply not adequate.

[Andrew Jones]

Every single Member of this House comes to me and says that every other area is being advantaged ahead of their own—

[Sir Edward Davey]

Look at the facts.

[Andrew Jones]

I have obviously gone over the facts and we are looking at them, but the point is that we have a programme that is delivering new rolling stock and upgrading the maintenance budgets. It is the largest investment that any Government have made in our railways, so to suggest that the Government are not backing the railways is simply not true. I am just highlighting some of the new things that are coming in.

There were a few questions about the franchise. The winning bidder, First MTR, will be investing £1.2 billion over the course of the franchise. A significant part of that will go on the fleet of new trains that will provide services for the constituents of the right hon. Member for Twickenham and more widely across the suburban services. We expect there to be some significant improvements in passenger experience thanks to new and refurbished rolling stock and smart ticketing options, as well as improved wi-fi provision at stations and beyond.

The franchise performance was clearly of concern. With the new franchise, we have set challenging targets for performance, with a financial incentive that would reward the operator for exceeding those targets. As everybody has said and as we all know, performance is not at the levels that passengers rightly expect, and it is below the target levels in the franchise agreement. South Western Railway is now investing an additional £5 million across a range of initiatives to improve performance. Many of these initiatives are targeted at improving the fleet’s reliability and are designed to reduce instances of services being formed of too few carriages or cancelled.

The right hon. Member for Kingston and Surbiton asked about several issues, including declining performance, but let me first address disabled access on the line, which the hon. Member for Strangford (Jim Shannon) asked about. We are dealing with a Victorian rail infrastructure, and disabled access on parts of it is simply not good enough. I entirely agree with the hon. Gentleman’s point and hope he will understand that we are putting extra funding in between now and 2024. We have made nearly 2,000 stations throughout the country disabled-access friendly, but there is a long way to go and we need to keep up the pressure. The hon. Gentleman was clearly right.