Rail Services (South-East England)

Heidi Alexander Excerpts

Wednesday 12th February 2014 Westminster Hall

[Mr John Denham (Southampton, Itchen) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Roger, and I congratulate the hon. Member for Dartford (Gareth Johnson) on securing such an important debate. I want to look at some of the fundamental issues relating to the financing of rail and commuter services. Governments of any party face major challenges in trying to bring a fair and just approach to rail fare financing in the south-east. As I am sure the shadow Minister, my hon. Friend the Member for Nottingham South (Lilian Greenwood), will set out, until the Chancellor was forced to act last summer, commuters faced a series of above-inflation fare increases.

It is worth looking at some of the figures. I have looked at the increases in train fares—season ticket prices—highlighted by Passenger Focus on a number of south-eastern routes. Sadly, my constituency is not included, but a number of others are. The increases in fares are compared with the increase in wages of the people living in the relevant areas. For example, in Gillingham in Kent—not too far from the hon. Member for Dartford—in the year from January 2010 to January 2011, the cost of a season ticket rose by 8.3% and wages by 2.1%. The following year, season tickets rose by 6% and wages by just 1.2%. In the next year, season tickets went up by 4.2% and wages by just 0.2%. In the year up to January 2014, season tickets went up by 3.1% while wages went up by just 0.7%.

A similar pattern is repeated across the south-east. In Portsmouth, from January 2010 to January 2011, fares went up by 7.2% and wages by just 2.1%. Fares went up the following year by 6.1%, but wages by just 1.2%. In 2012-13, season tickets went up by 4.2% and wages by 0.2%. In the past year, fares have gone up by 2.7% and wages by just 0.7%. Right across the south-east, year after year, we have had increases in season ticket prices that massively outstrip the real increases in wages earned by our constituents and many others in the region.

The annual season ticket from my constituency in Southampton is now more than £5,200, and commuters have faced many additional costs. I have not checked it on any websites, but I use the station and, as I recall, the parking charge at Southampton airport parkway has gone up from £10 to £14 a day in just the past three years. That is, of course, outside the regulated system; costs are being piled on to commuters wherever we choose to look.

It is easy just to list statistics and say that there is a problem, but we must look at some of the railway financing fundamentals that are driving the increases. We have a good opportunity to do that this morning. I take an unashamedly south and south-eastern view of the problem. The system operates in ways that are particularly unfair for our constituents in the south-east, and we must be prepared to face up to and challenge that.

What are the essential financing issues? We must look at two flows of money. The first is the money paid by the train operating companies—that is, the passengers who travel on their trains—to the Treasury. Some companies, almost all clustered in the south-east, are paying substantial amounts of money out of their fares in payment to the Government. In other parts of the country, it is the other way around: a subsidy goes from the Government to the train operating companies and their passengers. The second flow of money is the grant that train operating companies receive from Network Rail to train companies.

We must look at each flow in turn, and when we do we see an extraordinary situation. As I said, my constituents in Southampton pay £5,200 a year for a season ticket. For every mile they travel—every single mile from Southampton to London and from London back to Southampton—they are paying 8.7p to the Treasury. That is the highest rate in the country, but they are by no means the only set of passengers paying substantial amounts to the Treasury—not towards the cost of their rail service—for every mile that they travel.

These figures are from 2012-13, because this debate came up suddenly and I did not have a chance to see whether Passenger Focus has updated its analysis. The following figures were accurate in December. Passengers on Southern were paying 7.9p per mile to the Treasury; First Capital Connect passengers, 8.2p per mile; c2c passengers, 2.7p per mile; and for Greater Anglia, feeding into London from the other side, passengers were paying 5.5p per mile to the Treasury. Those train operating companies, clustered around the south-eastern commuter services, are between them paying more than £1 billion to the Treasury through such contributions. South West Trains paid £314 million, Southern paid £215 million, First Capital Connect paid £187 million, c2c paid £176 million, and Greater Anglia paid £139 million, all in the last year for which figures were available.

By contrast, in other parts of the country the payments went in the other direction—I will come on to the extent to which such payments are justified or not. Northern Rail received a subsidy from the Treasury of £152 million, Arriva Trains Wales received £140 million, First Trans- Pennine Express received £41 million and CrossCountry received £21 million. The only London commuter services that attracted a significant subsidy were Southeastern, which received £82 million, and Chiltern, which received £21 million.

I am probably the only person who has done so, but I have dubbed these payments a “commuter train tax” that our constituents—including yours, Sir Roger—pay to get to work in London. Of course, people say, “That is not the full picture,” because train operating companies receive a payment from the Government through Network Rail that must also be taken into account. However, if we do that, we discover an interesting pattern. The lowest subsidy per mile through Network Rail is for First Capital Connect, at just 5.3p per mile. Southern gets 7.3p per mile, c2c gets 7.1p, and South West Trains gets 7.6p.

If we look at other parts of the country, the Network Rail grant is worth 29.1p per mile to Northern Rail, 13.9p for East Midlands Trains, and 12.3p for First TransPennine Express. In other words, the same broad pattern is shown: not only are our constituents paying more per mile to the Treasury in one direction, but they are receiving less back per mile through the Network Rail grant. That is a major problem.

I must acknowledge that the architecture of the current system was introduced by the previous Labour Government. We are looking, therefore, not at some fundamental change that has been introduced in the past three years, but at the implications of simply rolling forward an approach that was put in place a number of years ago. I would argue that for my constituents the system is getting completely out of hand and completely unfair.

In the last year for which figures are available, the south-east commuter train companies were collectively paying more than £1 billion to the Treasury—or rather, their passengers were. That has quadrupled under the current Government—it was just £230 million in 2009. One might argue that, as part of a general shift towards putting greater pressure on passengers to pay for the rail services—my party, Labour, did that in government, and it has continued—some move in that direction was fair. However, we must now ask whether putting such a big weight on the pockets of commuters in the south-east is really fair.

There are a number of reasons for saying that we are producing real injustice, as regards the extent of the burden that passengers are expected to bear. We can look at two measures. The first is season ticket price as a percentage of salary. A season ticket on a medium-length journey is about 20% of the income of an operative who commutes to London, according to the Hay Group. For a professional, it is about 12%. That is twice the proportion of income paid by people commuting to Bristol, Cardiff, Birmingham, Manchester, Leeds, Glasgow or Edinburgh. In other words, commuters from our constituencies are paying a much higher proportion of their incomes to get to work than commuters do in comparable cities around the country. There is a similar pattern—not quite as marked—for people making long journeys to London from our constituencies, compared with those in other parts of the country. That is one indication of unfairness.

[Heidi Alexander (Lewisham East) (Lab)]

Is my right hon. Friend aware of the figures from the Campaign for Better Transport, which show that for a couple with two children in London, rail fares and child care costs can amount to 40% of their income? Does he agree that it is the cumulative impact of such outgoings—fares, child care, rent—that have such a devastating impact on many families in the south-east?

[Mr Denham]

My hon. Friend is right to raise that point; there is a cumulative impact. Another recent study, published a couple of weeks ago—I forget what it was called—showed that the increase in rail fares in various towns and cities in the south-east has now offset the apparent benefits of living outside London, where there are lower house prices. Fares have risen so much that, despite the disparity between London prices and those in other places, the costs are extremely high.

The other indicator of unfairness in the system is the fact that customer satisfaction with value for money, as measured by Passenger Focus, is lowest on the London commuter services. The hon. Member for Dartford talked about Southeastern, where only 31% of customers believe that they get value for money. On First Capital Connect, it is 32%; on South West Trains, 33%; on Southern, 36%. Perhaps we are not surprised that the more highly subsidised services, like Northern Rail, get a customer satisfaction rating of 54% on value for money, and Arriva Trains Wales 54%.

Westminster Hall debates are meant to raise issues, rather than to say there are simple answers to problems. The architecture of the subsidy and cross-subsidy system has been in place for some time, but it is now getting out of hand. It is perhaps comparable in some ways to measures such as the fuel duty escalator, which was originally introduced with cross-party support. It is sometimes amusingly referred to as Labour’s fuel duty escalator, even though it was introduced by a Conservative Government. Although there was cross-party support when it was introduced, the point came, as has been recognised by all parties, where simply rolling ahead with it became politically and financially untenable for many of our constituents. Those of us who are speaking up for the south-east must say that we cannot simply roll forward the current way of doing things without questioning it.

The Campaign for Better Transport recently published a consultant’s report, which said that even with fares capped, as the Chancellor has just done, by 2018 the Government will be making a profit out of running a rail system. In other words, passenger revenues paid to the Treasury will exceed the money paid out. That means that our constituents—commuters in the south-east whom we represent—will be paying the entire cost of subsidising railways in other parts of the country, and making a profit for the Government to boot. That is not tenable; we have to do something.

There are no easy answers. There is clearly no pot of public money sitting there that can be sloshed into a greater subsidy. I am not familiar with all the railways serving London, but there are lines where the quality of the rolling stock and track in the south-east is significantly better than in other parts of the country. A backlog of investment needs to be addressed in some areas, so it is not a matter of simply saying, “Let us tilt the balance in another direction”. However, looking forward, we have to try to set out a long-term strategy—hopefully one that can be agreed by all parties—for getting some basic fairness and justice back into the system, and for putting a cap on what our constituents are expected to pay, not only for their journeys to work, but for the cost of funding the rail system as a whole.

[Heidi Alexander (Lewisham East) (Lab)]

It is a pleasure to follow my right hon. Friend the Member for Southampton, Itchen (Mr Denham), who has put some very thoughtful points forward, and I congratulate the hon. Member for Dartford (Gareth Johnson) on securing the debate. I should say at the outset that I have a meeting that I need to chair at 10.30 am, so I hope Members will forgive me if I cannot stay for all of the debate.

Most people think that people who live in London travel by tube or bus to work. That is not strictly the case. In south-east London, we have swathes of the capital where people rely wholly on the rail network to get to work. The tube map barely reaches the boroughs of Lewisham, Bromley, Bexley and Greenwich, so the overland rail services, provided predominantly by Southeastern, and also by Southern in some areas, are essential for people’s daily lives. In Lewisham, 38,000 people travel to work by train—nearly a third of all the people who work. The figures are comparable for the other London boroughs that I have just mentioned.

If anyone had stood at any station in my constituency this morning, they would have seen thousands and thousands of people trying to cram themselves into horrendously overcrowded trains operated by Southeastern. One of the problems for my constituents living in Lewisham is that when the trains arrive at our stations—Blackheath, Grove Park or Lee Green—they are already packed full of people travelling to central London. For that pleasure, my constituents are asked to pay astronomical amounts of money. For a journey that should be about 10 minutes, from Hither Green to London Bridge, a zone 1 to 3 annual season ticket now costs £976. It has gone up by £216 since 2010. That is a 28% increase in four years. As my right hon. Friend the Member for Southampton, Itchen said, wages have simply not kept up with that increase. Ministers might want to tell themselves that they are being tough on rail fare increases, but it certainly does not feel that way to many people in Lewisham.

To add injury to insult, the service is not getting any better. In fact, many would say it is getting worse. Ms Mulvey, who wrote to me last year, said that her problems with Southeastern are a “daily source of frustration”. She went on:

“This week my train to work has been cancelled twice, and this is not an unusual occurrence. My annual season ticket from Grove Park costs me £1,368 and rises significantly every year, even though the service does not get any better...It is quite embarrassing to be regularly late for work. Luckily my current employer is understanding and flexible, but I would not be confident of always having such an understanding employer.”

Alternatively we could take Mr Jolly, who is a frequent correspondent on matters to do with Southeastern. He says:

“Generally speaking, over the last quarter of 2013 the service offered by Southeastern rail has been mediocre at best, appalling at worst. It has markedly deteriorated recently, not that it was ever up to standards.”

These comments are not one-offs; I suspect that they are echoed by virtually every person who boards a Southeastern train during rush hour in my constituency.

The sentiments expressed in those letters and e-mails to me are borne out by industry surveys. I think that my right hon. Friend the Member for Southampton, Itchen, referred to the national rail passenger survey. When it asked people last autumn about satisfaction levels, 42% of those asked thought that Southeastern services offered poor value for money. If we expect people to pay huge sums to travel, surely they should be able to expect a basic standard of service.

What are the problems and what needs to be done? The first main problem on Southeastern relates to overcrowding. I know that significant work has been done at stations in south-east London to lengthen platforms, so that they can take 12-car trains. As I understand it, at the moment, none of the rush hour trains are 12-car trains; they may be 8-car or 10-car trains. Can the Minister tell me today when my constituents can expect to see 12-car services on all rush-hour trains stopping in my constituency? I am conscious that discussions are taking place between Southeastern and the Department for Transport, but I want to know by which date my constituents can expect to see longer trains on the services they use.

Can the Minister also say what action he is taking to ensure that Network Rail properly manages engineering works and has robust plans in place to deal with episodes of signal failure? In December last year, there was an almost farcical situation whereby no trains were running out of any of the mainline stations that serve south-east London when there was a fire at a signal box at London Bridge. It created absolute chaos on the travel network. Many of my constituents contacted me at that time to ask what the problems are in getting Network Rail to address such one-off incidents speedily. However, we experience such problems time and again when engineering works overrun, meaning that on a Monday morning there are delays on the network. That just adds to the sense of frustration that people feel when they are being asked to pay exorbitant amounts of money for the service.

I echo the point made by the hon. Member for Dartford about the need for better communication in, and better contingency planning for, times of bad weather. I understand that the challenges of providing a rail service, especially when the weather is as it is at the moment, must be huge; it is very difficult to run a rail service at such times. However, when a company’s website is not updated in real time, we can understand why people just feel so frustrated that they are not receiving timely and adequate information about the services that will be available to them. Also, can the Minister say whether he believes there is an adequate compensation regime in place for the occasions on which people cannot access the services that they have paid for?

I will conclude by saying that London is a fantastic city to live and work in, but we have to get to grips with rail services that are failing, and failing badly. With the franchising chaos that the Government have managed to create, it seems that Southeastern will continue to limp on and deliver services for a number of years to come, before a new franchise is let. There is merit in exploring whether Transport for London should become the franchising authority for rail services in London. I know that there is some pushback against that idea from some local authorities in Kent. However, TfL has been the franchising authority for the East London line on the London overground, and there we have seen services of a high quality, with high standards and good reliability. My constituents, who live in London, would like the same standards applied to their services.

I ask the Minister to assure me that in his discussions with the senior management of Southeastern and Network Rail, he will raise the matters that I have brought to his attention; that he will do all he can to ensure that our rush-hour trains in south-east London are lengthened to 12 cars; and that he will do all that he can to ensure that my constituents, who make a huge contribution to the London economy, get the sort of rail services that they deserve.

I will give the last word to my constituent, Mr Jolly, whom I quoted earlier, because he encapsulates the challenge for us politicians in Parliament. He says:

“Ultimately, if Southeastern rail is incapable of running an acceptable service over an extended period—and I am talking about 25% of the year here, but the service is mostly poor or very poor all year round anyway—isn’t it time to set up a commission of enquiry as to why, and try to find lasting solutions beyond the DIY approach that appears to prevail?...At present, and against a background of rising fares across the board, I have the feeling there is a complete lack of accountability and an inability to take action at a political level, which I find disturbing and depressing, to say the least.”

--- Later in debate ---

[Heidi Alexander]

The Minister just said that he believes that all passengers should have services that are reliable, quick and comfortable. He will know, from my contribution, that none of those adjectives applies to services experienced by my constituents. What will he do to improve the quality of services for the people travelling in on Southeastern trains from south-east London?

[Mr Goodwill]

The hon. Lady is right. The situation has not just developed in the past four years; there has been a backlog in investment in our rail, particularly in rolling stock. Northern Rail has some very old rolling stock. Indeed, a couple of weeks ago, we had a debate in which my hon. Friend the Member for Stevenage (Stephen McPartland) suggested that the rolling stock on his line is older than he is. There is a lot to be done, but that is no reason for not continuing with the investment that we have announced and with the projects that we are continuing to deliver. I often hear the criticism that we are spending far too much in London, when other parts of the country are being neglected.

--- Later in debate ---

[Mr Goodwill]

As the hon. Lady knows, not all delays are due to the actions of the franchisee. Network Rail sometimes has some explaining to do, particularly on overrunning engineering works, which can be a problem. I will address that later in my speech.

[Heidi Alexander]

I am grateful to the Minister for giving way again; he is being very generous. He talks about Southeastern’s contractual obligations, with specific reference to delays and cancellations. Can he tell me what proportion of trains on the Southeastern network have been shorter than they are contractually obliged to be? One of my constituents’ main complaints is that a six-car train turns up when an eight-car train should arrive. How often is that happening?

[Mr Goodwill]

I confess that I do not have that figure in my head, but I will drop the hon. Lady a line to give it to her. She is right that if a train is shorter than expected, it will result in either more people standing or, in some cases, many people not being able to get on the train and having to wait for the next service. In fact, the person who texted me recently has always made the point that living in Dartford is good because the trains are usually fairly empty when they get there. As people get closer to London and go through places such as Lewisham, the trains get fuller and fuller and it becomes more difficult either to get a seat or, in some cases, to get on the train.

Of the total delay minutes for the Southeastern network, around one third are attributable to Southeastern. That is within Southeastern’s contractual benchmarks and 1.6 percentage points outside its improvement target set with Network Rail. The most significant amount, almost two thirds of all delay minutes, are attributable to Network Rail. Network Rail remains cumulatively 37.9% adrift of its targets, which is clearly influencing the downward PPM trend.

Delays attributable to Network Rail, however, include significant and, to a large extent, unavoidable delays. The St Jude’s day storm, for example, caused widespread disruption, as has the sustained severe weather we have been experiencing since just before Christmas. It is inevitable that some disruption will occur in such extreme weather. On a number of occasions Network Rail has been forced to order the suspension of rail services until a full route inspection has taken place, which has caused major disruption on many routes. I gave evidence to that effect to the Select Committee on Transport before Christmas.

Safety must remain the highest priority, and it is in no small part due to Network Rail’s performance on safety that the UK now has one of the safest, if not the safest, railways in Europe. However, adverse weather should not be allowed to overshadow risk factors that can be controlled. Indeed, it is noteworthy that the High Speed 1 line did not experience any problems due to the recent bad weather. Lines built to that standard, such as the new High Speed 2, should also not encounter such problems.