Confidence in the Secretary of State for Transport

Debate between Huw Merriman and Alan Brown

Tuesday 19th June 2018 Commons Chamber

[Alan Brown]

Yes, I do. The Secretary of State says that there was a parent company guarantee of £165 million for VTEC, which is a lot of money, but if the parent company is picking up other money in franchises, including the direct award of the west coast main line, it is not actually losing that money. It should be penalised properly, and I agree with the hon. Gentleman that it should not be able to bid for other franchises. Its ability to bid for the east coast main line partnership has still not been ruled out.

The Secretary of State also justifies the predicament of the parent company by saying that it “got its sums wrong.” I remind him again that it is his Department that got its sums wrong when it carried out its due diligence and assessment. The Government are lucky that one of the other franchise bidders is not seeking redress from them, because they clearly got it wrong, and got the whole process wrong.

[Huw Merriman]

Will the hon. Gentleman bear in mind that private rail operators in Britain are paying money into the Exchequer, whereas in France, 20% of the running costs come from the Government? When it comes to sums, which other areas of public spending would he have cut in order to pay for the things that he is talking about?

[Alan Brown]

I do not think that the hon. Gentleman listened to the point that I made about the subsidy that is paid to the rail franchise companies. It is a circular process, which makes it more complicated and more expensive, because of the number of cost consultants involved, taking money from one direction and paying money in another direction, and then blaming Network Rail. All that money can then circulate, and there are still net subsidies for those companies, although they pay track rental fees.

As I have said before, Richard Branson came out fighting. He blamed Network Rail for the overruns, but we have heard that Network Rail was not really at fault. The Secretary of State should be more robust in attacking VTEC. Letting it walk away owing that money undermines his position.

In previous incarnations, the east coast main line service has proved that public ownership can work. When it was last in public ownership, it paid the track rental fees and made a nominal profit, which went straight to the taxpayer. That model can work, and it should be used again in future. The Secretary of State ought to consider that.

Also on this Transport Secretary’s watch has been the Southern rail shambles. He did not do enough to step in. When I highlighted some of Southern’s failings on another occasion, he intervened and said that he was not the Transport Secretary who had been responsible for the allocation of the franchise. That completely missed the point: he was simply saying, “It’s not my fault, guv.”

Transport Secretary: East Coast Franchise

Debate between Huw Merriman and Alan Brown

Wednesday 23rd May 2018 Commons Chamber

[Alan Brown]

I agree with the hon. Lady. I will address a couple of those points because I agree wholeheartedly with what she says about the tender process and the backloading.

The reality is that private investors and companies either make money out of a franchise or they seem to be allowed to walk away. The Transport Secretary stated at the Dispatch Box that what is now happening is not a bail-out of VTEC. But if VTEC owes £2 billion in track premiums and is allowed to walk away without paying anything, that must by definition be a £2 billion bail-out. That is so simple and it cannot be argued against.

[Huw Merriman]

Surely the definition of a bail-out is when the Government actually have to pay money to the company, which of course they are not doing. If anything, the criticism of the Government is that they have ripped off the private sector and got more money from it than it could deliver.

[Alan Brown]

Yes, there we see the ideological blind spot yet again. If somebody owes me £2 billion, I would be writing off £2 billion of debt if I said, “Forget about it. It’s okay.” Let us say it is technically not a bail-out, but the Government are writing off £2 billion of debt that that company owes the taxpayer. The company is walking away and getting rid of a £2 billion liability, and I do not understand why Conservative Members are trying to argue different.

The Transport Secretary has previously justified the predicament by saying the franchisee got its sums wrong. That should not be an excuse, but, as I have repeatedly said, and the shadow Minister also touched on this, it means the Department for Transport also got its sums wrong when it thought the tender was suitable for award. It is not just the franchisee that got its sums wrong; the Department for Transport got its sums wrong, too.

The Government failed in their due diligence. What about the supposed parent company guarantees? Those guarantees clearly have not been worth much to the taxpayer. We do not know what the runner-up bids looked like, but do those runners up have a case against the Government, given they clearly failed in their due diligence by awarding this franchise, from which VTEC gets to walk away?

As the hon. Member for Edinburgh West (Christine Jardine) said, we know VTEC backloaded the track premiums. If another consortium’s bid did not backload the track premiums, the taxpayer might already have made more money, but we do not know whether there was such a bid because it is all clouded in commercial confidentiality. It also shows, yet again, that no lessons were learned from the failed 2012 west coast franchise. The Transport Secretary had a duty to ensure that lessons were learned and properly applied in awarding the east coast franchise, and it is clear that not enough analysis was undertaken.

When the story broke, although VTEC got the sums wrong, Richard Branson blamed some of the reduced numbers on Network Rail. Given the Transport Secretary also has responsibility for Network Rail, what is the truth in that statement? If it is true that Network Rail was the problem, VTEC should be compensated because that is the way the franchise model works. If it is not true, why has the Transport Secretary not come out fighting to disprove Richard Branson’s comments, instead of casually defending VTEC at the Dispatch Box? It is more smoke and mirrors from VTEC.

At the Transport Committee, the chief executive of Stagecoach used excuses such as that the Scottish referendum and Brexit hit the numbers. Considering that our referendum was in 2014, before the franchise was awarded, that is clearly patent nonsense.

Despite all that, the Transport Secretary’s new wheeze to prevent a blame game between the track owner and the franchise holder is a combined partnership model. That might improve things, but at this stage we do not know what the set-up will look like or how it will interact with other services outwith the franchise. Given the repeated Back-Bench Tory support for open access on the line, there will clearly be further complications for such a partnership to address. It is absolutely guaranteed that there will be further issues down the line.

--- Later in debate ---

[Alan Brown]

I completely agree. Rail franchise holders have been able to walk away. As has been said, the profits are privatised and the losses are underpinned by the taxpayer. That is not a proper free market model because there is absolutely no punitive action against franchise holders when they fail.

[Huw Merriman]

If that were the case, why did the share prices of the companies involved collapse?

[Alan Brown]

Funnily enough, Stagecoach’s share price increased when the Transport Secretary gave a statement from the Dispatch Box in February. Share prices go up and down, which is to do with the overall performance of these companies, and they are very big companies. The whole point of these big companies bidding and providing parent company guarantees is that it is supposed to offset the risk, rather than leaving the risk to the taxpayer.

On the question of state-owned companies or public sector organisations running franchises, the Transport Secretary’s logic completely falls apart when we consider that four foreign state-owned rail companies already operate franchises in the UK. Those companies are making a profit here for reinvestment in their domestic set-up, which is proof that state-run railways can work efficiently.

The previous east coast main line services are further proof that public ownership can work. When the previous franchise failed and was taken into public sector operation, it returned £1 billion in track fees to the Treasury and turned an operating profit of £42 million. So, as has been asked before, why move away from that successful model to one where VTEC can come in with inflated sums and then get to walk away? It is clearly not right.

The southern rail franchise shambles also happened on the Transport Secretary’s watch. The main conclusion of the NAO’s report is that it could not be demonstrated that the franchise has delivered value for money. At the time, the operator blamed Network Rail and the unions, and the Government blamed the unions, completely ignoring the Transport Secretary’s role in refusing to engage with them. The fact is that 60% of the cancellations were due to Govia Thameslink Railway and only 40% were caused by Network Rail. The UK Government set up the model supposedly to deal with the complex infrastructure upgrades, but the Government took all the revenue risks, so the strikes actually cost the taxpayer, because the loss of revenue is underwritten. The Government also awarded the franchise based on an even higher roll-out of driver-only operation, which is what caused some of the disputes.

TV Licence Fee

Debate between Huw Merriman and Alan Brown

Monday 20th November 2017 Westminster Hall

[Alan Brown]

Yes, I did suffer that. I alluded to what my constituent has had to put up with, and it was the same for our household, which was bombarded with letters that became increasingly threatening. My wife, who does all my paperwork, contacted TV Licensing and filled in an opt-out form online. That kept it at bay, although the letters have started again, so we need to go through the process again. That shows that people are continually assumed guilty rather than innocent.

From a Scottish perspective, the BBC has resisted calls for a “Scottish six” programme for years. It appears to have caved in to Unionist politicians who have pressurised it, in the fear that a national and international news programme created in Scotland, the same way as Radio Scotland is managed, would somehow create a nationalist nirvana. That is clearly an absurd proposition. Equally absurd is the UK Government’s resistance to devolving powers over broadcasting to Scotland. That is somehow seen as the Scottish National party trying to get its hands on control of output, whereas the SNP actually called for the measure when we were in opposition. It is a further example of Unionist parties conflating the SNP being in government and control being given to the Scottish Parliament. It is the Scottish Parliament as an institution that would control broadcasting powers if they were devolved to Scotland.

[Huw Merriman]

Does the hon. Gentleman agree that the BBC has a very difficult task when it comes to balancing the changing landscape of our institutions and politics? Some matters are devolved to Scotland, others are not. It is therefore difficult for the BBC to ride two horses, as it were—perhaps in the same way as it is for us.

[Alan Brown]

Perhaps it is difficult, but with the respected journalism that we have heard about today, it should not be too difficult for the BBC to ride those two horses. I must say that it failed spectacularly during the recent general election in Scotland. It allowed too much of the audience participation debates about the general election in Scotland to focus on devolved matters, rather than on matters reserved for Westminster, and that clouded the issues. The BBC needs to work harder on drawing the distinction between devolved matters and reserved matters.

Road Infrastructure

Debate between Huw Merriman and Alan Brown

Wednesday 5th July 2017 Westminster Hall

[Huw Merriman (Bexhill and Battle) (Con)]

I beg to move,

That this House has considered road infrastructure.

It is a pleasure to serve under your chairmanship, Mrs Gillan. I am conscious that many right hon. and hon. Members are in the room; I shall try to give way as much as I can and leave time for other Members to make speeches.

It is somewhat fortuitous that this debate is taking place today. According to the front page of The Times—I am sure it can, as ever, be believed—today is the day when the transport investment strategy for the next decade is to be announced, which will include a £1 billion per year fund to allow local authorities to bid for bypass projects. Can I be the first hon. Member in this House to make an oral application to the Roads Minister—for bypasses for Little Common, off the A259, and for Hurst Green, off the A21? I am sure I will not be the last applicant today.

Both those roads are busy, single-lane A roads that cause congestion and danger through two villages in East Sussex. They have the misfortune to be managed by Highways England. If the Roads Minister came and visited both roads—he would be absolutely welcome—he might be surprised that they are part of the Highways England portfolio. The reason is that they are deemed to be trunk roads, off the A27 and M25 respectively. The villages badly need to be bypassed, but Highways England naturally focuses its resources on the motorway or dual carriageway network within its portfolio.

As my colleagues here today will be aware, there are only 11 km of dual carriageway in the entire county of East Sussex. My ask is that the new fund should be accessible for local authorities to deliver bypasses, even if that bypass would be off a Highways England road. It is a misfortune for the two roads that I mentioned that they are controlled by Highways England—it is illogical—but my concern is that the new, £1 billion fund is available only to local authority-managed roads. That would be an obstacle for those two roads. I ask the Roads Minister that the issue of qualification should be type of road, rather than the entity managing it.

The A21 is a trunk road that runs from the M25 through Kent, then through East Sussex and down to the coastal town of Hastings. Highways England is continuing the dualling from Tonbridge to Tunbridge Wells in Kent, but it thereafter turns to single file when it enters East Sussex—a bit of discrimination, I would say, that benefits Kent. Some miles further on, the road goes through the heart of the village of Hurst Green in my constituency. In 2014, the A21 was deemed by the Road Safety Foundation as the most dangerous road in the UK—so much so that one section of dual carriageway that we do have in East Sussex has been closed and coned off as a single carriageway due to the dangers of speeding.

A bypass for Hurst Green was in the pipeline and homes were purchased by Highways England, but it was postponed in the 2010 spending review. Now those homes are being resold. Last year, Highways England announced that it would introduce average speed limits on to the A21, from the end of the new works at Tunbridge Wells all the way down to Hastings. Although that would not improve or remove the congestion, or decrease travel times, it would perhaps do something about the appalling safety record.

The villagers and I were therefore dismayed to find out last year that Highways England had decided that that work would not be forthcoming and that better options are available. None of those options has been given to us. I am afraid it just compounds our issue in East Sussex: that Highways England does not appear interested in our road network.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

The hon. Gentleman mentioned a dual carriageway where one lane is closed off because of speeding. Does he have any views on average speed cameras, which the Scottish Government have installed on some roads in Scotland? They meet a bit of resistance from drivers but have been proven to make roads safer and they control speeding on those roads.

[Huw Merriman]

I thank the hon. Gentleman for that point. The project put forward by Highways England was to have average speed cameras all the way down through the village—there is a primary school in the heart of the village. The A21 was modelled on a road in Scotland—it may be the one he referred to—which apparently reduced the traffic accident rate by 80%. We were very excited to copy that fine example from Scotland, so were dismayed when the scheme was cancelled. I very much take the point and I hope Highways England will do so as well.

My second example is the A259. Again, that road is managed by Highways England, unfortunately for us. It runs along the Sussex coast and takes over from the A27, which itself is in bad need of dualling, as championed by my hon. Friend the Member for Lewes (Maria Caulfield), my right hon. Friend the Member for Arundel and South Downs (Nick Herbert) and others. As the A259 approaches Bexhill at a village called Little Common, it acts as a dangerous bottleneck. Again, the village was due to be bypassed, as part of the Highways England south coast trunk road, which was due to come from Devon all the way to Dover and give us a much better transport system. That was scrapped in 2001.

Fortunately, a new link road was built by East Sussex County Council and our local enterprise partnership, with Government funding, and has opened between Bexhill and Hastings. It opened last year and has delivered not just improved journey times, but 50,000 square feet of land for a business park and 2,000 new homes—it is as much a business road as a transport system.

East Sussex County Council and our local enterprise partnership are now building a second road off that new link road, so we are effectively now two-thirds through bypassing a town of 40,000 residents. The last remaining section is for a bypass around the remainder of Little Common, which would deliver a bypass for the entirety of Bexhill and make it easier for the Sussex coastal towns to join up.

I have asked my local authorities and the local enterprise partnership to consider whether the housing infrastructure fund—the £20 billion fund announced by the Chancellor last year—could be tapped for Hurst Green and Little Common. The issue is that, having delivered the link road with its room for 2,000 houses, the local authorities rightly feel that they have already delivered housing and do not need any further. I will certainly be asking them to apply for the new bypass fund, but we first need clarity from the Roads Minister that they will be allowed to apply, given that the road is managed by Highways England.