Rail Fares

Mark Reckless Excerpts

Wednesday 5th September 2012 Commons Chamber

[Maria Eagle]

No.

What is the consequence? It is that the Government and the House do not have the ability to enforce the cap on fare rises they think they have approved. I therefore hope that we can all agree today that the cap should be precisely that—a cap, a maximum allowable increase.

Our motion also calls on the Government again to reverse their decision to increase the cap from RPI plus 1 to RPI plus 3 for 2013-14. This should not be a contentious proposal, and I hope that Members on both sides of the House will feel able to support it. I know that it is slightly devalued today, but Government Members might like to look back at the commitment they made in the coalition agreement:

“We are committed to fair pricing for rail travel”.

It simply is not credible to square that pledge with the decision taken to increase the annual cap on fares from RPI plus 1 to RPI plus 3.

Let us be clear who is benefiting from these excessive fare rises: the private train companies. I urge the new Secretary of State to ask his civil servants for a copy of a very good report—on his Department’s spending settlement and its progress in implementing it—recently published by the National Audit Office. It warns that the Department for Transport has failed to demonstrate that higher fares translate into payments back to taxpayers:

“There is a risk that the benefit of the resulting increase in passenger revenues will not be passed on to taxpayers fully, but will also result in increased train operating company profits.”

So there we have it. We know who benefits from fare rises: the private train companies.

[Mark Reckless (Rochester and Strood) (Con)]

Will the hon. Lady give way?

[Maria Eagle]

I am seeking to make some progress. If there is time, I will give way a little later.

I know that some hon. Members may think, “All well and good: these private companies should be able to make these very large profits for running our rail services.” However, I wonder whether Government Members have been keeping track of who has actually run our rail services since privatisation. For example, the Chiltern and CrossCountry franchises are run by subsidiaries of Deutsche Bahn, the German state railway. Southeastern, London Midland, TransPennine and Southern are all run in partnership with subsidiaries of SNCF, the French state railway, while Greater Anglia and Northern rail services are run by a subsidiary of Ned Rail, the Dutch state railway. Let us be clear: the ability of so-called private train companies to hike fares beyond the cap does not just mean additional profit, as the National Audit Office has warned; it means additional dividends from those profits going back to the state railways of France, Germany and the Netherlands. The consequence is that fares on their domestic rail networks are, on average, a third lower than those on ours.

--- Later in debate ---

[Maria Eagle]

No, I will not.

Why is a 3% above inflation increase acceptable this year, when it was, in the Chancellor’s words, “too much” last year?

[Mark Reckless]

The hon. Lady asks why an RPI plus 3% increase might be acceptable, but this Government have not increased any rail fares yet by RPI plus 3%. The only RPI plus 3% increase happened on the Southeastern franchise under the last Labour Government, because we were used as guinea pigs.

[Maria Eagle]

The hon. Gentleman is simply wrong about that. RPI plus 3% was cut last year to RPI plus 1%, but the year before it was RPI plus 3%, so what he says is simply inaccurate.

If anything, pressures on household budgets have increased in the past year. Families are finding it even harder to make ends meet, get through the month and pay all the bills. We are in a double-dip recession made in Downing street. More than 1 million young people remain out of work. Energy, food and fuel prices are all up, adding to the pressures facing our constituents. The rate of inflation—the RPI figure that will be used to calculate January’s fare rises—went up to 3.2% in July. With flex, the formula for January’s fare rises, as it stands, is 3.2% plus 3% plus 5%, which means fare rises of up to 11.2%. We should get rid of flex, but we should also—as the Chancellor said less than a year ago—set the cap at 1% above inflation.

I know that the Secretary of State has been appointed to change some of the policies pursued by his predecessor—at least that is what the newspapers say. However, I hope that on this issue he will agree with the right hon. Member for Putney (Justine Greening), who told the Financial Times last month:

“I am keen to see what we can do to keep fares down to something affordable. I will be looking at whether there is a way of doing this in the autumn.”

She added that

“she did not know if the Treasury would make funds available to do this,”

but said:

“If you don’t ask, you don’t get, so I’ll make sure to ask.”

If the Secretary of State has not already done so, I hope that he will be asking the Chancellor to agree to the lower cap on fares, because as his predecessor rightly said, “If you don’t ask, you don’t get.”

--- Later in debate ---

[Maria Eagle]

I am in the middle of answering the hon. Member for Gillingham and Rainham (Rehman Chishti).

The current Government are proposing an across-the-board increase of RPI plus 3% on everyone, whether or not there is any improvement in investment or any increase in service. At a time like this, when people’s incomes are being squeezed badly, it is not easy for them to cope with that. We should not continue with those levels of increases.

[Mark Reckless]

rose—

[Dr Huppert]

rose—

--- Later in debate ---

[Gordon Henderson]

I share the hon. Lady’s concern because my constituents have a similar problem. The franchise agreement with Southeastern also set out the level of subsidy that it would receive. That is important because the subsidy started at £139.9 million in year one, reducing to £24.7 million by year seven. In year eight, Southeastern will be expected to pay a premium of £9.3 million to the Department for Transport. It does not take a genius to work out that if the Government expect Southeastern to pay them a premium, rail fares will have to rise to fund it.

Who negotiated that franchise agreement? The Labour Government did. Indeed, their stated policy was to recruit more of the cost of the rail service from those who use it, rather than relying on the general taxpayer to subsidise it. It is, therefore, hypocritical in the extreme for Labour Members to complain now about a system of rail fare pricing that they introduced and supported. I greatly fear that spiralling rail fares will have a detrimental effect on commuters in my constituency, and will directly hit hard-working families who are already struggling. The increases will hit even harder people who have recently lost their jobs, such as those at Thamesteel who will have to commute some distance to find a job.

[Mark Reckless]

Does my hon. Friend agree that this is particularly difficult because Kent has some of the lowest average incomes in the south-east yet some of the highest commuter fares? The hon. Member for Brighton, Pavilion (Caroline Lucas) mentioned costs in her constituency, but the cost of commuting from Chatham, which is only 30 miles away, is about £100. Brighton is almost 50 miles away, yet the cost is almost the same.

[Gordon Henderson]

I agree with my hon. Friend. The cost per mile of rail travel from our part of Kent is one of the highest in the country, and commuters in my constituency have had to put up with that for a number of years. That is the issue I wish to address, and I welcome the Transport Secretary’s offer to meet Kent MPs. Although he is not present in the Chamber, I assure him that at that meeting I will press for help for commuters in my constituency.

As I said at the beginning of my remarks, I am in a difficult position. I support the sentiment of the motion but oppose the motive behind it. For that reason, I will abstain, as I hope will all my fellow Kent MPs.