East Coast Main Line

Lord McCrea of Magherafelt and Cookstown Excerpts

Wednesday 5th June 2013 Westminster Hall

[Several hon. Members]

rose—

[Dr William McCrea (in the Chair)]

Order. I am endeavouring to be helpful, given that well over 20 Back Benchers are in the Chamber. Ten Members have put down their names to speak and we have only a short period, so with the authority that has been given me, I must impose a time limit of four minutes, which I hope will allow them all to speak.

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[Mr Doran]

The Minister is nodding his head. It is a matter of some concern, which I hope he will clarify.

[Dr William McCrea (in the Chair)]

Order. The hon. Gentleman’s time is up.

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[Mrs Hodgson]

I agree. That was a good point, and it was well made.

I am a regular user of the service, as are many Members, constituents and people across the north-east, and the improvements in service and punctuality have been plain to see. That is not to say that there are not occasional causes for complaint; of course there are, and we all know what they are—often, it is the toilets. However, the service has improved, without the need for the private sector ethos that we often hear about from advocates of privatisation.

In a written answer to my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah), the Minister said:

“The Government remains committed to benefitting from private sector innovation and operational experience in its railways.”—[Official Report, 22 April 2013; Vol. 561, c. 590W.]

Given the improvements since the line was nationalised and the low reliance on subsidy, which is 1% of turnover, as well as East Coast’s returns of £800 million to the national coffers, the private sector organisations running other franchises could learn a thing or two from Directly Operated Railways.

The east coast line is getting increasingly busy, and it needs constant investment in maintenance and capacity improvement. Incidentally, one way that we could improve capacity—I and other north-east Members recently met the Minister to make this case—would be to bring the Leamside line back into use in the north-east to take some of the freight off the main east coast line. The Minister and I have discussed that at length. The proposal would have the added bonus of providing the means to extend the Tyne and Wear Metro to Washington, in my constituency, which would bring great benefits to the town and its residents.

However those improvements are made, they do need to be made, and that will require money. The benefit of keeping the franchise in public ownership is that that investment can be made by ploughing the generous profits generated—£800 million so far—back into the service, instead of giving them to overseas shareholders. Our network sees hundreds of millions of pounds disbursed to shareholders of private companies every year, despite the fact that those companies receive state subsidies to keep going. East Coast’s performance over the past three years has shown us the folly of that model. Why send profits generated from British passengers to foreign owners abroad, when some of those owners are subsidising rail fares in their own countries? We could and should use those profits here to improve our services and to help keep our fares down.

The East Coast arrangement is not hurting my constituents; it is working. It is not broken, so it does not need fixing—apart from the toilets, of course. If anything, based on the performance of East Coast, it would be desirable to see more of our key lines under public control. What the service needed was the stability to carry on planning for the future and improving performance and service standards further, while maintaining the return to the taxpayer. What it has, however, is the uncertainty caused by being put out to the market once again, where it may even be the subject of a tender by the company that failed to run it properly last time. That would cost taxpayers millions.

Given the shambles over the west coast line, I would have thought that the Government would at least leave a successfully operating line well alone—

[Dr William McCrea (in the Chair)]

Order.

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[Hugh Bayley]

No; I think I will make progress, because I have only a few minutes.

I ask the Minister to consider whether it makes sense to run a private franchise on the west coast main line, which he is obliged to do—Richard Branson will sue him if he does not—and continue, for a full franchise period of 15 years, a public sector operation on the east coast main line, and to compare like for like. Which delivers better value for money to the Government, gives a better service to the public, and does better at reducing fares? I put a final challenge to him: let the Government follow what the passengers want—put out a leaflet on East Coast trains and ask the public whether they want refranchising or to stick with East Coast. If they go for East Coast, give East Coast a whirl.

Several hon. Members rose—

[Dr William McCrea (in the Chair)]

Order. I intend to start the winding-up speeches no later than 3.40 and there are still four hon. Members who have said they want to speak. To allow that to happen I impose a three-minute limit, and hope to get everyone in.

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[Sheila Gilmore]

I am sorry; I do not think I have time to give way.

There was a view that the track should be separated from the trains and that the network should all be split up. However, we know from the McNulty report that the unit cost of railways in this country is 40% higher than in countries in Europe where there are publicly owned, integrated rail services. The time has come not to be ideological about this issue, nor even defensive about what anybody’s Government did in the past, but to look at what is actually happening out there.

In the first instance, we should say of the east coast line, “No, we will not put this out to franchise again at this stage. There is no need to do so.” Secondly, we should look at the whole process and analyse what is happening. Thirdly, we should perhaps look again at having an integrated rail system—

[Dr William McCrea (in the Chair)]

Order.

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[Grahame M. Morris (Easington) (Lab)]

It is a pleasure to serve under your chairmanship, Dr McCrea, and I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on the timely and comprehensive speech that he gave on this very important subject.

Government Members have accused Labour Members of making this an issue of ideology. Well, in Westminster Hall today we have a Minister who oversaw the architecture to privatise the NHS and who is now overseeing the privatisation of a successful publicly owned rail franchise in the north-east. Indeed, this process is an experiment. Under the previous Conservative Government, the rail network was broken up and a new model devised in a way that any objective commentator must acknowledge was a failure.

We have seen a decline in the quality of service, a lack of investment, higher public subsidies and inflation-busting fare increases since privatisation. In fact, a report by Just Economics showed that UK rail services were less affordable, less comfortable, slower and more inefficient than publicly owned rail services in Germany, France, Italy and Spain. British train tickets are now the most expensive in Europe. A typical season ticket in the UK now costs 14p per kilometre, compared with just 8p per kilometre in Germany, Holland and France, which are the next most expensive countries in Europe. So, if we are making comparisons on price or value for money, the privatised franchise model that we have here just does not stack up.

I do not wish to go off the rails in terms of time, Dr McCrea, but I am under a bit of pressure and we have had some first-class contributions from Members. I do not want to repeat what has been said. However, I am perplexed about why, after four years of stability, rising passenger satisfaction and significant returns to the Treasury, the Government are rushing through the privatisation of the east coast main line, if not for reasons of ideology and dogma, ignoring the evidence. Conservative Members ask, “Would you nationalise the industry?” Well, in public polling, not just of Labour voters, but generally, those in favour of nationalisation poll in excess of 70%, by MSN and NOP and 93% in The Guardian. There is nothing more ideological than privatisation for privatisation’s sake. This is a privatisation too far, and it is not fit for purpose.

[Dr William McCrea (in the Chair)]

Order.

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[Mr Burns]

On that point—

[Dr William McCrea (in the Chair)]

Order.

[Lilian Greenwood]

I agree that we should be paying tribute to the work of East Coast staff. They stepped into the breach at a difficult time. The two previous franchise holders failed, with one operator walking away from its obligations entirely. Yet East Coast, run as a not-for-dividend operator, has achieved what its predecessors could not: stability and constantly improving services. This Government’s actions are putting that progress at risk.

It is worth briefly highlighting how strong East Coast’s performance has been. Passenger satisfaction is up by 12% over the last year; 3 million more seats per year have been provided; punctuality has improved and a new timetable has been established; and the service has more than held its own financially. As a not-for-dividend operator, East Coast has already returned £640 million in premium payments to the taxpayer, while recording a £40 million profit.