Railways: East Coast Main Line

Tuesday 4th June 2013 Lords Chamber

Question

14:36

Asked By

[Lord Davies of Oldham]

To ask Her Majesty’s Government whether consideration has been given to extending the management by Directly Operated Railways of the east coast main line franchise.

[Earl Attlee]

My Lords, the Government carefully considered a number of issues before announcing the franchising programme schedule on 26 March. This schedule sees the commencement of a new franchise on the intercity east coast in February 2015. This will return the franchise to the private sector after an extended period of public control, putting in place a long-term partner for the significant investment that the Government will make in the east coast main line in future years.

[Lord Davies of Oldham]

My Lords, I have two questions. Will the noble Earl confirm that his ministerial colleague in the other place got it wrong when he stated that the publicly operated east coast main line returned a lower figure to the Treasury than the privately operated west coast? The 2011-12 figures show the opposite: £156 million was returned to the Treasury from Virgin on the west coast and £177 million was returned from the publicly operated east coast service, so my second question is this: what, apart from political dogma, inspires the Government to propose ending the east coast‘s successful operation?

[Earl Attlee]

My Lords, on the noble Lord’s first question, the short answer is no. During the three years to 2012, the Treasury received £411 million and £450 million from the east coast and west coast rail franchises respectively. This is completely separate from the money that the DfT paid to Virgin Trains as part of the revenue-based risk-sharing mechanism, which by its nature is variable, so the statement that my right honourable friend made is factually accurate. The bottom line is that the plans that we have set out will drive improvements to rail services and put passengers at the heart of a revitalised rail franchising system. It is also important to remember that rail franchises are not directly comparable.

It was never intended for the east coast main line to remain in the public sector. Indeed, when the then Secretary of State, the noble Lord, Lord Adonis, explained in this House in July 2009 the decision to bring the line into public control, he said:

“I do not believe that it would be in the public interest for us to have a nationalised train operating company indefinitely”.—[Official Report, 1/7/09; col. 232.]

[Lord Palmer]

My Lords, I must declare an interest, as the House of Lords pays an enormous amount of money to get me travelling from Berwick-upon-Tweed to here, and, indeed, my family spends an awful lot of money on buying their tickets. Since the east coast service is operating remarkably successfully and is working well, why is there this desperate need and hurry to denationalise it?

[Earl Attlee]

My Lords, many noble Lords have privately approached me and said how well the east coast franchise is working under DOR. However, we need a longer-term investment plan for the future. The Brown review finds that franchising is a fundamentally sound approach for securing the passenger railway services on which so many people rely. The Government remain committed to benefiting from private sector innovation and operational experience in their railways.

[Lord Shipley]

My Lords, I am a user of the east coast service. Will a new franchisee be tied to the presently proposed trains, or may they be able to propose an alternative of a much cheaper rolling-stock package?

[Earl Attlee]

My Lords, the future for the east coast main line includes the intercity express programme to replace the existing high-speed trains, which are very old. There is an option to extend the IEP to include replacing the 225 trains. The Government will have to decide later this year whether to take that option.

[Lord Grocott]

My Lords, is it a fair summary of the Government’s position that if an organisation in the private sector is making a mess of things and losing money, the taxpayer should pick it up and sort it out and that as soon as it is profitable again it should be returned to the private sector?

[Earl Attlee]

The noble Lord knows perfectly well that that is not a fair analysis of what went wrong with the east coast railway line. I am sure he would not suggest bringing an airline into direct operation by the Government.

[Lord Cormack]

My Lords, will my noble friend ensure that whoever operates this line in future offers a better, more regular service between London and Lincoln?

[Earl Attlee]

My Lords, my noble friend raises an important question. I have discussed this with officials and they are working on it. However, there are some complex problems concerning the logistics and timetabling. Currently, the Lincoln line is not electrified, so it is complex, but my officials are working on it.

[Baroness McIntosh of Hudnall]

My Lords, will the noble Earl expand a little on his answer to my noble friend Lord Grocott? He said earlier that different rail franchises cannot be compared, which may or may not be true but I will take it as true—in which case, can we just compare the performance of different operators on the east coast line? The failure of the private sector was what made it necessary, was it not, for the Government to intervene in the first place. Can he at the very least explain to the House in what way the successful operation of the east coast line under DOR has been analysed so that its successes can, as a minimum, be pointed to when a private sector operator takes it over, so that it can emulate them?

[Earl Attlee]

My Lords, the last part of the noble Baroness’s question was very good, because under Directly Operated Railways we understand the franchise and DOR will be able to suggest how in future the new franchise can better operate the railway. It is also important to understand that the west coast main line has increased its passenger rate by 100%, whereas the east coast main line has done so by only 30%.

[Lord Brooke of Alverthorpe]

My Lords, given that some of our current independent franchisees are classed as private companies but are foreign and indirectly owned by foreign Governments, such as the German Government, why are we prepared to accept that they can compete by taking British lines and running franchises, yet not prepared to contemplate extending some competition between the public and private sector owned by the British Government?

[Earl Attlee]

My Lords, the noble Lord will know perfectly well that we have to comply with European procurement rules. The ITT has initially to be published in the European journal and we have no intention of changing that situation.