Rail Fares

Wednesday 11th January 2012 Commons Chamber

14:07

[Maria Eagle (Garston and Halewood) (Lab)]

I beg to move,

That this House believes that the scale of increases to rail and bus fares and the high cost of fuel are significantly increasing the transport sector’s contribution to the cost of living crisis facing households up and down the UK; notes that, despite the Chancellor’s announcement in his Autumn Statement that rail fares would rise this month by 1 per cent. above inflation, many commuters have found their tickets have gone up by as much as 11 per cent.; recognises that this is a direct result of the decision to give back to train companies the right to add a further increase of up to 5 per cent., resulting in the cost of getting to work rising to more than the cost of monthly mortgage or rent payments for many families; notes with concern the National Audit Office’s warning to the Department for Transport that higher rail fares are likely to lead to higher profits for train operating companies; deplores the Government’s decision to levy even higher increases of 3 per cent. above inflation for 2013 and 2014; and calls on the Government to end the right of train companies to increase regulated tickets by more than the cap set by Ministers, so as to prevent fare increases of up to 13 per cent. that could otherwise hit passengers in each of the next two years.

This has not been a happy new year for many commuters. Having been promised by the Chancellor in his autumn statement that he was keeping increases in rail fares at just 1% above inflation, many had a nasty shock as they returned to work last week—not fare rises of 1% above inflation, but increases of up to almost 11%. Season tickets between Chester and Crewe are up by 10.6% on a year ago, and tickets between Llandudno and Bangor hiked by the same double-digit increase, 10.6%. Return tickets are also up—Exeter to London, for example, up by 9.6%, Cardiff to London by 9.7% and Plymouth to London by 9.7%.

But what did the Chancellor tell the House in November? He said:

“RPI plus 3% is too much. The Government will fund a reduction in the increase to RPI plus 1%. This will apply across national rail regulated fares, across the London tube and on London buses. It will help the millions of people who use our trains.”—[Official Report, 29 November 2011; Vol. 536, c. 810.]

He was right—it would have done, except that the Chancellor forgot to say that his Government had quietly given back to train companies the right to add up to another 5% on fares, provided the increases averaged out at the cap that he had set, giving the train companies back the right to fiddle the fares.

[Mr John Redwood (Wokingham) (Con)]

Given that we all would like lower rail fares, does the hon. Lady think that there should be a bigger Treasury subsidy out of taxpayers’ pockets in order to achieve that?

[Maria Eagle]

Our position is that we would have continued in this Parliament, as we did in 2009, to put a stop to the power train operating companies have to fiddle the fares—

[Stephen Hammond (Wimbledon) (Con)]

Will the hon. Lady give way?

[Maria Eagle]

If the hon. Gentleman will allow me to finish answering the last intervention, I might get around to giving way to him. As the previous Labour Transport Secretary made clear, we would not have given back to train operating companies the power to fiddle the fares by hiking them by more than the cap on the most profitable routes and getting away with it by introducing much lower increases on the routes that do not rake in the cash. That is something we put a stop to in government once times got tough.

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

Will the hon. Lady give way?

[Andrew Gwynne (Denton and Reddish) (Lab)]

Will my hon. Friend give way?

[Maria Eagle]

I will give way to the Minister, who I expect will be winding up the debate, and then to my hon. Friend.

[Mrs Villiers]

The hon. Lady claims that Lord Adonis, a previous Transport Minister, would have continued the suspension of the fares basket, but the reality is that he did not renegotiate that with the train operators; he negotiated for a one-year contractual suspension. If he had intended to carry on with that, he would have negotiated the period into the franchises, but he chose not to.

[Maria Eagle]

The right hon. Lady is wrong to say that there was no intention to continue with that. She can try to rewrite our policy as much as she wishes, but my noble Friend Lord Adonis made it perfectly clear in oral and written evidence to the Transport Committee that the ban on flex would continue into subsequent years, and that remains our policy.

[Andrew Gwynne]

My hon. Friend is right to point out that it was the previous Labour Government who got rid of train operating companies’ ability to fiddle the fares. Was she as astounded as I was at the lack of knowledge displayed earlier by the Prime Minister, who did not even know that it was his Government who had reinstated the right for those companies to clobber hard-working commuters?

[Maria Eagle]

I must say that I was quite surprised that the Prime Minister did not seem to have that information. It was only after my right hon. Friend the Leader of the Opposition had asked him three times that the Prime Minister managed to claw his way towards an accurate answer, but that is what we have come to expect from him.

[Dr Julian Huppert (Cambridge) (LD)]

While we are discussing the rewriting of policies, what message would the hon. Lady give to a previous Transport Secretary who in 2007 allowed Stagecoach South West to raise fares by 20%, or indeed to the Transport Secretaries who allowed that to happen in the 10 years before that? Does she agree that that was a huge mistake and that fares went too high?

[Maria Eagle]

If the hon. Gentleman will wait, I will move on to say a little more about our current policy thinking later in my speech.

[Mr David Evennett (Bexleyheath and Crayford) (Con)]

Will the hon. Lady give way?

[Maria Eagle]

I will give way, but then I must make some progress, because the debate already has to be shorter than we had hoped.

[Mr Evennett]

I am extremely grateful to the hon. Lady and am listening to her with great interest, but she is attempting to rewrite history. Does she feel any guilt about the huge fare increases that took place under the Labour Government, because commuters in my constituency had a really rough time?

[Maria Eagle]

The reality is that when the previous Government saw what train operating companies were doing with the power that flex gave them to game the system and clobber some commuters far more than others, we banned it. This Government have reintroduced it. Times are still tough and the Government should not have caved in to pressure from train companies, but they seem to be unwilling, or perhaps incapable, of standing up to vested interests on behalf of commuters, who are now paying the price. I have made it clear that we would have strictly enforced the 1% above inflation cap and not allowed the increases of up to 11% that commuters have faced at ticket offices since the new year.

[The Secretary of State for Transport (Justine Greening)]

Perhaps the hon. Lady would like to finish the other part of her phrase, which is that she would not have allowed rises of above RPI plus 1%, just as she would not have allowed below RPI plus 1% flexibility. Will she confirm that that is the position and that many commuters would face fare increases under her proposals?

[Maria Eagle]

What we are not seeing from train operating companies or the Government are proposals to reduce fares. The technical position is of course that if an average cap is applied to each fare, the fare rise will apply to each fare. The Secretary of State is right about that, technically speaking.

[Ms Karen Buck (Westminster North) (Lab)]

On the commitment to reduce fares, is my hon. Friend aware that the Labour candidate to be Mayor of London intends to bring forward a package to reduce fares, given that Boris Johnson’s increase in the cost of a zones 1 to 4 travelcard equals a 21% rise, despite the fact that Transport for London has a £729 million operating surplus? The Labour party has a commitment to cut fares.

[Maria Eagle]

I am aware of that and thank my hon. Friend for making that point. At least Labour’s candidate understands how hard it is for ordinary, hard-pressed commuters to afford the kind of fare rises that the Government are not only allowing, but promoting. It is no good Ministers hiding behind the deficit, because this is not a simple case of bringing additional money into the Treasury; it is also about bringing additional money into the profits of private train companies. The National Audit Office report on the Department for Transport’s spending settlement warned:

“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.”

High fares equal increased profits in an industry that relies on subsidies of more than £4 billion of taxpayers’ money every year. It is no wonder passengers in Britain are paying three and a half times more for their rail tickets than those in France, Germany and Holland, all countries that do not have the costly and fragmented rail industry structure that is the legacy of the Tories’ botched privatisation of our railway industry. The French, German and Dutch state railways are so successful that they are now bidding for and winning franchises to run rail services in Britain. The Government are step by step nationalising our rail services—it is just that it is not our nation. The profits will be helping to keep down fares in France, Germany and Holland for their own domestic passengers. It is no wonder that fares are so high under our broken system.

Therefore, we would enforce a strict cap on fare rises, but I believe that we need to go further and make fares fairer. Because the system has lost all credibility, passengers feel ripped off and know that they are being ripped off. They feel that the system does not work in their interests and that it is designed to catch them out. That is what I have been told by passengers as I have travelled across the country over the past year. In addition to getting spiralling rail fares under control, here are five other ideas that passengers have said would make a real difference. First, why is there no single national definition of peak time? Why are train companies allowed to set different rules so that passengers have to know precisely which company they are travelling with or risk facing a fine for travelling on the right ticket at the wrong time? Why are the companies allowed to chop and change peak time, stretching it out simply to hike their profits?

[Mrs Villiers]

rose—

[Dr Huppert]

rose—

[Maria Eagle]

I have already given way to the right hon. Lady and to the hon. Gentleman, so I will make some progress in my speech. At the very least, rail passengers would like tickets to state clearly the precise time restrictions that apply instead of simply being referred to some obscure part of a website that they do not have access to when purchasing a ticket.

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

Will the hon. Lady give way?

[Maria Eagle]

I want to make a few points about what I have heard from passengers and will try to give way to the hon. Gentleman later.

Secondly, passengers want a legal right to be offered the cheapest ticket for the journey they wish to make, and they do not think that it is too much to ask that the cheapest fare must be clearly advertised. Should passengers not be entitled to a refund if they have not been sold the cheapest ticket?

Under this Government, it is to become harder to buy the cheapest ticket if plans to replace staff with machines and close all 675 category E station ticket offices are implemented, yet that is what Ministers are considering, along with cutting the opening hours of 302 category D station ticket offices. All the evidence suggests that many people are not sold the cheapest ticket when they buy a ticket online or from a machine.

Thirdly, passengers have told us that they want the cheapest fares to be available wherever tickets are sold, yet the cheapest fares often appear to be available only online. Should not the same fare structure apply to tickets purchased at train stations and other outlets as applies to those bought online, ending the digital divide that is arising and increasing costs for older passengers, in particular?

Fourthly, what really annoys rail users is when they make a genuine mistake or are forced to change their travel plans but find themselves treated as a common criminal in front of other passengers and required to get out their cheque book and cough up. Of course we have to protect revenue, but we also have to have some common sense. Within the same period of the day, there has to be greater flexibility to vary plans, even on pre-booked tickets. Trains are not airlines, and we do not wish to go down the road of airline-style ticketing, with no cheap walk-on option.

Finally, passengers told us—

[Alok Sharma (Reading West) (Con)]

Will the hon. Lady give way?

[Maria Eagle]

If the hon. Gentleman will just let me get to the end of my points, I may give way to him.

Finally, passengers told us that they understand that sometimes a track has to close, such as for essential work, to keep our railways safe, but when a rail replacement service makes their journey longer, often adding considerable inconvenience, they want to know why their ticket costs the same. They can apply for a discount if their train is delayed, but not if it turns out not even to be a train and ends up being a bus.

Those are all ideas that we are looking at seriously, because for too long Governments have let the train companies get away with treating passengers in a way that would not be permitted in other industries.

[Paul Maynard]

Is the hon. Lady seriously arguing that peak hours on the west coast main line should be the same as those on Merseytravel lines?

[Maria Eagle]

I am arguing that it is important to have a national understanding of peak hours, so that passengers are not clobbered and do not have to wait until what seems like a long time after normal peak hours in order to get on a train home. That would be an improvement, and it would clarify the system. People would not be caught out as they frequently are, and they would not be inconvenienced by having to wait for hours after their meeting has finished in order to get on a train home.

If this Government are not going to stand up to the train companies and take on vested interests, we will. Those are all ideas that we are looking at seriously.

[Charlie Elphicke (Dover) (Con)]

Will the hon. Lady give way?

[Maria Eagle]

No, I am going to make some progress.

[Alok Sharma]

On that point?

[Maria Eagle]

I said that I am going to make some progress.

For too long, Governments have let the train companies get away with treating passengers in a way that would not be permitted in other industries. The previous Transport Secretary described rail fares as eye-watering and rail services in Britain as a “rich man’s toy”, yet he failed to understand that the policies of his own Government are making the situation worse.

[Alok Sharma]

Will the hon. Lady give way?

[Maria Eagle]

No.

Next year’s fare increases are set to be even higher—not 1% but 3% above inflation, with the same again in 2014. Unless the Government are willing to stand up to the train companies, and unless they are willing to take on the vested interests and remove the right to add another increase of up to another 5% on top of this year’s so-called cap, commuters next year will face fare rises of up to 13%, with another 13% the year after. That is happening at a time when average incomes are plummeting. Over three years, some tickets will rise by almost one third as people’s real incomes fall by 7.5%, yet the Government seem completely out of touch with the impact of that on households.

Season tickets are heading rapidly towards £10,000 a year on some routes into London once underground travel is included; families are now paying more on commuting costs than on the mortgage or rent; and ticket price rises are outstripping wage increases several times over, if people are fortunate to see a wage increase at all. That is the cost-of-living-crisis facing households throughout the country. Rent levels are going up; energy and water bills are rising relentlessly; bank charges are extortionate, as the cost of living means overdraft limits are breached; and the cost of transport is rising.

[Justine Greening]

I am listening very carefully to the hon. Lady, who is raising what we all recognise as important issues, but I want to double check something, because earlier in her speech she talked about getting more money into Government coffers through the RPI plus 5% flexible policy. Does she recognise that the policy she is announcing today is a spending commitment? If so, how does she set it against what her shadow Chancellor said yesterday, when he stated:

“I can say to you unequivocally we can make no commitments to reverse any of the Government’s tax rises or spending cuts”?

[Maria Eagle]

I do not know the spending commitment to which the Secretary of State says I have referred, because there is no spending commitment, and it is complete nonsense for her to say that there is —[Interruption.] I understand her point, but if she wishes to try again I will give way.

[Justine Greening]

Clearly, the money for that policy has to come from somewhere, and it is from the taxpayer. The hon. Lady obviously accepts that point, so the policy is a spending commitment. Will she simply confirm the reality of that?

[Maria Eagle]

What I have said is that we would stop the operation of the flex system, as the Secretary of State’s Labour predecessor did. We said before the election that we would do so, but the Government have reversed that policy, and commuters are being clobbered as a result. That is quite clear.

[Charlie Elphicke]

Will the hon. Lady give way?

[Maria Eagle]

No. This is a shortened debate, and I want to give people time to make their speeches, so I hope that the hon. Gentleman will forgive me if I make some progress. I have already spoken for a little longer than I would have hoped, and that is partly because I have taken interventions.

The Government need to be tougher not just on train companies, but on private bus operators. While train fares grab the headlines, most people’s experience of transport is in fact the local bus. For many, the bus is a lifeline: for those without a car; for older people who no longer drive or may never have done so; and for our young people, for whom the bus is their only way to get around, especially if mum or dad do not have a car or work all hours. Yet quietly, and without much fanfare, throughout the country there is a catastrophe facing bus services, with services being cut and fares rising. Again, that is thanks to decisions made by the Government. Their unwillingness to take on the vested interests in our transport industry is holding back the reform that is required.

In the spending review, the Government have made three decisions that have hit bus services. First, they have cut councils’ local transport funding by 28%—and front-loaded it. that has meant the end of support for many subsidised routes, and the end of ring-fencing has placed further pressure on councils—[Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. It really is not necessary for the Secretary of State to keep shouting across the Dispatch Box. She is about to address the House, and I am sure that she expects everybody to listen to her as well.

While I am on my feet, I must say that increasingly in the Chamber there is the behaviour whereby Members shout and heckle constantly when somebody else is speaking, and it is not really acceptable, so I hope that Members will stop it.

[Maria Eagle]

The end of ring-fencing has placed further pressure on councils to divert funds from bus services in order to protect other front-line services such as Sure Start or social care budgets.

The Government’s second decision has been to cut the funding available to bus companies in order to reclaim some of their fuel costs, particularly in rural areas where otherwise they would simply not run the service. Thirdly, the Government have changed the formula by which local authorities are reimbursed for the cost of delivering the concessionary fares scheme for older people, leaving councils with a funding shortfall that has led to new restrictions on when passes can be used, and to cuts in services.

On the impact, the Campaign for Better Transport calculates that one fifth of supported bus services throughout England now face the axe; more than 1,000 bus services have already been lost; and many surviving routes have seen fares hiked significantly.

The Public Transport Executive Group, which represents all the passenger transport executives, serving 11 million people throughout the metropolitan areas of England, calculates that as a result of the Government’s policies bus usage and patronage will decline by 20%, fares will increase by 24% above the rate of inflation and the added congestion alone will cost £68 million.

Ministers fail to understand that, when they cut a bus route, they cut an opportunity for young people to stay on in education, for people to travel further afield to take up employment, and for older people to remain connected to family and friends, with all the quality of life and, even, mental health benefits that that can bring. That impacts not only on those who rely on their local bus services, but on our ability to reduce the deficit. When those who want to travel further to take up work find that they cannot afford to do so or that the bus service is no longer there, those opportunities simply cannot be taken up. Young people who get the grades that they need to give them a chance in life and to find a good job will find that they simply cannot get to where they want to go for work or to continue their education.

The Government have said that those who are out of work should be willing to travel for up to 90 minutes to take up a reasonable job offer or else lose their jobseeker’s allowance. However, they are also taking away the only affordable means for people to do so. That is a total failure of joined-up government.

The Government are telling young people to stay on in education post-16, yet they have not only axed the education maintenance allowance, but failed to protect the local bus services that enable young people to get to college. The scale of the cuts faced by councils is leading to restrictions on concessionary fare schemes for young people. Some councils are telling us that they may have to axe schemes altogether. It is no wonder that the UK Youth Parliament chose to debate the need for cheaper fares and more accessible public transport for all young people during its annual sitting in this Chamber, following a vote by 65,000 people across the country.

The Association of Colleges has warned of a drop in further education enrolment and 60% of colleges have reported a drop in transport spending by their local authority. On average, students travel between 9 and 35 miles to get to college, with 72% of them relying on the bus to get there. That is another total failure of joined-up government. The consequence will be added pressures on family budgets or young people simply being unable to take up the opportunities that they need to reach their potential. That is a tragic waste for those young people. It is an idiotic policy because it will lead to higher welfare costs and less tax take in the future. It is a knee-jerk cut that will make it harder to reduce the deficit.

Cuts to school transport support for younger pupils are adding to the burden on families, with parents struggling to afford the fuel costs of the school run or having to juggle getting children to school with getting to work. Figures obtained by the Campaign for Better Transport show that council spending cuts have led to almost three quarters of local education authorities making cuts to school transport.

The loss of bus services has also had a devastating impact on older people. Despite the Prime Minister’s election pledge on the free bus pass that we introduced in government, he has axed £223 million from the scheme in this year alone. That has an impact on the viability of many bus services. Do not take my word for it; Tory-controlled Norfolk county council is leading the campaign for fair funding from the Government for concessionary fares. It has support from councils in Cumbria, Somerset and Devon, all of which have Tory leaders. Norfolk alone has calculated a £4.5 million shortfall in funding for the concessionary bus scheme. Up and down the country, pensioners are asking what is the point of a free bus pass if there is no bus. The Prime Minister has failed to honour the spirit of his election pledge and has left many older people isolated.

[Dr Huppert]

Will the hon. Lady give way?

[Maria Eagle]

I hope that the hon. Gentleman will forgive me, but I have given way to him once and I need to conclude.

The issue is not only about the level of spending; we need the proper regulation of bus services, not least when they rely on public subsidy. Having made these cuts, the Government are powerless to influence bus fares or to protect bus services because they are unwilling to stand up to the private bus operators and to take on the failure of bus deregulation outside London. In London, we have control over fare levels and we can regulate bus routes, or we could if we had a Mayor of London who was not choosing to let bus fares spiral out of control. It is time to consider the right way to reverse bus deregulation across England. We should give new powers to local communities to deliver bus services in the way that best suits them.

[Charlie Elphicke]

Will the hon. Lady give way?

[Maria Eagle]

I am coming to a conclusion so I will not.

Whether it is the increase in rail and bus fares or the rise in the cost of fuel, this Government are allowing the costs of transport to spiral, adding to the cost-of-living pressures faced by families. The Government have failed to tackle those increases not because of the deficit, but because they are unwilling to stand up to vested interests. They are failing to stand up to the train companies, letting train fares rocket by up to 11%. They are failing to stand up to the bus companies and to look at the best way to re-regulate the industry outside London. They are failing to stand up to the banks and impose a bonus tax, adding to the high cost of fuel. As a result there are rising transport costs, which are adding to the pressure on households up and down the country. This Government are too out of touch to do anything about it.

14:34

[The Secretary of State for Transport (Justine Greening)]

I am delighted to be back at the Dispatch Box for the second day in a row. I am also delighted to be debating this important issue with the Opposition who have left the country with such debts, that the Government have little leeway to do what the hon. Member for Garston and Halewood (Maria Eagle) is proposing, which is to add more debt on to a debt crisis.

The Opposition talk about how they feel about train services and rail fares and I will respond to the particular points that the hon. Lady has made. However, many people who are listening will find it galling that the day after the Leader of the Opposition made his relaunch speech which talked about responsibility, his party is instantly engaging in an Opposition debate that shows no responsibility whatever and is making more unfunded commitments that would only add to the debt levels with which it has already burdened our country. The Labour party left this country with the highest structural budget deficit of any major economy in the world and with the highest deficit in our peacetime history. Those debt levels are costing us £120 million a day. We would much rather invest that money in our transport system and other public services. The debt levels that the Labour party left us are crippling the country and we have to tackle them first. As we regain control of our country’s finances, we are aware of how difficult the economic situation is for many people. That is why the Government have taken tough decisions to restore credibility to this country’s economic policy.

[Mrs Anne Main (St Albans) (Con)]

I am pleased that the Secretary of State is drawing attention to the history behind this matter. My constituents experience the highest rail fares in the country at nearly 30p a mile. Those fares did not get to that level overnight. In his speech on Monday, the Leader of the Opposition described Hertfordshire as one of the cheaper places to live. That shows that the Opposition are completely out of touch with my constituents.

[Justine Greening]

The Opposition are out of touch. The speech largely failed to talk about how we can tackle the underlying problem in the rail industry, which is the cost. The hon. Member for Garston and Halewood touched on that point and I will come to it later. The industry was passed over to this Government with a high cost. I want to tackle that cost, but the previous Government did nothing to tackle it in 13 years. One of the most important things that the Government and I have to do is to get to grips with the high cost of the railway industry. That must be part and parcel of the Government’s overall approach to getting a grip on our public finances.

At the heart of the Government’s clear determination to do that is giving ourselves the best possible chance of keeping interest rates as low as possible for as long as possible to help families and businesses with loans and mortgages. It is not just the taxpayer who is paying through the nose for debt. We must keep interest rates as low as possible for people across this country who rely on that for their household finances to make sense. Let us be clear: if we had taken the advice of the Opposition to spend more and borrow more, which is what they have been talking about in this debate, we would be talking not about the cost of rail and bus fares, but about an International Monetary Fund bail-out to keep our country afloat, and we would be living in a country facing bond yields and interest rates like those of European countries such as Greece. That is the situation that the Opposition want to swap for.

[Kwasi Kwarteng (Spelthorne) (Con)]

Does my right hon. Friend have any idea why the perennial problem of rail costs was not tackled in 13 years under Labour and why she and her Department have had to deal with it?

[Justine Greening]

My personal view is that there were two key reasons—a lack of ability to tackle the problem, because Labour simply did not understand how to do so, and a lack of willingness. Tackling the problems means that we need to have some difficult discussions about the work force, and as we saw in the vote that has just taken place in the House, the Labour party shows no willingness ever to stand up to its party pay leaders, the unions.

[Maria Eagle]

Given that the Secretary of State has said that she is interested in reducing the costs of the railway industry, does she accept that she needs to examine its structure? One of the big causes of excess cost in the industry is the fragmentation that was left to us after the botched privatisation that the previous Tory Government carried out.

[Justine Greening]

I think many people watching the debate will wonder why the hon. Lady’s party did nothing in 13 years. I will shortly publish a Command Paper setting out our approach to tackling a number of the broad challenges that exist.

[Mr Tom Harris (Glasgow South) (Lab)]

I am disappointed that the Secretary of State is being so churlish and saying that the last Government did nothing to reduce costs. Is she even aware that in the five-year control period ending in 2009, they forced Network Rail to improve its efficiency by 33%? Why has she not admitted that that was a major achievement, or that further efficiency savings were included in the next control period ending in 2014?

[Justine Greening]

I do not think there is any way in which the hon. Gentleman can dress up the outcome of the McNulty report, which set out very clearly just how expensive our railway industry is compared with those in mainland Europe.

I understand that rail fares are a large part of household expenditure for many people, particularly commuters, who often travel significant distances to go to work and earn a living. Of course, the taxpayer subsidises the rail industry alongside rail fares, and thanks to difficult decisions that the Government took in the emergency Budget and the spending review, the Chancellor was able to announce in the autumn statement that we would fund a reduction in the planned increases in fares so that regulated fares would increase by RPI plus 1%. That reduction is helping millions of people who use our trains.

[Mr Edward Leigh (Gainsborough) (Con)]

Will my right hon. Friend say something about rural fares? The anytime weekly return to London from Market Rasen, which is not in the frozen north, is £150, and the average weekly wage in Market Rasen is £561. That means that people are paying 26% of their weekly salary just to get to London and back. That is not acceptable, and something must be done. We must have less emphasis on the high-speed rail link and all those wonderful projects and more emphasis on helping ordinary people in rural areas.

[Justine Greening]

My hon. Friend is right to set out the very difficult balance that we have to strike. On one hand we have to ensure that we keep rail fares affordable, and I am determined to do what I can to do that in spite of the fiscal straitjacket within which the Government are having to operate. On the other hand, we have to ensure that we can balance investment in the short term. I am sure that many Members were delighted to see Bombardier agree the contract with Southern for more carriages, and we are putting unprecedented investment into the existing railway lines. We have to strike a balance between working out who pays for the hard work that is going on today and ensuring that we have a railway network that is fit for service in the future.

I know that some passengers on particular routes have faced higher increases than others, and I listened to what the hon. Member for Garston and Halewood said about the 5% flex in rail fares. I am bound to point out, however, that it was the last Labour Government who introduced that flex in 2004.

[Maria Eagle]

I accept that it was introduced by the Labour Government, but it was then stopped by the Labour Government and reintroduced by the current Government.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

It was stopped for one year.

[Maria Eagle]

No, permanently.

[Justine Greening]

I am pleased that the hon. Lady has made that intervention, because I have with me an exact extract from the franchise agreement that the last Labour Transport Secretary put in place. I shall quote from it, to remove any uncertainty, and then maybe the hon. Lady would like to intervene on me again. It states:

“With effect from 1 January 2010, Schedule 5 of the Franchise Agreement will be amended as set out in the Appendix to this notice.”

That is the change that she has talked about. However, it continues:

“On and from 1 January 2011, the amendment to the Franchise Agreement set out in this notice of amendment shall be reversed.”

Does she want to intervene to correct the record?

[Maria Eagle]

I am very happy to intervene. Of course I will not contradict what the legal agreement states, but the last Labour Transport Secretary made it perfectly clear to the Transport Select Committee in 2009, in oral and written evidence, that the policy was to continue. It had not been negotiated, but that is different from the policy having been changed. Negotiations go on all the time in government, as the Secretary of State will be finding out. I do not think that quotation makes the point that she thinks it does.

[Justine Greening]

I really suggest that the hon. Lady stops digging the last Labour Transport Secretary into a deeper hole than he is already in. The contract is absolutely clear-cut, stating categorically in black and white that the flexibility levels introduced by her party’s Government would be reintroduced the year after their abolition.

[Mr Tom Harris]

Irrespective of what the legal agreement was, does the Transport Secretary personally believe that it would have been a good idea to renegotiate a further period for which the flex would not have been in force?

[Justine Greening]

I do not, because I believe that the train operating companies need flexibility, so I support my predecessor’s decision. If I did agree with negotiating a further period, it would represent a spending commitment. I agree with the shadow Chancellor that now is not the time to make any further spending commitments, even if the hon. Member for Garston and Halewood does not. We can see the absolute disarray that the Labour party is now in.

I find it incredibly frustrating and galling, as I think many other people do, to hear on one day the leader of the Labour party—the party that left this country in a worse financial state than any other Government ever have—profess that we must be responsible, even though Labour was irresponsible and did not have the custodian values that it needed in looking after our public finances, then the day after, to hear Labour talk about more spending and more debt in the middle of a debt crisis. The very people who let this country down the most and left our public finances in their worst state ever are now the ones talking about responsibility. Most people outside will see that for exactly what it is—absolute political gibberish.

[Ms Buck]

Will the Secretary of State give way?

[Justine Greening]

No, I am going to make some more progress now.

I ask the hon. Member for Garston and Halewood, or perhaps the shadow Minister who winds up the debate, to come clean and talk about how their spending commitment would be funded. If the hon. Lady wants to go against what the shadow Chancellor is saying about there being no more spending, she must accept that her suggestion represents a spending commitment. It is time to talk about how she would fund it, otherwise she has to accept that it would lead to more debt at a time when we are right in the middle of a debt crisis. There is no point in the Leader of the Opposition promoting responsibility when his own party continues to show absolutely none.

The hon. Lady also has to admit that the flexibility that she wants to take away from train operating companies has meant some passengers benefiting from lower increases or decreases. For instance, passengers on the Birmingham to London route via High Wycombe have seen their annual season ticket price reduced by 7%, and the Gatwick to Bournemouth saver return has been reduced by 28%. She is proposing to raise the cost of those passengers’ travel. Presumably she is quite happy to confirm that—she can intervene if she wants.

The bottom line is that for all the bluster that we heard from the hon. Lady, she would abandon the long-term investment in capacity improvements that depends on continued funding from both the taxpayer and the fare payer. She talks about 11% fare increases, but the last Government also allowed such increases. It is worth reminding ourselves of their record on rail fares and value for money. The Labour-led Transport Committee in the last Parliament stated:

“Neither passengers nor tax payers are getting value for their money…The value for money of rail travel has deteriorated by most yardsticks over the past decade.”

I have listened carefully to the comments of the hon. Member for Garston and Halewood, and I hope that we both accept that the real driver of rising costs for fare payers and taxpayers is the inefficiency of the rail system that we inherited from the Opposition. She mentioned other European railways, and Sir Roy McNulty’s independent review of our railway network found that the system that we inherited from the previous Government is 40% less efficient than those of our best European comparators. Taxpayers and fare payers must shoulder that huge cost burden because of the previous Government’s failure to reform our railways.

Unless we are prepared to get to grips with the underlying causes of the inefficiencies, we will never make the progress that I am so passionate about achieving. That means getting different parts of the industry to work more effectively together, as we are doing through the rail delivery group, which has been set up, as Roy McNulty proposed. It means aligning incentives better and increasing transparency—I absolutely agree with that. However, it also means tackling some of the work-force issues, which, we must all accept, have driven up costs. When we reach those difficult discussions in the coming weeks, months and years to tackle rail industry costs that are too high, I hope that the Labour party will step up to the plate and join us in making the necessary decisions to bring rail costs down for the longer term and relieve the fare rise pressures that we have experienced year after year.

[Kelvin Hopkins (Luton North) (Lab)]

The Secretary of State rightly draws attention to the difference in cost between continental railways and ours. The only major difference between them and us is that theirs are publicly owned and integrated and ours are privately owned and fragmented.

[Justine Greening]

That is an over-simplification. However, the hon. Gentleman is right to point out that Sir Roy McNulty identified in his report a need for the different parts of the rail industry to work together much better. Network Rail is already doing that with many of the train operating companies. That was to be a key way of driving costs down—not through worsening services but by running the system better in the first place.

[Stephen Hammond]

If we are comparing privatised or denationalised and nationalised railways, perhaps the Secretary of State would like to reflect on the point of history that, in the last 15 years of British Rail, fares rose faster than in 15 years of denationalised railways.

[Justine Greening]

As ever, my hon. Friend, for whom I have huge respect and who is obviously an expert in the House on the subject, makes an incredibly powerful point. It is worth complementing that with the point that we also experienced unprecedented increases in passenger demand since privatisation.

[Julie Hilling (Bolton West) (Lab)]

When the Secretary of States talks about reducing costs in the industry and staff numbers, does she mean cutting the salaries of people who work in ticket offices on basic wages of £16,000 or £17,000, or of train dispatchers, who are on basic wages of £14,000—not big, but low salaries? Is she saying that those people should have their salaries reduced?

[Justine Greening]

I do not think that I have talked about reducing salaries. Many people might say that a train driver on a salary of £40,000 or more had a well-paid job compared with them.

Clearly, we need to address important issues that relate to the costs of the railway industry. That is why we will publish the rail Command Paper early this year to set out how to meet the challenge. That is the real prize. The long-term way of reducing pressure for relentless fare rises is by tackling the underlying driver: the industry’s cost base. As I said, that will also give the Opposition an opportunity to demonstrate whether they are serious about reducing costs to passengers or whether their policy review is limited to tinkering at the edges with uncosted commitments drawn up on the back of an envelope.

[Mrs Main]

I have written to the Secretary of State about Network Rail, which has fundamentally failed many of the train operators—67% of all delays and stoppages are to do with Network Rail. It is time to have a debate about it. Network Rail, which is with the Office of Rail Regulation now, has been deeply inefficient in the amount of money that it costs the taxpayer.

[Justine Greening]

That is what I mean when I talk about the need to align financial incentives better so that people are pulling in the right direction and so that, when performance is not good enough, it costs the people who cause the inefficiency in the first place.

I want to move on to the second aspect of the comments of the hon. Member for Garston and Halewood —bus fares. Although every sector and Department have had to play their part in deficit reduction, the Labour party still does not accept that, even after yesterday’s speech by the Leader of the Opposition. Nevertheless, we are determined that, even in the difficult economic conditions that we face, buses will continue to receive their fair share of funding. Yes, it is constrained by the terrible legacy that the Labour party left us, but we are determined to encourage more people on to buses and to make bus travel more attractive. That is why we set out in a spending review our commitment to continuing our financial subsidy of bus operators. The bus service operators grant remains untouched for this financial year, with savings to be introduced only from April, alongside others that we have had to make across Government as part of tackling the deficit that the Labour party left us.

[Ms Buck]

Does the Secretary of State therefore think that the Mayor of London was wrong to raise a single bus fare by 50% since 2009?

[Justine Greening]

Many Londoners will not forget that the current Labour candidate for Mayor increased bus fares in 2004 by a huge amount. I simply do not accept that his proposals for London will mean anything other than catastrophically undermining the essential investment, on which so many Londoners count, in the transport system. It is financial jiggery-pokery, and it does not add up. I believe that Londoners will see right through it in May.

We must tackle the deficit, but we continue to ensure that funding goes into our bus services. Indeed, we spoke to the industry as part of the spending review about how we could get more out of the bus service operators grant. After difficult spending decisions, the industry said that it felt able to absorb the reduction without raising fares or cutting services. Nevertheless, we are protecting the concessionary bus travel scheme.

[Lilian Greenwood (Nottingham South) (Lab)]

I can assume only that the Secretary of State is out of date, because the Confederation of Passenger Transport UK told me that, although it initially felt that it could absorb the 20% cut in the bus service operators grant, the combination of that and the cuts to concessionary travel repayment and local transport was a perfect storm.

[Justine Greening]

The hon. Lady should apologise to that organisation more than anyone else because her Government left the country’s finances in a state that means that we have to make very difficult decisions. There is not a day when I do not come into the office wishing that the state of the public finances that the Labour party handed us was better. The reality that we must all, apparently apart from Labour Members, face is that we have got to tackle that problem. That means making some difficult decisions. The Labour party is in complete disarray.

[Several hon. Members]

rose—

[Justine Greening]

Until the Opposition speak with any sort of single voice, it is pointless taking further interventions. Most hon. Members would accept that I have taken an awful lot and it is time for constituency Members of Parliament to have their say on behalf of their communities.

We are committed to investing in bus travel. In the past two months, we have also announced nearly £100 million of additional investment in buses as part of the growth review.

We are committed to investing in the transport infrastructure—not only HS2, as we announced yesterday. We are putting unprecedented investment into rail infrastructure. Even in these tough times, the Government are taking action to help people with the rising cost of living at the same time as dealing with the massive budget deficit that the Labour Government left us. That is why we are helping keep interest rates low for families and businesses, freezing council tax for the second year running, cancelling this month’s fuel duty increase on top of last year’s fuel duty cut. It is why we are funding a reduction in the planned increase in regulated rail fares and continuing our financial subsidy of bus operators while implementing a massive programme of investment in our transport infrastructure, not just for passengers today and in the next 10 years, but for those in the decades to come. Our determination to reduce the cost of railways in the long term to fare payers and taxpayers means that we will introduce proposals for substantial reform in the rail Command Paper early this year.

That is the significant action that we are taking. The Labour party talks about responsibility at the top, but in reality that means difficult decisions. We are making them, and that stands in stark contrast to the Labour party’s tinkering, unfunded and, in so many cases, unworkable proposals.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I have to inform hon. Members that a time limit of six minutes has been placed on Back-Bench contributions.

15:00

[Mr Tom Harris (Glasgow South) (Lab)]

Since the Secretary of State spent some time talking not about rail fares but about the economic legacy of the last Labour Government, I wish to make one brief point first. As an Opposition Member, she was a member of the shadow Treasury team and, up until November 2007, the Conservative party’s policy was to support every penny of spending made by the Labour Government. If she is claiming that the deficit that the Government inherited was created in the last 18 months of the Labour Government, that is something that the House would like to debate. She cannot pour scorn on the spending of that Government when she sat on the Opposition Front Bench and supported every penny. That is double standards. The Secretary of State shakes her head, and I am more than happy to give way if she wants to explain why she did not tell the then shadow Chancellor that he should not support Labour’s spending plans.

[Justine Greening]

Everybody in Britain knows exactly which party got the country into the financial mess. It is precisely why Labour Members are on the Opposition Benches now: it was them.

[Mr Harris]

That says quite a lot about the Secretary of State’s reluctance to accept her own culpability for supporting the spending plans of the previous Labour Government.

I do not believe that the railway industry is broken, or a basket case. I was proud to serve as a railway Minister in the last Labour Government, and I understand the successes that have grown from 13 years of Labour governance of the railway industry. We have more people travelling on the railways than at any time in their history outside of wartime. We have more services every working day than ever before, and punctuality is at an all-time high. Those were achievements that this Government have managed to continue—and I hope that that continues—but fares are a fundamental weakness. They are the crucial interface between the travelling public and the railways and—irrespective of the public subsidy to the railways—if we do not make rail travel affordable for ordinary people, it will not be surprising if they feel that the railways are letting them down.

The previous Secretary of State for Transport, the right hon. Member for Runnymede and Weybridge (Mr Hammond), famously described the railways as a “rich man’s toy”. A few weeks ago, I challenged the Secretary of State in the Transport Committee about whether she agreed with that assessment and, understandably, she did not want to commit herself. She told the Transport Committee that she wanted to see the balance between the taxpayer and the fare payer move towards the latter. She also said that in the long term she wanted the fare payer to pay less. Well, she can have one or she can have the other, but she cannot have both. It is clear that unless the taxpayers’ contribution is increased, fares will not come down. The Secretary of State refused to answer that point at the time.

[Paul Maynard]

The hon. Gentleman raises the interesting question of whether the burden can be switched to the fare-paying passenger at the same time as reducing fares. Does he agree that if we do what McNulty recommends and try to reduce the overall cost base of the railways, that conundrum could be solved?

[Mr Harris]

I am sure that the hon. Gentleman, who also sits on the Transport Committee, is as much of an expert as any other Member, and I will agree to consider his comments.

The Prime Minister was wrong today and failed to give the facts about the policy of the last Labour Government and the policy of this Government. Even if it was for only one year, Lord Adonis managed to challenge the rail industry on the so-called basket of fares and whether the RPI plus 1% policy should apply to individual fares or to a basket of fares. He got a lot of support on both sides of the House for insisting—against the arguments of his own officials and the resistance of the industry—that that policy should apply only to individual fares. As we know, if it is applied to a basket of fares, some can go up by 6%, instead of 1%. Whether or not that was a temporary agreement for one year, surely when a new franchise is let the Minister has a responsibility to challenge the industry and set such an arrangement in stone at the very start.

When the railways were first privatised, the policy—it was then RPI minus 1%—was applied to a basket of fares, as agreed with Ministers. That was what Lord Adonis succeeded in challenging, but sadly only for one year. Will the Secretary of State give a commitment that, in future new franchises, the Adonis approach will be applied to fares to protect fare payers and to ensure that train operating companies take money out of their own pockets, rather than the pockets of fare-paying passengers?

[Mrs Villiers]

Will the hon. Gentleman give way?

[Mr Harris]

I only have six minutes and the Minister will have plenty of time to wind up at the end of the debate.

I hope that the Secretary of State will not take the same path as has been followed in Scotland, where the SNP Government—for the first time since the 1960s and Beeching—are threatening to close stations, including Kennishead in my constituency, even as passenger numbers are increasing there and throughout the network. That is a disgraceful approach for any so-called progressive Government to take, and I hope that the Secretary of State will make a commitment that she will not close stations or lines in the rest of the country.

It is too easy to criticise rail services and forget some of the major advances that have been made since privatisation, but at the crucial interface between train and customer, there is a growing crisis of affordability—on the personal level, rather than the national taxpayer level.

[Charlie Elphicke]

The hon. Gentleman says that the Adonis policy was for one year only. Was that not an election year? I am sure that most people would agree that that is the kind of cynicism that used to characterise the previous Government and it is a good thing that we have got rid of that.

[Mr Harris]

Most fare-paying passengers would not agree that it is a good thing that that policy was got rid of, because they are paying more as a result. Perhaps the hon. Gentleman represents constituents who are very wealthy and can afford to pay unlimited increases in fares. If he is claiming that it was a cynical manoeuvre by Lord Adonis, he has clearly never met him. It was officials who recommended that the agreement should be for one year. Is the hon. Gentleman really saying that a Secretary of State should ignore legal advice? That is disgraceful and completely misrepresents what the then Secretary of State and Labour Government were doing for rail passengers.

15:08

[Stephen Hammond (Wimbledon) (Con)]

I direct the House to my entry in the register. It is a great pleasure to follow the hon. Member for Glasgow South (Mr Harris), who is the joint chair of the rail group and was of course a distinguished rail Minister.

The motion makes four contentions. First, it is critical of the scale of fare increases overall. Secondly, it contends that the scale of rail fare increases has added disproportionally to the increase in the cost of living for us all. Thirdly, it says that the flex mechanism should be stopped, and fourthly that the profits of the rail companies are too high. I wonder whether, in my short contribution, we might look at some of the facts rather than the hyperbole.

First, as the hon. Gentleman pointed out, there can be no discussion of rail fares without accepting that there is always a balance between what is funded by the taxpayer and what is funded by the fare payer. Successive Governments since 1945 have chosen to subsidise both the operating and the capital costs of rail expenditure, so there has been an implicit subsidy of fares from the taxpayer. That equation has been long recognised. It was Lord Adonis who, in the later years of the Labour Government, decided that the balance had swung too far from taxpayer support and needed to swing back to the fare payer. Therefore, if we want to start talking about why rail fares are increasing and taxpayer subsidies are decreasing, let us all be absolutely clear. History shows that the change in the slant of that equation happened post 2004, and certainly accelerated from 2006, so that the £10.5 billion overall operating costs of the industry are now split, with 62% coming from the fare payer and 38% from the taxpayer. The bulk of that change happened between 2005 and 2010.

Secondly, when it comes to the system of regulated and non-regulated fares, it was the last Government who introduced the policy of RPI plus 1, which is why regulated fares are increasing this year by RPI plus 1. Are Opposition Front Benchers saying that they have changed their attitude towards regulated and non-regulated fares? Are they saying that they will not operate RPI plus 1 in future? The motion is of course stoically silent about that. Let us look at the relative contribution of different sectors to the increase in our cost of living. The motion’s claim does not bear too much examination, for it is not rail or bus fare increases that are contributing most to our increased cost of living. The World Bank global food index has gone up 19% over the last year, while Green Flag says that the costs of motoring and car insurance are up 21%. The average fare increase this year—I accept that it is an average; we will come to that point in a moment—is 5.9%, so the motion fails when it says that there is a disproportionate increase from transport.

As my right hon. Friend the Secretary of State has already pointed out, no one wants to see excessive price increases. Also, I accept that we are talking about an average and that some people have seen rather larger fare increases, but that is also the point about flex, is it not? Flex is a weighted average increase—a device, introduced by the last Labour Government and suspended for one year only, to manage demand. If the Labour Opposition are going to get rid of flex, they have to say whether the shadow Secretary of State will write to every commuter whose rail fare increase was less than the average and tell them why she is doing it. Is she going to put in place another tool or mechanism to manage demand? Let us not forget that although she talked about demand in peak hours, rail markets, like many other markets, are localised markets around cities or in rural areas. That is why the last, Labour Government agreed and negotiated differing peak hours with the rail companies, to ensure that localised demand could be managed over peak and “shoulder” hours. If she is going to get rid of flex, she has to stand up and say how she will accept that challenge and demand.

Finally, there is a lot of talk about the huge profits earned by the rail companies, but their operating profit margin has been absolutely constant over the last 10 years, at approximately 3%. Let us look at some of the other companies around—say, that mouthpiece of the Labour party, the Daily Mirror, whose operating profit margin is 16%. It is absolutely clear—it is also implicit in RPI plus 3—that any extra contribution will go back into the rail industry, not the profits of the rail companies. Today’s motion is interesting, but it fails the test of fact. That is why I hope the House will reject it.

15:14

[Owen Smith (Pontypridd) (Lab)]

Transport infrastructure is one of the most important and pressing aspects of economic renewal. It is one of the keys to seeing the real improvements in our economy, the growth in jobs and the economic development that we all need. That is perhaps particularly true in some of the, as it were, post-industrial parts of Britain, such as my constituency in the south Wales valleys. Rail there has always enormously important. Indeed, it is perhaps more important right now than during any period in the last century, and arguably since the 19th century.

That is why I welcome the Government’s infrastructure investment decisions. I welcome the announcement about electrification of the Great Western line between London and Cardiff, although I deplore the fact that the Government have not recognised the excellent business case for going as far as Swansea. I also welcome the decision to take forward, in conjunction with the National Assembly Government, a business case to consider electrification of the valleys and the creation there of a so-called metro system. The reason that is so important is that travel to work in urban metropolitan centres such as Cardiff from their hinterlands is the key to the economic regeneration of places such as Pontypridd, the seat I represent. I urge the Minister to consider that business case carefully when it comes forward and to look on it favourably, because doing so would be a genuinely bold and imaginative step, and a key to change.

Secondly, I agree with my hon. Friend the Member for Glasgow South (Mr Harris), the former Transport Minister, that we cannot say that all is ill with our railways right now. They are, without a doubt, more efficient, cleaner and less dangerous than they were before the Labour Government. It is Labour investment and Labour management of the rail system that led to those changes, in particular the way we effectively negotiated franchises, which—not always, but in the main—led to investment and improvement. Indeed, I commend the current Government for taking forward that infrastructure legacy.

[Mr Robert Buckland (South Swindon) (Con)]

Does the hon. Gentleman not agree, however, that the terms of reference for the previous Great Western franchise put the service at the wrong stage, in effect applying a lower common denominator and thereby regressing the service? The new franchise needs to start from the current level and quality of service, so that we can encourage value for money and progress, instead of the rather problematic issues that we have encountered with First Great Western in recent years.

[Owen Smith]

I am grateful for that intervention, which gives me the opportunity to say that it was, of course, the Labour Government who managed that franchise, such that we called in Great Western and demanded the changes that it made and that it adopt special measures.

[Mrs Villiers]

The Labour Government did make some attempt to fix the problems, but they created them, because they let the franchise in the first place.

[Owen Smith]

In truth, the problems we have with the railways are in large measure precisely due to the fragmentation that resulted from the botched privatisation of our rail industry. That is the reality.

The way we have debated this issue today—in particular, the way the Secretary of State took the opportunity, uncharacteristically perhaps, to make a lot of heavy-handed party political points—does not serve our constituents and rail travellers well. This is too important an economic issue, as she will know from her time on the Treasury Bench, for us to play knockabout politics with it. The key issue that the Opposition are raising today is affordability. Very simply, given that it is so important for many of our constituents that they are able to take advantage of the improved, more efficient and cleaner train services that are now available, those services must be affordable. That is why we are concerned about the large fare increases in the recent round, although Arriva Trains Wales has commendably kept down a lot of its fares across parts of my patch to RPI plus 1. On the Great Western line, however, there has been a worrying increase of 10% in the cost of travelling between Cardiff and London, as my hon. Friend the Member for Garston and Halewood (Maria Eagle) said. That will make businesses and commuters think hard about whether they can continue to travel on that vital line for commerce and commuting.

It is important that the public understand that this Government took a decision to repeal the ban on flexing fares that the Labour Government put in place. That measure was introduced as a result of the economically straitened times in which we found ourselves in 2009. Lord Adonis made that decision to try to address the issue of affordability, and it is party political point scoring to suggest that the fact it was negotiated as a legal contract for one year was indicative of a longer-term intention. There is no read-across in that respect, and the Secretary of State would do well to take Lord Adonis at his word when he put it in writing to the Select Committee that he intended to continue the practice while we remained in economic difficulty.

What has changed since 2009? People are harder up than they were. Things have not got easier for my constituents or for those of the Secretary of State; they have got harder. That is why the Government should have thought long and hard about how they could justify taking a decision that might be in the interests of the train operators but is not in the interests of the travelling public. That was fundamentally the wrong decision for them to take.

I welcome the common sense that we have heard from my hon. Friend the Member for Garston and Halewood today about the need for a cross-party review of our rail services. The fares are too complicated, and the system is too complicated. The flexing at peak times across different parts of the country is also too complicated. Many people end up paying higher fares than they ought to, because the system is engineered in such a way that they cannot access the cheapest fares. We have seen this with the energy companies as well. They rig the market in their favour by making it utterly impenetrable to ordinary people, and it is the same on the railways. My hon. Friend is absolutely right to say that we must look into those issues, and at the underpinning question of the nature of the structure—the ownership principles—of the railway industry. We cannot simply say that there is no alternative, and we cannot get into a tawdry, tedious knockabout over whether this or that issue represents a spending commitment. That is just point scoring, and we need a much more fundamental discussion about the nature of our rail services. We need a Government who are going to act in the interests of the people, not just those of their people.

15:23

[Mark Menzies (Fylde) (Con)]

May I start by welcoming the biggest rail investment programme that the country has seen? It was clear to all of us who were in the Chamber yesterday that the Secretary of State has shown great leadership and vision in taking difficult decisions on the future of the railway network. There is cross-party consensus on High Speed 2, but that was the kind of difficult decision that Governments can sometimes be tempted to kick into the long grass. I therefore welcome the fact that this Government have decided to press ahead with the project with such vigour. Such capital projects have to be paid for, however, and they cannot always be paid for solely from the public purse. Unfortunately, we also have to be prepared to ask the travelling public to make a contribution.

The electrification of the triangle of routes between Manchester, Preston and Liverpool represents a great step forward for the north of England, Mr Deputy Speaker. I know that you, too, care passionately about the railways, because you are a north-west MP. That investment will no doubt have substantial benefits for businesses in the north-west, and I am sure that the whole House will welcome it.

For the foreseeable future, the west coast main line will be the main artery connecting the north-west to London, and, as I know the Secretary of State is aware, the franchise is now up for renewal. May I take this opportunity to urge her, when she is looking into the franchise, to take into account not only the quality of the bids but the proposed fare structures? Will she ensure that low-cost, flexible fares remain available for the people who do not always have the luxury of being able to book many days in advance? We must ensure that people on low incomes who have to travel at short notice are not priced off the railways.

Moving on, may I point out that some of the key stations on the west coast main line, such as Preston and Wigan, are in desperate need of serious capital investment? For many years, they have been given a lick of paint and nothing more. I urge the Secretary of State to ensure that whoever operates that line focuses on such investment. We also need to be clear about how that investment will be paid for. We cannot keep asking the taxpayer to put their hand in their pocket; we must accept that if we want stations in the north-west and elsewhere in the UK that we can be proud of, some of the cost must fall on the travelling public.

Many of us will have received letters and postcards about the increase in rail fares, and in the current climate we must do everything possible to ease the stresses on people’s living expenses. They face not only higher rail fares but higher household fuel bills, for example. The Government are not insensitive to that, and we need to recognise that they are doing everything in their power to keep those costs to a minimum. In launching such large-scale, ambitious projects, my right hon. Friend the Secretary of State is to be congratulated on doing everything that she can to keep price increases down to RPI plus 1%. That is significantly less than the increase of RPI plus 3% that was expected before the autumn statement, which should be welcomed. We are a railway nation, but if we want railways that we can be proud of, we need to be prepared to pay for them. The taxpayer does not have a limitless cheque book.

15:27

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

I want first to talk about how the Government have increased fares with no added visible benefit to Teesside and the rail users of the north-east. The Secretary of State has mentioned unprecedented funds being put into rail lines, but sadly, that has not happened on Teesside. As the hon. Member for Fylde (Mark Menzies) said, the announcement in the Chancellor’s autumn statement that the trans-Pennine route from Manchester to Leeds and York would be electrified has been greeted with enthusiasm in the north. However, that enthusiasm has been tempered with concern that the move could risk fragmenting the highly successful trans-Pennine network. The plans for partial electrification have opened a can of worms, as they could leave many major towns and cities of the north worse off than they were before.

The TransPennine Express franchise covers a network of routes across the north and into Scotland, and currently uses an all-diesel fleet. With Manchester as its hub, the TPE network serves Manchester airport, Liverpool, Blackpool, Barrow, Windermere, Glasgow and Edinburgh on the west side. Liverpool and Blackpool are to be electrified under previously announced plans, leaving Carnforth, Barrow, Oxenholme and Windermere unwired. To the east from Manchester, the TPE operates to Leeds, Hull, York, Scarborough, Middlesbrough and Newcastle. The core route between Manchester and Leeds is used by all the TPE’s eastbound services, with a pattern of four trains an hour. The Hull route diverges east of Leeds, while the Scarborough line branches off at York, and the Middlesbrough trains leave the electrified east coast main line at Northallerton. The busy section between Manchester and Leeds is ideal for electrification with lots of trains operating over a steeply graded route. The northern hub strategy would see the core route’s frequency increased from four to six trains an hour, with many services running west from Stalybridge into Manchester Victoria.

The new Ordsall curve will, when completed, allow trains to continue to Piccadilly and the airport, while Liverpool services would head west over Chat Moss, but what happens to the routes such as those to Hull, Scarborough and Middlesbrough to the east and Barrow and Windermere to the west, which are not currently down to be electrified? I have already asked parliamentary questions about the future prospects of the service to Manchester airport, expressing the concern that Teesside could be left to languish on a “non-electrified branch line”. Rail campaigners I know in Cumbria have expressed worries about Barrow trains terminating at Lancaster and about Windermere becoming a self-contained branch.

The route in my area has massively increased in popularity, largely due to the huge benefits brought by the previous Cleveland Labour authority, which invested heavily in the local rail line in 1993 and formed new train stations such as Yarm.

It is ironic, given the recent Government announcement after fantastic campaigning by my hon. Friend the Member for Sedgefield (Phil Wilson) for the delivery of the Hitachi plant at Sedgefied, that dual-use—both diesel and electrified—trains made by Hitachi will be built in an area that would not benefit from those self-same carriages. Network Rail has been asked by the Department for Transport to look at the business case for electrifying the line to Middlesbrough, Scarborough and Hull, and I believe an announcement is expected in July.

All this comes down to basic economic arguments when we have a Government who are evacuating the public sector and public sector spending and trying to implement regionalised pay and to change local business rates supposedly to attract private investment. Industry, however, particularly that using freight in my area, has no market certainty about how this Government are developing their transport plans. What makes me and people in my area angry is that at a time when manufacturing is in the doldrums, with statistics showing a potential recession, and despite the fact that the north-east is bucking the trend through its chemical industry, local steel industry and the agricultural industries in the region, we are nevertheless not getting any of the infrastructure benefits of the positive measures coming from industry and local workers in my region.

The Secretary of State said that the previous Government had left a terrible legacy and that this Government’s fiscal measures were amending that position. I beg to differ. The reason why we are able to lend at better rates at the moment has absolutely nothing to do with the fiscal measures of this Chancellor—the Secretary of State knows this—as it is really due to quantitative easing and Bank of England policy since 2008. That can be measured by the fact that foreign market purchasing of our bond yields has not increased since 2008. The Secretary of State can talk as she wishes about the economic changes being made by this Government’s policies, but the truth is that this Government have no plan for growth. As I have said, manufacturing is delivering for this nation in my region, yet the Government are providing no infrastructure support. That has been backed up by the civil engineering association in my region, which recently met me and reiterated that argument.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I now have to announce the result of the deferred Division on the question of the carry-over for the Local Government Finance Bill. The Ayes were 329, the Noes were 207, so the Ayes have it.

[The Division list is published at the end of today’s debates.]

15:32

[Dr Julian Huppert (Cambridge) (LD)]

Rail fares in this country are far too high. Under the last Labour Government we saw year after year of fare rises, and we now have one of the most expensive railways in the world. From 1997, 13 years of Labour government saw rail fares going up by 66% in cash terms. I welcome, however, some of the shadow Secretary of State’s comments about people wanting simple ticketing, as they want to understand what is going on. I welcome that, although it is somewhat belated. I and many others have been arguing for that for many years. I hope we can go further; it is a shame that it did not happen during those 13 years.

Most recently, thanks to pressure from the Liberal Democrats—both inside government, from those such as the Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker) and outside it—and arguments won by a new Secretary of State and Minister for the railways, fares have risen by 1% above inflation this year rather than the planned 3%. I welcome that, and I hope it will not revert to 3% in future years.

We in the Liberal Democrats believe that fares should fall in real terms rather than rise even further above inflation, as happened year on year under Labour. As the shadow Secretary of State confirmed today, Labour policy is for fares to go up by more than inflation every year. That is something that the British public should be concerned about; they have heard it from the shadow Secretary of State today. The Conservatives have also argued for similar increases. We need to reduce the fares and to understand how we can reduce them, we first need to look at how fares have become so high.

[Justin Tomlinson (North Swindon) (Con)]

With pressure to raise revenue to offset fare rises and reduce overcrowding, why not give greater freedoms to train conductors to sell spare capacity in first-class carriages during peak times?

[Dr Huppert]

I would have to look at the details, but it is an interesting idea that is worth looking at. There is also the question of how much spare first-class capacity there should be so that potentially everybody could afford to use it. I am sure that the responsible Minister will look at that.

Why are rail fares so high? Why do commuters suffer from some of the most expensive tickets in Europe and some of the most crowded services? The main reason is chronic underinvestment and mismanagement of the railways. Over the last 50 years, for example, the length of our rail network has roughly halved, but even just since 1980, the number of passenger journeys has doubled. That is good, but it puts pressure on those railways. Government after Government have invested far too little in our most important transport network. Infrastructure spending simply has not kept up with demand, and that pressure on the railways has caused a downward spiral. An overcrowded, inefficient and unreliable service is far more expensive to run. The Office of Rail Regulation estimates that UK railways are up to 40% less efficient than their European counterparts, despite the cost of tickets. That puts fares up, and reduces the amount of investment that is available from them.

The network has become increasingly expensive to run as it has deteriorated, and Government after Government have shifted the spending burden on to passengers. I believe that a large chunk of the 30% savings identified by the McNulty review should be passed on to passengers in the form of lower fares as soon as possible, with the rest being spent on infrastructure. I hope that the Secretary of State and the Minister will accept that those are the priorities.

What is key is significant and well-targeted investment in the railways. That is why the Liberal Democrats were so thrilled by the announcements made by the coalition Government towards the end of last year. Despite the eye-watering public deficit that we face and the ongoing eurozone disaster, we managed to find the £1.4 billion of investment in our railways that was announced in the autumn statement—£400 million more than was announced for the roads, which represents a very good rebalancing towards sustainability—and yesterday we heard the excellent news about High Speed 2.

If we have managed to find those funds now, in such difficult times, just think what could have been done in the boom years. That opportunity was missed. It is deeply regrettable that the necessary investment was not made sooner. Funding would have been easier, decisions would have been much easier to make, and the fares that we face now would be lower. It is a great shame that that did not happen when the money was available.

As well as what can be done in the longer term, there is more that we can do now. For years the Liberal Democrats have called for rail fares to be more open, transparent and rational—so that people can understand what they are buying, why they are buying it and when they can use it—and for franchise agreements to be more flexible. On both those fronts, the Government are making significant progress by reforming franchise agreements and opening up Government data. Nevertheless, there is more to do, and I am sure that the Minister will say more about it later.

Without accountability and openness, there can be no reform and no incentive for fare reductions. It is because of the lack of transparency that successive Governments have employed in rail policy that the debate has become so fractious and fares are so stubbornly high. We see politicking and individual fares being picked on in various quarters. We can all do that. Today we heard the Labour party present the fare rises as though they were a new phenomenon, but fares have risen above inflation since 2003. Some fares have always been allowed to rise more than others as long as they fit the average cap. That was the system established by Labour in 2004.

I could give a number of examples. In 2007, fares on Stagecoach South West Trains rose by 20%. In January 2009, when the retail prices index was 0.1%, fares rose by 6%: 60 times as much as inflation, which was a huge amount. Some comments were made about Ken Livingstone earlier. Londoners will not forget that, having promised in his manifesto

“I will freeze bus and tube fares in real terms for four years”,

Ken Livingstone raised bus fares by 43% in January 2004. They will know what to believe when he makes similar promises again.

The real casualties of all that are the rail system and the passengers whom it is there to serve. The masking of the cause of the fare rises, the predicted income and the pricing structures have meant that the real issues have not been dealt with for too long. We are letting the public down by continuing down that route and not taking the steps that I have outlined. We should pay attention to what is happening throughout the country at present, not just to the extremes—the highest and lowest figures. Overall, fares are rising by 5.9%, which is below the “1% above inflation” cap. That is good, but the fares are still too high and they need to come down.

We should focus today on the overall burden on passengers, on the causes of that, and on how we can reduce those causes. Unless we invest and deal with the problem now, we shall never be able to achieve our goal of a cheap, efficient and sustainable transport network. I hope that Liberal Democrats in Government will be able to make those tough decisions in order to give Britain the efficient and sustainable network that we deserve, and I hope that we will be successful in our pressure for fares to go down in real terms and not up, up, up. The public deserve a good, reliable and affordable rail system.

15:39

[Alison Seabeck (Plymouth, Moor View) (Lab)]

Rail travel is vital to the far south-west. It takes nearly three and a half hours to travel from London to Plymouth, and five hours to travel further down the Penzance main line. We have ever-diminishing air travel options—Plymouth airport has just shut—and only two strategic road routes, and there is no motorway leading down to Cornwall. Rail and its affordability are therefore incredibly important.

Over the 15 years since privatisation, rail travel in the south-west has boomed. There have been 85% more journeys, 40% of them to London and the south-east. The number of journeys in Plymouth has increased over the past 10 years, despite the recession, and we have seen the fastest rate of travel-to-work growth—about 4.6% each year.

A major capacity gap is looming, however. The decisions taken on High Speed 2 will not help the south-west as much as we would like. It is especially expensive for people in the south-west to travel around the country, as we pay more per mile than those in other areas. That is part of the legacy of botched privatisation. There is a deep sense of unfairness. I fully accept that rail passengers have to pay towards the service they use, but there should be fairness in the system and that does not exist.

Local authority figures and development plans suggest that the number of rail passenger journeys will increase further, and in excess of Network Rail’s figures—I urge the Government to compare the figures of Network Rail with those of the local authorities—but passengers will still face historically high fares, and in particular those travelling from the south-west. Why are standard anytime single fares that are priced per mile so much higher for our region than for any other region? A standard open ticket down to Plymouth will now cost £252, up by 9.7%.

The Government put forward the idea that people can commute for 90 minutes into work. The 90-minute journey out of Plymouth to Taunton is a fair stretch, and a young person doing their first job will have to pay £170 a week if they cannot afford to buy a season ticket. That simply is not realistic, and it is certainly not affordable.

A number of Members touched on the economic significance of the rail network for regional and city growth. Its importance to the south-west cannot be overestimated. So much potential could be unlocked if our rail services were efficient, on time and, importantly, affordable. In yesterday’s local government finance debate, we talked about how local authority budgets might grow, such as through increasing business rate revenues. Those revenues will not grow if a decent infrastructure is not in place and if fares are not affordable, as under those circumstances businesses will not want to invest in cities that are distant from the central hub of London.

As always, we in the south-west and Plymouth are concerned about our peripherality. Following the HS2 announcement, we are increasingly concerned that the south-west’s links to London are not being looked at and that we are not getting a strategic overview of exactly how the benefits of HS2 will pan out in terms of access to and from the south-west. We have also received no reassurances about affordability, and we see no fairness in the fares structure. We need a fares structure that is simpler, too. We have a new franchise coming up, and fares structuring and pricing must be taken into account at that time. I also urge the Minister to take on board the concerns of the people of the south-west.

My hon. Friend the Member for Garston and Halewood (Maria Eagle) was right to call this debate, as we should highlight the policies of the Government, which do not tackle the rail companies and therefore, in effect, acquiesce in the unacceptably high rail fares. I urge Members to vote for our motion.

15:44

[Iain Stewart (Milton Keynes South) (Con)]

I am disappointed by the text of the motion. We could have had a sensible and mature debate on the future of the rail industry, its costs and the appropriate balance between revenue from the fare box and from the taxpayer, but instead we have merely had cheap political point making, which does no one any service. From listening to some contributions, one would have thought that train fare increases occurred for the very first time in January of this year, whereas there have, of course, been increases for many years.

For many years before I was elected, I commuted daily up and down the west coast main line between Milton Keynes and Euston. Every year, the season ticket went up a couple of hundred pounds. Now, it is about £5,000, and if one adds on parking charges, that is a huge sum of money to come out of people’s pockets after tax. I acknowledge that that is a huge cost, but we need to have a sensible debate about how we move forward from here, rather than just engaging in cheap point scoring across the board. I hope that the Select Committee on Transport, on which I serve, will turn its attention to this issue at some point this year, once the Government have published their fares review and response to McNulty.

In the short term, it is important that we do what we can to cap fares, and I welcome the announcement in the autumn statement that we are scaling back from RPI plus 3 to RPI plus 1. However, it is also important that passengers see something for what they are paying. I applaud what the Government have done to prioritise investment in the rail industry, and we have seen some examples of that on the line I use. It is far from perfect, but there are measures to tackle overcrowding. We have a new fleet of trains, and just this week, Virgin Trains announced that an extra three of its fast trains will stop at Milton Keynes during the evening peak. That will go some way towards relieving overcrowding, and many of the Pendolino trains are being lengthened. Some tangible improvements are therefore happening, although not as fast as I would like—I would like more trains to stop during the peak morning period—but, this is a welcome first step.

Also welcome is the announcement in the autumn statement about the East West Rail line, which will connect my constituency westwards to Oxford, and southwards to Aylesbury and on to London. I hope that, in the fullness of time, we will extend eastwards towards Cambridge, so that I can go and see my hon. Friend the Member for Cambridge (Dr Huppert) in record speed. However, I suspect that that is a little while off. The key point is that these are tangible improvements in the short term that passengers can see for the extra money they have to pay.

However, there are long-term structural issues within the rail industry, and we need to have a frank and honest debate about how we move forward. We should look not just at this country, but overseas to what other countries do. During the summer recess, I had the great privilege of travelling to Switzerland as the guest of the Swiss railway to examine its system. It has increased cost pressures, as well. We hold up the Swiss railway example as nirvana—the goal that we want to achieve—and in many respects it is, but it is having a big argument at the minute about putting up rail fares to pay for increased infrastructure investment in order to increase capacity. So, this problem is not unique to this country.

However, there are certain parts of the Swiss system that we should look at. In the one minute and 50 seconds remaining to me, I do not have quite enough time to go into that issue in depth, but the Swiss have what they call the general access card, which covers public transport costs across all modes, be they rail, tram, ferry or bus. We should encourage measures in this country to improve transport integration, which has long been talked about. The former Deputy Prime Minister, now Lord Prescott, proclaimed that we would have a committee for integrated transport; however, 13 years on, little has been achieved. We need to address such issues and to look at the long-term costs within the rail industry. Our rail costs are among the highest in the world, and we should not just accept that the existing situation must be preserved in aspic for ever.

Some tough issues have to be addressed and it is not going to be easy, but I am looking forward to having a sensible debate. I hope the Transport Committee will tackle these key issues when we conduct our inquiry, hopefully later this year, and that we can have a sensible debate, rather than the petty and pointless political point scoring that has happened today. There are many sensible Opposition Members with whom I serve on the Transport Committee, and I hope we can have a decent discussion and explore all the issues.

15:49

[Julie Hilling (Bolton West) (Lab)]

I start with the point that I wanted to make to the Secretary of State during her speech. There was a global financial crash; although the previous Prime Minister may have been a very powerful man, he did not cause a financial crash in America, Japan, Germany, Europe and the rest of the world.

In my postbag and in my surgeries I increasingly encounter stories from ever more desperate constituents. I hear from those who are losing their homes and their jobs, from those who are terrified about losing their disability benefits and about the changes to housing benefit, and from those who are having to give up their college courses because they can no longer afford to get to them. I hear from ordinary people who are paying the price of the failure of the banks and of this coalition Government’s economic policy.

The rise in gas and electricity prices means that many people are choosing between heating and eating, and some people cannot even afford food. Last year, the Trussell Trust fed more than 60,000 people who were experiencing food poverty, and the number of people seeking help because they simply do not have enough money to feed their family is growing. These people have lost their jobs or faced an unexpected bill, have had their benefits cut or fallen ill, their relationship has ended or they have simply not received a pay increase for a number of years. These are ordinary people facing devastating circumstances simply because they are poor.

Transport costs are yet another problem. Even in this age of the car, many people are totally dependent on public transport. That could be because they are too young or too old to drive, because they have disabilities, because they are young and cannot afford thousands of pounds for car insurance or because they are on low pay and cannot afford to own and drive a car. The bus is an essential part of most people’s travel on public transport. Twice as many people use buses as use trains, with bus use particularly common in the lower income bracket, and 25% of households do not have access to a car. There has been a perfect storm in the bus industry: a 20% cut in the bus service operator grant; a 28% cut to local government funding for transport; and changes to the way funding is provided for concessionary fares for older people, which cost local authorities £223 million in 2011-2012.

What has been the result of that? It has been as follows: children’s fares rising in my area to half the adult fare, rather than being the flat rate of 80p that they were before; bus services disappearing because local authorities can no longer support them; young people dropping out of college or not applying to go because they no longer get education maintenance allowance to pay for the fares; people no longer able to get to their place of work or to afford the fares to get there; the unemployed unable to afford fares to seek work; young people unable to get to youth projects and left with nothing to do; and the elderly and other vulnerable groups left isolated on their homes. It is no wonder that the UK Youth Parliament chose public transport as its No. 1 issue for 2012.

One of my constituents, Sandra, wrote to me about the increase in cost for children on the bus last April, saying that the cost of getting her two children to school had gone up by 50%. The weekly fare for both girls was £16 and it has risen to £24, or £96 per month, so she will have to find an extra £32 a month just for their transport. She said:

“What option do I have but to pay these amounts, this is the nearest school my girls can attend however it is too far for them to walk especially as it would involve crossing the busy A6 junction which has seen so many fatalities.

The other option is for me to drive them there and pick them up which in this day and age of trying to do our bit for the environment is very negative, plus it would mean taking away their independence which they gained since attending high school.

Surely the knock on effect will be that more parents will drive their children, congestion will increase and the bus company will see a reduction in people using their services which will ultimately see the service itself being cut due to lack of use….Working parents are feeling very stretched at the moment and all these extra costs seem very harsh.

I know many parents I have spoken to feel the same”.

Michelle contacted me in a similar vein, saying:

“As hard working parents who are really struggling to make ends meet in the current economic climate we don't qualify for any financial help from anyone, and there is a limit to how much we can afford to pay. I am aware that there such a thing as a Junior Saver Pass which can be bought weekly—but it would cost me even more to buy this pass than it will be to pay the increased bus fare! So, to put it bluntly, I am stuffed!!!

I wonder, are we going back to the dark times that Orwell wrote about not many miles away when many working families were living and working well below the breadline?”

Of course, it is not just children who face unaffordable increases in bus fares. First Bus will put up its fares this month by more than 7% and some providers are increasing fares by even more.

Let me turn finally to rail. UK rail fares are already the highest in Europe, with some season tickets costing a fifth of the average UK salary. We are forcing those who have cars to go back to driving, increasing congestion and carbon emissions, and forcing those who do not have cars into unemployment and isolation. The Secretary of State talks about the cost of our rail services but does not address the fundamental problems of botched privatisation in the first place. We clearly need to look at how we can reduce costs, but we should not do that at the expense of rail users.

I want to ask a final question: is public transport a public service? No public transport network in the world is not subsidised, but if the Government continue along the path of expecting the user to pay the full cost of any public transport service, people of ordinary means and the poor will be driven off public transport. Indeed, trains will become simply rich men’s toys.

15:55

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

It is a pleasure to speak in this debate. Paragraph 13 of the final McNulty report states quite clearly:

“Fares structures do not send efficient pricing signals, particularly in terms of managing peak demand, and are extremely complex.”

As a frequent user of the west coast main line I can only concur with that diagnosis, but what has struck me about today’s debate has been the lack of any praise for what the Government are doing to tackle it. I am not just talking about RPI plus 1 rather than RPI plus 3, or about the fact that we have more passengers on our railways than we did in the 1920s, but I find it strange that the Opposition find it difficult to recognise our investment, particularly in the north-west with the Ordsall chord, which is the first stage of the northern hub, and the electrification of the line to Blackpool—and that is before we get on to High Speed 2; I am told than those on both Front Benches are suffering a degree of HS2 fatigue.

I listened to the speech from the hon. Member for Garston and Halewood (Maria Eagle), the shadow Secretary of State, and I began to ask myself whether that was the new reality and the new approach for tough times or whether it was just about borrowing a bit more—the same old story and the same old solution—without saying where it would come from. That is not just a knockabout point, as it goes to the heart of transport policy. The previous Labour Government, rightly in my view, wanted to shift the burden of paying for our railways from the taxpayer to the fare-paying passenger, a policy that this Government are continuing. I am not quite sure I understand why the Labour Opposition do not want to continue with that approach. I began to get a bit confused. As I listened to the hon. Lady, I felt like I was watching a game of what I call policy Twister, where a Front-Bench team try to contort themselves into new poses to fit the leader’s latest re-launch. As someone who spent many years in an opposition front-bench team, I know what it feels like. I have been there, done that and bought the T-shirt.

I do not want to denigrate the hon. Lady’s proposals, as I thought that some of them made a lot of sense. For example, I have concerns about the digital divide and the availability of fares only online, and she was right to raise that. I feel, however, that in the wider debate we need a slightly more coherent understanding of what the McNulty review recommends. I am concerned that the debate seems to focus on what is said in the latest RMT or Transport Salaried Staffs Association press release. This is not just about ticket offices—and, by the by, I share many people’s concerns about the loss of ticket offices. We need to understand that McNulty goes much further than that.

Somewhere within rail policy, we must discuss where the burden lies and where the balance falls between the fare-paying passenger and the taxpayer. Given that McNulty called for a fare review and we are delivering a fare review at the end of the year, I am a little perplexed as to why the Opposition could not wait to see what is in the fare review. I am proud to serve on the Select Committee on Transport and I am looking forward to our cross-examination regarding the documents when they come forward. I have no doubt that we will find some flaws and will communicate those flaws to the Government in our usual courteous way, and that will be a good thing. Hon. Members have to recognise that there is a Command Paper coming out that will look at the structure of our railways and that there is a fare review coming out that will also address the issues.

The hon. Member for Garston and Halewood illustrated a useful point when she confirmed to me that one of her core beliefs is that the peak period should be the same in Euston as in Merseyside. I should think that would raise some very interesting problems. Anyone who uses the west coast main line, as I am sure she does to get back to Liverpool, must realise that at peak hours on a Friday the place is a hell hole. Passengers have to be put in cattle pens; it is not acceptable. Is she suggesting that we should reduce the standard national peak time? That would just cause that problem at Euston every day of the week and make it worse. Is she suggesting that we should have a much longer national peak hour? That would make it quite hard for many of our parents and neighbours who travel from Runcorn into Lime Street to do their shopping in Liverpool One to get there and back in a day on an off-peak ticket. That is an example of how the policies that the hon. Lady has suggested today have not really been thought through.

I would far rather that the hon. Lady recognised that the Government are taking relevant steps and are making a difference. They are bringing forward the fares review and the Command Paper on the structure of the rail industry that we need to see. I have a feeling that this debate might have been plonked on Opposition Members from above. I know that that happens sometimes—Members do not always choose to have a debate but might be told, “You’re having one.” They have done their best to cobble together a press release but I am afraid that although they get A-plus for effort, they get D-minus for homework. There is a debate to be had, but I am not sure that today’s debate was the one we wanted to be having.

16:01

[Heidi Alexander (Lewisham East) (Lab)]

Let me start by picking up on the last point that the hon. Member for Blackpool North and Cleveleys (Paul Maynard) made. He suggests that this debate was thrust on our Front Bench. Far from it; I believe that a number of Members desperately want to discuss this issue—[Hon. Members: “Where are they?”] Well, I am here and if hon. Members will grant me the courtesy of listening, I will tell them that my constituents e-mail and write to me on a weekly basis about this issue, and when I knock on their door they talk to me about the affordability of the railway. My constituents depend on the railway far more than most Members’ constituents, partly because there are not a huge number of locally based jobs in the area of Lewisham that I represent. Most of my constituents who work—70%—travel into central London, down to Croydon and out to Bromley using the railway, not the tube, and sometimes the bus to go about their daily life. The railway and the affordability of train fares are critical to my constituents. That is why we are having this debate today.

I was struck by the comments of the hon. Member for Milton Keynes South (Iain Stewart), who said that train fares have been increasing for a number of years. That certainly has been my experience as a London Member of Parliament, but the real difficulty this year is that the train fare increases are particularly hard to stomach given that they come on top of so many other increases in the cost of living, such as in utility bills and food. Constituents are coming to us and saying that their housing benefit is being reduced, and it is a real kick in the teeth when train and bus fares are being hiked by such considerable amounts this year.

[Iain Stewart]

The two issues that the hon. Lady has just mentioned are not separate points, because trains require energy to run on and if energy costs go up the operating costs of the railways also go up. One cannot simply differentiate those two issues.

[Heidi Alexander]

Energy was just one of the things that I mentioned. Most people would recognise that the cost of living is going up considerably. However, I agree with the hon. Gentleman when he says that, with fares going up, our constituents—the public—expect to see an improvement in service, getting some bang for their buck. When the trains roll into stations in my constituency, they are rammed full of people. This morning I tried to get on the 8.32 train from Lewisham and had to wait for the next one to come along. The previous Government put in place a number of measures to increase capacity on some of the suburban lines coming into London.

[Henry Smith (Crawley) (Con)]

Will the hon. Lady give way?

[Heidi Alexander]

I am afraid I will not give way; I have limited time. With the railways Minister present, I would like to make the point that that increase in capacity, lengthening trains to 12 cars, is incredibly important. Also, the new rolling stock on the suburban lines is critical. The new rolling stock has much more standing room, which my constituents are calling out for.

My problem with the increase in train fares is that it is making it much more difficult for my constituents to find work. A single man on low pay working in central London came to my surgery recently. He said that he was gravely worried about whether he could afford to get to work. If people are not able to stay in work or have to look for other jobs, that will add to the bill that the Government are paying out in jobseeker’s allowance. I have fundamental concerns about the impact of rising fares on people’s ability to stay in work. The Campaign for Better Transport has estimated that in London, if two parents are working and have two children in child care, that can swallow up 40% of the household’s income. Hundreds of pounds added each year to the cost of getting about in London will make a significant difference to household budgets.

Not only is it important that train fares are affordable so that people can go about their daily lives, get to work and stay in jobs, but everyone in the Chamber would recognise that ultimately we need to do more to get people on to public transport. The environmental benefits of getting people out of their cars, reducing congestion and pollution by getting them on to the trains and buses, are key. If people do not believe that public transport is affordable to them, we will not see the change in behaviour that all of us in the Chamber want.

In the few minutes remaining to me, I shall pick up on some of the remarks made earlier by the Secretary of State about the proposals put forward by Labour’s candidate for Mayor, Ken Livingstone, on fares policy. She suggested that in some way the 7% cut in fares that Ken Livingstone is promising for October this year would fundamentally destabilise Transport for London budgets. TfL has costed the proposal at £215 million. At present TfL works with an operating surplus of £727 million. It is possible and it can be done. That is why it is the right policy for Ken Livingstone to pursue.

I conclude by saying that it has always interested me that we view public money spent on roads as an investment, yet public money spent on railways as a subsidy. For me, the sooner that changes, the better.

16:08

[Lilian Greenwood (Nottingham South) (Lab)]

We have heard this afternoon exactly how the cost-of-living crisis is hitting households up and down the country. My hon. Friend the Member for Bolton West (Julie Hilling) described the devastating circumstances faced by some of her constituents. This debate is not about point scoring. It is about the lives of the people whom we represent—the people who went back to work after the Christmas holidays and suddenly found that they had to pay almost 11% more to catch the train. As my hon. Friend the Member for Pontypridd (Owen Smith) noted, passengers travelling from Cardiff to London face increases of 9.7%. My hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) highlighted the frightening cost of fares to and from the south-west.

As usual, there were plenty of warm words from the hon. Member for Cambridge (Dr Huppert), but I remind him that his party is part of this Government and their policy is to increase fares in this Parliament by RPI plus 3%.

[Dr Huppert]

Will the hon. Lady give way?

[Lilian Greenwood]

I will not give way at the moment.

We have heard about shoppers finding that they have less to spend when they get to the shops or the market because bus fares have gone up, about small businesses struggling with the high cost of petrol, and about mums and dads having to find more money from the family budget to help teenage sons and daughters pay to travel to college because they have lost their education maintenance allowance and the fare concessions they used to get have been cut. Parents are having to get the car out to take their children to school, even if they cannot really afford to, because school transport has been cut. As has been said, that does nothing to contribute to the green agenda.

The cost of living crisis is hitting hardest those who are least able to withstand it and is made worse by the decisions that the Government have made, which show that they are out of touch with the concerns of ordinary families. When so many people are struggling to pay their bills and make ends meet, only a Government who are completely out of touch with these concerns would allow inflation-busting increases in rail fares, yet that is exactly what this Government have done. They were forced to back down on their original plan to increase rail fares by inflation plus 3% this year, but passengers will still face those rises in January 2013 and January 2014.

When passengers heard the Chancellor’s autumn statement, they understandably expected that the most they would have to pay this year was an extra 1% above inflation, but they soon found that they were wrong, because the Government gave private train companies the right to increase some tickets by an additional 5%, something that Labour banned in government precisely because we understood the pressures commuters face in tough economic times.

[Alok Sharma]

At the start of the debate the hon. Member for Garston and Halewood (Maria Eagle) made a spending commitment to keep fares down. Will the hon. Lady tell us where the money for that would come from and, assuming she does not wish to increase the national debt, what she would cut to fund that commitment?

[Lilian Greenwood]

I am not making any spending commitments this afternoon. The real question needs to be addressed by the Minister, which she might do when summing up. She needs to address the point, made by the National Audit Office, that rather than protecting taxpayers or paying for the investment described by the hon. Member for Milton Keynes South (Iain Stewart), the flexibility will boost the profits of train operating companies. How will she tackle that?

As my hon. Friend the Member for Glasgow South (Mr Harris) rightly said, rail services flourished under Labour, with more services, more passengers and better punctuality than ever before. He also noted that Lord Adonis stood up to train operators and removed this flex. Lord Adonis stated in evidence to the Transport Committee:

“In a time of economic stringency I do not think it acceptable for individual commuters to face significantly above-average fare increases. The Government’s intention is, therefore, that in future the cap should apply to individual regulated fares, not just to the average of each fares basket.”

He said “in future” and nothing about it being for one year.

The Prime Minister might say that he wants to tackle crony capitalism, but actions speak louder than words. His Government have shown that they are on the side of private train operators, rather than passengers, letting them increase some fares by as much as 11% with no guarantee that the money will lead to a better deal for taxpayers. As I have said, the NAO has warned that that could simply result in higher profits for train companies. The Government also know how difficult it is for passengers to navigate their way around complex fare structures to find the cheapest tickets, but they will not rule out getting rid of the very ticket office staff who can help and advise people, particularly those who are unable to find the best offers online or by using a ticket machine.

If things are bad for rail users this January, bus users might say, “Look at the year we’ve already had.” The Transport Committee called the 2010 comprehensive spending review

“the greatest financial challenge for the English bus industry for a generation”.

Alongside rising fuel prices and a depressed economy, many bus operators have had no option but to raise fares, cut services or both. What have the Government done to help bus users, many of whom are among the least well-off in society? They have cut transport funding to local councils by 28%, a loss of £95 million in 2011-12 alone. They have changed the way in which the concessionary fares scheme is funded, taking a further £223 million away from local authorities in the past year, and they have decided to cut the bus service operators grant, the fuel rebate to bus companies, by 20% from April.

If we add those changes together, we find that the result is devastating. Fares are going up, one in five supported bus services has been scrapped and the Campaign for Better Transport has collected examples of more than 1,100 bus services that have already been lost in the English regions. Whole communities have been left isolated without access to public transport, and almost three quarters of local authorities have been forced to cut or to review school transport provision.

Older people, who are protected from fare rises, having benefited enormously from the free bus pass introduced by the previous Labour Government, are finding additional restrictions on when they can travel and, particularly in rural areas, that the service they relied on has disappeared. The Prime Minister may have promised to keep the free bus pass, but it is of little use if people have no local bus to travel on.

Time and again we see this Government choosing to implement policies that have a disproportionate impact on the very people who most need to be protected in harsh economic times: older people and disabled people, who often do not have the choice to use a car; and the unemployed, who are already paying the price of this Government's economic failure. Some 64% of those seeking work do not have a access to a car, so they rely on buses to get to interviews and jobs. As my hon. Friend the Member for Lewisham East (Heidi Alexander) said, how will they access job opportunities or stay in work without public transport and how can work pay if travel to work is not affordable?

We heard about young people, 72% of whom rely on buses to get to college and to give them independence. They are already struggling without their education maintenance allowance, or are facing a threefold increase in tuition fees, so it is little wonder that colleges report a fall in admissions, and that the UK Youth Parliament made cheaper, fairer and more accessible public transport its No. 1 issue for 2012.

For the one in 10 people in rural areas who do not have access to a private car, a bus is essential to get to the nearest shop, doctor or post office—not that car users have done much better. For all the Government’s talk of fuel stabilisers in opposition, one of their first acts was to increase VAT to 20%—immediately putting petrol prices up by 3p a litre and adding an extra £1.35 to the cost of filling up the average car.

The Government claim that those changes are all in the name of deficit reduction and that there is no alternative. That is not so. What is required is the determination to stand up to vested interests and to powerful lobby groups. We have already set out how we would ease the pressure on households from the rising costs of transport—not by increasing spending, but by banning private train companies from averaging out the cap on fare rises. That would mean a maximum increase of inflation plus 1% this year, not increases of up to 11%.

My hon. Friend the Member for Garston and Halewood (Maria Eagle) also set out how we are considering other options to ensure that passengers are protected from unfair pricing, including a single definition of peak and off-peak; a right to the cheapest ticket; a right to a single price for the same ticket; a more flexible way of changing one’s travel plans; and a right to a discount when a rail replacement bus service is put on.

Labour’s policy review is looking at all options for reforming the structure of Britain’s rail industry. We need root-and-branch reform of its costly fragmented structure, and we need a better deal for taxpayers and passengers. We also want to devolve more transport responsibilities, so that more decisions are made locally by integrated transport authorities with powers to deliver local bus services in a way that best suits each community, ensuring that the needs of local people are met and that fares are affordable. For young people who are aged 16 to 18 and in education, we want to see a concessionary fares scheme delivered by the major bus companies in return for the subsidies that they have received.

In the transport spending review, the Government recognised:

“Transport provides the crucial links that allow people and businesses to prosper”.

Well, people and businesses are suffering as a result of their poor decisions. Yesterday, we, like the hon. Member for Fylde (Mark Menzies), welcomed the good news about High Speed 2 and the Government’s commitment to long-term investment in our infrastructure, but they must face up to the here and now. They need to listen to passengers and start taking action to tackle the quiet crisis facing people the length and breadth of this country.

16:19

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

Time is too short to refer to every contribution to today’s debate, but I welcome all those that have been made.

The hon. Member for Glasgow South (Mr Harris) criticised a fares system that he presided over as rail Minister. My hon. Friend the Member for Wimbledon (Stephen Hammond), along with many others, pointed out that RPI plus 1 and above-inflation fare increases were introduced under the Labour Government and did not start under the coalition.

The hon. Member for Pontypridd (Owen Smith) commented on the Government’s continuation of a major investment programme and called for a simpler ticketing system. My hon. Friend the Member for Cambridge (Dr Huppert) also welcomed our commitment to a programme of rail improvements that is probably the biggest since the Victorian era. He welcomed the fact that we had been able to prioritise it despite the deficit because of the difficult decisions that we have made in other areas. My hon. Friend the Member for Milton Keynes South (Iain Stewart) welcomed the progress on East West Rail and made some important points about how fares operate.

The hon. Member for Bolton West (Julie Hilling) made a moving speech about the hardship that her constituents are feeling. As for buses, we are of course doing all that we can within the constraints of the fiscal straitjacket created by the deficit that we were left by Labour. Within those constraints we are of course striving to help those who are facing hardship with the cost of living.

My hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) pointed out the impracticalities of having a single uniform peak throughout the country and that the Opposition transport team appear not to have read the speeches made by their leader or the shadow Chancellor. I particularly liked my hon. Friend’s reference to the game of policy Twister that they have unfortunately had to play today.

The hon. Member for Lewisham East (Heidi Alexander) commented on the concern about the effect of inflation and fare rises. That is exactly the concern that the Chancellor responded to in his autumn statement in putting the limit on the average rise in national rail, tube and bus fares at RPI plus 1. That help for people struggling with the cost of living was welcomed by my hon. Friends the Members for Fylde (Mark Menzies), for Cambridge and for Milton Keynes South. We ought to pay tribute to the Secretary of State for her role in that. We were able to do that at the same time as delivering a major investment programme only because of savings made elsewhere in government to tackle the deficit—the kind of spending reductions that Labour has consistently opposed.

[Mr Tom Harris]

“Many families are feeling the pinch because of stratospheric fare increases—racing ahead of inflation—inflicted by the Department.”—[Official Report, 24 July 2007; Vol. 463, c. 691.] Those are not my words, but those of the Minister in this House. Can she point out any improvements that have been made since then?

[Mrs Villiers]

The former rail Minister has made my point for me. The Opposition must be suffering from collective amnesia if they think that this problem suddenly appeared in May 2010 when the coalition took over. In 2006, a Labour-dominated Select Committee described the Labour Government as “breathtakingly complacent” on value for money in fares. The truth is that concern about rail fares has been growing for years, as my hon. Friends the Members for Bexleyheath and Crayford (Mr Evennett), for St Albans (Mrs Main) and for Milton Keynes South have said.

A major reason for the increases is that under Labour the cost of running the railways spiralled and hard-pressed passengers and taxpayers were left to foot the bill. It is fair that passengers contribute to the cost of running the railways and to the massive programme of upgrades that we are taking forward, but neither fare payers nor taxpayers should have to pay for industry inefficiency. This Government understand how vital it is to get the cost of running the railways down and to tackle the legacy of inefficiency that we inherited from Labour. That is the long-term, sustainable solution to delivering better value for money for taxpayers and fare payers.

[Lilian Greenwood]

The point that we are seeking to make is that when the Government say that fares will go up by inflation plus 1%, that is what they should go up by, not by up to 11%, which is what many people face this year as a result of the Government’s decisions.

[Mrs Villiers]

The hon. Lady need not worry as I will come on to the fares basket in a moment. Before I do, it is crucial to say that we are determined to deliver our goal of ending the era of above-inflation fare rises. The only long-term, sustainable solution to delivering better value for money for taxpayers and fare payers is to get the cost of running the railways down, not the short-term, uncosted, poorly thought-through proposals that we have heard from the hon. Member for Garston and Halewood (Maria Eagle) this afternoon.

We have started reform already, with the reform of the franchising system and our commitment to further electrification to reduce costs. We are also determined to see the rail industry working together better, with a strong shared incentive to reduce costs and deliver better outcomes for passengers.

Another key plank of getting the cost of the railways down is making working practices on the railways more efficient. When Labour was in charge, pay in the rail sector rose more than twice as fast as it did in the economy more widely. Difficult decisions may lie ahead, and I do not believe Labour is capable of taking those decisions where the interests of the unions conflict with the goal of getting better value for money for passengers.

[Mr Tom Harris]

Will the Minister give way?

[Mrs Villiers]

No.

Labour failed to deal with the problem in government, and its heavy dependence on union funding would make it utterly incapable of dealing with it if the country were unwise enough to return a Labour Government. If the Opposition were really serious about getting better value for money for passengers, they would not be making glib announcements in the House; they would be remonstrating with their friends in the rail unions about a responsible approach to pay, from the boardroom to the platform.

I turn now to the fares basket and the flat cap on prices. Frankly, the shadow Secretary of State was in all sorts of trouble on the matter. The claim made by her and the Leader of the Opposition that the suspension of the cap was an ongoing policy, representing a dramatic change of heart by Lord Adonis, is simply not borne out by the facts of what Lord Adonis did in government.

[Mr Harris]

Will the Minister give way?

[Mrs Villiers]

No. The hon. Gentleman did not do anything about the flat cap in his entire time as a rail Minister, so I will not take his intervention on the matter.

Lord Adonis inserted in the franchise contracts a one-year suspension of the flat cap. That conflicts with what the shadow Secretary of State said today.

[Mr Harris]

I promise it is the last time, but will the Minister give way?

[Mrs Villiers]

No.

More important, the shadow Secretary of State has given us no indication of just how much it would cost to repeal the fares basket provision. Amazingly, she did not even seem to understand that it would have a cost. I can assure her that it would. She has given no credible explanation of how Labour would pay for the change, and whether it would come from higher fares, higher taxes, cuts in services, the cancelling of extra carriages or upgrades or more borrowing.

Just one day after the Leader of the Opposition finally acknowledged that dealing with Labour’s deficit means that there is no more money left to spend and said that the Opposition would take a more responsible approach, the shadow Secretary of State stood at the Dispatch Box making spending commitment after spending commitment on rail fares, concessionary bus travel, local government funding, school transport, VAT—the list goes on and on. She and the shadow Minister, the hon. Member for Nottingham South (Lilian Greenwood), made several billion pounds of commitments today.

The truth is that when it comes to the cost of living and the economy, Labour just does not get it. It must be just about the only political party in the world arguing that the way to get out of a debt crisis is by borrowing more money. Whether it is a credit card bill or the international gilts market, that simply does not work. There is no way that interest rates could have stayed at today’s low levels without the action that we have taken to deal with the deficit and avert the crisis enveloping other European countries with public finance positions almost as bad as ours.

In government, Labour brought this country to the brink of bankruptcy, leaving Britain with one of the biggest structural deficits in the developed world. Today’s debate demonstrates that, contrary to what the Leader of the Opposition said, Labour has learned nothing in opposition. The biggest threat to the cost of living in this country is the spiralling interest rates that we would get if we gave way to the demands that Labour makes every single day in the House for more and more spending.

It is clear that if Labour had won the last election—thankfully it did not—it would have utterly failed to take the tough decisions needed to get the deficit under control. That would have had disastrous consequences for the cost of living for millions of families right across the nation. I urge the House to reject the motion.

Question put.

16:29

Division 420

Ayes: 251

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Labour: 234
Democratic Unionist Party: 5
Scottish National Party: 5
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Alliance: 1
Green Party: 1
Independent: 1

Noes: 319

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Conservative: 271
Liberal Democrat: 46