Future of Rail Manufacturing

Gavin Newlands Excerpts

Tuesday 23rd April 2024 Westminster Hall

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

It is a pleasure to serve under you, Sir Gary. I congratulate my good friend and colleague from the Transport Committee, the hon. Member for Easington (Grahame Morris), on securing today’s debate. I could not disagree with a single word he said in his contribution. He spoke of the Hitachi Newton Aycliffe plant in his local area, in the constituency of the hon. Member for Sedgefield (Paul Howell), who is also my colleague on the Transport Committee. The hon. Member for Easington made a spirited plea for jobs there, and mentioned ROSCOs, as did the hon. Member for Ilford South (Sam Tarry), which I will come on to.

We have heard contributions from the Chair of the Select Committee, the hon. Member for Milton Keynes South (Iain Stewart), as well as the right hon. Member for North Durham (Mr Jones) and the hon. Members for Stockton North (Alex Cunningham) and for Ilford South. Only two of the contributors today are not current or very recent members of the august Select Committee on Transport, including the Minister himself.

We welcomed Great British Railways, at least in principle, because it was a step closer to reintegrating strategic decisions on track and trains. In many ways, it sought to replicate the arrangements that have been in place in Scotland in recent years, but which have been completely absent in England and Wales for 30 years since franchising. It has been six years since the Government commissioned a report that three years ago called for legislation to formally establish Great British Railways. Too much time has been wasted over these last years.

There are not many hon. Members present who would disagree that the Rail Minister is a fundamentally decent man who wants to see a better railway. I am sure he will form part of the shadow Cabinet in the not-too-distant future—what the Lord giveth, he taketh away—but he has inherited an utterly dysfunctional system. Not for the first time, that dysfunction is threatening tens of thousands of jobs in the rail industry, not just in primary manufacturers, but across the supply chain. I say that despite the welcome but last-minute intervention last week.

While I was researching for today’s debate, I came across a similar debate that took place in the Commons nearly 30 years ago. On that occasion, the debate was secured by the former Member for Cunninghame North, Brian Wilson. I need to wash my mouth out with soap, but this is one of the few occasions where I agree with the bulk of what he said. I can guarantee that this will not become a habit. On the last day before the Christmas recess in December 1994, Brian Wilson discussed the threat to the rail manufacturing industry that was posed by the Government’s policy and strategy, or rather the lack of them. He said:

“It is a rapidly unfolding, utterly unnecessary tragedy created solely by the Government’s policies towards the railways…Ministers could not have been more effective in creating a fatal hiatus for the train building industry if they had planned to do so.”—[Official Report, 20 December 1994; Vol. 251, c. 1538.]

Again, I do not want to make a habit of agreeing with Mr Wilson—I do not think that he would welcome that—but he was on the money then. Warnings were given that the ABB rolling stock works at York were under threat, due to a lack of orders, and that prediction came to pass just two years later. In major part, that lack of orders was caused by the confusion and dislocation caused by privatisation and franchising, which in turn paralysed British Rail, as it was then.

The creation of ROSCOs did not help matters, because they were hived off by the Government to the private sector at criminally low prices. The Minister who responded to that 1994 debate told the main Chamber that the rail industry had to face up to

“the realities of the marketplace.”—[Official Report, 20 December 1994; Vol. 251, c. 1545]

[Grahame Morris]

The hon. Member is making some excellent points. On ROSCOs, I remind hon. Members that in the current year, I believe that they are making in excess of £400 million in profit.

[Gavin Newlands]

I would not disagree with the hon. Member on that.

To continue on ROSCOs, nobody has ever satisfactorily explained why we continue to have a system whereby rolling stock companies, which are all owned by private equity and investment funds, are the primary owners of multiple units, locos, passenger carriages and freight wagons, rather than the taxpayer, who ultimately pays for them. ROSCOs are generating almost risk-free profits for their owners, which are almost exclusively overseas funds, because ultimately, private rail operators have the Department for Transport as an operator of last resort. They were gifted BR stock at a bargain price and have spent the last three decades coining it in every time a new fleet is needed for an operator. That is just one example of the billions leaking out of the system to private finance that could instead be invested in the public rail network or in a sustainable and properly managed rolling stock procurement programme.

To conclude, the current model has failed. It was failing 30 years ago, it has failed since then, and it will continue to fail for the next 30 years unless this issue is specifically addressed in any rail reform package that is brought forward by this Government or any future Government.